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Retirement and Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Retirement and Benefit Plans Retirement and Benefit Plans
The Bancorp’s qualified defined benefit plan’s benefits were frozen in 1998, except for grandfathered employees. The Bancorp’s other defined benefit retirement plans consist of non-qualified plans which are frozen and funded on an as-needed basis. A majority of these plans were obtained in acquisitions and are included with the qualified defined benefit plan in the following tables (“the Plan”). The Bancorp recognizes the overfunded or underfunded status of the Plan in other assets and accrued taxes, interest and expenses, respectively, in the Consolidated Balance Sheets.

The following table summarizes the defined benefit retirement plans as of and for the years ended December 31:
($ in millions)
20202019
Fair value of plan assets at January 1$175 164 
Actual return on assets13 26 
Contributions2 2 
Settlement(9)(9)
Benefits paid(8)(8)
Fair value of plan assets at December 31$173 175 
Projected benefit obligation at January 1$194 181 
Interest cost6 7 
Settlement(9)(9)
Actuarial loss20 23 
Benefits paid(8)(8)
Projected benefit obligation at December 31$203 194 
Underfunded projected benefit obligation at December 31$(30)(19)
Accumulated benefit obligation at December 31(a)
$203 194 
(a)Since the Plan’s benefits are frozen, the rate of compensation increase is no longer an assumption used to calculate the accumulated benefit obligation. Therefore, the accumulated benefit obligation was the same as the projected benefit obligation at both December 31, 2020 and 2019.

The following table summarizes net periodic benefit cost and other changes in the Plan’s assets and benefit obligations recognized in OCI for the years ended December 31:
($ in millions)202020192018
Components of net periodic benefit cost:
Interest cost$6 7 7 
Expected return on assets(4)(8)(11)
Amortization of net actuarial loss6 6 6 
Settlement3 3 3 
Net periodic benefit cost$11 8 5 
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss (gain)$12 5 (1)
Amortization of net actuarial loss(6)(6)(6)
Settlement(3)(3)(3)
Total recognized in other comprehensive income3 (4)(10)
Total recognized in net periodic benefit cost and other comprehensive income$14 4 (5)

Fair Value Measurements of Plan Assets
The following tables summarize Plan assets measured at fair value on a recurring basis as of December 31:
Fair Value Measurements Using(a)
2020 ($ in millions)Level 1Level 2Level 3    Total Fair Value
Cash equivalents$4 — — 4 
Mutual and exchange-traded funds68 — — 68 
Debt securities:
U.S. Treasury and federal agencies securities57 6 — 63 
Mortgage-backed securities:
Non-agency commercial mortgage-backed securities— 1 — 1 
Asset-backed securities and other debt securities(b)
— 37 — 37 
Total debt securities$57 44 — 101 
Total Plan assets$129 44 — 173 
(a)For further information on fair value hierarchy levels, refer to Note 1.
(b)Includes corporate bonds.
Fair Value Measurements Using(a)
2019 ($ in millions)Level 1Level 2Level 3 Total Fair Value
Cash equivalents$14 — — 14 
Mutual and exchange-traded funds76 — — 76 
Debt securities:
U.S. Treasury and federal agencies securities57 6 — 63 
Mortgage-backed securities:
Non-agency commercial mortgage-backed securities— 1 — 1 
Asset-backed securities and other debt securities(b)
— 21 — 21 
Total debt securities$57 28 — 85 
Total Plan assets$147 28 — 175 
(a)For further information on fair value hierarchy levels, refer to Note 1.
(b)Includes corporate bonds.

The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Cash equivalents
Cash equivalents are comprised of money market mutual funds that invest in short-term money market instruments that are issued and payable in U.S. dollars. The Plan measures its cash equivalent funds that are exchange-traded using the fund’s quoted price, which is in an active market. Therefore, these investments are classified within Level 1 of the valuation hierarchy.

Mutual and exchange-traded funds
The Plan measures its mutual and exchange-traded funds, which are registered with the SEC, using the funds’ quoted prices which are available in an active market. Therefore, these investments are classified within Level 1 of the valuation hierarchy. The mutual and exchange-traded funds held by the Plan are open-ended funds and are required to publicly publish their NAV on a daily basis. The funds are also required to transact and use the daily NAV as a basis for transactions. Therefore, the NAV reflects the fair value of the Plan’s investment.

Debt securities
Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics, or DCFs. Examples of such instruments, which are classified within Level 2 of the valuation hierarchy, include federal agencies securities, non-agency commercial mortgage-backed securities and asset-backed securities and other debt securities.

