3M has company-sponsored retirement plans covering substantially all U.S. employees and many employees outside the United States. In total, 3M has over 80 defined benefit plans in 28 countries. Pension benefits associated with these plans generally are based on each participant's years of service, compensation, and age at retirement or termination. The primary U.S. defined-benefit pension plan was closed to new participants effective January 1, 2009. The Company also provides certain postretirement health care and life insurance benefits for substantially all of its U.S. employees who reach retirement age while employed by the Company. Most international employees and retirees are covered by government health care programs. The cost of company-provided postretirement health care plans for international employees is not material and is combined with U.S. amounts in the tables that follow.

The Company also sponsors employee savings plans under Section 401(k) of the Internal Revenue Code. These plans are offered to substantially all regular U.S. employees. For eligible employees hired prior to January 1, 2009, employee 401(k) contributions of up to 6% of eligible compensation are matched in cash at rates of 60% or 75%, depending on the plan in which the employee participates. Employees hired on or after January 1, 2009, receive a cash match of 100% for employee 401(k) contributions of up to 6% of eligible compensation and also receive an employer retirement income account cash contribution of 3% of the participant's total eligible compensation. All contributions are invested in a number of investment funds pursuant to the employees' elections. Employer contributions to the U.S. defined contribution plans were $153 million, $136 million and $124 million for 2014, 2013 and 2012, respectively. 3M subsidiaries in various international countries also participate in defined contribution plans. Employer contributions to the international defined contribution plans were $75 million, $71 million and $58 million for 2014, 2013 and 2012, respectively.

The Company has made deposits for its defined benefit plans with independent trustees. Trust funds and deposits with insurance companies are maintained to provide pension benefits to plan participants and their beneficiaries. There are no plan assets in the non-qualified plan due to its nature. For its U.S. postretirement health care and life insurance benefit plans, the Company has set aside amounts at least equal to annual benefit payments with an independent trustee.

In August 2006, the Pension Protection Act (PPA) was signed into law in the U.S. The PPA transition rules increased the funding target for defined benefit pension plans to 100% of the target liability by 2011. 3M's primary U.S. qualified defined benefit plan does not have a mandatory cash contribution because the Company has a significant credit balance from previous discretionary contributions that can be applied to any PPA funding requirements.

In the fourth quarter of 2010, the Company made further changes to its U.S. postretirement health care benefit plans. As a result of these changes, the Company will transition all current and future retirees to the savings account benefits-based plan announced in 2008. These changes became effective beginning January 1, 2013, for all Medicare eligible retirees and their Medicare eligible dependents and will become effective beginning January 1, 2016, for all non-Medicare eligible retirees and their eligible dependents.

In December 2011, the Company offered a voluntary early retirement incentive program to certain eligible participants of its U.S. pension plans who met age and years of pension service requirements. The eligible participants who accepted the offer and retired on February 1, 2012, received an enhanced pension benefit. Pension benefits were enhanced by adding one additional year of pension service and one additional year of age for certain benefit calculations. 616 participants accepted the offer and retired on February 1, 2012. As a result, the Company incurred a $26 million charge related to these special termination benefits in the first quarter of 2012.

Effective July 1, 2012, 3M Canada closed its pension plans for salaried employees to new participants. The change did not trigger a plan remeasurement and therefore there was no immediate impact to the liability and expense.

In the third quarter of 2014, former U.S. employees who have a pension benefit for which they have not begun receiving payment (term vested) were offered a lump sum payout of their pension benefit. As a result of this action, the projected benefit obligation (PBO) liability was reduced in the fourth quarter of 2014 by approximately $270 million, with the actual cash payout of approximately the same amount paid from the plan's assets in the fourth quarter of 2014. The PBO liability reduction was 34% of the term vested eligible PBO and a 2% reduction in the overall U.S. pension PBO liability based on the December 31, 2013, valuation. There was no pension expense impact as a result of this action on 3M's consolidated statement of income in 2014.

In the fourth quarter of 2014, 3M's Board of Directors approved an amendment of the U.S. defined benefit pension plan to include a lump sum payment option for employees that have vested retirement benefits who commence their pension January 1, 2015, or later. This option is also available to vested employees who leave 3M before becoming eligible to retire at the time of termination. This change reduced 3M's year-end 2014 PBO liability by approximately $266 million.

As of December 31, 2014, the Company converted to the "RP 2014 Mortality Tables" and updated the mortality improvement scale it used for calculating the year-end 2014 U.S. defined benefit pension annuitant and postretirement obligations and 2015 expense. The impact of this change increased the year-end 2014 U.S. PBO for pension and the 2014 U.S. accumulated postretirement benefit obligation.

