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Employee Benefits | 12 Months Ended
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Dec. 31, 2019
Retirement Benefits [Abstract] |
Employee Benefits | Employee Benefits We maintain a number of active defined contribution retirement plans for our employees. The majority of our defined benefit plans are frozen. As a result, no new employees will be permitted to enter these plans and no additional benefits for current participants in the frozen plans will be accrued. We also have supplemental benefit plans that provide senior management with supplemental retirement, disability and death benefits. Certain supplemental retirement benefits are based on final monthly earnings. In addition, we sponsor a voluntary 401(k) plan under which we may match employee contributions up to certain levels of compensation as well as profit-sharing plans under which we contribute a percentage of eligible employees' compensation to the employees' accounts. We also provide certain medical, dental and life insurance benefits for active and retired employees and eligible dependents. The medical and dental plans and supplemental life insurance plan are contributory, while the basic life insurance plan is noncontributory. We currently do not prefund any of these plans. We recognize the funded status of our retirement and postretirement plans in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive loss, net of taxes. The amounts in accumulated other comprehensive loss represent net unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic pension cost pursuant to our accounting policy for amortizing such amounts. Net periodic benefit cost for our retirement and postretirement plans other than the service cost component are included in other expense (income), net in our consolidated statements of income. Benefit Obligation A summary of the benefit obligation and the fair value of plan assets, as well as the funded status for the retirement and postretirement plans as of December 31, 2019 and 2018, is as follows (benefits paid in the table below include only those amounts contributed directly to or paid directly from plan assets):
(in millions) | Retirement Plans |  | Postretirement Plans
| 2019 |  | 2018 |  | 2019 |  | 2018
Net benefit obligation at beginning of year | $ | 2,076 |  |  | $ | 2,329 |  |  | $ | 40 |  |  | $ | 49 |
Service cost | 3 |  |  | 3 |  |  | — |  |  | — |
Interest cost | 64 |  |  | 71 |  |  | 1 |  |  | 1 |
Plan participants’ contributions | — |  |  | — |  |  | 2 |  |  | 3 |
Actuarial loss (gain) | 232 |  |  | (199 | ) |  | 1 |  |  | (4 | )
Gross benefits paid | (75 | ) |  | (103 | ) |  | (6 | ) |  | (8 | )
Foreign currency effect | 13 |  |  | (26 | ) |  | — |  |  | — |
Other adjustments 1 | (368 | ) |  | 1 |  |  | — |  |  | (1 | )
Net benefit obligation at end of year | 1,945 |  |  | 2,076 |  |  | 38 |  |  | 40 |
Fair value of plan assets at beginning of year | 1,987 |  |  | 2,219 |  |  | 16 |  |  | 20 |
Actual return on plan assets | 354 |  |  | (113 | ) |  | 1 |  |  | — |
Employer contributions | 46 |  |  | 9 |  |  | — |  |  | 1 |
Plan participants’ contributions | — |  |  | — |  |  | 3 |  |  | 3 |
Gross benefits paid | (75 | ) |  | (103 | ) |  | (7 | ) |  | (8 | )
Foreign currency effect | 16 |  |  | (25 | ) |  | — |  |  | — |
Other adjustments 1 | (368 | ) |  | — |  |  | — |  |  | — |
Fair value of plan assets at end of year | 1,960 |  |  | 1,987 |  |  | 13 |  |  | 16 |
Funded status | $ | 15 |  |  | $ | (89 | ) |  | $ | (25 | ) |  | $ | (24 | )
Amounts recognized in consolidated balance sheets: |  |  |  |  |  |  |
Non-current assets | $ | 259 |  |  | $ | 125 |  |  | $ | — |  |  | $ | — |
Current liabilities | (10 | ) |  | (9 | ) |  | — |  |  | — |
