Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Obligations and Funded Status

Obligations and Funded Status


	Pension benefits						Other postretirement benefits
December 31,	2016			2015			2016			2015
Change in benefit obligation⁽¹⁾
Benefit obligation at beginning of year	$	14,247		$	15,019		$	2,319		$	2,368
Service cost		165			187			13			14
Interest cost		435			583			63			92
Amendments		2			18			-			-
Actuarial (gains) losses		770			(222	)		112			26
Acquisitions (F)		-			188			-			48
Transfer to Alcoa Corporation		(7,577	)		-			(1,340	)		-
Settlements		(82	)		(72	)		-			-
Curtailments		-			(12	)		-			(6	)
Benefits paid, net of participants’ contributions		(794	)		(1,033	)		(197	)		(235	)
Medicare Part D subsidy receipts		-			-			9			15
Foreign currency translation impact		(140	)		(409	)		1			(3	)
Benefit obligation at end of year⁽²⁾	$	7,026		$	14,247		$	980		$	2,319
Change in plan assets⁽¹⁾
Fair value of plan assets at beginning of year	$	10,928		$	11,717		$	-		$	-
Actual return on plan assets		89			24			-			-
Employer contributions		296			479			-			-
Participants’ contributions		16			21			-			-
Benefits paid		(762	)		(1,015	)		-			-
Administrative expenses		(65	)		(55	)		-			-
Acquisitions (F)		-			164			-			-
Transfer to Alcoa Corporation		(5,610	)		-			-			-
Settlements		(82	)		(72	)		-			-
Foreign currency translation impact		(144	)		(335	)		-			-
Fair value of plan assets at end of year⁽²⁾	$	4,666		$	10,928		$	-		$	-
Funded status*	$	(2,360	)	$	(3,319	)	$	(980	)	$	(2,319	)
Less: Amounts attributed to joint venture partners		-			30			-			-
Net funded status	$	(2,360	)	$	(3,289	)	$	(980	)	$	(2,319	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	6		$	9		$	-		$	-
Noncurrent assets of discontinued operations		-			35			-			-
Current liabilities		(21	)		(23	)		(91	)		(93	)
Current liabilities of discontinued operations		-			(12	)		-			(120	)
Noncurrent liabilities		(2,345	)		(1,925	)		(889	)		(917	)
Noncurrent liabilities of discontinued operations		-			(1,373	)		-			(1,189	)
Net amount recognized	$	(2,360	)	$	(3,289	)	$	(980	)	$	(2,319	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	2,979		$	5,351		$	150		$	398
Prior service cost (benefit)		15			70			(45	)		(106	)
Total, before tax effect		2,994			5,421			105			292
Less: Amounts attributed to joint venture partners		-			38			-			-
Net amount recognized, before tax effect	$	2,994		$	5,383		$	105		$	292
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss consist of:
Net actuarial loss	$	(1,992	)	$	440		$	(224	)	$	23
Amortization of accumulated net actuarial loss		(380	)		(468	)		(24	)		(17	)
Prior service (benefit) cost		(42	)		(7	)		37			1
Amortization of prior service (cost) benefit		(13	)		(25	)		24			37
Total, before tax effect		(2,427	)		(60	)		(187	)		44
Less: Amounts attributed to joint venture partners		(38	)		(5	)		-			-
Net amount recognized, before tax effect	$	(2,389	)	$	(55	)	$	(187	)	$	44

⁽¹⁾	The roll forward of the benefit obligation and the roll forward of plan assets have not been restated for discontinued operations for 2015 as it is impractical to do so.

