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Retirement Benefits
 12 Months Ended
Dec. 31, 2019
Defined Benefit Plan [Abstract]  
Retirement Benefits Retirement Benefits
The Company maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-U.S. eligible employees. The Company’s policy for funding its tax qualified defined benefit retirement plans is to contribute amounts at least sufficient to meet the funding requirements set forth by U.S. law and the laws of the non-U.S. jurisdictions in which the Company offers defined benefit plans.
Combined U.S. and Non-U.S. Plans
The weighted average actuarial assumptions utilized for the U.S. and significant non-U.S. defined benefit plans and post-retirement benefit plans are as follows:
  
Pension 
Benefits
 
Post-retirement
Benefits
 
2019

 
2018

 
2019

 
2018

Weighted average assumptions:
 
 
 
 
 
 
 
Discount rate (for expense)
3.48
%
 
3.07
%
 
3.65
%
 
3.21
%
Expected return on plan assets
5.74
%
 
5.83
%
 
—

 
—

Rate of compensation increase (for expense)*
1.74
%
 
1.73
%
 
—

 
—

Discount rate (for benefit obligation)
2.57
%
 
3.48
%
 
2.72
%
 
3.65
%
Rate of compensation increase (for benefit obligation)*
1.76
%
 
1.74
%
 
—

 
—


*Rate of compensation increase assumptions do not include a rate of compensation increase for the U.S. defined benefit plans since future benefit accruals were discontinued for those plans after December 31, 2016.
The Company uses actuaries from Mercer, a subsidiary of the Company, to perform valuations of its pension plans. The long-term rate of return on plan assets assumption is determined for each plan based on the facts and circumstances that exist as of the measurement date, and the specific portfolio mix of each plan’s assets. The Company utilizes a model developed by the Mercer actuaries to assist in the determination of this assumption. The model takes into account several factors, including: actual and target portfolio allocation; investment, administrative and trading expenses incurred directly by the plan trust; historical portfolio performance; relevant forward-looking economic analysis; and expected returns, variances and correlations for different asset classes. These measures are used to determine
probabilities using standard statistical techniques to calculate a range of expected returns on the portfolio. Generally, the Company does not adjust the rate of return assumption from year to year if, at the measurement date, it is within the range between the 25th and 75th percentile of the expected long-term annual returns. Historical long-term average asset returns of the most significant plans are also reviewed to determine whether they are consistent and reasonable compared with the rate selected. The expected return on plan assets is determined by applying the assumed long-term rate of return to the market-related value of plan assets. This market-related value recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return based on the market value of assets. Since the market-related value of assets recognizes gains or losses over a five-year period, the future market-related value of the assets will be impacted as previously deferred gains or losses are reflected.
The target asset allocation for the U.S. plans is 64% equities and equity alternatives and 36% fixed income. At the end of 2019, the actual allocation for the U.S. plans was 64% equities and equity alternatives and 36% fixed income. The target asset allocation for the U.K. plans, which comprise approximately 81% of non-U.S. plan assets, is 34% equities and equity alternatives and 66% fixed income. At the end of 2019, the actual allocation for the U.K. plans was 35% equities and equity alternatives and 65% fixed income. 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 uses threshold-based portfolio re-balancing to ensure the actual portfolio remains consistent with target asset allocation ranges.
The discount rate selected for each U.S. plan is based on a model bond portfolio with coupons and redemptions that closely match the expected liability cash flows from the plan. Discount rates for non-U.S. plans are based on appropriate bond indices adjusted for duration; in the U.K., the plan duration is reflected using the Mercer yield curve.
JLT Defined Benefit Pension Plans
As part of the JLT Transaction, the Company assumed responsibility for a number of pension plans throughout the world, with $255 million of net pension liabilities as of December 31, 2019 ($1,003 million in liabilities and $748 million of plan assets as of December 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 JLT U.K. plan 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
 
Post-retirement
For the Years Ended December 31,
Benefits
 
Benefits
(In millions of dollars)
2019

 
2018

 
2017

 
2019

 
2018

 
2017

Service cost
$
31

 
$
34

 
$
76

 
$
—

 
$
1

 
$
1

Interest cost
487

 
463

 
497

 
3

 
3

 
4

Expected return on plan assets
(863
)
 
(864
)
 
(921
)
 
—

 
—

 
—

Amortization of prior service (credit) cost
—

 
(2
)
 
(2
)
 
(2
)
 
(2
)
 
1

Recognized actuarial loss (gain)
104

 
146

 
167

 
(1
)
 
