Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Obligations and Funded Status

Obligations and Funded Status


	Pension benefits						Other postretirement benefits
December 31,	2013			2012			2013			2012
Change in benefit obligation
Benefit obligation at beginning of year	$	14,751		$	13,526		$	2,863		$	2,844
Service cost		213			203			17			14
Interest cost		611			647			114			132
Amendments		82			6			-			-
Actuarial (gains) losses		(849	)		1,120			(170	)		107
Settlements		(13	)		-			-			-
Benefits paid, net of participants’ contributions		(841	)		(833	)		(249	)		(256	)
Medicare Part D subsidy receipts		-			-			20			21
Foreign currency translation impact		(224	)		82			(3	)		1
Benefit obligation at end of year*	$	13,730		$	14,751		$	2,592		$	2,863
Change in plan assets
Fair value of plan assets at beginning of year	$	11,043		$	10,311		$	-		$	8
Actual return on plan assets		109			925			-			-
Employer contributions		473			571			-			-
Participants’ contributions		27			32			-			-
Benefits paid		(825	)		(822	)		-			(8	)
Administrative expenses		(40	)		(42	)		-			-
Settlements		(17	)		-			-			-
Foreign currency translation impact		(190	)		68			-			-
Fair value of plan assets at end of year*	$	10,580		$	11,043		$	-		$	-
Funded status*	$	(3,150	)	$	(3,708	)	$	(2,592	)	$	(2,863	)
Less: Amounts attributed to joint venture partners		(25	)		(40	)		(4	)		(4	)
Net funded status	$	(3,125	)	$	(3,668	)	$	(2,588	)	$	(2,859	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	88		$	86		$	-		$	-
Current liabilities		(30	)		(32	)		(234	)		(256	)
Noncurrent liabilities		(3,183	)		(3,722	)		(2,354	)		(2,603	)
Net amount recognized	$	(3,125	)	$	(3,668	)	$	(2,588	)	$	(2,859	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	5,198		$	5,880		$	389		$	593
Prior service cost (benefit)		94			119			(57	)		(76	)
Total, before tax effect		5,292			5,999			332			517
Less: Amounts attributed to joint venture partners		38			54			(1	)		(1	)
Net amount recognized, before tax effect	$	5,254		$	5,945		$	333		$	518
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss consist of:
Net actuarial (gain) loss	$	(193	)	$	1,073		$	(169	)	$	107
Amortization of accumulated net actuarial loss		(489	)		(384	)		(35	)		(25	)
Prior service cost		-			9			-			-
Amortization of prior service (cost) benefit		(25	)		(19	)		19			16
Total, before tax effect		(707	)		679			(185	)		98
Less: Amounts attributed to joint venture partners		(16	)		8			-			-
Net amount recognized, before tax effect	$	(691	)	$	671		$	(185	)	$	98

At December 31, 2013, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $10,643, $7,909, and $(2,734), respectively. At December 31, 2012, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $11,521, $8,437, and $(3,084), respectively.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations


	Pension benefits
	2013		2012
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	13,730	$	14,751
Accumulated benefit obligation		13,324		14,186

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		12,180		13,973
Fair value of plan assets		8,930		10,142

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		11,776		13,421
Fair value of plan assets		8,890		10,123

Components of Net Periodic Benefit Cost

Components of Net Periodic Benefit Cost


	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2013			2012			2011			2013			2012			2011
Service cost	$	194		$	186		$	165		$	17		$	14		$	17
Interest cost		602			639			678			114			131			158
Expected return on plan assets		(788	)		(808	)		(806	)		-			-			(2	)
Recognized net actuarial loss		489			384			247			35			25			26
Amortization of prior service cost (benefit)		19			19			19			(18	)		(16	)		(17	)
Settlements⁽³⁾		9			-			2			-			-			-
Curtailments⁽⁴⁾		6			-			(9	)		-			-			-
Special termination benefits⁽⁵⁾		77			-			-			-			-			-
Net periodic benefit cost⁽⁶⁾	$	608		$	420		$	296		$	148		$	154		$	182

⁽¹⁾	In 2013, 2012, and 2011, net periodic benefit cost for U.S pension plans was $391, $288, and $190, respectively.

⁽²⁾	In 2013, 2012, and 2011, net periodic benefit cost for other postretirement benefits reflects a reduction of $55, $64, and $43, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.

