Schlumberger sponsors several defined benefit pension plans that cover substantially all US employees hired prior to October 1, 2004. The benefits are based on years of service and compensation, on a career-average pay basis.

In addition to the US defined benefit pension plans, Schlumberger sponsors several other international defined benefit pension plans. The most significant of these international plans are the International Staff Pension Plan and the UK pension plan (collectively, the “International plans”). The International Staff Pension Plan covers certain international employees hired prior to July 1, 2014 and is based on years of service and compensation on a career-average pay basis. The UK plan covers employees hired prior to April 1, 1999, and is based on years of service and compensation, on a final salary basis.

The weighted-average assumed discount rate, compensation increases and expected long-term rate of return on plan assets used to determine the net pension cost for the US and International plans were as follows:



	US									International
	2019			2018			2017			2019			2018			2017
Discount rate		4.30	%		3.70	%		4.20	%		4.00	%		3.55	%		4.13	%
Compensation increases		4.00	%		4.00	%		4.00	%		4.83	%		4.81	%		4.81	%
Return on plan assets		6.60	%		7.25	%		7.25	%		7.22	%		7.40	%		7.40	%

Net pension cost (credit) for 2019, 2018 and 2017 included the following components:

(Stated in millions)

	US									International
	2019			2018			2017			2019			2018			2017
Service cost - benefits earned during the period	$	49		$	59		$	57		$	112		$	138		$	95
Interest cost on projected benefit obligation		180			167			175			333			304			306
Expected return on plan assets		(232	)		(248	)		(242	)		(592	)		(584	)		(541	)
Amortization of prior service cost		10			13			12			7			10			97
Amortization of net loss		29			47			39			70			140			120
Settlement charge		37			-			-			-			-			-
	$	73		$	38		$	41		$	(70	)	$	8		$	77

See Note 3 - Charges and Credits for details regarding the 2019 settlement charge.

The weighted-average assumed discount rate and compensation increases used to determine the projected benefit obligations for the US and International plans were as follows:

The changes in the projected benefit obligation, plan assets and funded status of the plans were as follows:

(Stated in millions)

	US						International
	2019			2018			2019			2018
Change in Projected Benefit Obligations
Projected benefit obligation at beginning of year	$	4,278		$	4,603		$	8,111		$	8,752
Service cost		49			59			112			138
Interest cost		180			167			333			304
Contribution by plan participants		-			-			63			79
Actuarial (gains) losses		535			(349	)		1,304			(758	)
Currency effect		-			-			50			(87	)
Settlement		(240	)		-			(17	)		-
Benefits paid		(209	)		(202	)		(309	)		(317	)
Projected benefit obligation at end of year	$	4,593		$	4,278		$	9,647		$	8,111
Change in Plan Assets
Plan assets at fair value at beginning of year	$	3,748		$	4,058		$	7,872		$	8,507
Actual return on plan assets		931			(112	)		1,676			(370	)
Currency effect		-			-			59			(105	)
Company contributions		6			4			19			78
Contributions by plan participants		-			-			63			79
Settlement		(240	)		-			(17	)		-
Benefits paid		(209	)		(202	)		(309	)		(317	)
Plan assets at fair value at end of year	$	4,236		$	3,748		$	9,363		$	7,872
Unfunded Liability	$	(357	)	$	(530	)	$	(284	)	$	(239	)
Amounts Recognized in Balance Sheet
Postretirement Benefits	$	(357	)	$	(530	)	$	(602	)	$	(514	)
Other Assets		-			-			318			275
	$	(357	)	$	(530	)	$	(284	)	$	(239	)
Amounts Recognized in Accumulated Other Comprehensive Loss
Actuarial losses	$	622		$	852		$	1,638		$	1,440
Prior service cost		9			18			-			9
	$	631		$	870		$	1,638		$	1,449
Accumulated benefit obligation	$	4,345		$	4,070		$	9,376		$	7,895

The unfunded liability represents the difference between the plan assets and the projected benefit obligation (“PBO”). The PBO represents the actuarial present value of benefits based on employee service and compensation and includes an assumption about future compensation levels. The accumulated benefit obligation (“ABO”) represents the actuarial present value of benefits based on employee service and compensation, but does not include an assumption about future compensation levels.

Actuarial losses arising during 2019 are primarily attributable to the decrease in the discount rate used to determine the PBO. As of December 31, 2019, the PBO and fair value of plan assets for plans with PBOs in excess of plan assets were $12.6 billion and $11.7 billion, respectively. The related ABO for these plans was $12.2 billion at December 31, 2019.

The weighted-average allocation of plan assets and the target allocations by asset category are as follows:



	US									International
	Target			2019			2018			Target			2019			2018
Equity securities	20 - 30		%		22	%		21	%	47 - 59		%		50	%		50
Debt securities	63 - 77				70			70		27 - 33				31			32
Cash and cash equivalents	0 - 3				2			2		0 - 5				4			2
Alternative investments	5 - 10				6			7		15 - 22				15			16
		100	%		100	%		100	%		100	%		100	%		100

Asset performance is monitored frequently with an overall expectation that plan assets will meet or exceed the weighted index of its target asset allocation and component benchmark over rolling five-year periods.

The expected rate of return on assets assumptions reflect the long-term average rate of earnings expected on funds invested or to be invested. The assumptions have been determined based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rates of return. The appropriateness of the assumptions is reviewed annually.