(1
)
 
—

Net periodic benefit (credit) cost
$
(241
)
 
$
(223
)
 
$
(183
)
 
$
—

 
$
1

 
$
6

Curtailment (loss) gain
—

 
—

 
(1
)
 
—

 
—

 
—

Settlement loss
7

 
42

 
54

 
—

 
—

 
—

Total (credit) cost
$
(234
)
 
$
(181
)
 
$
(130
)
 
$
—

 
$
1

 
$
6


The following chart provides the amounts reported in the consolidated statements of income:
Combined U.S. and significant non-U.S. Plans
Pension
Benefits
 
Post-retirement
Benefits
For the Years Ended December 31,
 
(In millions)
2019

 
2018

2017

 
2019

 
2018

2017

Compensation and benefits expense (Operating income)
$
31

 
$
34

$
76

 
$
—

 
$
1

$
1

Other net benefit (credit) cost
(265
)
 
(215
)
(206
)
 
—

 
—

5

Total (credit) cost
$
(234
)
 
$
(181
)
$
(130
)
 
$
—

 
$
1

$
6


Pension Settlement Charge
Defined Benefit Pension Plans in the U.K. and certain other countries allow participants an option for the payment of a lump sum distribution from plan assets before retirement in full satisfaction of the retirement benefits due to the participant as well as any survivor’s benefit. The Company’s policy under applicable U.S. GAAP is to treat these lump sum payments as a partial settlement of the plan liability if they exceed the total of interest plus service costs ("settlement thresholds"). Based on the amount of lump sum payments through December 31, 2018, the lump sum payments exceeded the settlement thresholds in two of the U.K. plans. The Company recorded non-cash settlement charges of $42 million and $54 million, in the consolidated statements of income for the twelve month periods ended December 31, 2018, and 2017, respectively, primarily related to these plans. The Company recorded $7 million of non-cash settlement charges in 2019 related to other non-U.S. plans.
Plan Assets
For the U.S. plans, investment allocation decisions are made by a fiduciary committee composed of senior executives appointed by the Company’s Chief Executive Officer. For the non-U.S. plans, investment allocation decisions are made by local fiduciaries, in consultation with the Company for the larger plans. Plan assets are invested in a manner consistent with the fiduciary standards set forth in all relevant laws relating to pensions and trusts in each country. Primary investment objectives are (1) to achieve an investment return that, in combination with current and future contributions, will provide sufficient funds to pay benefits as they become due, and (2) to minimize the risk of large losses. The investment allocations are designed to meet these objectives by broadly diversifying plan assets among numerous asset classes with differing expected returns, volatilities, and correlations.
The major categories of plan assets include equity securities, equity alternative investments, and fixed income securities. For the U.S. plan, the category ranges are 59-69% for equities and equity alternatives, and 31-41% for fixed income. For the U.K. plans, the category ranges are 31-37% for equities and equity alternatives, and 63-69% for fixed income. Asset allocation is monitored frequently and re-balancing actions are taken as appropriate.
Plan investments are exposed to stock market, interest rate, and credit risk. Concentrations of these risks are generally limited due to diversification by investment style within each asset class, diversification by investment manager, diversification by industry sectors and issuers, and the dispersion of investments across many geographic areas.
Unrecognized Actuarial Gains/Losses
In accordance with applicable accounting guidance, the funded status of the Company's pension plans is recorded in the consolidated balance sheets and provides for a delayed recognition of actuarial gains or losses arising from changes in the projected benefit obligation due to changes in the assumed discount rates, differences between the actual and expected value of plan assets and other assumption changes. The unrecognized pension plan actuarial gains or losses and prior service costs not yet recognized in net periodic pension cost are recognized in Accumulated Other Comprehensive Income ("AOCI"), net of tax. These gains and losses are amortized prospectively out of AOCI over a period that approximates the remaining life expectancy of participants in plans where substantially all participants are inactive, or the average remaining service period of active participants for plans with active participants.
U.S. Plans
The following schedules provide information concerning the Company’s U.S. defined benefit pension plans and post-retirement benefit plans:
 
U.S. Pension
Benefits
 
U.S. Post-retirement
Benefits
(In millions of dollars)
2019

 
2018

 
2019

 
2018

Change in benefit obligation:
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
5,529

 
$
6,221

 
$
32

 
$
36

Interest cost
241

 
235

 
1

 
1

Employee contributions
—

 
—

 
4

 
4

Plan combination
64

 
—

 
—

 
—

Actuarial (gain) loss
753

 
(502
)
 
