The Company and certain of its subsidiaries provide pension, health care and life insurance defined benefits to eligible retired employees, spouses and other eligible dependents through various domestic and foreign plans. The effect of its foreign pension and other postretirement benefit plans is immaterial to the Company's results of operations, liquidity and financial position. The Company froze its defined benefit postretirement medical plan in 2013 and its primary domestic pension plans in 2009.

As further discussed in Note 23, the Company and the Cigna Pension Plan are defendants in a class action lawsuit. When the plan amendment related to this litigation is adopted, the pension benefit obligation will be updated to reflect benefits resulting from this litigation.

The Company measures the assets and liabilities of its domestic pension and other postretirement benefit plans as of December 31. The following table summarizes the projected benefit obligations and assets related to the Company's domestic and international pension and other postretirement benefit plans as of, and for the year ended, December 31:

		Pension				Other Postretirement
		Benefits				Benefits
(In millions)	2015		2014		2015		2014
Change in benefit obligation
Benefit obligation, January 1	$	5,269	$	4,700	$	335	$	323
Service cost		2		2		-		-
Interest cost		194		206		11		12
(Gain) loss from past experience		(239)		679		(19)		31
Effect of plan amendment		-		2		-		-
Benefits paid from plan assets		(270)		(291)		(3)		(5)
Benefits paid — other		(22)		(29)		(29)		(26)
Benefit obligation, December 31		4,934		5,269		295		335
Change in plan assets
Fair value of plan assets, January 1		4,170		4,089		12		16
Actual return on plan assets		75		257		(1)		1
Benefits paid		(270)		(291)		(3)		(5)
Contributions		6		115		-		-
Fair value of plan assets, December 31		3,981		4,170		8		12
Funded Status	$	(953)	$	(1,099)	$	(287)	$	(323)

The postretirement benefits liability adjustment included in accumulated other comprehensive loss consisted of the following as of December 31:

	Pension				Other
	Benefits				Postretirement Benefits
(In millions)	2015		2014		2015		2014
Unrecognized net gain (loss)	$	(2,201)	$	(2,317)	$	1	$	(16)
Unrecognized prior service cost		(7)		(7)		52		54
Postretirement benefits liability adjustment	$	(2,208)	$	(2,324)	$	53	$	38

During 2015, the unfunded liability for the Company's pension and other postretirement benefit plans decreased by $182 million. In addition, the postretirement benefits liability adjustment (recorded in accumulated other comprehensive income) decreased by $131 million pre-tax ($85 million after-tax) resulting in an increase to shareholders' equity. These decreases were primarily due to an increase in the discount rate and a change in the mortality assumption (as discussed further in the assumptions section of this note).

Pension benefits. The Company funds its qualified pension plans at least at the minimum amount required by the Employee Retirement Income Security Act of 1974 and the Pension Protection Act of 2006. For 2016, the Company does not expect to make any contributions to the qualified pension plans because none are required. Future years' contributions will ultimately be based on a wide range of factors including but not limited to asset returns, discount rates, and funding targets.

(In millions)	2015		2014		2013
Service cost	$	2	$	2	$	3
Interest cost		194		206		181
Expected long-term return on plan assets		(267)		(264)		(272)
Amortization of:
Net loss from past experience		70		57		74
Settlement loss		-		6		-
Net pension cost	$	(1)	$	7	$	(14)

The Company expects to recognize pre-tax losses of $66 million in 2016 from amortization of the net loss from past experience. This estimate is based on a weighted average amortization period for the frozen and inactive plans that is based on the average expected remaining life of plan participants of approximately 28 years.

Plan assets. The Company's current target investment allocation percentages (50% fixed income, 25% public equity securities, and 25% in other investments, including securities partnerships, hedge funds and real estate) are developed by management as guidelines, although the fair values of each asset category are expected to vary as a result of changes in market conditions. The Company would expect to further reduce the allocation to equity securities and increase the allocation to fixed income investments as funding levels improve.