Non-current liabilities | (234 | ) |  | (205 | ) |  | (25 | ) |  | (24 | )
| $ | 15 |  |  | $ | (89 | ) |  | $ | (25 | ) |  | $ | (24 | )
Accumulated benefit obligation | $ | 1,932 |  |  | $ | 2,066 |  |  |  |  |
Plans with accumulated benefit obligation in excess of the fair value of plan assets: |  |  |  |  |  |  |
Projected benefit obligation | $ | 244 |  |  | $ | 214 |  |  |  |  |
Accumulated benefit obligation | $ | 231 |  |  | $ | 204 |  |  |  |  |
Fair value of plan assets | $ | — |  |  | $ | — |  |  |  |  |
Amounts recognized in accumulated other comprehensive loss, net of tax: |  |  |  |  |  |  |
Net actuarial loss (gain) | $ | 355 |  |  | $ | 460 |  |  | $ | (40 | ) |  | $ | (41 | )
Prior service credit | 2 |  |  | 2 |  |  | (13 | ) |  | (14 | )
Total recognized | $ | 357 |  |  | $ | 462 |  |  | $ | (53 | ) |  | $ | (55 | )
1 | Relates to the impact of a retiree annuity purchase in 2019. The Company purchased a group annuity contract under which an insurance company assumed a portion of the Company's obligation to pay pension benefits to the plan's beneficiaries. The purchase of this group annuity contract was funded by pension plan assets.
The actuarial loss included in accumulated other comprehensive loss for our retirement plans and expected to be recognized in net periodic benefit cost during the year ending December 31, 2020 is $15 million. There is an immaterial amount of prior service credit included in accumulated other comprehensive loss for our retirement plans expected to be recognized in net periodic benefit cost during the year ending December 31, 2020. The actuarial gain included in accumulated other comprehensive loss for our postretirement plans and expected to be recognized in net periodic benefit cost during the year ending December 31, 2020 is $2 million. The prior year service credit included in accumulated other comprehensive loss for our postretirement plans and expected to be recognized in net periodic benefit cost during the year ending December 31, 2020 is $1 million. Net Periodic Benefit Cost For purposes of determining annual pension cost, prior service costs are being amortized straight-line over the average expected remaining lifetime of plan participants expected to receive benefits. A summary of net periodic benefit cost for our retirement and postretirement plans for the years ended December 31, is as follows:
(in millions) | Retirement Plans |  | Postretirement Plans
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Service cost | $ | 3 |  |  | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest cost | 64 |  |  | 71 |  |  | 74 |  |  | 1 |  |  | 1 |  |  | 2 |
Expected return on assets | (108 | ) |  | (124 | ) |  | (126 | ) |  | — |  |  | — |  |  | — |
Amortization of: |  |  |  |  |  |  |  |  |  |  |
Actuarial loss (gain) | 12 |  |  | 20 |  |  | 18 |  |  | (2 | ) |  | (2 | ) |  | (2 | )
Prior service credit | — |  |  | — |  |  | — |  |  | (1 | ) |  | (1 | ) |  | (2 | )
Net periodic benefit cost | (29 | ) |  | (30 | ) |  | (31 | ) |  | (2 | ) |  | (2 | ) |  | (2 | )
Settlement charge | 113 |  | 1 | 4 |  | 2 | 8 |  | 2 | — |  |  | — |  |  | — |
Total net periodic benefit cost | $ | 84 |  |  | $ | (26 | ) |  | $ | (23 | ) |  | $ | (2 | ) |  | $ | (2 | ) |  | $ | (2 | )
1 | Relates to the impact of a retiree annuity purchase in 2019. The Company purchased a group annuity contract under which an insurance company assumed a portion of the Company's obligation to pay pension benefits to the plan's beneficiaries. The purchase of this group annuity contract was funded by pension plan assets. The non-cash pretax settlement charge reflects the accelerated recognition of a portion of unamortized actuarial losses in the plan.
2 | Represents a charge related to our U.K retirement plan.