1

 
(1
)
Benefits paid
(265
)
 
(425
)
 
(7
)
 
(8
)
Benefit obligation, December 31
$
6,322

 
$
5,529

 
$
31

 
$
32

Change in plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
4,062

 
$
4,787

 
$
1

 
$
2

Actual return on plan assets
834

 
(330
)
 
—

 
—

Employer contributions
35

 
30

 
4

 
3

Employee contributions
—

 
—

 
4

 
4

Benefits paid
(265
)
 
(425
)
 
(7
)
 
(8
)
Other
49

 
—

 
—

 
—

Fair value of plan assets, December 31
$
4,715

 
$
4,062

 
$
2

 
$
1

Net funded status, December 31
$
(1,607
)
 
$
(1,467
)
 
$
(29
)
 
$
(31
)
Amounts recognized in the consolidated balance sheets:
 
 
 
 
 
 
 
Current liabilities
$
(29
)
 
$
(28
)
 
$
(1
)
 
$
(2
)
Non-current liabilities
(1,578
)
 
(1,439
)
 
(28
)
 
(29
)
Net liability recognized, December 31
$
(1,607
)
 
$
(1,467
)
 
$
(29
)
 
$
(31
)
Amounts recognized in other comprehensive income (loss):
 
 
 
 
 
 
 
Net actuarial (loss) gain
(2,114
)
 
(1,896
)
 
4

 
6

Total recognized accumulated other comprehensive (loss) income, December 31
$
(2,114
)
 
$
(1,896
)
 
$
4

 
$
6

Cumulative employer contributions in excess of (less than) net periodic cost
507

 
429

 
(33
)
 
(37
)
Net amount recognized in consolidated balance sheet
$
(1,607
)
 
$
(1,467
)
 
$
(29
)
 
$
(31
)
Accumulated benefit obligation at December 31
$
6,322

 
$
5,529

 
$
—

 
$
—

 
 
 
 
 
 
 
 

 
U.S. Pension
Benefits
 
U.S. Post-retirement
Benefits
(In millions of dollars)
2019

 
2018

 
2019

 
2018

Reconciliation of net actuarial (loss) gain recognized in accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
Beginning balance
$
(1,896
)
 
$
(1,766
)
 
$
6

 
$
6

Recognized as component of net periodic benefit cost (credit)
44

 
55

 
(1
)
 
(1
)
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
 
 
 
 
 
 
 
Liability experience
(753
)
 
502

 
(1
)
 
1

Asset experience
491

 
(687
)
 
—

 
—

Total (loss) gain recognized as change in plan assets and benefit obligations
(262
)
 
(185
)
 
(1
)
 
1

Net actuarial (loss) gain, December 31
$
(2,114
)
 
$
(1,896
)
 
$
4

 
$
6


For the Years Ended December 31,
U.S. Pension
Benefits
 
U.S. Post-retirement
Benefits
(In millions of dollars)
2019

 
2018

 
2017

 
2019

 
2018

 
2017

Total recognized in net periodic benefit cost and other comprehensive loss (income)
$
160

 
$
63

 
$
(10
)
 
$
2

 
$
—

 
$
5


Estimated amounts that will be amortized from accumulated other comprehensive loss to net periodic pension cost in the next fiscal year:
 
U.S. Pension
Benefits
 
U.S. Post-retirement
Benefits
(In millions of dollars)
2020

 
2020

Net actuarial loss
$
72

 
$
1


The weighted average actuarial assumptions utilized in determining expense during the year and benefit obligation at the end of the year for the U.S. defined benefit and other U.S. post-retirement plans are as follows:
 
U.S. Pension
Benefits
 
U.S. Post-retirement Benefits
 
2019

 
2018

 
2019

 
2018

Weighted average assumptions:
 
 
 
 
 
 
 
Discount rate (for expense)
4.45
%
 
3.86
%
 
4.24
%
 
3.67
%
Expected return on plan assets
7.95
%
 
7.95
%
 
—

 
—

Discount rate (for benefit obligation)
3.44
%
 
4.45
%
 
3.10
%
 
4.24
%

The projected benefit obligation, accumulated benefit obligation and aggregate fair value of plan assets for U.S. pension plans with accumulated benefit obligations in excess of plan assets were $6.3 billion, $6.3 billion and $4.7 billion, respectively, as of December 31, 2019 and $5.5 billion, $5.5 billion and $4.1 billion, respectively, as of December 31, 2018.
The projected benefit obligation and fair value of plan assets for U.S. pension plans with projected benefit obligations in excess of plan assets was $6.3 billion and $4.7 billion, respectively, as of December 31, 2019 and $5.5 billion and $4.1 billion, respectively, as of December 31, 2018.
As of December 31, 2019, the U.S. qualified plan holds 2 million shares of the Company’s common stock which were contributed to the qualified plan by the Company in 2005. This represented approximately 4.8% of that plan's assets as of December 31, 2019.
The components of the net periodic benefit cost (credit) for the U.S. defined benefit and other post-retirement benefit plans are as follows:
U.S. Plans only
Pension
Benefits
 