3M was informed during the first quarter of 2009, that the general partners of WG Trading Company, in which 3M's benefit plans hold limited partnership interests, are the subject of a criminal investigation as well as civil proceedings by the SEC and CFTC (Commodity Futures Trading Commission). In March 2011, over the objections of 3M and six other limited partners of WG Trading Company, the district court judge ruled in favor of the court appointed receiver's proposed distribution plan (and in April 2013, the United States Court of Appeals for the Second Circuit affirmed the district court's ruling). The benefit plan trustee holdings of WG Trading Company interests were adjusted to reflect the decreased estimated fair market value, inclusive of estimated insurance proceeds, as of the annual measurement dates. The Company has insurance that it believes, based on what is currently known, will result in the probable recovery of a portion of the decrease in original asset value. As of the 2014 measurement date, these holdings represented less than one half of one percent of 3M's fair value of total plan assets. 3M currently believes that the resolution of these events will not have a material adverse effect on the consolidated financial position of the Company.

The following tables include a reconciliation of the beginning and ending balances of the benefit obligation and the fair value of plan assets as well as a summary of the related amounts recognized in the Company's consolidated balance sheet as of December 31 of the respective years. 3M also has certain non-qualified unfunded pension and postretirement benefit plans, inclusive of plans related to supplement/excess benefits for employees impacted by particular relocations and other matters, that individually and in the aggregate are not significant and which are not included in the tables that follow. The obligations for these plans are included within other liabilities in the Company's consolidated balance sheet and aggregated less than $30 million as of December 31, 2014 and 2013.

			Qualified and Non-qualified
			Pension Benefits									Postretirement
			United States					International				Benefits
(Millions)			2014		2013		`	2014		2013		2014		2013
Change in benefit obligation
	Benefit obligation at beginning of year		$	13,967	$	14,830		$	6,346	$	6,414	$	2,017	$	2,205
	Acquisitions/Transfers in			―		15			―		―		―		―
	Service cost			241		258			141		147		65		80
	Interest cost			676		598			252		238		97		88
	Participant contributions			―		―			10		8		18		30
	Foreign exchange rate changes			―		―			(663)		(79)		(11)		(13)
	Plan amendments			(266)		―			3		3		―		(20)
	Actuarial (gain) loss			2,874		(986)			1,128		(163)		415		(225)
	Medicare Part D Reimbursement			―		―			―		―		1		2
	Benefit payments			(1,039)		(747)			(235)		(222)		(140)		(130)
	Settlements, curtailments, special
		termination benefits and other		(1)		(1)			(3)		―		―		―
	Benefit obligation at end of year		$	16,452	$	13,967		$	6,979	$	6,346	$	2,462	$	2,017
Change in plan assets
	Fair value of plan assets at
		beginning of year	$	13,889	$	13,781		$	5,758	$	5,222	$	1,405	$	1,321
	Actual return on plan assets			1,749		803			813		421		148		178
	Company contributions			45		53			165		423		5		6
	Participant contributions			―		―			10		8		18		30
	Foreign exchange rate changes			―		―			(554)		(94)		―		―
	Benefit payments			(1,039)		(747)			(235)		(222)		(140)		(130)
	Settlements, curtailments, special
		termination benefits and other		(1)		(1)			―		―		―		―
	Fair value of plan assets at end of year		$	14,643	$	13,889		$	5,957	$	5,758	$	1,436	$	1,405
Funded status at end of year			$	(1,809)	$	(78)		$	(1,022)	$	(588)	$	(1,026)	$	(612)

			Qualified and Non-qualified
			Pension Benefits								Postretirement
			United States				International				Benefits
(Millions)			2014		2013		2014		2013		2014		2013
Amounts recognized in the
	Consolidated Balance Sheet as of
	Dec. 31,
	Non-current assets		$	3	$	399	$	43	$	178	$	―	$	―
	Accrued benefit cost
		Current liabilities		(46)		(47)		(10)		(10)		(4)		(4)
		Non-current liabilities		(1,766)		(430)		(1,055)		(756)		(1,022)		(608)
	Ending balance		$	(1,809)	$	(78)	$	(1,022)	$	(588)	$	(1,026)	$	(612)

The balance of amounts recognized for international plans in accumulated other comprehensive income as of December 31 in the preceding table are presented based on the foreign currency exchange rate on that date.

The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels. The accumulated benefit obligation of the U.S. pension plans was $15.335 billion and $13.357 billion at December 31, 2014 and 2013, respectively. The accumulated benefit obligation of the international pension plans was $6.401 billion and $5.825 billion at December 31, 2014 and 2013, respectively.

