The Company maintains The Hartford Retirement Plan for U.S. Employees, a U.S. qualified defined benefit pension plan (the “Plan”) that covers substantially all U.S. employees hired prior to January 1, 2013. The Company also maintains non-qualified pension plans to provide retirement benefits previously accrued that are in excess of Internal Revenue Code limitations.

Effective December 31, 2012, the Company amended the Plan to freeze participation and benefit accruals. As a result, employees do not accrue further benefits under the plan after that date, although interest will continue to accrue to existing cash balance formula account balances. Compensation earned by employees up to December 31, 2012 is used for purposes of calculating benefits under the Plan but there are no future benefit accruals after that date. Participants as of December 31, 2012 will continue to earn vesting credit with respect to their frozen accrued benefits as they continue to work. The freeze also applies to The Hartford Excess Pension Plan II, the Company's non-qualified excess benefit plan for certain highly compensated employees.

The Company provides certain health care and life insurance benefits for eligible retired employees. The Company’s contribution for health care benefits will depend upon the retiree’s date of retirement and years of service. In addition, the plan has a defined dollar cap for certain retirees which limits average Company contributions. The Hartford has prefunded a portion of the health care obligations through a trust fund where such prefunding can be accomplished on a tax effective basis. Effective January 1, 2002, Company-subsidized retiree medical, retiree dental and retiree life insurance benefits were eliminated for employees with original hire dates with the Company on or after January 1, 2002. The Company also amended its postretirement medical, dental and life insurance coverage plans to no longer provide subsidized coverage for employees who retire on or after January 1, 2014.

Assumptions

Pursuant to accounting principles related to the Company’s pension and other postretirement obligations to employees under its various benefit plans, the Company is required to make a significant number of assumptions in order to calculate the related liabilities and expenses each period. The two economic assumptions that have the most impact on pension and other postretirement expense are the discount rate and the expected long-term rate of return on plan assets. In determining the discount rate assumption, the Company utilizes a discounted cash flow analysis of the Company’s pension and other postretirement obligations and currently available market and industry data. The yield curve utilized in the cash flow analysis is comprised of bonds rated Aa or higher with maturities primarily between zero and thirty years. Based on all available information, it was determined that 4.00% and 3.75% were the appropriate discount rates as of December 31, 2014 to calculate the Company’s pension and other postretirement obligations, respectively.

The Company determines the expected long-term rate of return assumption based on an analysis of the Plan portfolio’s historical compound rates of return since 1979 (the earliest date for which comparable portfolio data is available) and over 5 year and 10 year periods. The Company selected these periods, as well as shorter durations, to assess the portfolio’s volatility, duration and total returns as they relate to pension obligation characteristics, which are influenced by the Company’s workforce demographics. In addition, the Company also applies long-term market return assumptions to an investment mix that generally anticipates 60% fixed income securities, 20% equity securities and 20% alternative assets to derive an expected long-term rate of return. Based upon these analyses, management determined the long-term rate of return assumption to be 7.10% as of December 31, 2014 and 2013. To determine the Company's 2015 expense, the Company plans to apply an expected long-term rate of return on plan assets of 6.90%.

Weighted average assumptions used in calculating the Company's benefit obligations and the net amount recognized were as follows:



	Pension Benefits				Other Postretirement Benefits
	For the years ended December 31,
	2014		2013		2014		2013
Discount rate	4.00	%	4.75	%	3.75	%	4.25	%

Weighted average assumptions used in calculating the net periodic benefit cost for the Company’s pension plans were as follows:



	For the years ended December 31,
	2014		2013		2012
Discount rate	4.75	%	4.00	%	4.50	%
Expected long-term rate of return on plan assets	7.10	%	7.10	%	7.30	%
Rate of increase in compensation levels	—	%	3.75	%	3.75	%

Weighted average assumptions used in calculating the net periodic benefit cost for the Company’s other postretirement plans were as follows:



	For the years ended December 31,
	2014		2013		2012
Discount rate	4.25	%	3.50	%	4.00	%
Expected long-term rate of return on plan assets	7.10	%	7.10	%	7.30	%

Assumed health care cost trend rates were as follows:



	For the years ended December 31,
	2014		2013		2012
Pre-65 health care cost trend rate	7.70	%	8.05	%	8.45	%
Post-65 health care cost trend rate	5.60	%	5.70	%	6.15	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00	%	5.00	%	4.75	%
Year that the rate reaches the ultimate trend rate	2023		2021		2020

A one-percentage point change in assumed health care cost trend rates would have an insignificant effect on the amounts reported for other postretirement plans.

Obligations and Funded Status

The following tables set forth a reconciliation of beginning and ending balances of the benefit obligation and fair value of plan assets,

as well as the funded status of the Company's defined benefit pension and postretirement health care and life insurance benefit plans. International plans represent an immaterial percentage of total pension assets, liabilities and expense and, for reporting purposes, are combined with domestic plans.



	Pension Benefits						Other Postretirement Benefits
	For the years ended December 31,
Change in Benefit Obligation	2014			2013			2014			2013
Benefit obligation — beginning of year	$	5,516		$	6,080		$	312		$	313
Service cost (excluding expenses)	2			1			—			—
Interest cost	258			238			14			11
Plan participants’ contributions	—			—			26			24
Actuarial loss (gain)	(8		)	14			38			39
Settlements	(319		)	—			—			—
Change in assumptions	846			(508		)	16			(19		)
Benefits paid	(268		)	(308		)	(70		)	(58		)
Retiree drug subsidy	—			—			2			2
Foreign exchange adjustment	(2		)	(1		)	—			—
Benefit obligation — end of year	$	6,025		$	5,516		$	338		$	312

Settlements in 2014 were primarily the result of the Company's extension of a limited time voluntary lump sum offer to approximately 13,500 vested participants in the U.S. qualified defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. The Company made lump sum benefit payments totaling $274 to approximately 5,600 vested participants. The Company also made lump sum payments of $45 to eligible cash balance participants independent of the voluntary lump sum offer.

Changes in assumptions in 2014 include an increase of $279 related to the Company's use of updated mortality rates reflecting improved life expectancy and an increase of $567 related to a reduction in the discount rate.



							Other Postretirement
	Pension Benefits						Benefits
	For the years ended December 31,
Change in Plan Assets	2014			2013			2014			2013
Fair value of plan assets — beginning of year	$	4,630		$	4,850		$	213		$	220
Actual return on plan assets	565			(27		)	16			13
Employer contributions	101			101			—			—
Benefits paid [1]	(245		)	(278		)	(33		)	(20		)
Expenses paid	(24		)	(15		)	—			—
Settlements	(319		)	—			—			—
Foreign exchange adjustment	(1		)	(1		)	—			—
Fair value of plan assets — end of year	$	4,707		$	4,630		$	196		$	213
Funded status — end of year	$	(1,318	)	$	(886	)	$	(142	)	$	(99	)


[1]	Other postretirement benefits paid represent non-key employee postretirement medical benefits paid from the Company's prefunded trust fund.

The fair value of assets for pension benefits, and hence the funded status, presented in the table above excludes assets of $129 and $123 as of December 31, 2014 and 2013, respectively, held in rabbi trusts and designated for the non-qualified pension plans. The assets do not qualify as plan assets; however, the assets are available to pay benefits for certain retired, terminated and active participants. Such assets are available to the Company’s general creditors in the event of insolvency. The assets consist of equity and fixed income investments. To the extent the fair value of these rabbi trusts were included in the table above, pension plan assets would have been $4,836 and $4,753 as of December 31, 2014 and 2013, respectively, and the funded status of pension benefits would have been $(1,189) and $(763) as of December 31, 2014 and 2013, respectively.

The accumulated benefit obligation for all defined benefit pension plans was $6,024 and $5,515 as of December 31, 2014 and 2013, respectively.