Post-retirement
Benefits
For the Years Ended December 31,
 
(In millions of dollars)
2019

 
2018

 
2017

 
2019

 
2018

 
2017

Interest cost
241

 
235

 
264

 
1

 
1

 
2

Expected return on plan assets
(343
)
 
(357
)
 
(357
)
 
—

 
—

 
—

Amortization of prior service cost
—

 
—

 
—

 
—

 
—

 
3

Recognized actuarial loss (gain)
44

 
55

 
37

 
(1
)
 
(1
)
 
(1
)
Net periodic benefit (credit) cost
$
(58
)
 
$
(67
)
 
$
(56
)
 
$
—

 
$
—

 
$
4


The assumed health care cost trend rate for Medicare eligibles and non-Medicare eligibles is approximately 6% in 2019, gradually declining to 4.5% in 2039. Assumed health care cost trend rates have a small effect on the amounts reported for the U.S. health care plans because the Company caps its share of health care trend at 5%. A one percentage point change in assumed health care cost trend rates would have no effect on the total service and interest cost components or the post-retirement benefit obligation.
 
 
 
 

Estimated Future Contributions
The Company expects to contribute approximately $76 million to its U.S. plans in 2020. The Company’s policy for funding its tax-qualified defined benefit retirement plans is to contribute amounts at least sufficient to meet the funding requirements set forth in the U.S. and applicable foreign law.
Non-U.S. Plans
The following schedules provide information concerning the Company’s non-U.S. defined benefit pension plans and non-U.S. post-retirement benefit plans:
 
Non-U.S. Pension
Benefits
 
Non-U.S.
Post-retirement Benefits
(In millions of dollars)
2019

 
2018

 
2019

 
2018

Change in benefit obligation:
 
 
 
 
 
 
 
Benefit obligation at beginning of year
$
8,969

 
$
10,053

 
$
57

 
$
68

Service cost
31

 
34

 
—

 
1

Interest cost
246

 
228

 
2

 
2

Employee contributions
2

 
2

 
—

 
—

Plan combination
915

 
—

 
—

 
—

Actuarial loss (gain)
1,339

 
(450
)
 
3

 
(8
)
Plan amendments
(1
)
 
44

 
—

 
—

Effect of settlement
(25
)
 
(162
)
 
—

 
—

Benefits paid
(364
)
 
(290
)
 
(3
)
 
(3
)
Foreign currency changes
209

 
(491
)
 
2

 
(3
)
Other
—

 
1

 
—

 
—

Benefit obligation, December 31
$
11,321

 
$
8,969

 
$
61

 
$
57

Change in plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
$
10,306

 
$
11,388

 
$
—

 
$
—

Plan combination
683

 
—

 
—

 
—

Actual return on plan assets
1,367

 
(141
)
 
—

 
—

Effect of settlement
(25
)
 
(162
)
 
—

 
—

Company contributions
87

 
82

 
3

 
3

Employee contributions
2

 
2

 
—

 
—

Benefits paid
(364
)
 
(290
)
 
(3
)
 
(3
)
Foreign currency changes
257

 
(573
)
 
—

 
—

Fair value of plan assets, December 31
$
12,313

 
$
10,306

 
$
—

 
$
—

Net funded status, December 31
$
992

 
$
1,337

 
$
(61
)
 
$
(57
)
Amounts recognized in the consolidated balance sheets:
 
 
 
 
 
 
 
Non-current assets
$
1,632

 
$
1,687

 
$
—

 
$
—

Current liabilities
(6
)
 
(5
)
 
(3
)
 
(3
)
Non-current liabilities
(634
)
 
(345
)
 
(58
)
 
(54
)
Net asset (liability) recognized, December 31
$
992

 
$
1,337

 
$
(61
)
 
$
(57
)
Amounts recognized in other comprehensive (loss) income:
 
 
 
 
 
 
 
Prior service credit
$
(2
)
 
$
(2
)
 
$
11

 
$
12

Net actuarial loss
(3,055
)
 