As of December 31, 2015, pension plan assets included $3.6 billion invested in the separate accounts of Connecticut General Life Insurance Company and Life Insurance Company of North America, that are subsidiaries of the Company, as well as an additional $332 million invested directly in funds offered by the buyer of the retirement benefits business.

The fair values of plan assets by category and by the fair value hierarchy as defined by GAAP are as follows. See Note 10 for further details regarding how the Company determines fair value, including the level within the fair value hierarchy and the procedures the Company uses to validate fair value measurements.

December 31, 2015
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Plan assets at fair value:
Fixed maturities:
Federal government and agency	$	1	$	1	$	-	$	2
Corporate		-		1,026		41		1,067
Mortgage and other asset-backed		-		19		2		21
Fund investments and pooled separate accounts⁽¹⁾		-		553		3		556
Total fixed maturities		1		1,599		46		1,646
Equity securities:
Domestic		585		6		86		677
International, including funds and pooled separate accounts⁽¹⁾		18		358		7		383
Total equity securities		603		364		93		1,060
Real estate, including pooled separate accounts⁽¹⁾		-		-		362		362
Commercial mortgage loans		-		-		131		131
Securities partnerships		-		-		406		406
Hedge funds		-		-		256		256
Guaranteed deposit account contract		-		-		58		58
Cash equivalents and other current assets, net		-		62		-		62
Total plan assets at fair value	$	604	$	2,025	$	1,352	$	3,981

(1) A pooled separate account has several participating benefit plans and each owns a share of the total pool of investments.

December 31, 2014
(In millions)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Plan assets at fair value:
Fixed maturities:
Federal government and agency	$	1	$	1	$	-	$	2
Corporate		-		1,025		35		1,060
Mortgage and other asset-backed		-		21		3		24
Fund investments and pooled separate accounts⁽¹⁾		-		744		3		747
Total fixed maturities		1		1,791		41		1,833
Equity securities:
Domestic		640		5		73		718
International, including funds and pooled separate accounts⁽¹⁾		131		241		7		379
Total equity securities		771		246		80		1,097
Real estate, including pooled separate accounts⁽¹⁾		-		-		331		331
Commercial mortgage loans		-		-		110		110
Securities partnerships		-		-		357		357
Hedge funds		-		-		283		283
Guaranteed deposit account contract		-		-		44		44
Cash equivalents and other current assets, net		-		115		-		115
Total plan assets at fair value	$	772	$	2,152	$	1,246	$	4,170

(1) A pooled separate account has several participating benefit plans and each owns a share of the total pool of investments.

Plan assets in Level 1 include exchange-listed equity securities. Level 2 assets primarily include:

Plan assets classified in Level 3 include investments primarily in securities partnerships, equity real estate and hedge funds generally valued based on the pension plan's ownership share of the equity of the investee including changes in the fair values of its underlying investments.

The following table summarizes the changes in pension plan assets classified in Level 3 for the years ended December 31, 2015 and December 31, 2014. Actual return on plan assets in this table may include changes in fair value that are attributable to both observable and unobservable inputs.

(In millions)	Fixed Maturities & Equity Securities		Real Estate & Mortgage Loans		Securities Partnerships		Hedge Funds		Guaranteed Deposit Account Contract		Total

Balance at January 1, 2015	$	121	$	441	$	357	$	283	$	44	$	1,246
Actual return on plan assets:
Assets still held at the reporting date		(3)		58		50		4		1		110
Assets sold during the period		-		-		-		-		-		-
Total actual return on plan assets		(3)		58		50		4		1		110
Purchases, sales, settlements, net		14		(6)		(1)		(31)		13		(11)
Transfers into/out of Level 3		7		-		-		-		-		7
Balance at December 31, 2015	$	139	$	493	$	406	$	256	$	58	$	1,352

(In millions)	Fixed Maturities & Equity Securities		Real Estate & Mortgage Loans		Securities Partnerships		Hedge Funds		Guaranteed Deposit Account Contract		Total

