Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Obligations and Funded Status

Obligations and Funded Status



	Pension benefits						Other postretirement benefits
December 31,	2018			2017			2018			2017
Change in benefit obligation
Benefit obligation at beginning of year	$	7,359		$	7,026		$	927		$	980
Service cost	46			90			7			7
Interest cost	219			234			28			30
Amendments	18			1			(25		)	—
Actuarial (gains) losses	(372		)	311			(51		)	1
Settlements	(146		)	—			—			—
Curtailments	(154		)	—			—			—
Benefits paid	(422		)	(425		)	(86		)	(98		)
Medicare Part D subsidy receipts	—			—			6			7
Foreign currency translation impact	(72		)	122			—			—
Benefit obligation at end of year⁽¹⁾	$	6,476		$	7,359		$	806		$	927
Change in plan assets⁽¹⁾
Fair value of plan assets at beginning of year	$	4,862		$	4,666		$	—		$	—
Actual return on plan assets	(144		)	212			—			—
Employer contributions	298			310			—			—
Benefits paid	(397		)	(404		)	—			—
Administrative expenses	(33		)	(33		)	—			—
Settlements	(178		)	—			—			—
Foreign currency translation impact	(74		)	111			—			—
Fair value of plan assets at end of year⁽¹⁾	$	4,334		$	4,862		$	—		$	—
Net funded status	$	(2,142	)	$	(2,497	)	$	(806	)	$	(927	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	111		$	89		$	—		$	—
Current liabilities	(23		)	(22		)	(83		)	(86		)
Noncurrent liabilities	(2,230		)	(2,564		)	(723		)	(841		)
Net amount recognized	$	(2,142	)	$	(2,497	)	$	(806	)	$	(927	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	2,957		$	3,240		$	87		$	146
Prior service cost (benefit)	3			10			(27		)	(37		)
Net amount recognized, before tax effect	$	2,960		$	3,250		$	60		$	109
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Loss consist of:
Net actuarial (gain) loss	$	(19	)	$	481		$	(52	)	$	1
Amortization of accumulated net actuarial loss	(264		)	(220		)	(7		)	(5		)
Prior service cost (benefit)	19			—			(25		)	—
Amortization of prior service (cost) benefit	(26		)	(5		)	35			8
Net amount recognized, before tax effect	$	(290	)	$	256		$	(49	)	$	4


⁽¹⁾	At December 31, 2018, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $5,282, $3,123, and $(2,159), respectively. 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.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations



	Pension benefits
	2018		2017
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	6,476	$	7,359
Accumulated benefit obligation	6,444		7,169
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	5,435		6,600
Fair value of plan assets	3,182		4,016
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	5,415		6,422
Fair value of plan assets	3,179		3,998

Components of Net Periodic Benefit Cost



	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
For the year ended December 31,	2018			2017			2016			2018			2017			2016
Service cost	$	46		$	90		$	155		$	7		$	7		$	13
Interest cost	219			234			431			28			30			63
Expected return on plan assets	(306		)	(332		)	(677		)	—			—			—
Recognized net actuarial loss	168			220			380			7			5			24
Amortization of prior service cost (benefit)	3			5			13			(7		)	(8		)	(24		)
Settlements⁽³⁾	96			—			19			—			—			—
Curtailments⁽⁴⁾	23			—			—			(28		)	—			—
Special termination benefits⁽⁵⁾	—			—			2			—			—			—
Net periodic benefit cost⁽⁶⁾	$	249		$	217		$	323		$	7		$	34		$	76
Discontinued operations	—			—			122			—			—			41
Net amount recognized in Statement of Consolidated Operations	$	249		$	217		$	201		$	7		$	34		$	35


Note:	the footnotes below include components of Net Periodic Benefit Cost related to Alcoa Corporation through the completion of the Separation Transaction in 2016.


⁽¹⁾	In 2018, 2017 and 2016, net periodic benefit cost for U.S. pension plans was $239, $206, and $261, respectively.


⁽²⁾	In 2018, 2017 and 2016, net periodic benefit cost for other postretirement benefits reflects a reduction of $10, $11, and $22, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.


⁽³⁾	In 2018 and 2016, settlements were due to workforce reductions (see Note D) and the payment of lump sum benefits and/or purchases of annuity contracts.


⁽⁴⁾	In 2018, curtailments were due to a reduction of future benefits, resulting in the recognition of favorable and unfavorable plan amendments.


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

⁽⁶⁾

Amounts attributed to joint venture partners are not included. Service cost was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; curtailments and settlements were included in Restructuring and other charges; and all other cost components were recorded in Other expense (income), net in the Statement of Consolidated Operations.

Amounts Expected to be Recognized in Net Periodic Benefit Cost



	Pension benefits		Other postretirement benefits
December 31,	2019		2019
Net actuarial loss recognition	$	139	$	3
Prior service cost (benefit) recognition	2		(4		)

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

Assumptions

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,	2018		2017
Discount rate	4.35	%	3.75	%
Rate of compensation increase	3.50		3.50
Cash balance plan interest crediting rate	3.00		3.00

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):



	2018		2017		2016
Discount rate to calculate service cost⁽¹⁾	3.75	%	4.20	%	4.29	%
Discount rate to calculate interest cost⁽¹⁾	3.30		3.60		3.15
Expected long-term rate of return on plan assets	7.00		7.75		7.75
Rate of compensation increase	3.50		3.50		3.50
Cash balance plan interest crediting rate	3.00		3.00		3.00

⁽¹⁾

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 2018, 2017, and 2016 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.

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):



	2018		2017		2016
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	2022		2021		2020

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:



	1% increase		1% decrease
Effect on other postretirement benefit obligations	$	22	$	(22	)
Effect on total of service and interest cost components	1		(1		)

Schedule of Fair Value of Pension Plan Assets

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, 2018	Level 1		Level 2		Net asset value		Total
Equities:
Equity securities	$	318	$	—	$	578	$	896
Long/short equity hedge funds	—		—		232		232
Private equity	—		—		147		147
	$	318	$	—	$	957	$	1,275
Fixed income:
Intermediate and long duration government/credit	$	200	$	934	$	770	$	1,904
Other	9		9		152		170
	$	209	$	943	$	922	$	2,074
Other investments:
Real estate	$	81	$	—	$	164	$	245
Discretionary and systematic macro hedge funds	—		—		471		471
Other	56		—		212		268
	$	137	$	—	$	847	$	984
Net plan assets⁽¹⁾	$	664	$	943	$	2,726	$	4,333



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⁽²⁾	$	906	$	996	$	2,932	$	4,834


⁽¹⁾	As of December 31, 2018, the total fair value of pension plans’ assets excludes a net receivable of $1, which represents securities purchased and sold but not yet settled plus interest and dividends earned on various investments.


⁽²⁾	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 not yet settled plus interest and dividends earned on various investments.

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

Plan Assets

Arconic’s pension plans’ investment policy and weighted average asset allocations at December 31, 2018 and 2017, by asset class, were as follows:



		Plan assets at December 31,
Asset class	Policy range	2018		2017
Equities	20–55%	29	%	28	%
Fixed income	25–55%	48		47
Other investments	15–35%	23		25
Total		100	%	100	%

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:



For the year ended December 31,	Pension benefits paid		Gross Other post- retirement benefits		Medicare Part D subsidy receipts		Net Other post- retirement benefits
2019	$	460	$	90	$	5	$	85
2020	460		85		5		80
2021	455		85		5		80
2022	455		85		5		80
2023	450		85		5		80
Thereafter	2,170		300		25		275
	$	4,450	$	730	$	50	$	680