We have funded noncontributory defined benefit pension plans for a significant portion of our employees. In addition, we have an unfunded supplemental pension plan covering certain employees, which provides incremental payments that would have been payable from our principal pension plans, were it not for limitations imposed by income tax regulations. The plans provide defined benefits based on years of service and final average salary. Additionally, we maintain an unfunded postretirement medical plan that provides health benefits to certain qualified retirees from ages 55 through 65. The measurement date for all retirement plans is December 31.

The following table summarizes the benefit obligations, the fair value of plan assets, and the funded status of our pension and postretirement medical plans:

	Funded						Unfunded						Postretirement
	Pension Plans						Pension Plan						Medical Plan
	2018			2017			2018			2017			2018			2017
	(In millions)
Change in Benefit Obligation
Balance at January 1,	$	2,765		$	2,560		$	249		$	256		$	87		$	84
Service cost		30			36			12			13			2			4
Interest cost		84			93			7			9			3			3
Actuarial (gains) loss (a)		(237	)		138			(29	)		10			(24	)		3
Benefit payments (b)		(110	)		(113	)		(19	)		(39	)		(7	)		(7	)
Plan curtailments		(10	)		(3	)		(4	)		—			(2	)		—
Plan amendments		4			—			—			—			—			—
Foreign currency exchange rate changes		(34	)		54			—			—			—			—
Balance at December 31, (c)		2,492			2,765			216			249			59			87
Change in Fair Value of Plan Assets
Balance at January 1,	$	2,732		$	2,284		$	—		$	—		$	—		$	—
Actual return on plan assets		(77	)		351			—			—			—			—
Employer contributions		59			158			19			39			7			7
Benefit payments (b)		(110	)		(113	)		(19	)		(39	)		(7	)		(7	)
Foreign currency exchange rate changes		(36	)		52			—			—			—			—
Balance at December 31,		2,568			2,732			—			—			—			—

Funded Status (Plan assets greater (less) than benefit obligations) at December 31,	$	76		$	(33	)	$	(216	)	$	(249	)	$	(59	)	$	(87	)

Unrecognized Net Actuarial (Gains) Losses	$	778		$	789		$	47		$	84		$	(32	)	$	(10	)

(a)	The change in discount rate in 2018 resulted in total actuarial gains of approximately $235 million (2017: $170 million of actuarial losses).

(b)	Benefit payments include lump-sum settlement payments of approximately $32 million in 2018 (2017: $57 million).

(c)	At December 31, 2018, the accumulated benefit obligation for the funded and unfunded defined benefit pension plans was $2,424 million and $171 million, respectively (2017: $2,679 million and $190 million, respectively).

Amounts recognized in the Consolidated Balance Sheet at December 31 consisted of the following:

	Funded					Unfunded						Postretirement
	Pension Plans					Pension Plan						Medical Plan
	2018		2017			2018			2017			2018			2017
	(In millions)
Noncurrent assets	$	76	$	22		$	—		$	—		$	—		$	—
Current liabilities		—		—			(30	)		(18	)		(9	)		(11	)
Noncurrent liabilities		—		(55	)		(186	)		(231	)		(50	)		(76	)
Pension assets / (accrued benefit liability)	$	76	$	(33	)	$	(216	)	$	(249	)	$	(59	)	$	(87	)

Accumulated other comprehensive loss, pre-tax (a)	$	778	$	789		$	47		$	84		$	(32	)	$	(10	)

(a)	The after‑tax deficit reflected in Accumulated other comprehensive income (loss) was $581 million at December 31, 2018 (2017: $548 million deficit).

