Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of Obligations and Funded Status

Obligations and Funded Status


	Pension benefits						Other postretirement benefits
December 31,	2014			2013			2014			2013
Change in benefit obligation
Benefit obligation at beginning of year	$	13,730		$	14,751		$	2,592		$	2,863
Service cost		182			213			15			17
Interest cost		640			611			114			114
Amendments		33			82			(111	)		-
Actuarial losses (gains)		1,552			(849	)		16			(170	)
Acquisitions (F)		455			-			-			-
Divestitures (F)		(142	)		-			(10	)		-
Settlements		(134	)		(13	)		-			-
Benefits paid, net of participants’ contributions		(1,051	)		(841	)		(264	)		(249	)
Medicare Part D subsidy receipts		-			-			19			20
Foreign currency translation impact		(246	)		(224	)		(3	)		(3	)
Benefit obligation at end of year*	$	15,019		$	13,730		$	2,368		$	2,592
Change in plan assets
Fair value of plan assets at beginning of year	$	10,580		$	11,043		$	-		$	-
Actual return on plan assets		1,764			109			-			-
Employer contributions		507			473			-			-
Participants’ contributions		25			27			-			-
Benefits paid		(1,038	)		(825	)		-			-
Administrative expenses		(54	)		(40	)		-			-
Acquisitions (F)		431			-			-			-
Divestitures (F)		(164	)		-			-			-
Settlements		(134	)		(17	)		-			-
Foreign currency translation impact		(200	)		(190	)		-			-
Fair value of plan assets at end of year*	$	11,717		$	10,580		$	-		$	-
Funded status*	$	(3,302	)	$	(3,150	)	$	(2,368	)	$	(2,592	)
Less: Amounts attributed to joint venture partners		(33	)		(25	)		-			(4	)
Net funded status	$	(3,269	)	$	(3,125	)	$	(2,368	)	$	(2,588	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	53		$	88		$	-		$	-
Current liabilities		(31	)		(30	)		(213	)		(234	)
Noncurrent liabilities		(3,291	)		(3,183	)		(2,155	)		(2,354	)
Net amount recognized	$	(3,269	)	$	(3,125	)	$	(2,368	)	$	(2,588	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	5,379		$	5,198		$	392		$	389
Prior service cost (benefit)		102			94			(144	)		(57	)
Total, before tax effect		5,481			5,292			248			332
Less: Amounts attributed to joint venture partners		43			38			-			(1	)
Net amount recognized, before tax effect	$	5,438		$	5,254		$	248		$	333
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss consist of:
Net actuarial loss (gain)	$	572		$	(193	)	$	15		$	(169	)
Amortization of accumulated net actuarial loss		(391	)		(489	)		(13	)		(35	)
Prior service cost		26			-			(112	)		-
Amortization of prior service (cost) benefit		(18	)		(25	)		25			19
Total, before tax effect		189			(707	)		(85	)		(185	)
Less: Amounts attributed to joint venture partners		5			(16	)		-			-
Net amount recognized, before tax effect	$	184		$	(691	)	$	(85	)	$	(185	)

At December 31, 2014, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $11,397, $8,570, and $(2,827), respectively. 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.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations


	Pension benefits
	2014		2013
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	15,019	$	13,730
Accumulated benefit obligation		14,553		13,324

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		14,151		12,180
Fair value of plan assets		10,777		8,930

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		13,112		11,776
Fair value of plan assets		10,144		8,890

Components of Net Periodic Benefit Cost

Components of Net Periodic Benefit Cost


	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2014			2013			2012			2014			2013			2012
Service cost	$	166		$	194		$	186		$	15		$	17		$	14
Interest cost		630			602			639			114			114			131
Expected return on plan assets		(782	)		(788	)		(808	)		-			-			-
Recognized net actuarial loss		391			489			384			13			35			25
Amortization of prior service cost (benefit)		18			19			19			(25	)		(18	)		(16	)
Settlements⁽³⁾		26			9			-			-			-			-
Curtailments⁽⁴⁾		-			6			-			-			-			-
Special termination benefits⁽⁵⁾		-			77			-			-			-			-
Net periodic benefit cost⁽⁶⁾	$	449		$	608		$	420		$	117		$	148		$	154

⁽¹⁾	In 2014, 2013, and 2012, net periodic benefit cost for U.S pension plans was $335, $391, and $288, respectively.

⁽²⁾	In 2014, 2013, and 2012, net periodic benefit cost for other postretirement benefits reflects a reduction of $38, $55, and $64, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.

⁽³⁾	In 2014, settlements were due to workforce reductions (see Note D). In 2013, settlements were due to the payment of significant lump sum benefits and/or purchases of annuity contracts.

⁽⁴⁾	In 2013, 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
	2015		2015
Net actuarial loss recognition	$	465	$	15
Prior service cost (benefit) recognition		17		(38	)

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):


	2014			2013			2012
Health care cost trend rate assumed for next year		5.5	%		5.5	%		6.0	%
Rate to which the cost trend rate gradually declines		4.5	%		4.5	%		4.5	%
Year that the rate reaches the rate at which it is assumed to remain		2018			2017			2017

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:


	1% increase		1% decrease
Effect on other postretirement benefit obligations	$	115	$	(125	)
Effect on total of service and interest cost components		6		(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, 2014 and 2013, by asset class, were as follows:


				Plan assets at December 31,
Asset class	Policy range			2014			2013
Equities		20–55	%		33	%		37	%
Fixed income		25–55	%		45			41
Other investments		15–35	%		22			22
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, 2014	Level 1		Level 2		Level 3		Total
Equities:
Equity securities	$	1,156	$	1,131	$	176	$	2,463
Long/short equity hedge funds		-		-		963		963
Private equity		-		-		543		543
	$	1,156	$	1,131	$	1,682	$	3,969
Fixed income:
Intermediate and long duration government/credit	$	2,998	$	1,900	$	-	$	4,898
Other		-		413		-		413
	$	2,998	$	2,313	$	-	$	5,311
Other investments:
Real estate	$	152	$	18	$	459	$	629
Discretionary and systematic macro hedge funds		-		-		1,408		1,408
Other		140		-		376		516
	$	292	$	18	$	2,243	$	2,553
Total*	$	4,446	$	3,462	$	3,925	$	11,833

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

As of December 31, 2014, the total fair value of pension plans’ assets excludes a net payable of $116, which represents assets related to divested businesses (see Note F) to be transferred to the buyers’ pension plans less securities sold not yet settled plus interest and dividends earned on various investments.

**	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:


	2014			2013
Balance at beginning of year	$	3,421		$	3,119
Realized gains		180			140
Unrealized gains		146			173
Purchases		868			636
Sales		(768	)		(626	)
Issuances		-			-
Settlements		-			-
Acquisitions (F)		117			-
Foreign currency translation impact		(39	)		(21	)
Transfers in and/or out of Level 3*		-			-
Balance at end of year	$	3,925		$	3,421

*	In 2014 and 2013, 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
2015	$	890	$	230	$	15	$	215
2016		890		220		15		205
2017		900		220		15		205
2018		910		220		15		205
2019		920		220		15		205
2020 through 2024		4,670		1,000		85		915
	$	9,180	$	2,110	$	160	$	1,950

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,	2014			2013
Discount rate		4.00	%		4.80	%
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):


	2014			2013			2012
Discount rate*		4.80	%		4.15	%		4.90	%
Expected long-term rate of return on plan assets		8.00			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 2014 and 2013 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.