Retirement Benefits

9 Months Ended

Sep. 30, 2019

The Company maintains qualified and non-qualified defined benefit pension plans for some of its U.S. and non-U.S. eligible employees. The Company’s policy for funding its tax-qualified defined benefit pension plans is to contribute amounts at least sufficient to meet the funding requirements set forth in accordance with applicable law.

The target asset allocation for the Company's U.S. Plan was 64% equities and equity alternatives and 36% fixed income. At September 30, 2019 the actual allocation for the Company's U.S. Plan was 62% equities and equity alternatives and 38% fixed income. The target allocation for the U.K. Plans at September 30, 2019 was 36% equities and equity alternatives and 64% fixed income. At September 30, 2019, the actual allocation for the U.K. Plans was 33% equities and equity alternatives and 67% fixed income. The Company's U.K. Plans comprised approximately 81% of non-U.S. plan assets at December 31, 2018. The assets of the Company's defined benefit plans are diversified and are managed in accordance with applicable laws and with the goal of maximizing the plans' real return within acceptable risk parameters. The Company generally uses threshold-based portfolio re-balancing to ensure the actual portfolio remains consistent with target asset allocation ranges.

JLT Defined Pension Plans

As part of the JLT Transaction, the Company has assumed responsibility for a number of pension plans throughout the world, with $248 million of net pension liabilities as of March 31, 2019 (approximately $700 million of plan assets as of March 31, 2019), the most significant of which is the Jardine Lloyd Thompson U.K. Pension Scheme ("JLT U.K. plan"). The JLT U.K. plan has a defined benefit section which was frozen to future accrual in 2006 and a defined contribution section. The assets of the scheme are held in a trustee administered fund separate from the Company.

The components of the net periodic benefit cost for defined benefit and other post-retirement plans are as follows:



Combined U.S. and significant non-U.S. Plans	Pension Benefits						Post-retirement Benefits
For the Three Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019			2018
Service cost	$	10		$	8		$	—		$	1
Interest cost	120			114			1			—
Expected return on plan assets	(214		)	(213		)	—			—
Amortization of prior service (credit) cost	—			—			—			(1		)
Recognized actuarial loss	25			36			(1		)	1
Net periodic benefit (credit) cost	$	(59	)	$	(55	)	$	—		$	1

Combined U.S. and significant non-U.S. Plans	Pension Benefits						Post-retirement Benefits
For the Nine Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019			2018
Service cost	$	28		$	25		$	—		$	1
Interest cost	360			349			2			2
Expected return on plan assets	(644		)	(652		)	—			—
Amortization of prior service credit	—			(1		)	(1		)	(3		)
Recognized actuarial loss	77			110			(1		)	1
Net periodic benefit (credit) cost	$	(179	)	$	(169	)	$	—		$	1
Settlement loss	4			—			—			—
Total (credit) cost	$	(175	)	$	(169	)	$	—		$	1



Amounts Recorded in the Consolidated Statement of Income
Combined U.S. and significant non-U.S. Plans	Pension Benefits						Post-retirement Benefits
For the Three Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019		2018
Compensation and benefits expense (Operating income)	$	10		$	8		$	—	$	1
Other net benefit credits	(69		)	(63		)	—		—
Total (credit) cost	$	(59	)	$	(55	)	$	—	$	1



Amounts Recorded in the Consolidated Statement of Income
Combined U.S. and significant non-U.S. Plans	Pension Benefits						Post-retirement Benefits
For the Nine Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019		2018
Compensation and benefits expense (Operating income)	$	28		$	25		$	—	$	1
Other net benefit credits	(203		)	(194		)	—		—
Total (credit) cost	$	(175	)	$	(169	)	$	—	$	1



U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Three Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019			2018
Interest cost	$	61		$	58		$	1		$	—
Expected return on plan assets	(86		)	(89		)	—			—
Recognized actuarial loss	11			14			(1		)	—
Net periodic benefit credit	$	(14	)	$	(17	)	$	—		$	—



U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Nine Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019			2018
Interest cost	$	181		$	176		$	1		$	1
Expected return on plan assets	(257		)	(268		)	—			—
Amortization of prior service credit	—			—			—			(1		)
Recognized actuarial loss (credit)	33			41			(1		)	—
Net periodic benefit credit	$	(43	)	$	(51	)	$	—		$	—



Significant non-U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Three Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019		2018
Service cost	$	10		$	8		$	—	$	1
Interest cost	59			56			—		—
Expected return on plan assets	(128		)	(124		)	—		—
Amortization of prior service credit	—			—			—		(1		)
Recognized actuarial loss	14			22			—		1
Net periodic benefit (credit) cost	$	(45	)	$	(38	)	$	—	$	1



Significant non-U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Nine Months Ended September 30,	Pension Benefits						Post-retirement Benefits
(In millions)	2019			2018			2019			2018
Service cost	$	28		$	25		$	—		$	1
Interest cost	179			173			1			1
Expected return on plan assets	(387		)	(384		)	—			—
Amortization of prior service credit	—			(1		)	(1		)	(2		)
Recognized actuarial loss	44			69			—			1
Net periodic benefit (credit) cost	$	(136	)	$	(118	)	$	—		$	1
Settlement loss	4			—			—			—
Total (credit) cost	$	(132	)	$	(118	)	$	—		$	1

The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:



Combined U.S. and significant non-U.S. Plans	Pension Benefits				Post-retirement Benefits
Combined U.S. and significant non-U.S. Plans	Pension Benefits				Post-retirement Benefits
September 30,	2019		2018		2019		2018
Weighted average assumptions:
Expected return on plan assets	5.74	%	5.83	%	—		—
Discount Rate	3.48	%	3.07	%	3.65	%	3.21	%
Rate of compensation increase	1.74	%	1.73	%	—		—

The Company made approximately $85 million of contributions to its U.S. and non-U.S. defined benefit pension plans for the nine months ended September 30, 2019. The Company expects to contribute approximately $32 million to its U.S. and non-U.S. defined benefit pension plans during the remainder of 2019.

Defined Contribution Plans

The Company maintains certain defined contribution plans ("DC Plans") for its employees, the most significant being in the U.S. and the U.K. The cost of the U.S. DC Plans was $106 million and $100 million for the nine months ended September 30, 2019 and 2018, respectively. The cost of the U.K. DC Plans was $74 million and $61 million for the nine months ended September 30, 2019 and 2018, respectively.