The net periodic benefit cost for funded and unfunded pension plans, and the postretirement medical plan, is as follows:

	Pension Plans									Postretirement Medical Plan
	2018			2017			2016			2018			2017		2016
	(In millions)
Service cost	$	42		$	49		$	60		$	2		$	4	$	4
Interest cost		91			102			107			3			3		3
Expected return on plan assets		(194	)		(168	)		(166	)		—			—		—
Amortization of unrecognized net actuarial losses (gains)		39			58			60			(2	)		—		—
Settlement loss		4			19			—			—			—		—
Curtailment gain		—			—			—			(2	)		—		—
Special termination benefit recognized		—			—			1			—			—		—
Net Periodic Benefit Cost (a)	$	(18	)	$	60		$	62		$	1		$	7	$	7

In 2018, we recorded curtailment gains of $14 million to Accumulated other comprehensive Income (loss) and $2 million to the Statement of Consolidated Income following workforce reductions. In connection with this curtailment, as required under accounting standards, we remeasured our U.S. retirement plans and recorded a total decrease of $125 million in the Corporation’s U.S. post retirement liabilities. This reduction was primarily driven by a change in weighted average discount rates used to measure the liabilities. There was no change to the weighted average expected long-term rate of return on plan assets.

For the full year 2019, we forecast pension service costs for our pension and postretirement medical plans to be approximately $40 million and net non-service pension costs of approximately $40 million of income, which is comprised of interest cost of approximately $95 million, amortization of unrecognized net actuarial losses of approximately $45 million, and estimated expected return on plan assets of approximately $180 million.

The weighted average actuarial assumptions used to determine Benefit obligations at December 31 and Net periodic benefit cost for the three years ended December 31 for our funded and unfunded pension plans were as follows:

The actuarial assumptions used to determine Benefit obligations at December 31 for the postretirement medical plan were as follows:

The assumptions used to determine net periodic benefit cost for each year were established at the end of each previous year while the assumptions used to determine benefit obligations were established at each year‑end. The net periodic benefit cost and the actuarial present value of benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The discount rate is developed based on a portfolio of high‑quality, fixed income debt instruments with maturities that approximate the expected payment of plan obligations. Beginning in 2018, we have elected to use a split discount rate approach for all of our retirement plans. This involves the continued use of a single weighted-average discount rate in the calculation of the projected benefit obligation, and separate discount rates for each projected benefit payment in the calculation of service cost and interest cost. In contrast, historically, a single weighted-average discount rate was used in both the calculation of the projected benefit obligation, and service cost and interest cost.

The overall expected return on plan assets is developed from the expected future returns for each asset category, weighted by the target allocation of pension assets to that asset category. The future expected return assumptions for individual asset categories are largely based on inputs from various investment experts regarding their future return expectations for particular asset categories.

Our investment strategy is to maximize long‑term returns at an acceptable level of risk through broad diversification of plan assets in a variety of asset classes. Asset classes and target allocations are determined by our investment committee and include domestic and foreign equities, fixed income, and other investments, including hedge funds, real estate and private equity. Investment managers are prohibited from investing in securities issued by us unless indirectly held as part of an index strategy. The majority of plan assets are highly liquid, providing ample liquidity for benefit payment requirements. The current target allocations for plan assets are 50% equity securities, 30% fixed income securities (including cash and short‑term investment funds) and 20% to all other types of investments. Asset allocations are rebalanced on a periodic basis throughout the year to bring assets to within an acceptable range of target levels.

The following tables provide the fair value of the financial assets of the funded pension plans at December 31, 2018 and 2017 in accordance with the fair value measurement hierarchy described in Note 1, Nature of Operations, Basis of Presentation and Summary of Accounting Policies.