The following amounts relate to pension plans with accumulated benefit obligations in excess of plan assets as of December 31:

Components of net periodic cost and other amounts recognized in other comprehensive income

Net periodic benefit cost is recorded in cost of sales, selling, general and administrative expenses, and research, development and related expenses. Components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31 follow:

			Qualified and Non-qualified
			Pension Benefits												Postretirement
			United States						International						Benefits
(Millions)			2014		2013		2012		2014		2013		2012		2014		2013		2012
Net periodic benefit cost (benefit)
	Service cost		$	241	$	258	$	254	$	141	$	147	$	124	$	65	$	80	$	78
	Interest cost			676		598		587		252		238		247		97		88		86
	Expected return on plan assets			(1,043)		(1,046)		(992)		(312)		(291)		(295)		(90)		(90)		(84)
	Amortization of transition
		(asset) obligation		―		―		―		(1)		(1)		(1)		―		―		―
	Amortization of prior service
		cost (benefit)		4		5		5		(16)		(16)		(17)		(47)		(66)		(72)
	Amortization of net actuarial (gain)
		loss		243		399		470		121		153		122		56		95		108
Net periodic benefit cost (benefit)			$	121	$	214	$	324	$	185	$	230	$	180	$	81	$	107	$	116
Settlements, curtailments, special
	termination benefits and other			―		―		26		4		2		4		―		―		―
Net periodic benefit cost (benefit)
	after settlements, curtailments,
	special termination benefits
	and other		$	121	$	214	$	350	$	189	$	232	$	184	$	81	$	107	$	116
Other changes in plan assets and
	benefit obligations recognized in
	other comprehensive (income)
	loss
	Amortization of transition (asset)
		obligation		―		―		―		1		1		1		―		―		―
	Prior service cost (benefit)			(266)		―		―		3		3		(7)		―		(20)		―
	Amortization of prior service cost
		(benefit)		(4)		(5)		(5)		16		16		17		47		66		72
	Net actuarial (gain) loss			2,167		(743)		(470)		592		(294)		707		358		(313)		(33)
	Amortization of net actuarial (gain)
		loss		(243)		(399)		(470)		(121)		(153)		(122)		(56)		(95)		(108)
	Foreign currency			―		―		―		(215)		(47)		24		(1)		(2)		(1)
Total recognized in other
	comprehensive (income) loss		$	1,654	$	(1,147)	$	(945)	$	276	$	(474)	$	620	$	348	$	(364)	$	(70)
Total recognized in net periodic
	benefit cost (benefit) and other
	comprehensive (income) loss		$	1,775	$	(933)	$	(595)	$	465	$	(242)	$	804	$	429	$	(257)	$	46

Amounts expected to be amortized from accumulated other comprehensive income into net periodic benefit costs over the next fiscal year

	Qualified and Non-qualified Pension Benefits
	Qualified and Non-qualified Pension Benefits						Postretirement
(Millions)	United States		International		Benefits
Amortization of transition (asset) obligation	$	―	$	(1)	$	―
Amortization of prior service cost (benefit)		(24)		(15)		(33)
Amortization of net actuarial (gain) loss		408		154		77
Total amortization expected over the next fiscal year	$	384	$	138	$	44

The Company is in the process of transitioning all current and future retirees in the U.S. postretirement health care benefit plans to the savings account benefits-based plan announced in 2008. The contributions provided by the Company to the health savings accounts increase three percent per year. Therefore, the Company no longer has material exposure to health care cost inflation.

Weighted-average assumptions used to determine net cost for years ended



		Qualified and Non-qualified Pension Benefits												Postretirement
		United States						International						Benefits
		2014		2013		2012		2014		2013		2012		2014		2013		2012

Discount rate		4.98	%	4.14	%	4.15	%	4.02	%	3.78	%	4.58	%	4.83	%	4.00	%	4.04	%
Expected return
	on assets	7.75	%	8.00	%	8.25	%	5.83	%	5.87	%	6.38	%	7.11	%	7.19	%	7.30	%
Compensation rate
	increase	4.00	%	4.00	%	4.00	%	3.35	%	3.31	%	3.52	%	N/A		N/A		N/A

The Company determines the discount rate used to measure plan liabilities as of the December 31 measurement date for the pension and postretirement benefit plans, which is also the date used for the related annual measurement assumptions. The discount rate reflects the current rate at which the associated liabilities could be effectively settled at the end of the year. The Company sets its rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits. Using this methodology, the Company determined a discount rate of 4.10% for pension and 4.07% for postretirement benefits to be appropriate for its U.S. plans as of December 31, 2014, which is a decrease of 0.88 percentage points and 0.76 percentage points, respectively, from the rates used as of December 31, 2013. For the international pension and postretirement plans the discount rates also reflect the current rate at which the associated liabilities could be effectively settled at the end of the year. If the country has a deep market in corporate bonds the Company matches the expected cash flows from the plan either to a portfolio of bonds that generate sufficient cash flow or a notional yield curve generated from available bond information. In countries that do not have a deep market in corporate bonds, government bonds are considered with a risk premium to approximate corporate bond yields.

