Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Expense recognized for defined contribution savings plans, included in compensation and benefits and discontinued operations in the consolidated statements of income

The expense recognized for these plans is included in Compensation and benefits in the Consolidated Statements of Income. The expense for the significant plans in the U.S., U.K., Netherlands and Canada is as follows (in millions):



Years ended December 31	2017		2016		2015
U.S.	$	105	$	121	$	100
U.K.	43		43		42
Netherlands and Canada	25		27		24
Total	$	173	$	191	$	166

Reconciliation of the changes in the benefit obligations and fair value of assets and a statement of the funded status

The following table provides an overview of the accumulated projected benefit obligation, fair value of plan assets, funded status and net amount recognized as of December 31, 2017 and 2016 for the Company’s other significant postretirement benefit plans located in the U.S. and Canada (in millions):



	2017			2016
Accumulated projected benefit obligation	$	99		$	110
Fair value of plan assets	17			18
Funded status	(82		)	(92		)
Unrecognized prior-service credit	(1		)	(3		)
Unrecognized (gain) loss	(3		)	10
Net amount recognized	$	(86	)	$	(85	)

The following tables provide a reconciliation of the changes in the projected benefit obligations and fair value of assets for the years ended December 31, 2017 and 2016 and a statement of the funded status as of December 31, 2017 and 2016, for the material U.K., U.S., and other major plans, which are located in the Netherlands, and Canada. These plans represent approximately 92% of the Company’s projected benefit obligations.



	U.K.						U.S.						Other
(millions)	2017			2016			2017			2016			2017			2016
Change in projected benefit obligation
At January 1	$	4,874		$	4,985		$	2,902		$	3,154		$	1,227		$	1,177
Service cost	—			—			—			—			—			—
Interest cost	123			158			96			111			26			29
Plan amendment	—			(20		)	—			—			—			—
Settlements	(496		)	(159		)	—			(281		)	—			—
Actuarial loss (gain)	(22		)	32			127			(43		)	16			(7		)
Benefit payments	(146		)	(242		)	(152		)	(139		)	(39		)	(39		)
Change in discount rate	122			1,079			182			100			33			100
Foreign currency impact	438			(959		)	—			—			138			(33		)
At December 31	$	4,893		$	4,874		$	3,155		$	2,902		$	1,401		$	1,227
Accumulated benefit obligation at end of year	$	4,893		$	4,874		$	3,155		$	2,902		$	1,373		$	1,191
Change in fair value of plan assets
At January 1	$	5,675		$	5,903		$	1,683		$	1,951		$	1,076		$	1,019
Actual return on plan assets	274			1,233			308			116			70			111
Employer contributions	86			67			119			36			21			20
Settlements	(496		)	(159		)	—			(281		)	—			—
Benefit payments	(146		)	(242		)	(152		)	(139		)	(39		)	(39		)
Foreign currency impact	513			(1,127		)	—			—			128			(35		)
At December 31	$	5,906		$	5,675		$	1,958		$	1,683		$	1,256		$	1,076
Market related value at end of year	$	5,906		$	5,675		$	1,926		$	1,819		$	1,256		$	1,076
Amount recognized in Statement of Financial Position at December 31
Funded status	$	1,013		$	801		$	(1,197	)	$	(1,219	)	$	(145	)	$	(151	)
Unrecognized prior-service cost	19			19			5			6			(7		)	(6		)
Unrecognized loss	1,217			1,237			1,701			1,612			459			400
Net amount recognized	$	2,249		$	2,057		$	509		$	399		$	307		$	243

Amounts recognized in the Consolidated Statements of Financial Position

Amounts recognized in the Consolidated Statements of Financial Position consist of (in millions):



