Employee Benefits (Tables)

12 Months Ended

Dec. 31, 2018

Expense recognized for defined contribution savings plans, included in compensation and benefits and discontinued operations 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	2018		2017		2016
U.S.	$	98	$	105	$	121
U.K.	45		43		43
Netherlands and Canada	25		25		27
Total	$	168	$	173	$	191

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, 2018 and 2017 for the Company’s other significant postretirement benefit plans located in the U.S. and Canada (in millions):



	2018			2017
Accumulated projected benefit obligation	$	91		$	99
Fair value of plan assets	14			17
Funded status	(77		)	(82		)
Unrecognized prior-service credit	(1		)	(1		)
Unrecognized (gain) loss	(6		)	(3		)
Net amount recognized	$	(84	)	$	(86	)

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, 2018 and 2017 and a statement of the funded status as of December 31, 2018 and 2017, for the material U.K., U.S., and other major plans, which are located in the Netherlands, and Canada. These plans represent approximately 90% of the Company’s projected benefit obligations.



	U.K.						U.S.						Other
(millions)	2018			2017			2018			2017			2018			2017
Change in projected benefit obligation
At January 1	$	4,893		$	4,874		$	3,155		$	2,902		$	1,401		$	1,227
Service cost	—			—			—			—			—			—
Interest cost	109			123			99			96			27			26
Plan amendment	13			—			—			—			—			—
Settlements	(176		)	(496		)	—			—			—			—
Actuarial loss (gain)	(297		)	100			(221		)	309			(47		)	49
Benefit payments	(160		)	(146		)	(156		)	(152		)	(43		)	(39		)
Foreign currency impact	(253		)	438			—			—			(67		)	138
At December 31	$	4,129		$	4,893		$	2,877		$	3,155		$	1,271		$	1,401
Accumulated benefit obligation at end of year	$	4,129		$	4,893		$	2,877		$	3,155		$	1,247		$	1,373
Change in fair value of plan assets
At January 1	$	5,906		$	5,675		$	1,958		$	1,683		$	1,256		$	1,076
Actual return on plan assets	(125		)	274			(141		)	308			(19		)	70
Employer contributions	97			86			135			119			20			21
Settlements	(176		)	(496		)	—			—			—			—
Benefit payments	(160		)	(146		)	(156		)	(152		)	(43		)	(39		)
Foreign currency impact	(317		)	513			—			—			(59		)	128
At December 31	$	5,225		$	5,906		$	1,796		$	1,958		$	1,155		$	1,256
Market related value at end of year	$	5,225		$	5,906		$	1,981		$	1,926		$	1,155		$	1,256
Amount recognized in Statement of Financial Position at December 31
Funded status	$	1,096		$	1,013		$	(1,081	)	$	(1,197	)	$	(116	)	$	(145	)
Unrecognized prior-service cost	30			19			3			5			(7		)	(7		)
Unrecognized loss	1,106			1,217			1,705			1,701			440			459
Net amount recognized	$	2,232		$	2,249		$	627		$	509		$	317		$	307

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
	2018			2017			2018			2017			2018			2017
Prepaid benefit cost ⁽¹⁾	$	1,113		$	1,034		$	—		$	—		$	—		$	—
Accrued benefit liability - current⁽²⁾	(1		)	(1		)	(46		)	(43		)	(5		)	(5		)
Accrued benefit liability - non-current⁽³⁾	(16		)	(20		)	(1,035		)	(1,154		)	(111		)	(140		)
Accumulated other comprehensive loss	1,136			1,236			1,708			1,706			433			452
Net amount recognized	$	2,232		$	2,249		$	627		$	509		$	317		$	307


(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, 2018 and 2017 consist of (in millions):



	U.K.				U.S.				Other
	2018		2017		2018		2017		2018			2017
Net loss	$	1,106	$	1,217	$	1,705	$	1,701	$	440		$	459
Prior service cost (income)	30		19		3		5		(7		)	(7		)
Total	$	1,136	$	1,236	$	1,708	$	1,706	$	433		$	452

Components of net periodic benefit cost for the pension plans

Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):



	U.K.									U.S.									Other
	2018			2017			2016			2018			2017			2016			2018			2017			2016
Service cost	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Interest cost	109			123			158			99			96			111			27			26			29
Expected return on plan assets, net of administration expenses	(192		)	(199		)	(243		)	(144		)	(140		)	(156		)	(45		)	(47		)	(48		)
Amortization of prior-service cost	1			1			2			2			2			2			—			—			—
Amortization of net actuarial loss	28			31			31			59			50			50			12			11			10
Net periodic benefit (income) cost	(54		)	(44		)	(52		)	16			8			7			(6		)	(10		)	(9		)
Settlement expense	37			125			61			—			—			158			—			—			—
Total net periodic benefit cost (income)	$	(17	)	$	81		$	9		$	16		$	8		$	165		$	(6	)	$	(10	)	$	(9	)

