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Benefit Plans | 12 Months Ended
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Dec. 31, 2016
Benefit Plans | Note 9. Benefit Plans Pension Plans Prior to the July 2, 2015 closing of the coffee business transactions, certain active employees who transitioned to JDE participated in our Non-U.S. pension plans. Following the transactions, benefits began to be provided directly by JDE to participants continuing with JDE. JDE assumed certain pension plan obligations and received the related plan assets. In 2015, we reduced our net benefit plan liabilities by $131 million and the related deferred tax assets by $24 million. For participants that elected not to transfer into the JDE plans, we retained the plan obligations and related plan assets. Obligations and Funded Status: The projected benefit obligations, plan assets and funded status of our pension plans were:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
|  |  |  |  | (in millions) |  |  |  |
Benefit obligation at January 1 |  | $ | 1,566 |  |  | $ | 1,606 |  |  | $ | 9,547 |  |  | $ | 10,854 |
Service cost |  |  | 57 |  |  |  | 64 |  |  |  | 147 |  |  |  | 188 |
Interest cost |  |  | 61 |  |  |  | 67 |  |  |  | 229 |  |  |  | 307 |
Benefits paid |  |  | (32 | ) |  |  | (35 | ) |  |  | (425 | ) |  |  | (435 | )
Settlements paid |  |  | (91 | ) |  |  | (88 | ) |  |  | – |  |  |  | 1 |
Actuarial (gains) / losses |  |  | 52 |  |  |  | (49 | ) |  |  | 1,284 |  |  |  | (262 | )
Deconsolidation of JDE coffee business |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (261 | )
Divestiture |  |  | – |  |  |  | – |  |  |  | (5 | ) |  |  | – |
Currency |  |  | – |  |  |  | – |  |  |  | (979 | ) |  |  | (766 | )
Other |  |  | 1 |  |  |  | 1 |  |  |  | 16 |  |  |  | (79 | )
Benefit obligation at December 31 |  |  | 1,614 |  |  |  | 1,566 |  |  |  | 9,814 |  |  |  | 9,547 |
Fair value of plan assets at January 1 |  |  | 1,247 |  |  |  | 1,216 |  |  |  | 7,721 |  |  |  | 8,362 |
Actual return on plan assets |  |  | 118 |  |  |  | (71 | ) |  |  | 1,079 |  |  |  | 192 |
Contributions |  |  | 378 |  |  |  | 225 |  |  |  | 419 |  |  |  | 318 |
Benefits paid |  |  | (32 | ) |  |  | (35 | ) |  |  | (425 | ) |  |  | (435 | )
Settlements paid |  |  | (91 | ) |  |  | (88 | ) |  |  | – |  |  |  | – |
Deconsolidation of JDE coffee business |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (130 | )
Divestiture |  |  | – |  |  |  | – |  |  |  | (4 | ) |  |  | – |
Currency |  |  | – |  |  |  | – |  |  |  | (863 | ) |  |  | (579 | )
Other |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | (7 | )
Fair value of plan assets at December 31 |  |  | 1,620 |  |  |  | 1,247 |  |  |  | 7,926 |  |  |  | 7,721 |
Net pension assets (liability) at December 31 |  | $ | 6 |  |  | $ | (319 | ) |  | $ | (1,888 | ) |  | $ | (1,826 | )
The accumulated benefit obligation, which represents benefits earned to the measurement date, was $1,540 million at December 31, 2016 and $1,463 million at December 31, 2015 for the U.S. pension plans. The accumulated benefit obligation for the non-U.S. pension plans was $9,531 million at December 31, 2016 and $9,267 million at December 31, 2015. For salaried and non-union hourly employees hired after January 1, 2009, we discontinued benefits under our U.S. pension plans and replaced them with an enhanced Company contribution to our employee defined contribution plan. Effective December 31, 2019, benefit accruals will cease under the U.S. non-union pension plan. For non-union employees participating in that plan on December 31, 2019, we will calculate the pension benefit obligation based on pay and service as of that date and no longer accrue new benefits. The combined U.S. and non-U.S. pension plans resulted in a net pension liability of $1,882 million at December 31, 2016 and $2,145 million at December 31, 2015. We recognized these amounts in our consolidated balance sheets as follows:
|  | As of December 31, |
|  | 2016 |  |  | 2015 |
|  | (in millions) |
Prepaid pension assets |  | $ | 159 |  |  | $ | 69 |
Other accrued liabilities |  |  | (27 | ) |  |  | (31 | )
Accrued pension costs |  |  | (2,014 | ) |  |  | (2,183 | )
|  | $ | (1,882 | ) |  | $ | (2,145 | )
Certain of our U.S. and non-U.S. plans are underfunded and have accumulated benefit obligations in excess of plan assets. For these plans, the projected benefit obligations, accumulated benefit obligations and the fair value of plan assets were:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | As of December 31, |  |  | As of December 31, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
|  | (in millions) |
Projected benefit obligation |  | $ | 96 |  |  | $ | 1,566 |  |  | $ | 8,386 |  |  | $ | 8,139 |
Accumulated benefit obligation |  |  | 88 |  |  |  | 1,463 |  |  |  | 8,168 |  |  |  | 7,920 |
