Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Obligations and Funded Status

Obligations and Funded Status



	Pension benefits						Other postretirement benefits
December 31,	2019			2018			2019			2018
Change in benefit obligation
Benefit obligation at beginning of year	$	6,476		$	7,359		$	806		$	927
Service cost	25			46			7			7
Interest cost	235			219			28			28
Amendments	—			18			(78		)	(25		)
Actuarial losses (gains)	974			(372		)	100			(51		)
Settlements	(23		)	(146		)	—			—
Curtailments	—			(154		)	—			—
Benefits paid	(477		)	(422		)	(82		)	(86		)
Medicare Part D subsidy receipts	—			—			5			6
Foreign currency translation impact	39			(72		)	—			—
Benefit obligation at end of year⁽¹⁾	$	7,249		$	6,476		$	786		$	806
Change in plan assets⁽¹⁾
Fair value of plan assets at beginning of year	$	4,334		$	4,862		$	—		$	—
Actual return on plan assets	731			(144		)	—			—
Employer contributions	268			298			—			—
Benefits paid	(453		)	(397		)	—			—
Administrative expenses	(34		)	(33		)	—			—
Settlements	(22		)	(178		)	—			—
Foreign currency translation impact	44			(74		)	—			—
Fair value of plan assets at end of year⁽¹⁾	$	4,868		$	4,334		$	—		$	—
Net funded status	$	(2,381	)	$	(2,142	)	$	(786	)	$	(806	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	104		$	111		$	—		$	—
Current liabilities	(25		)	(23		)	(72		)	(83		)
Noncurrent liabilities	(2,460		)	(2,230		)	(714		)	(723		)
Net amount recognized	$	(2,381	)	$	(2,142	)	$	(786	)	$	(806	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	3,375		$	2,957		$	179		$	87
Prior service cost (benefit)	1			3			(37		)	(27		)
Net amount recognized, before tax effect	$	3,376		$	2,960		$	142		$	60
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Loss consist of:
Net actuarial loss (gain)	$	566		$	(19	)	$	100		$	(52	)
Amortization of accumulated net actuarial loss	(148		)	(264		)	(8		)	(7		)
Prior service cost (benefit)	—			19			(78		)	(25		)
Amortization of prior service (cost) benefit	(2		)	(26		)	68			35
Net amount recognized, before tax effect	$	416		$	(290	)	$	82		$	(49	)

⁽¹⁾

At December 31, 2019, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $5,884, $3,513, and $(2,371), respectively. 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.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations



	Pension benefits
	2019		2018
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans were as follows:
Projected benefit obligation	$	7,249	$	6,476
Accumulated benefit obligation	7,219		6,444
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	6,064		5,435
Fair value of plan assets	3,579		3,182
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	6,045		5,415
Fair value of plan assets	3,579		3,179

Components of Net Periodic Benefit Cost



	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
For the year ended December 31,	2019			2018			2017			2019			2018			2017
Service cost	$	25		$	46		$	90		$	7		$	7		$	7
Interest cost	235			219			234			28			28			30
Expected return on plan assets	(286		)	(306		)	(332		)	—			—			—
Recognized net actuarial loss	139			168			220			4			7			5
Amortization of prior service cost (benefit)	2			3			5			(6		)	(7		)	(8		)
Settlements⁽³⁾	9			96			—			—			—			—
Curtailments⁽⁴⁾	—			23			—			(58		)	(28		)	—
Net periodic benefit cost⁽⁵⁾	$	124		$	249		$	217		$	(25	)	$	7		$	34


⁽¹⁾	In 2019, 2018 and 2017, net periodic benefit cost for U.S. pension plans was $127, $239, and $206, respectively.


⁽²⁾	In 2019, 2018 and 2017, net periodic benefit cost for other postretirement benefits reflects a reduction of $11, $10, and $11, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.


⁽³⁾	In 2019 and 2018, settlements were due to workforce reductions (see Note C) and the payment of lump sum benefits.


⁽⁴⁾	In 2019 and 2018, curtailments were due to a reduction of future benefits, resulting in the recognition of favorable and unfavorable plan amendments.

⁽⁵⁾

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,	2020		2020
Net actuarial loss recognition	$	176	$	8
Prior service cost (benefit) recognition	—		(7		)

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):



	2019		2018		2017
Discount rate to calculate service cost⁽¹⁾	4.35	%	3.75	%	4.20	%
Discount rate to calculate interest cost⁽¹⁾	4.00		3.30		3.60
Expected long-term rate of return on plan assets	7.00		7.00		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 2019, 2018, and 2017 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.

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,	2019		2018
Discount rate	3.30	%	4.35	%
Rate of compensation increase	—		3.50
Cash balance plan interest crediting rate	3.00		3.00

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):



	2019		2018		2017
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	2023		2022		2021

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	$	23	$	(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, 2019	Level 1		Level 2		Net asset value		Total
Equities:
Equity securities	$	590	$	—	$	508	$	1,098
Long/short equity hedge funds	—		—		260		260
Private equity	—		—		155		155
	$	590	$	—	$	923	$	1,513
Fixed income:
Intermediate and long duration government/credit	$	121	$	1,047	$	1,003	$	2,171
Other	126		7		144		277
	$	247	$	1,054	$	1,147	$	2,448
Other investments:
Real estate	$	104	$	—	$	165	$	269
Discretionary and systematic macro hedge funds	—		—		405		405
Other	—		—		240		240
	$	104	$	—	$	810	$	914
Net plan assets⁽¹⁾	$	941	$	1,054	$	2,880	$	4,875



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⁽²⁾	$	664	$	943	$	2,726	$	4,333


⁽¹⁾	As of December 31, 2019, the total fair value of pension plans’ assets excludes a net payable of $7, which represents securities purchased and sold but not yet settled plus interest and dividends earned on various investments.


⁽²⁾	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.

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, 2019 and 2018, by asset class, were as follows:



		Plan assets at December 31,
Asset class	Policy range	2019		2018
Equities	20–55%	31	%	29	%
Fixed income	25–55%	50		48
Other investments	15–35%	19		23
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
2020	$	470	$	80	$	5	$	75
2021	465		80		5		75
2022	460		80		5		75
2023	455		80		5		75
2024	450		75		5		70
Thereafter	2,120		260		25		235
	$	4,420	$	655	$	50	$	605