Pension, Other Post-employment Benefits and Employee Benefit Plans.

Federal-Mogul, ARI and Viskase each sponsor several defined benefit pension plans (the ''Pension Benefits'') (and, in the case of Viskase, its pension plans include defined contribution plans). Additionally, Federal-Mogul, ARI and Viskase each sponsors health care and life insurance benefits (''Other Post-Employment Benefits'') for certain employees and retirees around the world. The Pension Benefits are funded based on the funding requirements of federal and international laws and regulations, as applicable, in advance of benefit payments and the Other Benefits as benefits are provided to participating employees. As prescribed by applicable U.S. GAAP, Federal-Mogul, ARI and Viskase each uses, as applicable, appropriate actuarial methods and assumptions in accounting for its defined benefit pension plans, non-pension post-employment benefits, and disability, early retirement and other post-employment benefits. The measurement date for all defined benefit plans is December 31 of each year.

Components of net periodic benefit cost (credit) for the years ended December 31, 2013, 2012 and 2011 are as follows:



	Pension Benefits									Other Post-Employment Benefits
	Year Ended December 31,									Year Ended December 31,
	2013			2012			2011			2013			2012			2011
	(in millions)
Service cost	$	16		$	30		$	29		$	—		$	1		$	1
Interest cost	69			77			83			11			14			18
Expected return on plan assets	(70		)	(62		)	(67		)	—			—			—
Amortization of actuarial losses	27			39			26			6			2			1
Amortization of prior service credit	—			1			—			(9		)	(14		)	(16		)
Settlement loss (gain)	1			(1		)	—			—			—			—
Curtailment gain	—			(1		)	—			(40		)	(51		)	(1		)
	$	43		$	83		$	71		$	(32	)	$	(48	)	$	3

Automotive

The following provides disclosures for our Automotive segment's benefit obligations, plan assets, funded status, recognition in the consolidated balance sheets and inputs and valuation assumptions:



	Pension Benefits												Other Post-Employment Benefits
	United States Plans						Non-U.S. Plans						Other Post-Employment Benefits
	2013			2012			2013			2012			2013			2012
	(in millions)
Change in benefit obligation:
Benefit obligation, beginning of year	$	1,298		$	1,227		$	474		$	362		$	395		$	350
Service cost	4			21			12			9			—			1
Interest cost	47			53			14			16			11			14
Employee contributions	—			—			—			—			1			—
Benefits paid	(64		)	(62		)	(28		)	(21		)	(28		)	(29		)
Medicare subsidies received	—			—			—			—			3			3
Plan amendments	—			—			—			1			—			(16		)
Curtailments	—			(16		)	(1		)	—			(1		)	—
Settlements	—			(4		)	—			—			—			—
Contractual termination benefit	—			6			—			—			—			—
Actuarial losses and changes in actuarial assumptions	(101		)	98			(25		)	94			(43		)	75
Net transfers (out) in	—			(25		)	(11		)	3			(1		)	(3		)
Currency translation	—			—			15			10			(2		)	—
Benefit obligation, end of year	1,184			1,298			450			474			335			395

Change in plan assets:
Fair value of plan assets, beginning of year	778			670			55			48			—			—
Actual return on plan assets	138			82			2			3			—			—
Employee contributions	—			—			—			—			1			—
Company contributions	60			93			24			24			24			26
Benefits paid	(64		)	(62		)	(28		)	(21		)	(28		)	(29		)
Expenses	(3		)	(5		)	—			—			—			—
Medicare subsidies received	—			—			—			—			3			3
Currency translation	—			—			2			1			—			—
Fair value of plan assets, end of year	909			778			55			55			—			—
Funded status of the plan	$	(275	)	$	(520	)	$	(395	)	$	(419	)	$	(335	)	$	(395	)

Amounts recognized in the consolidated balance sheets:
Net liability recognized	$	(275	)	$	(520	)	$	(395	)	$	(419	)	$	(335	)	$	(395	)

Amounts recognized in accumulated other comprehensive loss, inclusive of tax impacts:
Net actuarial loss	$	242		$	435		$	81		$	107		$	63		$	113
Prior service cost (credit)	—			—			3			4			(28		)	(75		)
Total	$	242		$	435		$	84		$	111		$	35		$	38

U. S. Pension Plan

In the fourth quarter of 2012, Federal-Mogul froze contributions credits under its U.S. qualified pension plan for salaried and non-union hourly employees. The elimination of benefit accruals related to participants' future service is treated as a curtailment and is shown as a $16 million reduction to the benefit obligation.