The following table provides information for the Company's defined benefit pension plans with an accumulated benefit obligation in excess of plan assets.



	As of December 31,
	2014		2013
Projected benefit obligation	$	6,025	$	5,516
Accumulated benefit obligation	6,024		5,515
Fair value of plan assets	4,707		4,630

As of December 31, 2014, pension and other postretirement benefits plan assets totaling $4.9 billion were invested in the separate accounts of HLIC.

Amounts recognized in the Company's Consolidated Balance Sheets consist of:



	Pension Benefits				Other Postretirement Benefits
	As of December 31,
	2014		2013		2014		2013
Other liabilities	$	1,318	$	886	$	142	$	99

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income (Loss)

Total net periodic benefit cost includes the following components:



	Pension Benefits									Other Postretirement Benefits
	For the years ended December 31,
	2014			2013			2012			2014			2013			2012
Service cost	$	2		$	1		$	92		$	—		$	—		$	2
Interest cost	258			238			250			14			11			14
Expected return on plan assets	(325		)	(315		)	(312		)	(14		)	(14		)	(14		)
Amortization of prior service credit	—			—			(9		)	(7		)	(7		)	(4		)
Amortization of actuarial loss	45			59			231			5			2			1
Settlements	128			—			1			—			—			—
Curtailment gain due to plan freeze	—			—			(11		)	—			—			(1		)
Net periodic benefit cost	$	108		$	(17	)	$	242		$	(2	)	$	(8	)	$	(2	)

Amounts recognized in other comprehensive income (loss) were as follows:



	Pension Benefits					Other Postretirement Benefits
	For the years ended December 31,
	2014			2013		2014			2013
Amortization of actuarial loss	$	45		$	59	$	5		$	2
Settlement loss	128			—		—			—
Amortization of prior service credit	—			—		(7		)	(7		)
Net gain (loss) arising during the year	(622		)	137		(51		)	(21		)
Total	$	(449	)	$	196	$	(53	)	$	(26	)

Amounts in accumulated other comprehensive income (loss) on a before tax basis that have not yet been recognized as components of net periodic benefit cost consist of:



	Pension Benefits						Other Postretirement Benefits
	As of December 31,
	2014			2013			2014			2013
Net loss	$	(2,428	)	$	(1,979	)	$	(124	)	$	(77	)
Prior service credit	—			—			97			103
Total	$	(2,428	)	$	(1,979	)	$	(27	)	$	26

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2015 is $58. The estimated prior service cost for the other postretirement benefit plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2015 is $(7). The estimated net loss for the other postretirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2015 is $5.

Plan Assets

Investment Strategy and Target Allocation

The overall investment strategy of the Plan is to maximize total investment returns to provide sufficient funding for present and anticipated future benefit obligations within the constraints of a prudent level of portfolio risk and diversification. With respect to asset management, the oversight responsibility of the Plan rests with The Hartford’s Pension Fund Trust and Investment Committee composed of individuals whose responsibilities include establishing overall objectives and the setting of investment policy; selecting appropriate investment options and ranges; reviewing the asset allocation mix and asset allocation targets on a regular basis; and monitoring performance to determine whether or not the rate of return objectives are being met and that policy and guidelines are being followed. The Company believes that the asset allocation decision will be the single most important factor determining the long-term performance of the Plan.

The Company’s pension plan and other postretirement benefit plans’ target allocation by asset category is presented in the table below.



	Target Asset Allocation
	Pension Plans				Other Postretirement Plans
	(minimum)		(maximum)		(minimum)		(maximum)
Equity securities	10	%	25	%	15	%	35	%
Fixed income securities	50	%	70	%	65	%	85	%
Alternative assets	10	%	25	%	—	%	—	%

Divergent market performance among different asset classes may, from time to time, cause the asset allocation to deviate from the desired asset allocation ranges. The asset allocation mix is reviewed on a periodic basis. If it is determined that an asset allocation mix rebalancing is required, future portfolio additions and withdrawals will be used, as necessary, to bring the allocation within tactical ranges.