For the primary U.S. qualified pension plan, the Company's assumption for the expected return on plan assets was 7.75% in 2014. Projected returns are based primarily on broad, publicly traded equity and fixed-income indices and forward-looking estimates of active portfolio and investment management. As of December 31, 2014, the Company's 2015 expected long-term rate of return on U.S. plan assets is 7.75%, unchanged from 2014. The expected return assumption is based on the strategic asset allocation of the plan, long term capital market return expectations and expected performance from active investment management. The 2014 expected long-term rate of return is based on an asset allocation assumption of 26% global equities, with an expected long-term rate of return of 7%; 17% private equities, with an expected long-term rate of return of 12%; 44% fixed-income securities, with an expected long-term rate of return of 4.5%; and 13% absolute return investments independent of traditional performance benchmarks, with an expected long term return of 6.75%. The Company expects additional positive return from active investment management. These assumptions result in a 7.75% expected rate of return on an annualized basis in 2015. The actual net rate of return on plan assets in 2014 was 13.0%. In 2013 the plan earned a rate of return of 6.0% and in 2012 earned a return of 13.6%. The average annual actual return on the plan assets over the past 10 and 25 years has been 8.7% and 10.0%, respectively. Return on assets assumptions for international pension and other post-retirement benefit plans are calculated on a plan-by-plan basis using plan asset allocations and expected long-term rate of return assumptions.

During 2014, the Company contributed $210 million to its U.S. and international pension plans and $5 million to its postretirement plans. During 2013, the Company contributed $476 million to its U.S. and international pension plans and $6 million to its postretirement plans. In 2015, the Company expects to contribute an amount in the range of $100 million to $200 million of cash to its U.S. and international retirement plans. The Company does not have a required minimum cash pension contribution obligation for its U.S. plans in 2015. Future contributions will depend on market conditions, interest rates and other factors.

Future Pension and Postretirement Benefit Payments

The following table provides the estimated pension and postretirement benefit payments that are payable from the plans to participants.


	Qualified and Non-qualified
	Pension Benefits				Postretirement
(Millions)	United States		International		Benefits
2015 Benefit Payments	$	946	$	209	$	127
2016 Benefit Payments		964		226		139
2017 Benefit Payments		983		237		156
2018 Benefit Payments		1,010		256		160
2019 Benefit Payments		1,037		273		162
Next five years		5,381		1,563		860

3M's investment strategy for its pension and postretirement plans is to manage the funds on a going-concern basis. The primary goal of the trust funds is to meet the obligations as required. The secondary goal is to earn the highest rate of return possible, without jeopardizing its primary goal, and without subjecting the Company to an undue amount of contribution risk. Fund returns are used to help finance present and future obligations to the extent possible within actuarially determined funding limits and tax-determined asset limits, thus reducing the potential need for additional contributions from 3M. The investment strategy has used long duration cash bonds and derivative instruments to offset a significant portion of the interest rate sensitivity of U.S. pension liabilities.

Normally, 3M does not buy or sell any of its own securities as a direct investment for its pension and other postretirement benefit funds. However, due to external investment management of the funds, the plans may indirectly buy, sell or hold 3M securities. The aggregate amount of 3M securities are not considered to be material relative to the aggregate fund percentages.

The discussion that follows references the fair value measurements of certain assets in terms of levels 1, 2 and 3. See Note 12 for descriptions of these levels. While the company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

In order to achieve the investment objectives in the U.S. pension plans, the investment policy includes a target strategic asset allocation. The investment policy allows some tolerance around the target in recognition that market fluctuations and illiquidity of some investments may cause the allocation to a specific asset class to vary from the target allocation, potentially for long periods of time. Acceptable ranges have been designed to allow for deviation from strategic targets and to allow for the opportunity for tactical over- and under-weights. The portfolio will normally be rebalanced when the quarter-end asset allocation deviates from acceptable ranges. The allocation is reviewed regularly by the named fiduciary of the plans.

The Company revised the classification of amounts previously presented in the table below for absolute return and long/short equity assets held by the U.S. pension plans as of December 31, 2013. These immaterial revisions reclassified $100 million and $67 million of previously presented absolute return and long/short equity amounts from level 3 to level 2, respectively. The revision to the classification of absolute return assets is also reflected within net transfers into/(out of) level 3 in the later table summarizing changes in the fair values of the U.S. pension plans' level 3 assets for the year ended December 31, 2013. The revision to the classification of long/short equity assets is also reflected within the January 1, 2013 balance in the later table summarizing changes in the fair values of the U.S. pension plans' level 3 assets.