	U.K.						U.S.						Other
	2017			2016			2017			2016			2017			2016
Prepaid benefit cost ⁽¹⁾	$	1,034		$	836		$	—		$	—		$	—		$	—
Accrued benefit liability - current⁽²⁾	(1		)	(1		)	(43		)	(44		)	(5		)	(5		)
Accrued benefit liability - non-current⁽³⁾	(20		)	(34		)	(1,154		)	(1,175		)	(140		)	(146		)
Accumulated other comprehensive loss	1,236			1,256			1,706			1,618			452			394
Net amount recognized	$	2,249		$	2,057		$	509		$	399		$	307		$	243


(1)	Included in Prepaid pension


(2)	Included in Other current liabilities


(3)	Included in Pension, other postretirement, and postemployment liabilities

Amounts recognized in Accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost

Amounts recognized in Accumulated other comprehensive loss (income) that have not yet been recognized as components of net periodic benefit cost at December 31, 2017 and 2016 consist of (in millions):



	U.K.				U.S.				Other
	2017		2016		2017		2016		2017			2016
Net loss	$	1,217	$	1,237	$	1,701	$	1,612	$	459		$	400
Prior service cost (income)	19		19		5		6		(7		)	(6		)
Total	$	1,236	$	1,256	$	1,706	$	1,618	$	452		$	394

Components of net periodic benefit cost for the pension plans

The following table provides the components of net periodic benefit (income) cost for the plans (in millions):



	U.K.									U.S.									Other
	2017			2016			2015			2017			2016			2015			2017			2016			2015
Service cost	$	—		$	—		$	1		$	—		$	—		$	—		$	—		$	—		$	—
Interest cost	123			158			198			96			111			131			26			29			33
Expected return on plan assets, net of administration expenses	(199		)	(243		)	(307		)	(140		)	(156		)	(154		)	(47		)	(48		)	(50		)
Amortization of prior-service cost	1			2			1			2			2			2			—			—			—
Amortization of net actuarial loss	31			31			41			50			50			54			11			10			11
Net periodic benefit (income) cost	(44		)	(52		)	(66		)	8			7			33			(10		)	(9		)	(6		)
Settlement expense	125			61			—			—			158			—			—			—			—
Total net periodic benefit cost (income)	$	81		$	9		$	(66	)	$	8		$	165		$	33		$	(10	)	$	(9	)	$	(6	)

Weighted-average assumptions used to determine future benefit obligations and net periodic benefit cost

The weighted-average assumptions used to determine benefit obligations are as follows:



	U.K.		U.S. ⁽¹⁾		Other
	2017	2016	2017	2016	2017	2016
Discount rate	2.63%	2.77%	3.27 - 3.61%	3.53 - 4.11%	1.78 - 3.39%	1.85 - 3.81%
Rate of compensation increase	3.70 - 4.20%	3.70 - 4.20%	N/A	N/A	1.00 - 3.00%	1.00 - 3.50%
Underlying price inflation	1.87%	1.83%	N/A	N/A	2.00%	2.00 - 2.50%


(1)	U.S. pension plans are frozen and therefore not impacted by compensation increases or price inflation.

The weighted-average assumptions used to determine the net periodic benefit cost are as follows:



	U.K.			U.S.			Other
	2017	2016	2015	2017	2016	2015	2017	2016	2015
Discount rate	2.77%	3.96%	3.70%	3.53 - 4.11%	3.69 - 4.43%	3.37 - 4.08%	1.85 - 3.81%	2.43 - 3.96%	2.03 - 3.91%
Expected return on plan assets, net of administration expenses	3.36%	4.55%	5.09%	7.88%	7.81%	7.96%	2.68 - 5.15%	3.47 - 4.95%	3.99 - 5.21%
Rate of compensation increase	3.70 - 4.20%	3.63 - 4.13%	3.55 - 4.05%	N/A	N/A	N/A	1.00 - 3.50%	2.00 - 3.50%	2.25 - 3.50%

Fair values of pension plan assets

The fair values of the Company’s major U.K. pension plan assets at December 31, 2017 and December 31, 2016, by asset category, are as follows (in millions):