The Company’s pension plan and other postretirement benefit plans’ weighted average asset allocation is presented in the table below.



	Pension Plans				Other Postretirement Plans
	Percentage of Assets				Percentage of Assets
	at Fair Value				at Fair Value
	As of December 31,
	2014		2013		2014		2013
Equity securities	21	%	23	%	25	%	31	%
Fixed income securities	62	%	57	%	75	%	68	%
Alternative assets	17	%	20	%	—	%	1	%
Total	100	%	100	%	100	%	100	%

The Plan assets are invested primarily in separate portfolios managed by HIMCO, a wholly-owned subsidiary of the Company, except for the international equity assets which are managed by a major financial institution. These portfolios encompass multiple asset classes reflecting the current needs of the Plan, the investment preferences and risk tolerance of the Plan and the desired degree of diversification. These asset classes include publicly traded equities, bonds and alternative investments and are made up of individual investments in cash and cash equivalents, equity securities, debt securities, asset-backed securities and hedge funds. Hedge fund investments represent a diversified portfolio of partnership investments in absolute-return investment strategies.

In addition, the Company uses U.S. Treasury bond futures contracts and U.S. Treasury STRIPS in a duration overlay program to adjust the duration of Plan assets to better match the duration of the benefit obligation.

Investment Valuation

For further discussion of the valuation of investments, see Note 5 - Fair Value Measurements of Notes to Consolidated Financial Statements.

Pension Plan Assets

The fair values of the Company’s pension plan assets by asset category are as follows:



	Pension Plan Assets at Fair Value as of December 31, 2014
Asset Category	Level 1		Level 2		Level 3		Total
Short-term investments:	$	56	$	252	$	—	$	308
Fixed Income Securities:
Corporate	—		919		34		953
RMBS	—		181		28		209
U.S. Treasuries	24		1,198		5		1,227
Foreign government	—		65		5		70
CMBS	—		156		—		156
Other fixed income [1]	—		93		4		97
Equity Securities:
Large-cap domestic	526		—		—		526
International	435		3		—		438
Other investments:
Hedge funds	—		562		181		743
Total pension plan assets at fair value [2]	$	1,041	$	3,429	$	257	$	4,727


[1]	Includes ABS, municipal bonds, and foreign bonds.


[2]	Excludes approximately $42 of investment payables net of investment receivables that are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Also excludes approximately $22 of interest receivable.

The fair values of the Company’s pension plan assets by asset category are as follows:



	Pension Plan Assets at Fair Value as of December 31, 2013
Asset Category	Level 1		Level 2		Level 3		Total
Short-term investments:	$	13	$	364	$	—	$	377
Fixed Income Securities:
Corporate	—		890		12		902
RMBS	—		156		2		158
U.S. Treasuries	10		922		1		933
Foreign government	—		42		4		46
CMBS	—		196		1		197
Other fixed income [1]	—		85		10		95
Equity Securities:
Large-cap domestic	—		514		—		514
Mid-cap domestic	50		—		—		50
Small-cap domestic	50		—		—		50
International	459		1		—		460
Other investments:
Hedge funds	—		499		361		860
Total pension plan assets at fair value [2]	$	582	$	3,669	$	391	$	4,642


[1]	Includes ABS and municipal bonds.


[2]	Excludes approximately $34 of investment payables net of investment receivables that are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Also excludes approximately $22 of interest receivable.

The tables below provide fair value level 3 rollforwards for the Pension Plan Assets for which significant unobservable inputs (Level 3) are used in the fair value measurement on a recurring basis. The Plan classifies the fair value of financial instruments within Level 3 if there are no observable markets for the instruments or, in the absence of active markets, if one or more of the significant inputs used to determine fair value are based on the Plan’s own assumptions. Therefore, the gains and losses in the tables below include changes in fair value due to both observable and unobservable factors.