Our U.K. retirement plan accounted for a benefit of $14 million in 2019, $10 million in 2018 and $6 million in 2017 of the net periodic benefit cost attributable to the funded plans. Other changes in plan assets and benefit obligations recognized in other comprehensive income, net of tax for the years ended December 31, are as follows:
(in millions) | Retirement Plans |  | Postretirement Plans
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Net actuarial (gain) loss | $ | (10 | ) |  | $ | 28 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | (7 | ) |  | $ | (3 | )
Recognized actuarial (gain) loss | (10 | ) |  | (15 | ) |  | (12 | ) |  | 1 |  |  | 1 |  |  | 1 |
Prior service (credit) cost | — |  |  | 1 |  |  | — |  |  | 1 |  |  | 1 |  |  | 1 |
Settlement charge | (85 | ) | 1 | (4 | ) | 2 | (7 | ) | 2 | — |  |  | — |  |  | — |
Total recognized | $ | (105 | ) |  | $ | 10 |  |  | $ | (39 | ) |  | $ | 2 |  |  | $ | (5 | ) |  | $ | (1 | )
1 | Relates to the impact of a retiree annuity purchase in 2019. The Company purchased a group annuity contract under which an insurance company assumed a portion of the Company's obligation to pay pension benefits to the plan's beneficiaries. The purchase of this group annuity contract was funded by pension plan assets. The non-cash after tax settlement charge reflects the accelerated recognition of a portion of unamortized actuarial losses in the plan.
2 | Represents a charge related to our U.K retirement plan.
The total cost for our retirement plans was $187 million for 2019, $80 million for 2018 and $70 million for 2017. The total cost for our retirement plans in 2019 includes the $113 million settlement charge related to the retiree annuity purchase in 2019. Included in the total retirement plans cost are defined contribution plans cost of $73 million for 2019, $79 million for 2018 and $70 million for 2017. Assumptions
| Retirement Plans |  | Postretirement Plans
| 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Benefit obligation: |  |  |  |  |  |  |  |  |  |  |
Discount rate 2 | 3.45 | % |  | 4.40 | % |  | 3.68 | % |  | 3.08 | % |  | 4.15 | % |  | 3.40 | %
Net periodic cost: |  |  |  |  |  |  |  |  |  |  |
Weighted-average healthcare cost rate 1 |  |  |  |  |  |  | 6.50 | % |  | 6.50 | % |  | 7.00 | %
Discount rate - U.S. plan 2 | 4.40 | % |  | 3.68 | % |  | 4.13 | % |  | 4.15 | % |  | 3.40 | % |  | 3.69 | %
Discount rate - U.K. plan 2 | 2.72 | % |  | 2.41 | % |  | 2.58 | % |  |  |  |  |  |
Return on assets 3 | 6.00 | % |  | 6.00 | % |  | 6.25 | % |  |  |  |  |  |
1 | The assumed weighted-average healthcare cost trend rate will decrease ratably from 6% in 2019 to 5% in 2024 and remain at that level thereafter. Assumed healthcare cost trends have an effect on the amounts reported for the healthcare plans. A one percentage point change in assumed healthcare cost trend creates the following effects:
(in millions) | 1% point increase |  | 1% point decrease
Effect on postretirement obligation | $ | — |  |  | $ | — |
2 | Effective January 1, 2019, we changed our discount rate assumption on our U.S. retirement plans to 4.40% from 3.68% in 2018 and changed our discount rate assumption on our U.K. plan to 2.72% from 2.41% in 2018.
3 | The expected return on assets assumption is calculated based on the plan’s asset allocation strategy and projected market returns over the long-term. Effective January 1, 2020, our return on assets assumption for the U.S. plan was reduced to 5.50% from 6.00% and the U.K. plan remained unchanged at 6.00%.