The fair values of the assets held by the U.S. pension plans by asset class are as follows:

			Fair Value Measurements Using Inputs Considered as												Fair Value at
(Millions)			Level 1				Level 2				Level 3				Dec. 31,
Asset Class			2014		2013		2014		2013		2014		2013		2014		2013
Equities
	U.S. equities		$	1,766	$	1,595	$	3	$	3	$	―	$	3	$	1,769	$	1,601
	Non-U.S. equities			1,214		1,324		1		1		―		―		1,215		1,325
	Index funds			―		―		148		151		2		1		150		152
	Long/short equity			―		―		71		67		382		393		453		460
Total Equities			$	2,980	$	2,919	$	223	$	222	$	384	$	397	$	3,587	$	3,538
Fixed Income
	U.S. government securities		$	1,032	$	908	$	590	$	601	$	―	$	―	$	1,622	$	1,509
	Non-U.S. government
		securities		7		20		381		316		―		―		388		336
	Preferred and convertible
		securities		3		―		―		4		―		―		3		4
	U.S. corporate bonds			8		14		2,550		2,046		―		―		2,558		2,060
	Non-U.S. corporate bonds			―		―		478		412		―		―		478		412
	Asset-backed securities			―		―		20		26		―		―		20		26
	Collateralized mortgage
		obligations		―		―		29		28		―		―		29		28
	Private placements			3		―		388		251		―		2		391		253
	Derivative instruments			6		(1)		126		6		―		―		132		5
	Other			―		―		31		37		―		―		31		37
Total Fixed Income			$	1,059	$	941	$	4,593	$	3,727	$	―	$	2	$	5,652	$	4,670
Private Equity
	Buyouts		$	―	$	―	$	―	$	―	$	700	$	737	$	700	$	737
	Derivative instruments			―		―		―		―		(74)		(97)		(74)		(97)
	Direct investments			―		―		―		―		516		467		516		467
	Distressed debt			―		―		―		―		202		211		202		211
	Growth equity			15		21		―		―		183		170		198		191
	Mezzanine			―		―		―		―		116		83		116		83
	Real estate			―		―		―		―		147		156		147		156
	Secondary			―		―		―		―		145		152		145		152
	Venture capital			―		―		―		―		552		548		552		548
Total Private Equity			$	15	$	21	$	―	$	―	$	2,487	$	2,427	$	2,502	$	2,448
Total Absolute Return			$	26	$	―	$	1,141	$	1,175	$	1,006	$	658	$	2,173	$	1,833
Commodities			$	―	$	―	$	―	$	88	$	―	$	―	$	―	$	88
Cash and Cash Equivalents			$	287	$	301	$	617	$	1,017	$	―	$	―	$	904	$	1,318
Total			$	4,367	$	4,182	$	6,574	$	6,229	$	3,877	$	3,484	$	14,818	$	13,895
Other items to reconcile to fair
	value of plan assets														$	(175)	$	(6)
Fair value of plan assets															$	14,643	$	13,889

Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded. Index funds are valued at the net asset value (NAV) as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding. Long/short equity interests are valued using the NAV as determined by the administrator or custodian of the fund. Long/short equity interests, which have a redemption right in the near term and are past any lock-up redemption period, are classified as level 2.

Fixed income includes derivative instruments such as credit default swaps, interest rate swaps and futures contracts. U.S. government and government agency bonds and notes are valued at the closing price reported in the active market in which the individual security is traded. Corporate bonds and notes, asset backed securities and collateralized mortgage obligations are valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks. Private placements are valued by the custodian using recognized pricing services and sources. Swaps and derivative instruments are valued by the custodian using closing market swap curves and market derived inputs.

The private equity portfolio is a diversified mix of direct investments, derivative instruments and partnership interests including buyouts, distressed debt, growth equity, mezzanine, real estate and venture capital investments. Partnership interests are valued using the most recent general partner statement of fair value, updated for any subsequent partnership interests' cash flows or expected changes in fair value. Direct investments are equity co-investments in private companies and projects, the majority of which are power infrastructure investments, which are valued by an independent valuation agent.

Absolute return consists primarily of private partnership interests in hedge funds, hedge fund of funds and bank loan funds. Partnership interests are valued using the NAV as determined by the administrator or custodian of the fund. Generally, hedge fund partnership interests, which have a redemption right in the near term and are past any lock-up redemption period, are classified as level 2. A hedge fund investment was moved from level 3 to level 2 during 2013 because the lock-up redemption period had expired. A hedge fund investment was moved to level 3 during 2014 after the investment was transferred to a new share class with a longer lock-up period.

Commodities consist of commodity-linked notes and commodity-linked derivative contracts designed to deliver investment returns similar to the Goldman Sachs Commodities Index (GSCI) or Bloomberg Commodity index returns. Commodities are valued at closing prices determined by calculation agents for outstanding transactions.

