Retirement Benefits

6 Months Ended

Jun. 30, 2020

Retirement Benefits [Abstract]

Retirement Benefits

Retirement Benefits

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 June 30, 2020 the actual allocation for the Company's U.S. Plan was 61% equities and equity alternatives and 39% fixed income. The target allocation for the U.K. Plans at June 30, 2020 was 33% equities and equity alternatives and 67% fixed income. At June 30, 2020, the actual allocation for the U.K. Plans was 31% equities and equity alternatives and 69% 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 Benefit 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 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 June 30,
(In millions)	2020			2019			2020			2019
Service cost	$	9		$	10		$	—		$	—
Interest cost	104			121			—			—
Expected return on plan assets	(207		)	(217		)	—			—
Recognized actuarial loss	40			26			—			—
Net periodic benefit credit	$	(54	)	$	(60	)	$	—		$	—
Combined U.S. and significant non-U.S. Plans	Pension Benefits						Post-retirement Benefits
For the Six Months Ended June 30,
(In millions)	2020			2019			2020			2019
Service cost	$	17		$	18		$	—		$	—
Interest cost	210			240			1			1
Expected return on plan assets	(417		)	(430		)	—			—
Amortization of prior service credit	—			—			(1		)	(1		)
Recognized actuarial loss	80			52			—			—
Net periodic benefit credit	$	(110	)	$	(120	)	$	—		$	—
Settlement loss	—			4			—			—
Total credit	$	(110	)	$	(116	)	$	—		$	—

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 June 30,
(In millions)	2020			2019			2020		2019
Compensation and benefits expense (Operating income)	$	9		$	10		$	—	$	—
Other net benefit credits	(63		)	(70		)	—		—
Total (credit) cost	$	(54	)	$	(60	)	$	—	$	—

Amounts Recorded in the Consolidated Statement of Income
Combined U.S. and significant non-U.S. Plans	Pension Benefits						Post-retirement Benefits
For the Six Months Ended June 30,
(In millions)	2020			2019			2020		2019
Compensation and benefits expense (Operating income)	$	17		$	18		$	—	$	—
Other net benefit credits	(127		)	(134		)	—		—
Total credit	$	(110	)	$	(116	)	$	—	$	—

U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Three Months Ended June 30,
(In millions)	2020			2019			2020		2019
Interest cost	$	54		$	60		$	—	$	—
Expected return on plan assets	(87		)	(85		)	—		—
Recognized actuarial loss	18			11			—		—
Net periodic benefit credit	$	(15	)	$	(14	)	$	—	$	—

U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Six Months Ended June 30,
(In millions)	2020			2019			2020		2019
Interest cost	$	107		$	120		$	—	$	—
Expected return on plan assets	(173		)	(171		)	—		—
Recognized actuarial loss (credit)	36			22			—		—
Net periodic benefit credit	$	(30	)	$	(29	)	$	—	$	—

Significant non-U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Three Months Ended June 30,
(In millions)	2020			2019			2020		2019
Service cost	$	9		$	10		$	—	$	—
Interest cost	50			61			—		—
Expected return on plan assets	(120		)	(132		)	—		—
Recognized actuarial loss	22			15			—		—
Net periodic benefit credit	$	(39	)	$	(46	)	$	—	$	—

Significant non-U.S. Plans only	Pension Benefits						Post-retirement Benefits
For the Six Months Ended June 30,
(In millions)	2020			2019			2020			2019
Service cost	$	17		$	18		$	—		$	—
Interest cost	103			120			1			1
Expected return on plan assets	(244		)	(259		)	—			—
Amortization of prior service credit	—			—			(1		)	(1		)
Recognized actuarial loss	44			30			—			—
Net periodic benefit credit	$	(80	)	$	(91	)	$	—		$	—
Settlement loss	—			4			—			—
Total credit	$	(80	)	$	(87	)	$	—		$	—

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
June 30,	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 $53 million of contributions to its U.S. and non-U.S. defined benefit pension plans for the six months ended June 30, 2020. After consideration of the deferral discussed below, the Company expects to contribute approximately $57 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 $73 million and $70 million for the six months ended June 30, 2020 and 2019, respectively. The cost of the U.K. DC Plans was $64 million and $46 million for the six months ended June 30, 2020 and 2019, respectively.