	Level 1		Level 2		Level 3		Net Asset Value (d)		Total
	(In millions)
December 31, 2018
Cash and Short-Term Investment Funds	$	3	$	47	$	—	$	—	$	50
Equities:
U.S. equities (domestic)		654		—		—		—		654
International equities (non-U.S.)		92		29		—		288		409
Global equities (domestic and non-U.S.)		2		203		—		—		205
Fixed Income:
Treasury and government issued (a)		—		240		—		—		240
Government related (b)		—		37		—		—		37
Mortgage-backed securities (c)		—		159		—		27		186
Corporate		—		272		—		31		303
Other:
Hedge funds		—		—		—		135		135
Private equity funds		—		—		—		170		170
Real estate funds		49		—		61		50		160
Diversified commodities funds		—		19		—		—		19
Total investments	$	800	$	1,006	$	61	$	701	$	2,568

December 31, 2017
Cash and Short-Term Investment Funds	$	32	$	69	$	—	$	—	$	101
Equities:
U.S. equities (domestic)		789		—		—		—		789
International equities (non-U.S.)		104		34		—		296		434
Global equities (domestic and non-U.S.)		2		238		—		—		240
Fixed Income:
Treasury and government issued (a)		—		271		—		—		271
Government related (b)		—		34		1		—		35
Mortgage-backed securities (c)		—		139		1		26		166
Corporate		—		182		—		6		188
Other:
Hedge funds		—		—		—		187		187
Private equity funds		—		—		—		140		140
Real estate funds		63		—		2		92		157
Diversified commodities funds		—		24		—		—		24
Total investments	$	990	$	991	$	4	$	747	$	2,732

(a)	Includes securities issued and guaranteed by U.S. and non‑U.S. governments.

(b)	Primarily consists of securities issued by governmental agencies and municipalities.

(c)	Comprised of U.S. residential and commercial mortgage-backed securities.

(d)

Includes certain investments that have been valued using the net asset value practical expedient, and therefore have not been categorized in the fair value hierarchy. The inclusion of such amounts in the above table is intended to aid reconciliation of investments categorized in the fair value hierarchy to total pension plan assets.

Cash and short‑term investment funds - Consists of cash on hand and short-term investment funds that provide for daily investments and redemptions. Cash on hand is classified as Level 1 and short‑term investment funds are classified as Level 2.

Equities - Consists of individually held or commingled funds of U.S. and International equity securities. Equity securities, which are individually held and are traded actively on exchanges, are classified as Level 1. Commingled funds, consisting primarily of equity securities, are valued using the net asset value (NAV) per fund share derived from quoted prices in active markets of the underlying securities. These funds are classified as Level 2 where they have readily determinable fair values, otherwise they are classified under the NAV practical expedient.

Fixed income investments - Consists of securities issued by the U.S. government, non‑U.S. governments, governmental agencies, municipalities and corporations, and agency and non-agency mortgage‑backed securities. This investment category also includes commingled investment funds that invest in fixed income securities. Individual fixed income securities are generally priced based on evaluated prices from independent pricing services, which are monitored and provided by the third-party custodial firm responsible for safekeeping plan assets. Individual fixed income securities are classified as Level 2. Certain fixed income investments are commingled funds that are valued at the NAV per fund share derived indirectly from observable inputs or from quoted prices in less liquid markets of the underlying securities. These funds are classified as Level 2 where they have readily determinable fair values, otherwise they are classified under the NAV practical expedient.

Other investments - Consists of exchange‑traded real estate investment trust securities, which are classified as Level 1. Commingled funds and limited partnership investments in hedge funds, private equity and real estate funds are valued at the NAV per fund share derived using information provided by fund managers which include various inputs such as discounted future cash flows, market based comparable data and independent appraisals from third parties. These funds are classified as Level 2 or 3 where they have readily determinable fair values, otherwise they are classified under the NAV practical expedient.

The following tables provide changes in financial assets that are measured at fair value based on Level 3 inputs that are held by institutional funds classified as:

We expect to contribute approximately $40 million to our funded pension plans in 2019.

Estimated future benefit payments by the funded and unfunded pension plans, and the postretirement medical plan, which reflect expected future service, are as follows (in millions):

We also have several defined contribution plans for certain eligible employees. Employees may contribute a portion of their compensation to these plans and we match a portion of the employee contributions. We recorded expense of $19 million in 2018 for contributions to these plans (2017: $22 million; 2016: $25 million).