Retirement Benefits

3 Months Ended

Mar. 31, 2020

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 March 31, 2020 the actual allocation for the Company's U.S. Plan was 60% equities and equity alternatives and 40% fixed income. The target allocation for the U.K. Plans at March 31, 2020 was 33% equities and equity alternatives and 67% fixed income. At March 31, 2020, the actual allocation for the U.K. Plans was 30% equities and equity alternatives and 70% fixed income. The Company's U.K. Plans comprised approximately 81% of non-U.S. plan assets at December 31, 2019. 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 $255 million of net pension liabilities as of December 31, 2019 (approximately $1,003 million in liabilities and $748 million of plan assets), 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 March 31,	Pension Benefits						Post-retirement Benefits
(In millions)	2020			2019			2020			2019
Service cost	$	8		$	8		$	—		$	—
Interest cost	106			119			1			1
Expected return on plan assets	(210		)	(213		)	—			—
Amortization of prior service (credit) cost	—			—			(1		)	(1		)
Recognized actuarial loss	40			26			—			—
Net periodic benefit (credit) cost	$	(56	)	$	(60	)	$	—		$	—
Settlement loss	—			4			—			—
Total (credit) cost	$	(56	)	$	(56	)	$	—		$	—



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 March 31,	Pension Benefits						Post-retirement Benefits
(In millions)	2020			2019			2020		2019
Compensation and benefits expense (Operating income)	$	8		$	8		$	—	$	—
Other net benefit credits	(64		)	(64		)	—		—
Total (credit) cost	$	(56	)	$	(56	)	$	—	$	—



U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Three Months Ended March 31,	Pension Benefits						Post-retirement Benefits
(In millions)	2020			2019			2020		2019
Interest cost	$	53		$	60		$	—	$	—
Expected return on plan assets	(86		)	(86		)	—		—
Recognized actuarial loss	18			11			—		—
Net periodic benefit credit	$	(15	)	$	(15	)	$	—	$	—



Significant non-U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Three Months Ended March 31,	Pension Benefits						Post-retirement Benefits
(In millions)	2020			2019			2020			2019
Service cost	$	8		$	8		$	—		$	—
Interest cost	53			59			1			1
Expected return on plan assets	(124		)	(127		)	—			—
Amortization of prior service credit	—			—			(1		)	(1		)
Recognized actuarial loss	22			15			—			—
Net periodic benefit (credit) cost	$	(41	)	$	(45	)	$	—		$	—
Settlement loss	—			4			—			—
Total (credit) cost	$	(41	)	$	(41	)	$	—		$	—

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
March 31,	2020		2019		2020		2019
Weighted average assumptions:
Expected return on plan assets	5.31	%	5.74	%	—		—
Discount rate	2.57	%	3.48	%	2.72	%	3.65	%
Rate of compensation increase	1.76	%	1.74	%	—		—

The Company made approximately $27 million of contributions to its U.S. and non-U.S. defined benefit pension plans for the three months ended March 31, 2020. After consideration of the deferral discussed below, the Company expects to contribute approximately $87 million to its U.S. and non-U.S. defined benefit pension plans during the remainder of 2020. Pursuant to the terms of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), contributions previously due during 2020 will be deferred until January 1, 2021. As a result, the Company will defer funding of approximately $47 million to its U.S. qualified defined benefit plans until January 1, 2021.

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 $37 million and $35 million for the three months ended March 31, 2020 and 2019, respectively. The cost of the U.K. DC Plans was $31 million and $22 million for the three months ended March 31, 2020 and 2019, respectively.