(2,568
)
 
(5
)
 
(1
)
Total recognized accumulated other comprehensive (loss) income, December 31
$
(3,057
)
 
$
(2,570
)
 
$
6

 
$
11

Cumulative employer contributions in excess of (less than) net periodic cost
4,049

 
3,907

 
(67
)
 
(68
)
Net asset (liability) recognized in consolidated balance sheets, December 31
$
992

 
$
1,337

 
$
(61
)
 
$
(57
)
Accumulated benefit obligation, December 31
$
11,079

 
$
8,752

 
$
—

 
$
—

 
Non-U.S. Pension
Benefits
 
Non-U.S.
Post-retirement Benefits
(In millions of dollars)
2019

 
2018

 
2019

 
2018

Reconciliation of prior service credit (cost) recognized in accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
Beginning balance
$
(2
)
 
$
43

 
$
12

 
$
15

Recognized as component of net periodic benefit credit:
 
 
 
 
 
 
 
Amortization of prior service credit
—

 
(2
)
 
(2
)
 
(2
)
Total recognized as component of net periodic benefit credit
—

 
(2
)
 
(2
)
 
(2
)
Changes in plan assets and benefit obligations recognized in other comprehensive income:
 
 
 
 
 
 
 
Plan amendments
1

 
(44
)
 
—

 
—

Exchange rate adjustments
(1
)
 
1

 
1

 
(1
)
Prior service credit, December 31
$
(2
)
 
$
(2
)
 
$
11

 
$
12

 
Non-U.S. Pension
Benefits
 
Non-U.S.
Post-retirement Benefits
(In millions of dollars)
2019

 
2018

 
2019

 
2018

Reconciliation of net actuarial (loss) gain recognized in accumulated other comprehensive (loss) income:
 
 
 
 
 
 
 
Beginning balance
$
(2,568
)
 
$
(2,646
)
 
$
(1
)
 
$
(10
)
Recognized as component of net periodic benefit cost:
 
 
 
 
 
 
 
Amortization of net loss
60

 
91

 
—

 
—

Effect of settlement
7

 
42

 
—

 
—

Total recognized as component of net periodic benefit credit
67

 
133

 
—

 
—

Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
 
 
 
 
 
 
 
Liability experience
(1,339
)
 
450

 
(3
)
 
8

Asset experience
847

 
(648
)
 
—

 
—

Other
—

 
3

 
—

 
—

Total amount recognized as change in plan assets and benefit obligations
(492
)
 
(195
)
 
(3
)
 
8

Exchange rate adjustments
(62
)
 
140

 
(1
)
 
1

Net actuarial loss, December 31
$
(3,055
)
 
$
(2,568
)
 
$
(5
)
 
$
(1
)
For the Years Ended December 31,
Non-U.S. Pension
Benefits
 
Non-U.S. Post-retirement
Benefits
(In millions of dollars)
2019

 
2018

 
2017

 
2019

 
2018

 
2017

Total recognized in net periodic benefit cost and other comprehensive loss (income)
$
311

 
$
(147
)
 
$
(513
)
 
$
5

 
$
(5
)
 
$
(14
)

Estimated amounts that will be amortized from accumulated other comprehensive loss to net periodic pension cost in the next fiscal year:
  
Non-U.S. Pension
Benefits
 
Non-U.S.
Post-retirement Benefits
(In millions of dollars)
2020

 
2020

Prior service credit
$
—

 
$
(2
)
Net actuarial loss
90

 
—

Projected cost
$
90

 
$
(2
)

The weighted average actuarial assumptions utilized in determining expense during the year and benefit obligation at the end of the year for the non-U.S. defined benefit and post-retirement plans are as follows:
 
Non-U.S. Pension
Benefits
 
Non-U.S.
Post-retirement Benefits
 
2019

 
2018

 
2019

 
2018

Weighted average assumptions:
 
 
 
 
 
 
 
