Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Obligations and Funded Status

Obligations and Funded Status



	Pension benefits						Other postretirement benefits
December 31,	2017			2016			2017			2016
Change in benefit obligation
Benefit obligation at beginning of year	$	7,026		$	14,247		$	980		$	2,319
Service cost	90			165			7			13
Interest cost	234			435			30			63
Amendments	1			2			—			—
Actuarial (gains) losses	311			770			1			112
Transfer to Alcoa Corporation	—			(7,577		)	—			(1,340		)
Settlements	—			(82		)	—			—
Benefits paid, net of participants’ contributions	(425		)	(794		)	(98		)	(197		)
Medicare Part D subsidy receipts	—			—			7			9
Foreign currency translation impact	122			(140		)	—			1
Benefit obligation at end of year⁽¹⁾	$	7,359		$	7,026		$	927		$	980
Change in plan assets⁽¹⁾
Fair value of plan assets at beginning of year	$	4,666		$	10,928		$	—		$	—
Actual return on plan assets	212			89			—			—
Employer contributions	310			296			—			—
Participants’ contributions	—			16			—			—
Benefits paid	(404		)	(762		)	—			—
Administrative expenses	(33		)	(65		)	—			—
Transfer to Alcoa Corporation	—			(5,610		)	—			—
Settlements	—			(82		)	—			—
Foreign currency translation impact	111			(144		)	—			—
Fair value of plan assets at end of year⁽¹⁾	$	4,862		$	4,666		$	—		$	—
Funded status*	$	(2,497	)	$	(2,360	)	$	(927	)	$	(980	)
Less: Amounts attributed to joint venture partners	—			—			—			—
Net funded status	$	(2,497	)	$	(2,360	)	$	(927	)	$	(980	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	89		$	6		$	—		$	—
Current liabilities	(22		)	(21		)	(86		)	(91		)
Noncurrent liabilities	(2,564		)	(2,345		)	(841		)	(889		)
Net amount recognized	$	(2,497	)	$	(2,360	)	$	(927	)	$	(980	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	3,240		$	2,979		$	146		$	150
Prior service cost (benefit)	10			15			(37		)	(45		)
Total, before tax effect	3,250			2,994			109			105
Less: Amounts attributed to joint venture partners	—			—			—			—
Net amount recognized, before tax effect	$	3,250		$	2,994		$	109		$	105
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss consist of:
Net actuarial loss (gain)	$	481		$	(1,992	)	$	1		$	(224	)
Amortization of accumulated net actuarial loss	(220		)	(380		)	(5		)	(24		)
Prior service (benefit) cost	—			(42		)	—			37
Amortization of prior service (cost) benefit	(5		)	(13		)	8			24
Total, before tax effect	256			(2,427		)	4			(187		)
Less: Amounts attributed to joint venture partners	—			38			—			—
Net amount recognized, before tax effect	$	256		$	(2,389	)	$	4		$	(187	)


⁽¹⁾	At December 31, 2017, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $6,018, $3,544, and $(2,474), respectively. At December 31, 2016, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $5,707, $3,495, and $(2,212), respectively.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations



	Pension benefits
	2017		2016
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	7,359	$	7,026
Accumulated benefit obligation	7,169		6,850
The aggregate projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets was as follows:
Projected benefit obligation	6,600		6,995
Fair value of plan assets	4,016		4,629
The aggregate accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets was as follows:
Accumulated benefit obligation	6,422		6,104
Fair value of plan assets	3,998		3,894

Components of Net Periodic Benefit Cost



	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2017			2016			2015			2017			2016			2015
Service cost	$	90		$	155		$	175		$	7		$	13		$	14
Interest cost	234			431			577			30			63			92
Expected return on plan assets	(332		)	(677		)	(753		)	—			—			—
Recognized net actuarial loss	220			380			468			5			24			17
Amortization of prior service cost (benefit)	5			13			16			(8		)	(24		)	(37		)
Settlements⁽³⁾	—			19			16			—			—			—
Curtailments⁽⁴⁾	—			—			9			—			—			(4		)
Special termination benefits⁽⁵⁾	—			2			16			—			—			—
Net periodic benefit cost⁽⁶⁾	$	217		$	323		$	524		$	34		$	76		$	82
Discontinued operations	—			122			248			—			41			43
Net amount recognized in Statement of Consolidated Operations	$	217		$	201		$	276		$	34		$	35		$	39


Note:	the footnotes below include components of Net Periodic Benefit Cost related to Alcoa Corporation through the completion of the Separation Transaction.


⁽¹⁾	In 2017, 2016 and 2015, net periodic benefit cost for U.S. pension plans was $206, $261, and $423, respectively.


⁽²⁾	In 2017, 2016 and 2015, net periodic benefit cost for other postretirement benefits reflects a reduction of $11, $22, and $34, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.


⁽³⁾	In 2016, settlements were due to workforce reductions (see Note D) and the payment of lump sum benefits and/or purchases of annuity contracts. In 2015, settlements were due to workforce reductions (see Note D) and the payment of lump sum benefits and/or purchases of annuity contracts.


⁽⁴⁾	In 2015, curtailments were due to elimination of benefits or workforce reductions (see Note D).


⁽⁵⁾	In 2016 and 2015, special termination benefits were due to workforce reductions (see Note D).


⁽⁶⁾	Amounts attributed to joint venture partners are not included.