				Fair Value Measurements Using
	Balance at December 31, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	209		$	209	$	—		$	—
Equity investments:
Pooled funds:
Global ⁽²⁾	401			—		—			—
Europe ⁽²⁾	6			—		—			—
Fixed income investments: ⁽³⁾
Derivatives ⁽⁴⁾	(771		)	—		(771		)	—
Fixed income securities ⁽⁵⁾	2,787			2,362		425			—
Annuities	1,909			—		—			1,909
Pooled funds:
Derivatives ⁽²⁾	57			—		—			—
Fixed income securities ⁽²⁾	251			—		—			—
Other investments:
Real estate ^{(2) (6)}	146			—		—			—
Alternative investments ^{(2) (7)}	911			—		—			—
Total	$	5,906		$	2,571	$	(346	)	$	1,909


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles.


(4)	Consists of equity securities and equity derivatives, including repurchase agreements.


(5)	Consists of corporate and government bonds.


(6)	Consists of property funds and trusts holding direct real estate investments.


(7)	Consists of limited partnerships, private equity, and hedge funds.



			Fair Value Measurements Using
	Balance at December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	86	$	86	$	—	$	—
Equity investments:
Global	135		135		—		—
Pooled funds:
Global ⁽²⁾	365		—		—		—
Europe ⁽²⁾	18		—		—		—
Fixed income investments: ⁽³⁾
Derivatives ⁽⁴⁾	10		—		10		—
Fixed income securities ⁽⁵⁾	2,129		1,726		403		—
Annuities	1,773		—		—		1,773
Pooled funds:
Derivatives ⁽²⁾	62
Fixed income securities ⁽²⁾	223		—		—		—
Other investments:
Real estate ^{(2) (6)}	101		—		—		—
Alternative investments ^{(2) (7)}	773		—		—		—
Total	$	5,675	$	1,947	$	413	$	1,773


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles.


(4)	Consists of equity securities and equity derivatives.


(5)	Consists of corporate and government bonds and fixed income derivatives.


(6)	Consists of property funds and trusts holding direct real estate investments.


(7)	Consists of limited partnerships, private equity, and hedge funds.

The fair values of the Company’s other major pension plan assets at December 31, 2017 and December 31, 2016, by asset category, are as follows (in millions):



			Fair Value Measurements Using
	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	11	$	11	$	—	$	—
Equity investments:
Pooled funds:
Global ⁽¹⁾	370		—		—		—
North America ⁽¹⁾	26		—		—		—
Fixed income investments:
Fixed income securities ⁽²⁾	211		—		211		—
Derivatives ⁽²⁾	40		—		40		—
Pooled funds:
Fixed income securities ⁽¹⁾	566		—		—		—
Other investments:
Alternative investments ^{(1) (3)}	26		—		—		—
Pooled funds:
REITs ^{(1) (4)}	6		—		—		—
Total	$	1,256	$	11	$	251	$	—


(1)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(2)	Consists of corporate and government bonds and fixed-income derivatives.


(3)	Consists of limited partnerships, private equity, and hedge funds.


(4)	Consists of property funds and trusts holding direct real estate investments.



			Fair Value Measurements Using
	Balance at December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	11	$	11	$	—	$	—
Equity investments:
Pooled funds:
Global ⁽¹⁾	322		—		—		—
North America ⁽¹⁾	36		—		—		—
Derivatives ⁽¹⁾	20		—		—		—
Fixed income investments:
Fixed income securities ⁽²⁾	166		—		166		—
Derivatives ⁽²⁾	37		—		37		—
Pooled funds:
Fixed income securities ⁽¹⁾	469		—		—		—
Other investments:
Alternative investments ^{(1) (3)}	9		—		—		—
Pooled funds:
REITs ^{(1) (4)}	6		—		—		—
Total	$	1,076	$	11	$	203	$	—


(1)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(2)	Consists of corporate and government bonds and fixed-income derivatives.


(3)	Consists of limited partnerships, private equity, and hedge funds.


(4)	Consists of property funds and trusts holding direct real estate investments.