Balance at January 1, 2014	$	74	$	339	$	304	$	360	$	44	$	1,121
Actual return on plan assets:
Assets still held at the reporting date		1		41		40		17		2		101
Assets sold during the period		-		-		-		-		-		-
Total actual return on plan assets		1		41		40		17		2		101
Purchases, sales, settlements, net		44		61		13		(94)		(2)		22
Transfers into/out of Level 3		2		-		-		-		-		2
Balance at December 31, 2014	$	121	$	441	$	357	$	283	$	44	$	1,246

Other postretirement benefits. The Company's pre-tax expense for these plans was $8 million for 2015, $9 million for 2014 and $(11) million for 2013. The 2013 benefit was primarily due to a pre-tax curtailment gain of $19 million resulting from the freeze of the postretirement medical plan. Changes in the estimated rate of future increases in the per capital cost of health care benefits would have no material effect on postretirement benefit costs or obligations.

Assumptions for pension and other postretirement benefit plans. Management determined the present value of the projected benefit obligation and the accumulated other postretirement benefit obligation and related benefit costs based on the following weighted average assumptions as of and for the years ended December 31:

	2015	2014
Discount rate:
Pension benefit obligation	4.17%	3.75%
Other postretirement benefit obligation	3.89%	3.50%
Pension benefit cost	3.75%	4.50%
Other postretirement benefit cost	3.50%	4.00%
Expected long-term return on plan assets:
Pension benefit cost	7.25%	7.25%
Other postretirement benefit cost	5.00%	5.00%

The Society of Actuaries mortality table and projection scale published in the fourth quarter of 2014 was adopted for the Company's defined benefit pension and other postretirement plans as of December 31, 2014. We used the updated table because the Company's mortality experience over the past several years closely matched the updated mortality table based on a study conducted in 2014. In the fourth quarter of 2015, the Society of Actuaries published an updated improvement scale based on two additional years of experience. The Company adopted the updated improvement scale as of December 31, 2015 after reviewing its experience compared with the updated improvement scale.

In measuring the benefit obligation, the Company sets discount rates by applying actual annualized yields at various durations from a discount rate curve to the expected cash flows of the pension and other postretirement benefits liabilities. The discount rate curve is constructed using an array of bonds in various industries throughout the domestic market for high quality bonds, but only selects those for the curve that have an above average return at each duration. The bond portfolio used to construct the curve is monitored to ensure that only high quality issues are included. The Company believes that this curve is representative of the yields that the Company is able to achieve in its plan asset investment strategy. As part of its discount rate setting process, the Company reviewed alternative indices and determined that they were not materially different than the result produced by the curve used.

Expected long-term rates of return on plan assets were developed considering actual long-term historical returns, expected long-term market conditions, plan asset mix and management's investment strategy that continues a significant allocation to domestic and foreign equity securities as well as real estate, securities partnerships and hedge funds. Expected long-term market conditions take into consideration certain key macroeconomic trends including expected domestic and foreign GDP growth, employment levels and inflation.

To measure pension costs, the Company uses a market-related asset valuation for domestic pension plan assets invested in non-fixed income investments. The market-related value of these pension assets recognizes the difference between actual and expected long-term returns in the portfolio over 5 years, a method that reduces the short-term impact of market fluctuations on pension cost. At December 31, 2015, the market-related asset value was approximately $3.9 billion compared with a market value of approximately $4.0 billion.

The Company sponsors a 401(k) plan in which the Company matches a portion of employees' pre-tax contributions. Participants in the plan may invest in various funds that invest in the Company's common stock, several diversified stock funds, a bond fund or a fixed-income fund. In conjunction with the action to freeze the domestic defined benefit pension plans, effective January 1, 2010, the Company increased its matching contributions to 401(k) plan participants.

The Company may elect to increase its matching contributions if the Company's annual performance meets certain targets. The Company's expense for these plans was $106 million for 2015, $98 million for 2014 and $91 million for 2013.