Discount rate (for expense)
2.89
%
 
2.58
%
 
3.32
%
 
2.97
%
Expected return on plan assets
4.87
%
 
4.94
%
 
—

 
—

Rate of compensation increase (for expense)
2.82
%
 
2.80
%
 
—

 
—

Discount rate (for benefit obligation)
2.09
%
 
2.89
%
 
2.53
%
 
3.32
%
Rate of compensation increase (for benefit obligation)
2.75
%
 
2.82
%
 
—

 
—


The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the non-U.S. pension plans with accumulated benefit obligations in excess of plan assets were $2.9 billion, $2.7 billion and $2.2 billion, respectively, as of December 31, 2019 and $1.7 billion, $1.6 billion and $1.3 billion, respectively, as of December 31, 2018.
The projected benefit obligation and fair value of plan assets for non-U.S. pension plans with projected benefit obligations in excess of plan assets was $3.0 billion and $2.3 billion, respectively, as of December 31, 2019 and $1.9 billion and $1.6 billion, respectively, as of December 31, 2018.
Non-U.S. Plan Amendments
In March 2017, the Company modified its defined benefit pension plans in Canada to discontinue further benefit accruals for participants after December 31, 2017 and replaced them with a defined contribution arrangement. The Company also amended its post-retirement benefits plan in Canada so that individuals who retire after April 1, 2019 will not be eligible to participate, except in certain situations. The Company re-measured the assets and liabilities of the plans, based on assumptions and market conditions on the amendment date.

Components of Net Periodic Benefits Costs
The components of the net periodic benefit cost for the non-U.S. defined benefit and other post-retirement benefit plans and the curtailment, settlement and termination expenses are as follows:
For the Years Ended December 31,
Non-U.S. Pension
Benefits
 
Non-U.S. Post-retirement
Benefits
(In millions of dollars)
2019

 
2018

 
2017

 
2019

 
2018

 
2017

Service cost
$
31

 
$
34

 
$
76

 
$
—

 
$
1

 
$
1

Interest cost
246

 
228

 
233

 
2

 
2

 
2

Expected return on plan assets
(520
)
 
(507
)
 
(564
)
 
—

 
—

 
—

Amortization of prior service credit
—

 
(2
)
 
(2
)
 
(2
)
 
(2
)
 
(2
)
Recognized actuarial loss
60

 
91

 
130

 
—

 
—

 
1

Net periodic benefit (credit) cost
(183
)
 
(156
)
 
(127
)
 
—

 
1

 
2

Settlement loss
7

 
42

 
54

 
—

 
—

 
—

Curtailment (gain) loss
—

 
—

 
(1
)
 
—

 
—

 
—

Total (credit) cost
$
(176
)
 
$
(114
)
 
$
(74
)
 
$
—

 
$
1

 
$
2


The assumed health care cost trend rate was approximately 4.98% in 2019, gradually declining to 4.34% in 2029. Assumed health care cost trend rates can have a significant effect on the amounts reported for the non-U.S. health care plans. A one percentage point change in assumed health care cost trend rates would have the following effects:
(In millions of dollars)
1 Percentage
Point Increase
 
1 Percentage
Point Decrease
Effect on total of service and interest cost components
$
—

 
$
—

Effect on post-retirement benefit obligation
$
6

 
$
(5
)

Estimated Future Contributions
The Company expects to contribute approximately $84 million to its non-U.S. pension plans in 2020. Funding requirements for non-U.S. plans vary by country. Contribution rates are generally based on local funding practices and requirements, which may differ significantly from measurements under U.S. GAAP. Funding amounts may be influenced by future asset performance, the level of discount rates and other variables impacting the assets and/or liabilities of the plan. Discretionary contributions may also be affected by alternative uses of the Company’s cash flows, including dividends, investments and share repurchases.
In the U.K., the assumptions used to determine pension contributions are the result of legally-prescribed negotiations between the Company and the plans' trustee that typically occurs every three years in conjunction with the actuarial valuation of the plans. Currently, this results in a lower funded status than under U.S. GAAP and may result in contributions irrespective of the U.S. GAAP funded status. For the MMC UK Pension Fund, in November 2016, the Company and the trustee agreed to a funding deficit recovery plan for the U.K. defined benefit pension plans. A new agreement was reached with the trustee in fourth quarter of 2019 based on the surplus funding position at December 31, 2018. Under the agreement no deficit funding is required until 2023. The funding level will be re-assessed during 2022 to determine if contributions are required in 2023. As part of a long-term strategy, which depends on having greater influence over asset allocation and overall investment decisions, in November 2019 the Company renewed its agreement to support annual deficit contributions by the U.K. operating companies under certain circumstances, up to GBP 450 million over a seven-year period. In addition in the U.K. the Company assumed responsibility for the JLT's Pension Scheme (JLT U.K. plan). Deficit funding of approximately $28 million is expected during 2020 with a new funding agreement expected to be reached with the trustee during 2020.



Estimated Future Benefit Payments
The estimated future benefit payments for the Company's pension and post-retirement benefit plans are as follows:
For the Years Ended December 31,
Pension
Benefits
 
Post-retirement
Benefits
(In millions of dollars)
U.S.
 
