Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Obligations and Funded Status

Obligations and Funded Status


	Pension benefits						Other postretirement benefits
December 31,	2015			2014			2015			2014
Change in benefit obligation
Benefit obligation at beginning of year	$	15,019		$	13,730		$	2,368		$	2,592
Service cost		187			182			14			15
Interest cost		583			640			92			114
Amendments		18			33			-			(111	)
Actuarial (gains) losses		(222	)		1,552			26			16
Acquisitions (F)		188			455			48			-
Divestitures (F)		-			(142	)		-			(10	)
Settlements		(72	)		(134	)		-			-
Curtailments		(12	)		-			(6	)		-
Benefits paid, net of participants’ contributions		(1,033	)		(1,051	)		(235	)		(264	)
Medicare Part D subsidy receipts		-			-			15			19
Foreign currency translation impact		(409	)		(246	)		(3	)		(3	)
Benefit obligation at end of year*	$	14,247		$	15,019		$	2,319		$	2,368
Change in plan assets
Fair value of plan assets at beginning of year	$	11,717		$	10,580		$	-		$	-
Actual return on plan assets		24			1,764			-			-
Employer contributions		479			507			-			-
Participants’ contributions		21			25			-			-
Benefits paid		(1,015	)		(1,038	)		-			-
Administrative expenses		(55	)		(54	)		-			-
Acquisitions (F)		164			431			-			-
Divestitures (F)		-			(164	)		-			-
Settlements		(72	)		(134	)		-			-
Foreign currency translation impact		(335	)		(200	)		-			-
Fair value of plan assets at end of year*	$	10,928		$	11,717		$	-		$	-
Funded status*	$	(3,319	)	$	(3,302	)	$	(2,319	)	$	(2,368	)
Less: Amounts attributed to joint venture partners		(30	)		(33	)		-			-
Net funded status	$	(3,289	)	$	(3,269	)	$	(2,319	)	$	(2,368	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	44		$	53		$	-		$	-
Current liabilities		(35	)		(31	)		(213	)		(213	)
Noncurrent liabilities		(3,298	)		(3,291	)		(2,106	)		(2,155	)
Net amount recognized	$	(3,289	)	$	(3,269	)	$	(2,319	)	$	(2,368	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	5,351		$	5,379		$	398		$	392
Prior service cost (benefit)		70			102			(106	)		(144	)
Total, before tax effect		5,421			5,481			292			248
Less: Amounts attributed to joint venture partners		38			43			-			-
Net amount recognized, before tax effect	$	5,383		$	5,438		$	292		$	248
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss consist of:
Net actuarial loss	$	440		$	572		$	23		$	15
Amortization of accumulated net actuarial loss		(468	)		(391	)		(17	)		(13	)
Prior service (benefit) cost		(7	)		26			1			(112	)
Amortization of prior service (cost) benefit		(25	)		(18	)		37			25
Total, before tax effect		(60	)		189			44			(85	)
Less: Amounts attributed to joint venture partners		(5	)		5			-			-
Net amount recognized, before tax effect	$	(55	)	$	184		$	44		$	(85	)

At December 31, 2015, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $10,983, $8,077, and $(2,906), respectively. At December 31, 2014, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $11,404, $8,576, and $(2,828), respectively.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations


	Pension benefits
	2015		2014
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	14,247	$	15,019
Accumulated benefit obligation		13,832		14,553

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		14,146		14,151
Fair value of plan assets		10,786		10,777

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		12,510		13,112
Fair value of plan assets		9,512		10,144

Components of Net Periodic Benefit Cost

Components of Net Periodic Benefit Cost


	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2015			2014			2013			2015			2014			2013
Service cost	$	175		$	166		$	194		$	14		$	15		$	17
Interest cost		577			630			602			92			114			114
Expected return on plan assets		(753	)		(782	)		(788	)		-			-			-
Recognized net actuarial loss		468			391			489			17			13			35
Amortization of prior service cost (benefit)		16			18			19			(37	)		(25	)		(18	)
Settlements⁽³⁾		16			26			9			-			-			-
Curtailments⁽⁴⁾		9			-			6			(4	)		-			-
Special termination benefits⁽⁵⁾		16			-			77			-			-			-
Net periodic benefit cost⁽⁶⁾	$	524		$	449		$	608		$	82		$	117		$	148

⁽¹⁾	In 2015, 2014, and 2013, net periodic benefit cost for U.S pension plans was $423, $335, and $391, respectively.

⁽²⁾	In 2015, 2014, and 2013, net periodic benefit cost for other postretirement benefits reflects a reduction of $34, $38, and $55, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.

⁽³⁾

In 2015, settlements were due to workforce reductions (see Note D) and the payment of lump sum benefits and/or purchases of annuity contracts. In 2014, settlements were due to workforce reductions (see Note D). In 2013, settlements were due to the payment of lump sum benefits and/or purchases of annuity contracts.

⁽⁴⁾	In 2015 and 2013, curtailments were due to elimination of benefits or workforce reductions (see Note D).

⁽⁵⁾	In 2015 and 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
	2016		2016
Net actuarial loss recognition		413		21
Prior service cost (benefit) recognition		15		(26	)

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):


	2015			2014			2013
Health care cost trend rate assumed for next year		5.5	%		5.5	%		5.5	%
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		2019			2018			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	$	126	$	(113	)
Effect on total of service and interest cost components		5		(5	)

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, 2015 and 2014, by asset class, were as follows:


				Plan assets at December 31,
Asset class	Policy range			2015			2014
Equities		20–55	%		30	%		33	%
Fixed income		25–55	%		43			45
Other investments		15–35	%		27			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, 2015	Level 1		Level 2		Level 3		Total
Equities:
Equity securities	$	826	$	929	$	170	$	1,925
Long/short equity hedge funds		-		-		932		932
Private equity		-		-		466		466
	$	826	$	929	$	1,568	$	3,323
Fixed income:
Intermediate and long duration government/credit	$	2,496	$	1,255	$	-	$	3,751
Other		-		952		-		952
	$	2,496	$	2,207	$	-	$	4,703
Other investments:
Real estate	$	158	$	16	$	562	$	736
Discretionary and systematic macro hedge funds		-		-		1,671		1,671
Other		126		-		367		493
	$	284	$	16	$	2,600	$	2,900
Total*	$	3,606	$	3,152	$	4,168	$	10,926

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

*	As of December 31, 2015, the total fair value of pension plans’ assets excludes a net receivable of $2 which represents securities sold not yet settled plus interest and dividends earned on various investments.

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.

Schedule of Reconciliation of Activity for Investments

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


	2015			2014
Balance at beginning of year	$	3,925		$	3,421
Realized gains		118			180
Unrealized gains		94			146
Purchases		640			868
Sales		(481	)		(768	)
Issuances		-			-
Settlements		-			-
Acquisitions (F)		12			117
Foreign currency translation impact		(140	)		(39	)
Transfers in and/or out of Level 3*		-			-
Balance at end of year	$	4,168		$	3,925

*	In 2015 and 2014, 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 postretirement benefits		Medicare Part D subsidy receipts		Net Other postretirement benefits
2016	$	910	$	230	$	15	$	215
2017		900		225		15		210
2018		910		225		15		210
2019		910		220		15		205
2020		920		220		20		200
2021 through 2025		4,650		975		80		895
	$	9,200	$	2,095	$	160	$	1,935

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,	2015			2014
Discount rate		4.29	%		4.00	%
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):


	2015			2014			2013
Discount rate*		4.00	%		4.80	%		4.15	%
Expected long-term rate of return on plan assets		7.75			8.00			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 2015, 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.