Fair value of plan assets |  |  | 2 |  |  |  | 1,247 |  |  |  | 6,451 |  |  |  | 6,252 |
We used the following weighted-average assumptions to determine our benefit obligations under the pension plans:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | As of December 31, |  |  | As of December 31, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Discount rate |  |  | 4.19% |  |  |  | 4.50% |  |  |  | 2.31% |  |  |  | 3.11% |
Expected rate of return on plan assets |  |  | 6.25% |  |  |  | 6.75% |  |  |  | 5.14% |  |  |  | 5.87% |
Rate of compensation increase |  |  | 4.00% |  |  |  | 4.00% |  |  |  | 3.29% |  |  |  | 3.18% |
Year-end discount rates for our U.S., Canadian, Eurozone and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class. At the end of 2015, we changed the approach used to measure service and interest costs for pension benefits. For 2015, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016, we measured service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. We believe the new approach provided a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. The impact of this change was a decrease in net periodic pension cost of approximately $64 million for the year ended December 31, 2016. This change did not affect the measurement of our plan obligations. We accounted for this change as a change in accounting estimate and, accordingly, accounted for it on a prospective basis. Components of Net Periodic Pension Cost: Net periodic pension cost consisted of the following:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | For the Years Ended December 31, |  |  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Service cost |  | $ | 57 |  |  | $ | 64 |  |  | $ | 57 |  |  | $ | 147 |  |  | $ | 188 |  |  | $ | 184 |
Interest cost |  |  | 61 |  |  |  | 67 |  |  |  | 67 |  |  |  | 229 |  |  |  | 307 |  |  |  | 388 |
Expected return on plan assets |  |  | (97 | ) |  |  | (93 | ) |  |  | (81 | ) |  |  | (418 | ) |  |  | (478 | ) |  |  | (485 | )
Amortization: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net loss from experience differences |  |  | 42 |  |  |  | 43 |  |  |  | 29 |  |  |  | 120 |  |  |  | 141 |  |  |  | 106 |
Prior service cost (1) |  |  | 2 |  |  |  | 2 |  |  |  | 2 |  |  |  | (3 | ) |  |  | 15 |  |  |  | – |
Settlement losses and other expenses (2) |  |  | 30 |  |  |  | 19 |  |  |  | 28 |  |  |  | 6 |  |  |  | 2 |  |  |  | 14 |
Net periodic pension cost |  | $ | 95 |  |  | $ | 102 |  |  | $ | 102 |  |  | $ | 81 |  |  | $ | 175 |  |  | $ | 207 |
| (1) | For the year ended December 31, 2015, amortization of prior service cost includes $17 million of pension curtailment losses related to employees who transitioned to JDE upon the contribution of our global coffee business. Refer to Note 2, Divestitures and Acquisitions – JDE Coffee Business Transactions, for more information.
| (2) | Settlement losses include $15 million for the year ended December 31, 2016 and $9 million for the year ended December 31, 2015 of pension settlement losses for employees who elected lump-sum payments in connection with our 2014-2018 Restructuring Program. Retired employees who elected lump-sum payments resulted in net settlement losses in 2016 of $15 million for our U.S. plans and $6 million for our non-U.S. plans and in 2015 of $10 million for our U.S. plans and $2 million for our non-U.S. plans. Employees who elected lump-sum payments in connection with our 2012-2014 Restructuring Program and cost saving initiatives and retired employees who elected lump-sum payments resulted in net settlement losses for our U.S. plans of $28 million in 2014. In addition, we incurred special termination benefit costs of $2 million in 2014 in the non-U.S. plans related to the 2012-2014 Restructuring Program. See Note 6, Restructuring Programs, for more information. We recorded an additional $90 million of pension settlement losses related to the coffee business transactions within the gain on the coffee business transactions. Refer to Note 2, Divestitures and Acquisitions – JDE Coffee Business Transactions, for more information.
For the U.S. plans, we determine the expected return on plan assets component of net periodic benefit cost using a calculated market return value that recognizes the cost over a four year period. For our non-U.S. plans, we utilize a similar approach with varying cost recognition periods for some plans, and with others, we determine the expected return on plan assets based on asset fair values as of the measurement date. As of December 31, 2016, for the combined U.S. and non-U.S. pension plans, we expected to amortize from accumulated other comprehensive earnings / (losses) into net periodic pension cost during 2017:
| • |  | an estimated $202 million of net loss from experience differences; and
| • |  | $1 million of estimated prior service credit.