Non-U.S.
 
U.S.
 
Non-U.S.
2020
$
281

 
$
322

 
$
4

 
$
3

2021
$
293

 
$
328

 
$
4

 
$
3

2022
$
305

 
$
338

 
$
3

 
$
3

2023
$
312

 
$
358

 
$
3

 
$
3

2024
$
318

 
$
368

 
$
3

 
$
3

2025-2029
$
1,675

 
$
2,019

 
$
11

 
$
15


Defined Benefit Plans Fair Value Disclosures
The U.S. and non-U.S. plan investments are classified into Level 1, which refers to investments valued using quoted prices from active markets for identical assets; Level 2, which refers to investments not traded on an active market but for which observable market inputs are readily available; Level 3, which refers to investments valued based on significant unobservable inputs; and NAV, which refers to investments valued using net asset value as a practical expedient. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The following table sets forth, by level within the fair value hierarchy, a summary of the U.S. and non-U.S. plans' investments measured at fair value on a recurring basis at December 31, 2019 and 2018:
 
Fair Value Measurements at December 31, 2019
Assets
(In millions of dollars)
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
NAV
 
Total
Common/collective trusts
$
492

 
$
—

 
$
—

 
$
5,959

 
$
6,451

Corporate obligations
—

 
4,063

 
—

 
—

 
4,063

Corporate stocks
2,871

 
34

 
1

 
—

 
2,906

Private equity/partnerships
—

 
—

 
—

 
1,055

 
1,055

Government securities
20

 
679

 
—

 
—

 
699

Real estate
—

 
—

 
—

 
660

 
660

Short-term investment funds
309

 
3

 
—

 
—

 
312

Company common stock
223

 
—

 
—

 
—

 
223

Other investments
15

 
17

 
682

 
2

 
716

Total investments
$
3,930

 
$
4,796

 
$
683

 
$
7,676

 
$
17,085

  
Fair Value Measurements at December 31, 2018
Assets
(In millions of dollars)
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
NAV
 
Total
Common/collective trusts
$
291

 
$
—

 
$
—

 
$
5,329

 
$
5,620

Corporate obligations
—

 
3,673

 
—

 
—

 
3,673

Corporate stocks
2,046

 
33

 
1

 
—

 
2,080

Private equity/partnerships
—

 
—

 
—

 
921

 
921

Government securities
15

 
535

 
—

 
—

 
550

Real estate
—

 
—

 
—

 
563

 
563

Short-term investment funds
286

 
—

 
—

 
—

 
286

Company common stock
319

 
—

 
—

 
—

 
319

Other investments
13

 
20

 
333

 
—

 
366

Total investments
$
2,970

 
$
4,261

 
$
334

 
$
6,813

 
$
14,378


The tables below set forth a summary of changes in the fair value of the plans’ Level 3 assets for the years ended December 31, 2019 and December 31, 2018:
Assets
(In millions)
Fair Value,
January 1, 2019
 
Purchases
 
Sales
 
Unrealized
Gain/
(Loss)
 
Realized
Gain/
(Loss)
 
Exchange
Rate
Impact
 
Transfers
in/(out)
and
Other (a)
 
Fair
Value, December 31, 2019
Other investments
$
333

 
$
17

 
$
(14
)
 
$
72

 
$
1

 
$
(9
)
 
$
282

 
$
682

Corporate stocks
1

 
—

 
—

 
—

 
—

 
—

 
—

 
1

Total assets
$
334

 
$
17

 
$
(14
)
 
$
72

 
$
1

 
$
(9
)
 
$
282

 
$
683

(a) Transfers in during 2019 are primarily related to the inclusion of JLT plan assets.
Assets
(In millions)
Fair Value,
January 1, 2018
 
Purchases
 
Sales
 
Unrealized
Gain/
(Loss)
 
Realized
Gain/
(Loss)
 
Exchange
Rate
Impact
 
Transfers
in/(out)
and
Other
 
Fair
Value, December 31, 2018
Other investments
$
350

 
$
20

 
$
(19
)
 
$
(5
)
 
$
1

 
$
(14
)
 
$
—

 
$
333

Corporate stocks
2

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
1

Corporate obligations
20

 
—

 
—

 
—

 
—

 
—

 
(20
)
 
—

Total assets
$
372

 
$
20

 
$
(19
)
 
$
(5
)
 
$
1

 
$
(14
)
 
$
(21
)
 