Schedule of Amounts Expected to be Recognized in Net Periodic Benefit Cost

Amounts Expected to be Recognized in Net Periodic Benefit Cost



	Pension benefits	Other postretirement benefits
	2018	2018
Net actuarial loss recognition	168	9
Prior service cost (benefit) recognition	3	(8	)

Schedule of Weighted Average Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost

Weighted average assumptions used to determine net periodic benefit cost for U.S. pension and other postretirement benefit plans were as follows (assumptions for non-U.S. plans did not differ materially):



	2017		2016		2015
Discount rate to calculate service cost*	4.20	%	4.29	%	4.00	%
Discount rate to calculate interest cost*	3.60		3.15		4.00
Expected long-term rate of return on plan assets	7.75		7.75		7.75
Rate of compensation increase	3.50		3.50		3.50

In all periods presented, the respective discount rates were used to determine net periodic benefit cost for most U.S. pension plans for the full annual period. However, the discount rates for a limited number of plans were updated during 2017, 2016, and 2015 to reflect the remeasurement of these plans due to new union labor agreements, settlements, and/or curtailments. The updated discount rates used were not significantly different from the discount rates presented.

Weighted average assumptions used to determine benefit obligations for U.S. pension and other postretirement benefit plans were as follows (assumptions for non-U.S. plans did not differ materially):



December 31,	2017		2016
Discount rate	3.75	%	4.20	%
Rate of compensation increase	3.50		3.50

Schedule of Assumed Health Care Cost Trend Rates

Assumed health care cost trend rates for U.S. other postretirement benefit plans were as follows (assumptions for non-U.S. plans did not differ materially):



	2017		2016		2015
Health care cost trend rate assumed for next year	5.50	%	5.50	%	5.50	%
Rate to which the cost trend rate gradually declines	4.50	%	4.50	%	4.50	%
Year that the rate reaches the rate at which it is assumed to remain	2021		2020		2019

Schedule of One-Percentage Point Change in Assumed Rates of Health Care Cost Trend Rates

Assumed health care cost trend rates have an effect on the amounts reported for the health care plan. A one-percentage point change in these assumed rates would have the following effects:

Schedule of Pension and Postretirement Plans Investment Policy and Weighted Average Asset Allocations

Arconic’s pension plans’ investment policy and weighted average asset allocations at December 31, 2017 and 2016, by asset class, were as follows:



		Plan assets at December 31,
Asset class	Policy range	2017		2016
Equities	20–55%	28	%	30	%
Fixed income	25–55%	47		42
Other investments	15–35%	25		28
Total		100	%	100	%

The following table presents the fair value of pension plan assets classified under the appropriate level of the fair value hierarchy or net asset cost:



December 31, 2017	Level 1		Level 2		Net asset value		Total
Equities:
Equity securities	$	379	$	—	$	593	$	972
Long/short equity hedge funds	—		—		230		230
Private equity	—		—		155		155
	$	379	$	—	$	978	$	1,357
Fixed income:
Intermediate and long duration government/credit	$	201	$	981	$	779	$	1,961
Other	164		8		145		317
	$	365	$	989	$	924	$	2,278
Other investments:
Real estate	$	85	$	—	$	172	$	257
Discretionary and systematic macro hedge funds	—		—		583		583
Other	77		7		275		359
	$	162	$	7	$	1,030	$	1,199
Net plan assets*	$	906	$	996	$	2,932	$	4,834



December 31, 2016	Level 1		Level 2		Net Asset Value		Total
Equities
Equity securities	$	393	$	—	$	431	$	824
Long/short equity hedge funds	—		—		406		406
Private equity	—		—		165		165
	$	393	$	—	$	1,002	$	1,395
Fixed income:
Intermediate and long duration government/credit	$	23	$	95	$	655	$	773
Other	1,060		51		74		1,185
	$	1,083	$	146	$	729	$	1,958
Other investments:
Real estate	$	81	$	—	$	185	$	266
Discretionary and systematic macro hedge funds	—		—		784		784
Other	65		—		178		243
	$	146	$	—	$	1,147	$	1,293
Net plan assets**	$	1,622	$	146	$	2,878	$	4,646


*	As of December 31, 2017, the total fair value of pension plans’ assets excludes a net receivable of $28, which represents assets due from Alcoa Corporation as a result of plan separations and securities sold but not yet settled plus interest and dividends earned on various investments.


**	As of December 31, 2016, the total fair value of pension plans’ assets excludes a net receivable of $20, which represents assets due from Alcoa Corporation as a result of plan separations and securities sold not yet settled plus interest and dividends earned on various investments.

Schedule of Benefit Payments Expected to be Paid and Expected Medicare Part D Subsidy Receipts

Benefit payments expected to be paid to pension and other postretirement benefit plans’ participants and expected Medicare Part D subsidy receipts are as follows utilizing the current assumptions outlined above:



Year ended December 31,	Pension benefits paid		Gross Other post- retirement benefits		Medicare Part D subsidy receipts		Net Other post- retirement benefits
2018	$	435	$	90	$	5	$	85
2019	440		90		5		85
2020	440		90		5		85
2021	445		90		5		85
2022	450		90		5		85
Thereafter	2,265		335		25		310
	$	4,475	$	785	$	50	$	735

1%
increase

1%
decrease

Effect on other postretirement benefit obligations

Effect on total of service and interest cost components