Plan Assumptions
The Plan’s assumptions are evaluated annually and are updated as necessary. The discount rate assumption reflects the yield on a portfolio of high quality fixed-income instruments that have a similar duration to the Plan’s liabilities. The expected long-term rate of return assumption reflects the average return expected on the assets invested to provide for the Plan’s liabilities. In determining the expected long-term rate of return, the Bancorp evaluated actuarial and economic inputs, including long-term inflation rate assumptions and broad equity and bond indices long-term return projections, as well as actual long-term historical plan performance.

The following table summarizes the weighted-average plan assumptions for the years ended December 31:
202020192018
For measuring benefit obligations at year end:(a)
Discount rate2.26 %3.05 4.10 
For measuring net periodic benefit cost:(a)
Discount rate3.05 4.10 3.47 
Expected return on plan assets2.64 5.50 6.00 
(a)Since the Plan’s benefits were frozen, except for grandfathered employees, the rate of compensation increase is no longer applicable beginning in 2014 since minimal grandfathered employees are still accruing benefits.

Lowering both the expected rate of return on the plan assets and the discount rate by 0.25% would have increased the 2020 pension expense by approximately $1 million.

Based on the actuarial assumptions, the Bancorp expects to contribute $2 million to the Plan in 2021. Estimated pension benefit payments are $18 million for 2021, $17 million for 2022, $18 million for 2023, $16 million for 2024 and $18 million for 2025. The total estimated payments for the years 2026 through 2030 is $66 million.
Investment Policies and Strategies
The Bancorp’s policy for the investment of Plan assets is to employ investment strategies that achieve a range of weighted-average target asset allocations relating to equity securities, fixed-income securities (including U.S. Treasury and federal agencies securities, mortgage-backed securities, asset-backed securities, corporate bonds and municipal bonds), alternative strategies (including traditional mutual funds, precious metals and commodities) and cash.

The following table provides the Bancorp’s targeted and actual weighted-average asset allocations by asset category for the years ended December 31:
Targeted Range(b)  
20202019
Equity securities(a)
0-55  % 
3 19 
Fixed-income securities
50-100      
90 59 
Alternative strategies
0-5      
— — 
Cash or cash equivalents
0-100      
7 22 
Total100 %100 
(a)Includes mutual and exchange-traded funds.
(b)These reflect the targeted ranges for the year ended December 31, 2020.

Plan Management’s objective is to achieve and maintain a fully-funded status of the qualified defined benefit plan while also minimizing the risk of excess assets. As a result, the portfolio assets of the qualified defined benefit plan will continue to increase the weighting of long duration fixed income, or liability matching assets, as the funded status increases. There were no significant concentrations of risk associated with the investments of the Plan at December 31, 2020.

Permitted asset classes of the Plan include cash and cash equivalents, fixed-income (domestic and non-U.S. bonds), equities (U.S., non-U.S., emerging markets and real estate investment trusts), equipment leasing and mortgages. The Plan utilizes derivative instruments including puts, calls, straddles or other option strategies, as approved by management.

Fifth Third Bank, National Association, as Trustee, is expected to manage Plan assets in a manner consistent with the Plan agreement and other regulatory, federal and state laws. As of December 31, 2020 and 2019, $173 million and $175 million, respectively, of Plan assets were managed by Fifth Third Bank, National Association. The Fifth Third Bank Pension, 401(k) and Medical Plan Committee (the “Committee”) is the plan administrator. The Trustee is required to provide to the Committee monthly and quarterly reports covering a list of Plan assets, portfolio performance, transactions and asset allocation. The Trustee is also required to keep the Committee apprised of any material changes in the Trustee’s outlook and recommended investment policy. There were no fees paid by the Plan for investment management, accounting or administrative services provided by the Trustee.

Other Information on Retirement and Benefit Plans
The Bancorp has a qualified defined contribution savings plan that allows participants to make voluntary 401(k) contributions on a pre-tax or Roth basis, subject to statutory limitations. Expenses recognized for matching contributions to the Bancorp’s qualified defined contribution savings plan were $105 million, $90 million and $83 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Bancorp did not make profit sharing contributions during both the years ended December 31, 2020 and 2018. The Bancorp recognized $4 million of profit sharing expense associated with the MB Financial, Inc. acquisition during the year ended December 31, 2019. In addition, the Bancorp has a non-qualified defined contribution plan that allows certain employees to make voluntary contributions into a deferred compensation plan. Expenses recognized by the Bancorp for its non-qualified defined contribution plan were $5 million, $6 million and $4 million for the years ended December 31, 2020, 2019 and 2018, respectively.