Other items to reconcile to fair value of plan assets include the net of insurance receivables for WG Trading Company, interest receivables, amounts due for securities sold, amounts payable for securities purchased and interest payable.

The following table sets forth a summary of changes in the fair values of the U.S. pension plans' level 3 assets for the years ended December 31, 2014 and 2013:

		Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
		Equities		Fixed Income		Private Equity		Absolute Return		Commodities		Total
(Millions)		Equities		Fixed Income		Private Equity		Absolute Return		Commodities		Total
Beginning balance at Jan. 1, 2013		$	421	$	2	$	2,136	$	865	$	107	$	3,531
Net transfers into / (out of) level 3			―		―		―		(101)		―		(101)
Purchases, sales, issuances, and
	settlements, net		(92)		―		54		(104)		(96)		(238)
Realized gain / (loss)			10		―		126		46		(1)		181
Change in unrealized gains / (losses)
	relating to instruments sold during
	the period		(5)		―		3		(30)		(10)		(42)
Change in unrealized gains / (losses)
	relating to instruments still held at
	the reporting date		63		―		108		(18)		―		153
Ending balance at Dec. 31, 2013			397		2		2,427		658		―		3,484
Net transfers into / (out of) level 3			―		―		―		100		―		100
Purchases, sales, issuances, and
	settlements, net		(43)		(1)		(260)		205		―		(99)
Realized gain / (loss)			2		―		185		―		―		187
Change in unrealized gains / (losses)
	relating to instruments sold during
	the period		(12)		―		64		2		―		54
Change in unrealized gains / (losses)
	relating to instruments still held at
	the reporting date		40		(1)		71		41		―		151
Ending balance at Dec. 31, 2014		$	384	$	―	$	2,487	$	1,006	$	―	$	3,877

Outside the U.S., pension plan assets are typically managed by decentralized fiduciary committees. The disclosure below of asset categories is presented in aggregate for over 70 defined benefit plans in 27 countries; however, there is significant variation in asset allocation policy from country to country. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment allocation process in each country. The Company provides standard funding and investment guidance to all international plans with more focused guidance to the larger plans.

Each plan has its own strategic asset allocation. The asset allocations are reviewed periodically and rebalanced when necessary.

The fair values of the assets held by the international pension plans by asset class are as follows:

		Fair Value Measurements Using Inputs Considered as												Fair Value at
(Millions)		Level 1				Level 2				Level 3				Dec. 31,
Asset Class		2014		2013		2014		2013		2014		2013		2014		2013
Equities
	Growth equities	$	672	$	733	$	176	$	190	$	―	$	―	$	848	$	923
	Value equities		595		653		23		14		―		―		618		667
	Core equities		19		19		642		668		4		5		665		692
Total Equities		$	1,286	$	1,405	$	841	$	872	$	4	$	5	$	2,131	$	2,282
Fixed Income
	Domestic government debt	$	87	$	199	$	542	$	539	$	3	$	3	$	632	$	741
	Foreign government debt		45		28		816		657		―		1		861		686
	Corporate debt securities		1		1		615		638		5		20		621		659
	Mortgage backed debt		―		―		82		75		―		―		82		75
	Other debt obligations		―		―		708		391		11		13		719		404
Total Fixed Income		$	133	$	228	$	2,763	$	2,300	$	19	$	37	$	2,915	$	2,565
Private Equity
	Private equity funds	$	―	$	―	$	―	$	―	$	23	$	22	$	23	$	22
	Real estate		3		3		73		87		55		53		131		143
Total Private Equity		$	3	$	3	$	73	$	87	$	78	$	75	$	154	$	165
Absolute Return
	Hedge funds	$	―	$	―	$	95	$	62	$	22	$	56	$	117	$	118
	Insurance		―		―		―		―		476		492		476		492
	Derivatives		―		2		(4)		3		―		―		(4)		5
	Other		―		―		13		2		3		2		16		4
Total Absolute Return		$	―	$	2	$	104	$	67	$	501	$	550	$	605	$	619
Cash and Cash Equivalents		$	161	$	112	$	32	$	14	$	―	$	―	$	193	$	126
Total		$	1,583	$	1,750	$	3,813	$	3,340	$	602	$	667	$	5,998	$	5,757
Other items to reconcile to fair
	value of plan assets													$	(41)	$	1
Fair value of plan assets														$	5,957	$	5,758

Equities consist primarily of mandates in public equity securities managed to the Morgan Stanley Capital All Country World Index. Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded.

Fixed Income investments include domestic and foreign government, corporate, mortgage backed and other debt. Governments, corporate bonds and notes and mortgage backed securities are valued at the closing price reported if traded on an active market or at yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks.