Pension Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate			RMBS			Foreign government			Other fixed income			Hedge funds			Totals
Fair Value as of January 1, 2014	$	12		$	2		$	4		$	12		$	361		$	391
Realized gains (losses), net	—			—			—			—			4			4
Changes in unrealized gains (losses), net	—			7			1			(5		)	4			7
Purchases	12			3			2			6			219			242
Sales	(5		)	(1		)	(2		)	(2		)	(183		)	(193		)
Transfers into Level 3	20			17			—			7			—			44
Transfers out of Level 3	(5		)	—			—			(9		)	(224		)	(238		)
Fair Value as of December 31, 2014	$	34		$	28		$	5		$	9		$	181		$	257

During the year ended December 31, 2014, transfers into and (out) of Level 3 are primarily attributable to the appearance of or lack thereof of market observable information and the re-evaluation of the observability of pricing inputs.



Pension Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate			RMBS			Foreign government		Other fixed income			Hedge funds			Totals
Fair Value as of January 1, 2013	$	3		$	3		$	2	$	9		$	263		$	280
Realized gains/(losses), net	—			—			—		—			(6		)	(6		)
Changes in unrealized gains/(losses), net	—			—			—		(1		)	2			1
Purchases	12			—			2		10			200			224
Sales	(3		)	(1		)	—		(3		)	(79		)	(86		)
Transfers into Level 3	—			—			—		1			36			37
Transfers out of Level 3	—			—			—		(4		)	(55		)	(59		)
Fair Value as of December 31, 2013	$	12		$	2		$	4	$	12		$	361		$	391

During the year ended December 31, 2013, transfers in and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

There was no Company common stock included in the Plan’s assets as of December 31, 2014 and 2013.

The fair value of the Company’s other postretirement plan assets by asset category are as follows:



	Other Postretirement Plan Assets at Fair Value as of December 31, 2014
Asset Category	Level 1		Level 2		Level 3		Total
Short-term investments	$	8	$	5	$	—	$	13
Fixed Income Securities:
Corporate	—		41		3		44
RMBS	—		22		3		25
U.S. Treasuries	1		44		—		45
Foreign government	—		2		—		2
CMBS	—		15		—		15
Other fixed income	—		7		—		7
Equity Securities:
Large-cap	49		—		—		49
Total other postretirement plan assets at fair value [1]	$	58	$	136	$	6	$	200


[1]	Excludes approximately $5 of investment payables net of investment receivables that are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Also excludes approximately $1 of interest receivable.

The fair value of the Company’s other postretirement plan assets by asset category are as follows:



	Other Postretirement Plan Assets at Fair Value as of December 31, 2013
Asset Category	Level 1		Level 2		Level 3		Total
Short-term investments	$	—	$	10	$	—	$	10
Fixed Income Securities:
Corporate	—		55		—		55
RMBS	—		19		—		19
U.S. Treasuries	—		38		—		38
Foreign government	—		1		—		1
CMBS	—		24		—		24
Other fixed income	—		4		—		4
Equity Securities:
Large-cap	—		66		—		66
Total other postretirement plan assets at fair value [1]	$	—	$	217	$	—	$	217


[1]	Excludes approximately $5 of investment payables net of investment receivables that are not carried at fair value and approximately $1 of interest receivable carried at fair value.



Other Postretirement Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate		RMBS		Foreign Government		Other Fixed Income		Totals
Fair Value as of January 1, 2014	$	—	$	—	$	—	$	—	$	—
Realized gains/(losses), net	—		—		—		—		—
Changes in unrealized gains/(losses), net	—		—		—		—		—
Purchases	3		3		—		—		6
Sales	—		—		—		—		—
Transfers into Level 3	—		—		—		—		—
Transfers out of Level 3	—		—		—		—		—
Fair Value as of December 31, 2014	$	3	$	3	$	—	$	—	$	6

There was no Company common stock included in the other postretirement benefit plan assets as of December 31, 2014 and 2013.