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
	2018	2017	2018	2017	2018	2017
Discount rate	2.95%	2.63%	3.92 - 4.26%	3.27 - 3.61%	1.89 - 3.88%	1.78 - 3.39%
Rate of compensation increase	3.73 - 4.23%	3.70 - 4.20%	N/A	N/A	1.00 - 3.00%	1.00 - 3.00%
Underlying price inflation	1.88%	1.87%	N/A	N/A	2.00%	2.00%


(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
	2018	2017	2016	2018	2017	2016	2018	2017	2016
Discount rate	2.63%	2.77%	3.96%	3.27 - 3.61%	3.53 - 4.11%	3.69 - 4.43%	1.78 - 3.39%	1.85 - 3.81%	2.43 - 3.96%
Expected return on plan assets, net of administration expenses	3.34%	3.36%	4.55%	7.71%	7.88%	7.81%	1.70 - 4.85%	2.68 - 5.15%	3.47 - 4.95%
Rate of compensation increase	3.70 - 4.20%	3.70 - 4.20%	3.63 - 4.13%	N/A	N/A	N/A	1.00 - 3.00%	1.00 - 3.50%	2.00 - 3.50%

Fair values of pension plan assets

The fair values of the Company’s major U.K. pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):



				Fair Value Measurements Using
	Balance at December 31, 2018			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⁾	$	96		$	96	$	—		$	—
Equity investments:
Pooled funds:
Global ⁽²⁾	209			—		—			—
Europe ⁽²⁾	3			—		—			—
Fixed income investments: ⁽³⁾
Derivatives ⁽⁴⁾	(949		)	—		(949		)	—
Fixed income securities ⁽⁵⁾	2,446			2,079		367			—
Annuities	1,688			—		—			1,688
Pooled funds:
Derivatives ⁽²⁾	39			—		—			—
Fixed income securities ⁽²⁾	850			—		—			—
Other investments:
Real estate ^{(2) (6)}	149			—		—			—
Alternative investments ^{(2) (7)}	694			—		—			—
Total	$	5,225		$	2,175	$	(582	)	$	1,688


(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, 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.

The fair values of the Company’s U.S. pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):



				Fair Value Measurements Using
Asset Category	Balance at December 31, 2018			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⁾	$	130		$	130	$	—		$	—
Equity investments:
Large cap domestic	294			294		—			—
Small cap domestic	14			14		—			—
International	76			76		—			—
Equity derivatives	(14		)	—		(14		)	—
Pooled funds:
International ⁽²⁾	235			—		—			—
Large cap domestic ⁽²⁾	8			—		—			—
Small cap domestic ⁽²⁾	42			—		—			—
Fixed income investments: ⁽³⁾
Corporate bonds	111			—		111			—
Government and agency bonds	126			95		31			—
Asset-backed securities	2			—		2			—
Pooled funds:
Government and agency bonds ⁽²⁾	95			—		—			—
Corporate bonds ⁽²⁾	322			—		—			—
Other investments:
Real estate and REITs ⁽⁴⁾	78			78		—			—
Alternative investments ^{(2) (5)}	277			—		—			—
Total	$	1,796		$	687	$	130		$	—


(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, 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 REITs.


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

The fair values of the Company’s other major pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):



			Fair Value Measurements Using
	Balance at December 31, 2018		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	$	10	$	10	$	—	$	—
Equity investments:
Pooled funds:
Global ⁽¹⁾	281		—		—		—
Fixed income investments:
Derivatives ⁽²⁾	9		—		9		—
Pooled funds:
Fixed income securities ⁽¹⁾	766		—		—		—
Derivatives ⁽¹⁾⁽²⁾	16		—		—		—
Other investments:
Alternative investments ^{(1) (3)}	63		—		—		—
Pooled funds:
REITs ^{(1) (4)}	10		—		—		—
Total	$	1,155	$	10	$	9	$	—


(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, 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.

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, 2018 and December 31, 2017 (in millions):



Fair Value Measurements Using Level 3 Inputs	Annuities
Balance at January 1, 2017	$	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
Actual return on plan assets:
Relating to assets still held at December 31, 2018	(122		)
Purchases, sales and settlements—net	7
Foreign exchange	(106		)
Balance at December 31, 2018	$	1,688

Estimated Future Benefit Payments

Estimated future benefit payments for plans, not including voluntary one-time lump sum payments, are as follows at December 31, 2018 (in millions):



	U.K.		U.S.		Other
2019	$	137	$	178	$	42
2020	139		182		43
2021	144		185		44
2022	149		187		45
2023	152		177		46
2024 – 2028	795		879		248

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:



	2018	2017	2016
Net periodic benefit cost recognized (millions)	$3	$1	$5
Weighted-average discount rate used to determine future benefit obligations	3.91 - 4.26%	3.32 - 3.64%	3.71 - 4.15%
Weighted-average discount rate used to determine net periodic benefit costs	3.32 - 3.64%	3.71 - 4.15%	3.99 - 4.33%