Private equity funds consist of both active and passive mandates. Partnership interests are valued using the most recent general partner statement of fair value, updated for any subsequent partnership interests' cash flows or expected changes in fair value. Real estate consists of property funds and REITS (Real Estate Investment Trusts). Property funds are valued using the most recent partnership statement of fair value, updated for any subsequent partnership interests' cash flows. REITS are valued at the closing price reported in the active market in which it is traded.

Absolute return consists of private partnership interests in hedge funds, insurance contracts, derivative instruments, hedge fund of funds, and bank loan funds. Insurance consists of insurance contracts, which are valued using cash surrender values which is the amount the plan would receive if the contract was cashed out at year end. Derivative instruments consist of interest rate swaps that are used to help manage risks. Hedge funds are valued at the NAV as determined by the independent administrator or custodian of the fund. Generally, hedge fund partnership interests, which have a redemption right in the near term and are past any lock-up redemption period, are classified as level 2. In 2014, a hedge fund investment was moved to level 3 after the investment was transferred to a new share class with a longer lock-up period. Another hedge fund was moved from level 3 to level 2 during 2014 because the lock-up redemption period had expired.

Other items to reconcile to fair value of plan assets include the net of interest receivables, amounts due for securities sold, amounts payable for securities purchased and interest payable.

The following table sets forth a summary of changes in the fair values of the international pension plans' level 3 assets for the years ended December 31, 2014 and 2013:

		Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
		Equities		Fixed Income		Private Equity		Absolute Return		Total
(Millions)		Equities		Fixed Income		Private Equity		Absolute Return		Total
Beginning balance at Jan. 1, 2013		$	5	$	36	$	71	$	485	$	597
Net transfers into / (out of) level 3			―		―		―		―		―
Foreign currency exchange			―		(2)		(1)		9		6
Purchases, sales, issuances, and
	settlements, net		―		(2)		1		50		49
Realized gain / (loss)			―		―		2		―		2
Change in unrealized gains / (losses)
	relating to instruments sold during
	the period		―		―		―		1		1
Change in unrealized gains / (losses)
	relating to instruments still held at
	the reporting date		―		5		2		5		12
Ending balance at Dec. 31, 2013			5		37		75		550		667
Net transfers into / (out of) level 3			―		―		―		(32)		(32)
Foreign currency exchange			(1)		(4)		(6)		(64)		(75)
Purchases, sales, issuances, and
	settlements, net		―		(14)		(2)		28		12
Realized gain / (loss)			―		―		2		―		2
Change in unrealized gains / (losses)
	relating to instruments sold during
	the period		―		(1)		(1)		―		(2)
Change in unrealized gains / (losses)
	relating to instruments still held at
	the reporting date		―		1		10		19		30
Ending balance at Dec. 31, 2014		$	4	$	19	$	78	$	501	$	602

In order to achieve the investment objectives in the U.S. postretirement plan, the investment policy includes a target strategic asset allocation. The investment policy allows some tolerance around the target in recognition that market fluctuations and illiquidity of some investments may cause the allocation to a specific asset class to vary from the target allocation, potentially for long periods of time. Acceptable ranges have been designed to allow for deviation from strategic targets and to allow for the opportunity for tactical over- and under-weights. The portfolio will normally be rebalanced when the quarter-end asset allocation deviates from acceptable ranges. The allocation is reviewed regularly by the named fiduciary of the plan.

The fair values of the assets held by the postretirement benefit plans by asset class are as follows:

			Fair Value Measurements Using Inputs Considered as												Fair Value at
(Millions)			Level 1				Level 2				Level 3				Dec. 31,
Asset Class			2014		2013		2014		2013		2014		2013		2014		2013
Equities
	U.S. equities		$	565	$	552	$	―	$	―	$	―	$	―	$	565	$	552
	Non-U.S. equities			56		58		―		―		―		―		56		58
	Index funds			―		―		38		44		―		―		38		44
	Long/short equity			―		―		3		―		14		16		17		16
Total Equities			$	621	$	610	$	41	$	44	$	14	$	16	$	676	$	670
Fixed Income
	U.S. government securities		$	68	$	62	$	186	$	202	$	―	$	―	$	254	$	264
	Non-U.S. government
		securities		―		1		17		14		―		―		17		15
	U.S. corporate bonds			―		―		119		96		―		―		119		96
	Non-U.S. corporate bonds			―		―		24		21		―		―		24		21
	Asset-backed securities			―		―		7		9		―		―		7		9
	Collateralized mortgage
		obligations		―		―		5		5		―		―		5		5
	Private placements			―		―		25		16		―		―		25		16
	Derivative instruments			―		―		5		―		―		―		5		―
	Other			―		―		1		1		―		―		1		1
Total Fixed Income			$	68	$	63	$	389	$	364	$	―	$	―	$	457	$	427
Private Equity
	Buyouts		$	―	$	―	$	―	$	―	$	56	$	58	$	56	$	58
	Derivative instruments			―		―		―		―		(3)		(3)		(3)		(3)
	Direct investments			―		―		―		―		19		16		19		16
	Distressed debt			―		―		―		―		8		7		8		7
	Growth equity			1		1		―		―		7		6		8		7
	Mezzanine			―		―		―		―		4		3		4		3
	Real estate			―		―		―		―		5		5		5		5
	Secondary			―		―		―		―		5		5		5		5
	Venture capital			―		―		―		―		58		64		58		64
Total Private Equity			$	1	$	1	$	―	$	―	$	159	$	161	$	160	$	162
Total Absolute Return			$	1	$	―	$	41	$	37	$	37	$	26	$	79	$	63
Commodities			$	―	$	―	$	―	$	3	$	―	$	―	$	―	$	3
Cash and Cash Equivalents			$	33	$	35	$	23	$	34	$	―	$	―	$	56	$	69
Total			$	724	$	709	$	494	$	482	$	210	$	203	$	1,428	$	1,394
Other items to reconcile to fair
	value of plan assets														$	8	$	11
Fair value of plan assets															$	1,436	$	1,405