Cash Flows In December of 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was enacted. The Act established a prescription drug benefit under Medicare, known as “Medicare Part D”, and a federal subsidy to sponsors of retiree healthcare benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. Our benefits provided to certain participants are at least actuarially equivalent to Medicare Part D, and, accordingly, we are entitled to a subsidy. Expected employer contributions in 2020 are $11 million and $5 million for our retirement and postretirement plans, respectively. In 2020, we may elect to make additional non-required contributions depending on investment performance and the pension plan status. Information about the expected cash flows for our retirement and postretirement plans and the impact of the Medicare subsidy is as follows:
(in millions) |  |  | Postretirement Plans 2
| Retirement 1 Plans |  | Gross payments |  | Retiree contributions |  | Medicare subsidy 3 |  | Net payments
2020 | $ | 63 |  |  | $ | 7 |  |  | $ | (2 | ) |  | $ | — |  |  | $ | 5 |
2021 | 66 |  |  | 6 |  |  | (2 | ) |  | — |  |  | 4 |
2022 | 69 |  |  | 6 |  |  | (2 | ) |  | — |  |  | 4 |
2023 | 72 |  |  | 5 |  |  | (1 | ) |  | — |  |  | 4 |
2024 | 75 |  |  | 5 |  |  | (1 | ) |  | — |  |  | 4 |
2025-2029 | 413 |  |  | 17 |  |  | (6 | ) |  | — |  |  | 11 |
1 | Reflects the total benefits expected to be paid from the plans or from our assets including both our share of the benefit cost and the participants’ share of the cost.
2 | Reflects the total benefits expected to be paid from our assets.
3 | Expected medicare subsidy amounts, for the years presented, are less than $1 million.
Fair Value of Plan Assets In accordance with authoritative guidance for fair value measurements certain assets and liabilities are required to be recorded at fair value. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value hierarchy has been established which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:
• | Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
• | Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The fair value of our defined benefit plans assets as of December 31, 2019 and 2018, by asset class is as follows:
(in millions) | December 31, 2019
| Total |  | Level 1 |  | Level 2 |  | Level 3
Cash and short-term investments | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Equities: |  |  |  |  |  |  |
U.S. indexes 1 | 23 |  |  | 23 |  |  | — |  |  | — |
U.S. growth and value | 56 |  |  | 56 |  |  | — |  |  | — |
Fixed income: |  |  |  |  |  |  |
Long duration strategy 2 | 1,078 |  |  | — |  |  | 1,078 |  |  | — |
Intermediate duration securities | 20 |  |  | — |  |  | 20 |  |  | — |
Agency mortgage backed securities | 3 |  |  | — |  |  | 3 |  |  | — |
Asset backed securities | 14 |  |  | — |  |  | 14 |  |  | — |
Non-agency mortgage backed securities 3 | 11 |  |  | — |  |  | 11 |  |  | — |
International, excluding U.K. | 15 |  |  | — |  |  | 15 |  |  | — |
Real Estate: |  |  |  |  |  |  |
U.K. 4 | 39 |  |  | — |  |  | — |  |  | 39 |
Total | $ | 1,262 |  |  | $ | 82 |  |  | $ | 1,141 |  |  | $ | 39 |
Collective investment funds 5 | $ | 698 |  |  |  |  |  |  |
Total | $ | 1,960 |  |  |  |  |  |  |
(in millions) | December 31, 2018
| Total |  | Level 1 |  | Level 2 |  | Level 3
Cash and short-term investments | $ | 4 |  |  | $ | 4 |  |  | $ | — |  |  | $ | — |
Equities: |  |  |  |  |  |  |
U.S. indexes 1 | 21 |  |  | 21 |  |  | — |  |  | — |
U.S. growth and value | 69 |  |  | 69 |  |  | — |  |  | — |
U.K. | — |  |  | — |  |  | — |  |  | — |
International, excluding U.K. | — |  |  | — |  |  | — |  |  | — |
Fixed income: |  |  |  |  |  |  |
Long duration strategy 2 | 1,070 |  |  | — |  |  | 1,070 |  |  | — |
Intermediate duration securities | 35 |  |  | — |  |  | 35 |  |  | — |
Agency mortgage backed securities | 4 |  |  | — |  |  | 4 |  |  | — |
Asset backed securities | 18 |  |  | — |  |  | 18 |  |  | — |
Non-agency mortgage backed securities 3 | 13 |  |  | — |  |  | 13 |  |  | — |
International, excluding U.K. | 18 |  |  | — |  |  | 18 |  |  | — |
Real Estate: |  |  |  |  |  |  |
U.K. 4 | 39 |  |  | — |  |  | — |  |  | 39 |
Total | $ | 1,291 |  |  | $ | 94 |  |  | $ | 1,158 |  |  | $ | 39 |
Collective investment funds 5 | $ | 696 |  |  |  |  |  |  |
Total | $ | 1,987 |  |  |  |  |  |  |
1 | Includes securities that are tracked in the S&P Smallcap 600 index.