The fair value of Schlumberger’s pension plan assets at December 31, 2019 and 2018, by asset category, is presented below and was determined based on valuation techniques categorized as follows:

(Stated in millions)

	US Plan Assets
	2019								2018
			Level		Level		Level				Level		Level		Level
	Total		One		Two		Three		Total		One		Two		Three
Asset Category:
Cash and Cash Equivalents	$	73	$	59	$	14	$	-	$	80	$	44	$	36	$	-
Equity Securities:
US ^(a)		605		500		105		-		501		416		85		-
International^(b)		320		315		5		-		267		263		4		-
Debt Securities
Corporate bonds^(c)		1,687		-		1,687		-		1,517		-		1,517		-
Government and government-related debt securities^(d)		1,256		74		1,182		-		1,072		66		1,006		-
Collateralized mortgage obligations and mortgage backed securities^(e)		21		-		21		-		40		-		40		-
Alternative Investments:
Private equity ^(f)		181		-		-		181		185		-		-		185
Real estate ^(g)		93		-		-		93		86		-		-		86
Total	$	4,236	$	948	$	3,014	$	274	$	3,748	$	789	$	2,688	$	271

(Stated in millions)

	International Plan Assets
	2019								2018
			Level		Level		Level				Level		Level		Level
	Total		One		Two		Three		Total		One		Two		Three
Asset Category:
Cash and Cash Equivalents	$	351	$	166	$	185	$	-	$	157	$	75	$	82	$	-
Equity Securities:
US ^(a)		2,834		2,347		487		-		2,421		2,028		393		-
International^(b)		1,871		1,723		148		-		1,526		1,406		120		-
Debt Securities
Corporate bonds^(c)		1,105		-		1,105		-		923		-		923		-
Government and government-related debt securities^(d)		1,602		5		1,597		-		1,377		5		1,372		-
Collateralized mortgage obligations and mortgage backed securities^(e)		161		-		161		-		236		-		236		-
Alternative Investments:
Private equity ^(f)		623		-		-		623		565		-		-		565
Real estate ^(g)		183		-		-		183		150		-		-		150
Other		633		-		-		633		517		-		-		517
Total	$	9,363	$	4,241	$	3,683	$	1,439	$	7,872	$	3,514	$	3,126	$	1,232

Schlumberger’s funding policy is to annually contribute amounts that are based upon a number of factors including the actuarial accrued liability, amounts that are deductible for income tax purposes, legal funding requirements and available cash flow. Schlumberger expects to contribute approximately $20 million to its postretirement benefit plans in 2020, subject to market and business conditions.

Schlumberger provides certain healthcare benefits to certain former US employees who have retired. Effective April 1, 2015, Schlumberger changed the way it provides healthcare coverage to certain retirees who are age 65 and over. Under the amended plan, these retirees transferred to individual coverage under the Medicare Exchange. Schlumberger subsidizes the cost of the program by providing these retirees with a Health Reimbursement Account. The annual subsidy may be increased based on medical cost inflation, but it will not be increased by more than 5% in any given year.

The actuarial assumptions used to determine the accumulated postretirement benefit obligation and net periodic benefit cost for the US postretirement medical plan were as follows:



	Benefit Obligations						Net Periodic Benefit
	At December 31,						Cost for the Year
	2019			2018			2019			2018			2017
Discount rate		3.30	%		4.30	%		4.30	%		3.70	%		4.20	%
Return on plan assets	-			-				7.00	%		7.00	%		7.00	%
Current medical cost trend rate		7.50	%		7.50	%		7.50	%		7.00	%		7.25	%
Ultimate medical cost trend rate		4.50	%		4.50	%		4.50	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate	2031			2031			2031			2026			2026

The net periodic benefit credit for the US postretirement medical plan included the following components:

The changes in the accumulated postretirement benefit obligation, plan assets and funded status were as follows:

(Stated in millions)

	2019			2018
Change in Projected Benefit Obligations
Benefit obligation at beginning of year	$	1,106		$	1,213
Service cost		29			32
Interest cost		45			43
Contribution by plan participants		8			8
Actuarial (gains) losses		65			(128	)
Benefits paid		(60	)		(62	)
Benefit obligation at end of year	$	1,193		$	1,106
Change in Plan Assets
Plan assets at fair value at beginning of year	$	997		$	1,094
Actual return on plan assets		240			(44	)
Company contributions		-			1
Contributions by plan participants		8			8
Benefits paid		(60	)		(62	)
Plan assets at fair value at end of year	$	1,185		$	997
Unfunded Liability	$	(8	)	$	(109	)
Amounts Recognized in Accumulated Other Comprehensive Loss
Actuarial (gains) losses	$	(98	)	$	14
Prior service credit		(158	)		(186	)
	$	(256	)	$	(172	)

The unfunded liability is included in Postretirement Benefits in the Consolidated Balance Sheet.

The assets of the US postretirement medical plan are invested 60% in equity securities and 40% in debt securities at December 31, 2019. The fair value of these assets was primarily determined based on Level Two valuation techniques.

The expected benefits to be paid under the US and International pension plans as well as the postretirement medical plan are as follows:

In addition to providing defined pension benefits and a postretirement medical plan, Schlumberger has other deferred benefit programs, primarily profit sharing and defined contribution pension plans. Expenses for these programs were $410 million, $435 million and $413 million in 2019, 2018 and 2017, respectively.