⁽³⁾	In all periods presented, settlements were due to the payment of significant lump sum benefits and/or purchases of annuity contracts.

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

⁽⁵⁾	In 2013, 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
	2014		2014
Net actuarial loss recognition	$	384	$	19
Prior service cost (benefit) recognition		15		(18	)

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):


	2013			2012			2011
Health care cost trend rate assumed for next year		5.5	%		6.0	%		6.5	%
Rate to which the cost trend rate gradually declines		4.5	%		4.5	%		5.0	%
Year that the rate reaches the rate at which it is assumed to remain		2017			2017			2016

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

A one-percentage point change in these assumed rates would have the following effects:


	1% increase		1% decrease
Effect on other postretirement benefit obligations	$	146	$	(130	)
Effect on total of service and interest cost components		7		(6	)

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

Alcoa’s pension plans’ investment policy and weighted average asset allocations at December 31, 2013 and 2012, by asset class, were as follows:


				Plan assets at December 31,
Asset class	Policy range			2013			2012
Equities		20–55	%		37	%		33	%
Fixed income		25–55	%		41			50
Other investments		15–35	%		22			17
Total					100	%		100	%

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:


December 31, 2013	Level 1		Level 2		Level 3		Total
Equities:
Equity securities	$	1,084	$	1,360	$	144	$	2,588
Long/short equity hedge funds		-		-		744		744
Private equity		-		-		520		520
	$	1,084	$	1,360	$	1,408	$	3,852
Fixed income:
Intermediate and long duration government/credit	$	2,251	$	1,551	$	-	$	3,802
Other		-		469		-		469
	$	2,251	$	2,020	$	-	$	4,271
Other investments:
Real estate	$	124	$	18	$	494	$	636
Discretionary and systematic macro hedge funds		-		-		1,287		1,287
Other		143		-		232		375
	$	267	$	18	$	2,013	$	2,298
Total*	$	3,602	$	3,398	$	3,421	$	10,421

December 31, 2012	Level 1		Level 2		Level 3		Total
Equities
Equity securities	$	1,016	$	1,196	$	117	$	2,329
Long/short equity hedge funds		-		-		756		756
Private equity		-		-		550		550
	$	1,016	$	1,196	$	1,423	$	3,635
Fixed income:
Intermediate and long duration government/credit	$	1,169	$	3,689	$	215	$	5,073
Other		-		507		-		507
	$	1,169	$	4,196	$	215	$	5,580
Other investments:
Real estate	$	113	$	22	$	438	$	573
Discretionary macro hedge funds		-		-		796		796
Other		212		-		247		459
	$	325	$	22	$	1,481	$	1,828
Total	$	2,510	$	5,414	$	3,119	$	11,043

*	As of December 31, 2013, the total fair value of pension plans’ assets excludes a net receivable of $159, which represents securities sold not yet settled plus interest and dividends earned on various investments.

Schedule of Reconciliation of Activity for Investments

The following table presents a reconciliation of activity for such investments:


	2013			2012
Balance at beginning of year	$	3,119		$	2,816
Realized gains		140			56
Unrealized gains		173			140
Purchases		636			636
Sales		(626	)		(538	)
Issuances		-			-
Settlements		-			-
Foreign currency translation impact		(21	)		9
Transfers in and/or out of Level 3*		-			-
Balance at end of year	$	3,421		$	3,119

*	In 2013 and 2012, there were no transfers of financial instruments into or out of Level 3

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:


Year ended December 31,	Pension benefits		Gross Other post- retirement benefits		Medicare Part D subsidy receipts		Net Other post- retirement benefits
2014	$	880	$	260	$	25	$	235
2015		880		260		25		235
2016		900		260		25		235
2017		910		255		30		225
2018		920		255		30		225
2019 through 2023		4,680		1,195		145		1,050
	$	9,170	$	2,485	$	280	$	2,205

Benefit Obligation [Member]

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

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,	2013			2012
Discount rate		4.80	%		4.15	%
Rate of compensation increase		3.5			3.5

Net Periodic Benefit Cost [Member]

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):


	2013			2012			2011
Discount rate*		4.15	%		4.90	%		5.75	%
Expected long-term rate of return on plan assets		8.50			8.50			8.50
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 2013 and 2011 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.