2 | Includes securities that are mainly investment grade obligations of issuers in the U.S.
3 | Includes U.S. mortgage-backed securities that are not backed by the U.S. government.
4 | Includes a fund which holds real estate properties in the U.K.
5 | Includes the Standard & Poor's 500 Composite Stock Index, the Standard & Poor's MidCap 400 Composite Stock Index, a short-term investment fund which is a common collective trust vehicle, and other various asset classes.
For securities that are quoted in active markets, the trustee/custodian determines fair value by applying securities’ prices obtained from its pricing vendors. For commingled funds that are not actively traded, the trustee applies pricing information provided by investment management firms to the unit quantities of such funds. Investment management firms employ their own pricing vendors to value the securities underlying each commingled fund. Underlying securities that are not actively traded derive their prices from investment managers, which in turn, employ vendors that use pricing models (e.g., discounted cash flow, comparables). The domestic defined benefit plans have no investment in our stock, except through the S&P 500 commingled trust index fund. The trustee obtains estimated prices from vendors for securities that are not easily quotable and they are categorized accordingly as Level 3. The following table details further information on our plan assets where we have used significant unobservable inputs :
(in millions) | Level 3
Balance as of December 31, 2018 | $ | 39 |
Purchases | — |
Distributions | — |
Gain (loss) | — |
Balance as of December 31, 2019 | $ | 39 |
Pension Trusts’ Asset Allocations There are two pension trusts, one in the U.S. and one in the U.K.
• | The U.S. pension trust had assets of $1,432 million and $1,572 million as of December 31, 2019 and 2018 respectively, and the target allocations in 2019 include 75% fixed income, 16% domestic equities and 9% international equities.
• | The U.K. pension trust had assets of $528 million and $415 million as of December 31, 2019 and 2018, respectively, and the target allocations in 2019 include 40% fixed income, 30% diversified growth funds, 20% equities and 10% real estate.
The pension assets are invested with the goal of producing a combination of capital growth, income and a liability hedge. The mix of assets is established after consideration of the long-term performance and risk characteristics of asset classes. Investments are selected based on their potential to enhance returns, preserve capital and reduce overall volatility. Holdings are diversified within each asset class. The portfolios employ a mix of index and actively managed equity strategies by market capitalization, style, geographic regions and economic sectors. The fixed income strategies include U.S. long duration securities, opportunistic fixed income securities and U.K. debt instruments. The short-term portfolio, whose primary goal is capital preservation for liquidity purposes, is composed of government and government-agency securities, uninvested cash, receivables and payables. The portfolios do not employ any financial leverage. U.S. Defined Contribution Plan Assets of the defined contribution plan in the U.S. consist primarily of investment options, which include actively managed equity, indexed equity, actively managed equity/bond funds, target date funds, S&P Global Inc. common stock, stable value and money market strategies. There is also a self-directed mutual fund investment option. The plan purchased 165,286 shares and sold 333,030 shares of S&P Global Inc. common stock in 2019 and purchased 193,051 shares and sold 205,798 shares of S&P Global Inc. common stock in 2018. The plan held approximately 1.3 million and 1.5 million shares of S&P Global Inc. common stock as of December 31, 2019 and 2018, respectively, with market values of $355 million and $251 million, respectively. The plan received dividends on S&P Global Inc. common stock of $3 million during both the years ended December 31, 2019 and December 31, 2018.

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