⁽²⁾

At December 31, 2016, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $5,707, $3,495, and $(2,212), respectively. 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.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations


	Pension benefits
	2016		2015
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	7,026	$	14,247
Accumulated benefit obligation		6,850		13,832

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		6,995		14,146
Fair value of plan assets		4,629		10,786

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		6,104		12,510
Fair value of plan assets		3,894		9,512

Components of Net Periodic Benefit Cost

Components of Net Periodic Benefit Cost


	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2016			2015			2014			2016			2015			2014
Service cost	$	155		$	175		$	166		$	13		$	14		$	15
Interest cost		431			577			630			63			92			114
Expected return on plan assets		(677	)		(753	)		(782	)		-			-			-
Recognized net actuarial loss		380			468			391			24			17			13
Amortization of prior service cost (benefit)		13			16			18			(24	)		(37	)		(25	)
Settlements⁽³⁾		19			16			26			-			-			-
Curtailments⁽⁴⁾		-			9			-			-			(4	)		-
Special termination benefits⁽⁵⁾		2			16			-			-			-			-
Net periodic benefit cost⁽⁶⁾	$	323		$	524		$	449		$	76		$	82		$	117
Discontinued operations		122			248			215			41			43			68
Net amount recognized in Statement of Consolidated Operations	$	201		$	276		$	234		$	35		$	39		$	49

Note:

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

⁽¹⁾	In 2016, 2015, and 2014, net periodic benefit cost for U.S pension plans was $261, $423, and $335, respectively.

⁽²⁾	In 2016, 2015, and 2014, net periodic benefit cost for other postretirement benefits reflects a reduction of $22, $34, and $38, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.

⁽³⁾

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

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

⁽⁵⁾	In 2016 and 2015, 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
	2017		2017
Net actuarial loss recognition		216		8
Prior service cost (benefit) recognition		5		(8	)

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):


	2016			2015			2014
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		2020			2019			2018

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	$	44	$	(40	)
Effect on total of service and interest cost components		4		(3	)

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, 2016 and 2015, by asset class, were as follows:


				Plan assets at December 31,
Asset class	Policy range			2016			2015
Equities		20–55	%		30	%		30	%
Fixed income		25–55	%		42			43
Other investments		15–35	%		28			27
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, 2016	Level 1		Level 2		Total
Equities:
Equity securities	$	393	$	-	$	393
Fixed income:
Intermediate and long duration government/credit	$	23	$	95	$	118
Other		1,060		51		1,111
	$	1,083	$	146	$	1,229
Other investments:
Real estate	$	81	$	-	$	81
Other		65		-		65
	$	146	$	-	$	146
Net plan assets subject to leveling	$	1,622	$	146	$	1,768
Plan assets measured at net asset value:
Equity securities					$	431
Long/short equity hedge funds						406
Private equity						165
Fixed income						729
Real estate						185
Discretionary and systematic macro hedge funds						784
Other investments						178
Total plan assets measured at net asset value					$	2,878
Net plan assets*					$	4,646


December 31, 2015	Level 1		Level 2		Total
Equities
Equity securities	$	826	$	-	$	826
Fixed income:
Intermediate and long duration government/credit	$	2,496	$	487	$	2,983
Other		-		307		307
	$	2,496	$	794	$	3,290
Other investments:
Real estate	$	158	$	-	$	158
Other		126		-		126
	$	284	$	-	$	284
Net plan assets subject to leveling	$	3,606	$	794	$	4,400
Plan assets measured at net asset value:
Equity securities					$	1,099
Long/short equity hedge funds						932
Private equity						466
Fixed income						1,413
Real estate						578
Discretionary and systematic macro hedge funds						1,671
Other investments						367
Total plan assets measured at net asset value					$	6,526
Net plan assets**					$	10,926

*	As of December 31, 2016, the total fair value of pension plans’ assets excludes a net receivable of $20, which represents assets due from the Alcoa Corporation as a result of plan separations and securities sold not yet settled plus interest and dividends earned on various investments.

**	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.

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:


Year ended December 31,	Pension benefits		Gross Other post- retirement benefits		Medicare Part D subsidy receipts		Net Other post- retirement benefits
2017	$	420	$	95	$	5	$	90
2018		425		95		5		90
2019		425		95		5		90
2020		430		95		5		90
2021		435		95		5		90
2022 through 2026		2,195		415		35		380
	$	4,330	$	890	$	60	$	830

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,	2016			2015
Discount rate		4.20	%		4.29	%
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):


	2016			2015			2014
Discount rate*		4.29	%		4.00	%		4.80	%
Expected long-term rate of return on plan assets		7.75			7.75			8.00
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 2016, 2015, and 2014 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.