$
334


The following is a description of the valuation methodologies used for assets measured at fair value:
Company common stock:  Valued at the closing price reported on the New York Stock Exchange.
Common stocks, preferred stocks, convertible equity securities, rights/warrants and real estate investment trusts (included in Corporate stocks):  Valued at the closing price reported on the primary exchange.
Corporate bonds (included in Corporate obligations):  The fair value of corporate bonds is estimated using recently executed transactions, market price quotations (where observable) and bond spreads. The spread data used are for the same maturity as the bond. If the spread data does not reference the issuer, then data that references a comparable issuer are used. When observable price quotations are not available, fair value is determined based on cash flow models.
Commercial mortgage-backed and asset-backed securities (included in Corporate obligations):  Fair value is determined using discounted cash flow models. Observable inputs are based on trade and quote activity of bonds with similar features including issuer vintage, purpose of underlying loan (first or second lien), prepayment speeds and credit ratings. The discount rate is the combination of the appropriate rate from the benchmark yield curve and the discount margin based on quoted prices.
Common/Collective trusts:  Valued at the net asset value of units of a bank collective trust. The net asset value as provided by the trustee, is used as a practical expedient to estimate fair value. The net asset value is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported net asset value.
U.S. government bonds (included in Government securities):  The fair value of U.S. government bonds is estimated by pricing models that utilize observable market data including quotes, spreads and data points for yield curves.
U.S. agency securities (included in Government securities):  U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage pass-throughs. Agency issued debt securities are valued by benchmarking market-derived prices to quoted market prices and trade data for identical or comparable securities. Mortgage pass-throughs include certain "To-be-announced" (TBA) securities and mortgage pass-through pools. TBA securities are generally valued using quoted market prices or are benchmarked thereto. Fair value of mortgage pass-through pools are model driven with respect to spreads of the comparable TBA security.
Private equity and real estate partnerships:  Investments in private equity and real estate partnerships are valued based on the fair value reported by the manager of the corresponding partnership and reported on a one quarter lag. The managers provide unaudited quarterly financial statements and audited annual financial statements which set forth the value of the fund. The valuations obtained from the managers are based on various analyses on the underlying holdings in each partnership, including financial valuation models and projections, comparable valuations from the public markets, and precedent private market transactions. Investments are valued in the accompanying financial statements based on the Plan’s beneficial interest in the underlying net assets of the partnership as determined by the partnership agreement.
Insurance group annuity contracts:  The fair values for these investments are based on the current market value of the aggregate accumulated contributions plus interest earned.
Swap assets (included in Other investments):  Fair values for interest rate swaps, equity index swaps and inflation swaps are estimated using a discounted cash flow pricing model. These models use observable market data such as contractual fixed rate, spot equity price or index value and dividend data. The fair values of credit default swaps are estimated using an income approach model which determines expected cash flows based on default probabilities from the issuer-specific credit spread curve and credit loss recovery rates, both of which are dependent on market quotes.
Short-term investment funds:  Primarily high-grade money market instruments valued at net asset value at year-end.
Registered investment companies:  Valued at the closing price reported on the primary exchange.
Defined Contribution Plans
The Company maintains certain defined contribution plans for its employees, including the Marsh & McLennan Companies 401(k) Savings & Investment Plan ("401(k) Plan"), that are qualified under U.S. tax laws. Under these plans, eligible employees may contribute a percentage of their base salary, subject to certain limitations. For the 401(k) Plan, the Company matches a fixed portion of the employees’ contributions. In addition, as mentioned above, as part of the modification to its U.S. defined benefit pension plans, the Company also amended its U.S. defined contribution retirement plans for most of its U.S. employees to add an automatic Company contribution equal to 4% of eligible base pay beginning on January 1, 2017. The 401(k) Plan contains an Employee Stock Ownership Plan feature under U.S. tax law. Approximately $556 million of the 401(k) Plan’s assets at December 31, 2019 and $444 million at December 31, 2018 were invested in the Company’s common stock. If a participant does not choose an investment direction for his or her future contributions, they are automatically invested in a BlackRock LifePath Portfolio that most closely matches the participant’s expected retirement year. The cost of these defined contribution plans was $139 million in 2019, $133 million in 2018 and $130 million in 2017. In addition, the Company has significant defined contribution plans in the U.K. As noted above, effective August 1, 2014, a newly formed defined contribution plan replaced the existing defined contribution and defined benefit plans with regard to future service. In addition, the Company has assumed responsibility
for the defined contribution section of the JLT U.K. plan. The cost of the U.K. defined contribution plan was $100 million, $80 million and $75 million in 2019, 2018 and 2017, respectively.