The fair values of the Company’s U.S. pension plan assets at December 31, 2017 and December 31, 2016, by asset category, are as follows (in millions):



			Fair Value Measurements Using
Asset Category	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	56	$	56	$	—	$	—
Equity investments:
Large cap domestic	313		313		—		—
Small cap domestic	17		17		—
International	90		90		—
Equity derivatives	111		—		111		—
Pooled funds:
International ⁽²⁾	270		—		—		—
Large cap domestic ⁽²⁾	12		—		—		—
Small cap domestic ⁽²⁾	114		—		—		—
Fixed income investments: ⁽³⁾
Corporate bonds	110		—		110		—
Government and agency bonds	148		114		34		—
Pooled funds:
Corporate bonds ⁽²⁾	290		—		—		—
Other investments:
Real estate and REITs ⁽⁴⁾	82		82		—		—
Alternative investments ^{(2) (5)}	345		—		—		—
Total	$	1,958	$	672	$	255	$	—


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of corporate and government bonds, asset-backed securities, and fixed-income derivatives.


(4)	Consists of exchange traded real estate investment trusts (“REITs”).


(5)	Consists of limited partnerships, private equity, and hedge funds.



			Fair Value Measurements Using
Asset Category	Balance at December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents ⁽¹⁾	$	100	$	100	$	—	$	—
Equity investments:
Large cap domestic	268		268		—		—
Small cap domestic	15		15		—		—
International	64		64		—		—
Equity derivatives	81		78		3		—
Pooled funds:
International ⁽²⁾	196		—		—		—
Small cap domestic ⁽²⁾	52		—		—		—
Fixed income investments: ⁽³⁾
Corporate bonds	105		—		105		—
Government and agency bonds	132		76		56		—
Fixed income derivatives	65		65		—		—
Pooled funds:
Corporate bonds ⁽²⁾	255		—		—		—
Other investments:
Commodity derivatives ⁽⁴⁾	22		—		22		—
Real estate and REITs ⁽⁵⁾	61		61		—		—
Alternative investments ^{(2) (6)}	267		—		—		—
Total	$	1,683	$	727	$	186	$	—


(1)	Consists of cash and institutional short-term investment funds.


(2)	Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.


(3)	Consists of corporate and government bonds, asset-backed securities, and fixed-income derivatives.


(4)	Consists of long-dated options on a commodity index.


(5)	Consists of exchange traded REITs.


(6)	Consists of limited partnerships, private equity, and hedge funds.

Changes in the Level 3 fair-value category

The following table presents the changes in the Level 3 fair-value category in the Company’s U.K. pension plans for the years ended December 31, 2017 and December 31, 2016 (in millions):



Fair Value Measurements Using Level 3 Inputs	Annuities
Balance at January 1, 2016	$	827
Actual return on plan assets:
Relating to assets still held at December 31, 2016	7
Purchases, sales and settlements—net	1,248
Foreign exchange	(309		)
Balance at December 31, 2016	1,773
Actual return on plan assets:
Relating to assets still held at December 31, 2017	(66		)
Purchases, sales and settlements—net	45
Foreign exchange	157
Balance at December 31, 2017	$	1,909

Estimated Future Benefit Payments

Estimated future benefit payments for plans, not including voluntary one-time lump sum payments, are as follows at December 31, 2017 (in millions):



	U.K.		U.S.		Other
2018	$	134	$	170	$	43
2019	141		176		45
2020	145		182		46
2021	151		187		47
2022	159		182		48
2023 – 2027	858		901		257

Other information related to the Company's other post-retirement benefit plans

Other information related to the Company’s other postretirement benefit plans are as follows:



	2017	2016	2015
Net periodic benefit cost recognized (millions)	$1	$5	$6
Weighted-average discount rate used to determine future benefit obligations	3.32 - 3.64%	3.71 - 4.15%	3.99 - 4.33%
Weighted-average discount rate used to determine net periodic benefit costs	3.71 - 4.15%	3.99 - 4.33%	3.83 - 4.08%