U.S. Welfare Benefit Plan

In the second quarter of 2013, Federal-Mogul ceased operations at one of its U.S. manufacturing locations. The resulting reduction in the average remaining future service period to the full eligibility date of the remaining active plan participants in Federal-Mogul's U.S. Welfare Benefit Plan triggered the recognition of an OPEB curtailment gain of $19 million, which is included as a reduction to selling, general and administrative in the consolidated statements of operations, for the year ended December 31, 2013. Additionally, in the third quarter of 2013, Federal-Mogul completed the sale of its fuel manufacturing facility and research and development center located in the U.S., resulting in the termination of certain employees that participated in Federal-Mogul's U.S. Welfare Benefit Plan. The resulting reduction in the average remaining future service period to the full eligibility date of the remaining active plan participants in Federal-Mogul's U.S. Welfare Benefit Plan triggered the recognition of an additional OPEB curtailment gain of $19 million, which is included in the determination of net loss on disposition of assets within other income, net in the consolidated statements of operations for the year ended December 31, 2013. Our Automotive segment recorded aggregate OPEB curtailment gains of $38 million for the year ended December 31, 2013.

In third quarter of 2012, as a result of contract negotiations with a union at one of Federal-Mogul's U.S. manufacturing locations, the benefits under the U.S. Welfare Benefit Plan were eliminated for the location's active participants. Since this plan change reduced benefits attributable to employee service already rendered, it was treated as a negative plan amendment, which created a $13 million prior service credit in accumulated other comprehensive income (“AOCI”). The corresponding reduction in the average remaining future service period to the full eligibility date also triggered the recognition of a $51 million OPEB curtailment gain which was recognized in the consolidated statements of operations during the third quarter of 2012. It should be noted that the calculation of the curtailment excluded the newly created prior service credit.

In December 2011, Federal-Mogul ceased operations at one of its U.S. manufacturing locations. The resulting reduction in the average remaining future service period to the full eligibility date of the remaining active plan participants in Federal-Mogul's U.S. Welfare Benefit Plan triggered the recognition of a $1 million curtailment gain which was recognized in the consolidated statements of operations during the fourth quarter of 2011.

Weighted-average assumptions used to determine the benefit obligation as of December 31, 2013 and 2012:



	Pension Benefits								Other Post-Employment Benefits
	United States Plans				Non-U.S. Plans				Other Post-Employment Benefits
	December 31,								December 31,
	2013		2012		2013		2012		2013		2012
	(in millions)
Discount rate	4.55	%	3.70	%	3.49	%	2.99	%	4.45	%	3.60	%
Rate of compensation increase	N/A		N/A		3.17	%	3.13	%	N/A		N/A

Weighted-average assumptions used to determine net periodic benefit cost (credit) for the years ended December 31, 2013 and 2012:



	Pension Benefits								Other Post-Employment Benefits
	United States Plans				Non-U.S. Plans				Other Post-Employment Benefits
	Year Ended December 31,								Year Ended December 31,
	2013		2012		2013		2012		2013		2012
	(in millions)
Discount rate	3.70	%	4.50	%	2.99	%	4.69	%	3.60	%	4.45	%
Expected return on plan assets	7.45	%	7.60	%	4.62	%	5.27	%	N/A		N/A
Rate of compensation increase	N/A		3.50	%	3.13	%	3.16	%	N/A		N/A

Federal-Mogul evaluates its discount rate assumption annually as of December 31 for each of its retirement-related benefit plans based upon the yield of high quality, fixed-income debt instruments, the maturities of which correspond to expected benefit payment dates.