Concentration of Risk

In order to minimize risk, the Plan maintains a listing of permissible and prohibited investments. In addition, the Plan has certain concentration limits and investment quality requirements imposed on permissible investment options. Permissible investments include U.S. equity, international equity, alternative asset and fixed income investments including derivative instruments. Derivative instruments include future contracts, options, swaps, currency forwards, caps or floors and will be used to control risk or enhance return but will not be used for leverage purposes.

Securities specifically prohibited from purchase include, but are not limited to: shares or fixed income instruments issued by The Hartford, short sales of any type within long-only portfolios, non-derivative securities involving the use of margin, leveraged floaters and inverse floaters, including money market obligations, natural resource real properties such as oil, gas or timber and precious metals.

Other than U.S. government and certain U.S. government agencies backed by the full faith and credit of the U.S. government, the Plan does not have any material exposure to any concentration risk of a single issuer.

Cash Flows

The following table illustrates the Company’s contributions.



Employer Contributions	Pension Benefits		Other Postretirement Benefits
2014	$	101	$	—
2013	$	101	$	—

In 2014, the Company, at its discretion, made $100 in contributions to the U.S. qualified defined benefit pension plan. The Company does not have a 2015 required minimum funding contribution for the U.S. qualified defined benefit pension plan. The Company has not determined whether, and to what extent, contributions may be made to the U. S. qualified defined benefit pension plan in 2015. The Company will monitor the funded status of the U.S. qualified defined benefit pension plan during 2015 to make this determination.

Employer contributions in 2014 and 2013 were made in cash and did not include contributions of the Company’s common stock.

Benefit Payments

The following table sets forth amounts of benefits expected to be paid over the next ten years from the Company’s pension and other postretirement plans as of December 31, 2014:



	Pension Benefits		Other Postretirement Benefits
2015	$	318	$	42
2016	324		40
2017	327		38
2018	332		35
2019	338		32
2020 - 2024	1,735		123
Total	$	3,374	$	310

In addition, the following table sets forth amounts of other postretirement benefits expected to be received under the Medicare Part D Subsidy over the next ten years as of December 31, 2014:



2015	$	3
2016	3
2017	3
2018	3
2019	3
2020 - 2024	18
Total	$	33

Investment and Savings Plan

Substantially all U.S. employees of the Company are eligible to participate in The Hartford Investment and Savings Plan under which designated contributions may be invested in common stock of The Hartford or certain other investments. The Company's contributions include a non-elective contribution of 2.0% of eligible compensation and a dollar-for-dollar matching contribution of up to 6.0% of eligible compensation contributed by the employee each pay period. The Company also maintains a non-qualified savings plan, The Hartford Excess Savings Plan, with the same level of Company matching contributions, with respect to employee compensation in excess of the limit that can be recognized under the tax-qualified Investment and Savings Plan. The Company discontinued non-elective contributions to the Excess Savings Plan effective December 31, 2013. Eligible compensation includes overtime and bonuses but is limited to a total, for the Investment and Savings Plan and Excess Savings Plan combined, of $1 annually. The total cost to The Hartford for these plans was approximately $113 and $123 for the years ended December 31, 2014 and 2013, respectively.

Prior to January 1, 2013, the contributions to The Hartford Investment and Savings Plan were matched at a 50% rate up to a Company contribution of 3.0% of base salary. In 2012, employees who had earnings of less than $110 thousand in the preceding year also received a contribution of 1.5% of base salary and employees who had earnings of $110 thousand or more in the preceding year received a contribution of 0.5% of base salary. The cost to The Hartford for this plan was approximately $58 for the year ended December 31, 2012.

Additionally, The Hartford has established defined contribution pension plans for certain employees of the Company’s international subsidiaries. The cost to The Hartford for the years ended December 31, 2014, 2013, and 2012 for these plans was immaterial.

As of December 31, 2014, investment and savings plan assets totaling $368 million were invested in the separate accounts of HLIC.