Publicly traded equities are valued at the closing price reported in the active market in which the individual securities are traded. Index funds are valued at the NAV as determined by the custodian of the fund. The NAV is based on the fair value of the underlying assets owned by the fund, minus its liabilities then divided by the number of units outstanding. Long/short equity interests are valued using the NAV as determined by the administrator or custodian of the fund. Long/short equity interests, which have a redemption right in the near term and are past any lock-up redemption period, are classified as level 2. A long/short equity interest was moved from level 3 to level 2 during 2014 because the lock-up redemption period had expired.

Fixed income includes derivative investments such as credit default swaps, interest rate swaps and futures contracts that are used to help manage risks. U.S. government and government agency bonds and notes are valued at the closing price reported in the active market in which the individual security is traded. Corporate bonds and notes, asset backed securities and collateralized mortgage obligations are valued at either the yields currently available on comparable securities of issuers with similar credit ratings or valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable such as credit and liquidity risks. Private placements are valued by the custodian using recognized pricing services and sources. Swaps and derivative instruments are valued by the custodian using market swap curves and market derived inputs.

Absolute return primarily consists of private partnership interests in hedge funds, hedge fund of funds and bank loan funds. Partnership interests are valued using the NAV as determined by the independent administrator or custodian of the fund. Generally, hedge fund partnership interests, which have a redemption right in the near term and are past any lock-up redemption period, are classified as level 2. In 2014, a hedge fund investment was moved to level 3 after the investment was transferred to a new share class with a longer lock-up period. Another hedge fund was moved from level 3 to level 2 during 2014 because the lock-up redemption period had expired. The hedge fund level changes net to zero in the table below.

Commodities consist of commodity-linked notes and commodity-linked derivative contracts designed to deliver investment returns similar to the GSCI or Bloomberg Commodity index returns. Commodities are valued at closing prices determined by calculation agents for outstanding transactions.

Other items to reconcile to fair value of plan assets include the net of interest receivables, amounts due for securities sold, foreign currency fluctuations, amounts payable for securities purchased and interest payable.

The following table sets forth a summary of changes in the fair values of the postretirement plans' level 3 assets for the years ended December 31, 2014 and 2013:

		Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
		Equities		Fixed Income		Private Equity		Absolute Return		Commodities		Total
(Millions)		Equities		Fixed Income		Private Equity		Absolute Return		Commodities		Total
Beginning balance at Jan. 1, 2013		$	16	$	―	$	170	$	28	$	4	$	218
Net transfers into / (out of) level 3			―		―		―		―		―		―
Purchases, sales, issuances, and
	settlements, net		(3)		―		(27)		(4)		(4)		(38)
Realized gain / (loss)			―		―		10		2		―		12
Change in unrealized gains / (losses)
	relating to instruments sold during
	the period		―		―		(3)		(1)		―		(4)
Change in unrealized gains / (losses)
	relating to instruments still held at
	the reporting date		3		―		11		1		―		15
Ending balance at Dec. 31, 2013			16		―		161		26		―		203
Net transfers into / (out of) level 3			(2)		―		―		―		―		(2)
Purchases, sales, issuances, and
	settlements, net		(2)		―		(45)		8		―		(39)
Realized gain / (loss)			―		―		29		―		―		29
Change in unrealized gains / (losses)
	relating to instruments sold during
	the period		―		―		(5)		―		―		(5)
Change in unrealized gains / (losses)
	relating to instruments still held at
	the reporting date		2		―		19		3		―		24
Ending balance at Dec. 31, 2014		$	14	$	―	$	159	$	37	$	―	$	210