Federal-Mogul's expected return on assets is established annually through analysis of anticipated future long-term investment performance for the plan based upon the asset allocation strategy. While the study gives appropriate consideration to recent fund performance and historical returns, the assumption is primarily a long-term prospective rate.

The U.S. investment strategy mitigates risk by incorporating diversification across appropriate asset classes to meet the plan's objectives. It is intended to reduce risk, provide long-term financial stability for the plan and maintain funded levels that meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments. Risk assumed is considered appropriate for the return anticipated and consistent with the total diversification of plan assets.

Federal-Mogul's investment strategy, which includes a target asset allocation of 50% equity investments, 25% fixed income investments and 25% in other investment types including hedge funds. Approximately 74% of the U.S. plan assets were invested in actively managed investment funds.

The majority of the assets of the non-U.S. plans are invested through insurance contracts. The insurance contracts guarantee a minimum rate of return. Federal-Mogul has no input into the investment strategy of the assets underlying the contracts, but they are typically heavily invested in active bond markets and are highly regulated by local law. The target asset allocation for the non-U.S. pension plans is 80% insurance contracts, 15% debt investments and 5% equity investments.

Refer to Note 7, “Fair Value Measurements,” for discussion of the fair value of each major category of plan assets, including the inputs and valuation techniques used to develop the fair value measurements of the plans' assets, at December 31, 2013 and 2012.

Information for defined benefit plans with projected benefit obligations in excess of plan assets:



	Pension Benefits								Other Post-Employment Benefits
	United States Plans				Non-U.S. Plans				Other Post-Employment Benefits
	December 31,								December 31,
	2013		2012		2013		2012		2013		2012
	(in millions)
Projected benefit obligation	$	1,184	$	1,298	$	448	$	472	$	335	$	395
Fair value of plan assets	909		778		52		51		—		—

Information for pension plans with accumulated benefit obligations in excess of plan assets:



	Pension Benefits
	United States Plans				Non-U.S. Plans
	December 31,
	2013		2012		2013		2012
	(in millions)
Projected benefit obligation	$	1,184	$	1,298	$	444	$	471
Accumulated benefit obligation	1,184		1,298		409		436
Fair value of plan assets	909		778		49		50

The accumulated benefit obligation for all pension plans was $1,598 million and $1,735 million as of December 31, 2013 and 2012, respectively.

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost over 2014:



	Pension Benefits				Other Post-Employment Benefits
	United States		Non-U.S.		Other Post-Employment Benefits
	(in millions)
Amortization of actuarial losses	$	4	$	5	$	3
Amortization of prior service credit	—		—		(5		)
	$	4	$	5	$	(2	)

The assumed health care and drug cost trend rates used to measure next year's post-employment healthcare benefits are as follows:



	Other Post-Employment Benefits
	2013	2012
Health care cost trend rate	6.88%	7.25%
Ultimate health care cost trend rate	5.00%	5.00%
Year ultimate health care cost trend rate reached	2018	2018

Drug cost trend rate	7.81%	8.38%
Ultimate drug cost trend rate	5.00%	5.00%
Year ultimate drug cost trend rate reached	2018	2018

The assumed health care cost trend rate has a significant impact on the amounts reported for OPEB plans. The following table illustrates the sensitivity to a change in the assumed health care cost trend rate:



	Total Service and Interest Cost			APBO
	(in millions)
100 basis point (“bp”) increase in health care cost trend rate	$	1		$	26
100 bp decrease in health care cost trend rate	(1		)	(23		)

The following table illustrates the sensitivity to a change in certain assumptions for projected benefit obligations (“PBO”), associated expense and other comprehensive loss (“OCL”). The changes in these assumptions have no impact on Federal-Mogul's 2014 funding requirements.



	Pension Benefits																		Other Post-Employment Benefits
	United States Plans									Non-U.S. Plans									Other Post-Employment Benefits
	Change in 2014 expense			Change in PBO			Change in accumulated OCL			Change in 2014 expense			Change in PBO			Change in accumulated OCL			Change in 2014 expense	Change in PBO
	(in millions)
25 bp decrease in discount rate	$	1		$	28		$	(28	)	$	1		$	14		$	(14	)	—	$	7
25 bp increase in discount rate	(1		)	(27		)	27			(1		)	(13		)	13			—	(7		)
25 bp decrease in return on assets rate	2			—			—			—			—			—			—	—
25 bp increase in return on assets rate	(2		)	—			—			—			—			—			—	—

Federal-Mogul's projected benefit payments from the plans are estimated as follows:



	Pension Benefits				Other Post-Employment Benefits
Years	United States Plans		Non-U.S. Plans		Other Post-Employment Benefits
	(in millions)
2014	$	82	$	25	$	28
2015	82		23		28
2016	84		24		27
2017	83		23		27
2018	86		26		27
2019-2023	435		134		120

Federal-Mogul expects to contribute approximately $78 million to its pension plans in fiscal 2014.

Federal-Mogul also maintains certain defined contribution pension plans for eligible employees. Effective January 1, 2013, Federal-Mogul amended its U.S. defined contribution plan to allow for an enhanced company match and company provided age-based contributions for eligible U.S. salaried and non-union hourly employees. The total expenses attributable to Federal-Mogul's defined contribution savings plan were $42 million, $23 million and $23 million for the years ended December 31, 2013, 2012 and 2011, respectively. The amounts contributed to defined contribution pension plans include contributions to multi-employer plans of $1 million for each of the years ended December 31, 2013, 2012 and 2011.

Other Benefits

Federal-Mogul accounts for benefits to former or inactive employees paid after employment but before retirement pursuant to FASB ASC Topic 712, Compensation - Nonretirement Post-employment Benefits. The liabilities for such U.S. and European post-employment benefits were $29 million and $34 million at December 31, 2013 and 2012, respectively.

Railcar and Food Packaging

ARI is the sponsor of three defined benefit pension plans, two of which cover certain employees at designated repair facilities. All three of ARI's defined benefit pension plans are frozen and no additional benefits are accruing thereunder. Viskase and its subsidiaries have defined contribution and defined benefit plans varying by country and subsidiary. Viskase's operations in the United States, France, Germany and Canada have historically offered defined benefit retirement plans and post-retirement health care and life insurance benefits to their employees. Most of these benefits have been terminated, resulting in reductions in various liabilities.

The following provides disclosures for ARI's and Viskase's benefit obligations, plan assets, funded status, and recognition in the consolidated balance sheets. As pension costs for ARI and Viskase are not material to our consolidated financial position and results of operations, we do not provide information regarding their inputs and valuation assumptions.



	Pension Benefits						Other Post-Employment Benefits
	2013			2012			2013		2012
	(in millions)
Change in benefit obligation:
Benefit obligation, beginning of year	$	198		$	178		$	—	$	—
Service cost	1			1			—		—
Interest cost	8			8			—		—
Benefits paid	(10		)	(9		)	—		—
Actuarial losses	(21		)	20			—		—
Adjustments to benefits	—			—			—		—
Benefit obligation, end of year	176			198			—		—
Change in plan assets:
Fair value of plan assets, beginning of year	125			114			—		—
Actual return on plan assets	20			13			—		—
Company contributions	5			7			—		—
Benefits paid	(10		)	(9		)	—		—
Fair value of plan assets, end of year	140			125			—		—
Funded status of the plan	$	(36	)	$	(73	)	$	—	$	—
Amounts recognized in the consolidated balance sheets:
Net liability recognized	$	(36	)	$	(73	)	$	—	$	—
Amounts recognized in accumulated other comprehensive loss, inclusive of tax impacts:
Net actuarial (loss) gain	$	(28	)	$	(66	)	$	1	$	1
Prior service credit	—			—			—		2
Total	$	(28	)	$	(66	)	$	1	$	3