We used the following weighted-average assumptions to determine our net periodic pension cost:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | For the Years Ended December 31, |  |  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |  | 2016 |  |  | 2015 |  |  | 2014 |
Discount rate |  |  | 4.50% |  |  |  | 4.20% |  |  |  | 5.10% |  |  |  | 3.11% |  |  |  | 2.99% |  |  |  | 4.03% |
Expected rate of return on plan assets |  |  | 6.75% |  |  |  | 7.25% |  |  |  | 7.75% |  |  |  | 5.87% |  |  |  | 5.96% |  |  |  | 6.17% |
Rate of compensation increase |  |  | 4.00% |  |  |  | 4.00% |  |  |  | 4.00% |  |  |  | 3.18% |  |  |  | 3.26% |  |  |  | 3.63% |
Plan Assets: The fair value of pension plan assets was determined using the following fair value measurements:
|  | As of December 31, 2016 |
|  |  |  |  | Quoted Prices |  |  | Significant |  |  |  |
Asset Category |  | Total Fair Value |  |  | in Active Markets for Identical Assets (Level 1) |  |  | Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (in millions) |
U.S. equity securities |  | $ | 1 |  |  | $ | 1 |  |  | $ | – |  |  | $ | – |
Non-U.S. equity securities |  |  | 427 |  |  |  | 427 |  |  |  | – |  |  |  | – |
Pooled funds - equity securities |  |  | 1,524 |  |  |  | 286 |  |  |  | 1,235 |  |  |  | 3 |
Total equity securities |  |  | 1,952 |  |  |  | 714 |  |  |  | 1,235 |  |  |  | 3 |
Government bonds |  |  | 3,009 |  |  |  | 37 |  |  |  | 2,972 |  |  |  | – |
Pooled funds - fixed-income securities |  |  | 756 |  |  |  | 103 |  |  |  | 618 |  |  |  | 35 |
Corporate bonds and other fixed-income securities |  |  | 852 |  |  |  | 357 |  |  |  | (43 | ) |  |  | 538 |
Total fixed-income securities |  |  | 4,617 |  |  |  | 497 |  |  |  | 3,547 |  |  |  | 573 |
Real estate |  |  | 170 |  |  |  | 98 |  |  |  | 50 |  |  |  | 22 |
Hedge funds |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Private equity |  |  | 2 |  |  |  | – |  |  |  | – |  |  |  | 2 |
Cash |  |  | 73 |  |  |  | 72 |  |  |  | 1 |  |  |  | – |
Other |  |  | 3 |  |  |  | 1 |  |  |  | – |  |  |  | 2 |
Total assets in the fair value hierarchy |  | $ | 6,817 |  |  | $ | 1,382 |  |  | $ | 4,833 |  |  | $ | 602 |
Investments measured at net asset value |  |  | 2,667 |  |  |  |  |  |  |  |  |  |  |  |  |
Total Investments at fair value |  | $ | 9,484 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | As of December 31, 2015 |
|  |  |  |  | Quoted Prices |  |  | Significant |  |  |  |
Asset Category |  | Total Fair Value |  |  | in Active Markets for Identical Assets (Level 1) |  |  | Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (in millions) |
U.S. equity securities |  | $ | 2 |  |  | $ | 2 |  |  | $ | – |  |  | $ | – |
Non-U.S. equity securities |  |  | 498 |  |  |  | 412 |  |  |  | 86 |  |  |  | – |
Pooled funds - equity securities |  |  | 1,468 |  |  |  | 275 |  |  |  | 1,193 |  |  |  | – |
Total equity securities |  |  | 1,968 |  |  |  | 689 |  |  |  | 1,279 |  |  |  | – |
Government bonds |  |  | 1,770 |  |  |  | 35 |  |  |  | 1,735 |  |  |  | – |
Pooled funds - fixed-income securities |  |  | 575 |  |  |  | 118 |  |  |  | 431 |  |  |  | 26 |
Corporate bonds and other fixed-income securities |  |  | 1,686 |  |  |  | 320 |  |  |  | 701 |  |  |  | 665 |
Total fixed-income securities |  |  | 4,031 |  |  |  | 473 |  |  |  | 2,867 |  |  |  | 691 |
Real estate |  |  | 339 |  |  |  | 109 |  |  |  | – |  |  |  | 230 |
Hedge funds |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Private equity |  |  | 2 |  |  |  | – |  |  |  | – |  |  |  | 2 |
Cash |  |  | 138 |  |  |  | 138 |  |  |  | – |  |  |  | – |
Other |  |  | 2 |  |  |  | 1 |  |  |  | – |  |  |  | 1 |
Total assets in the fair value hierarchy |  | $ | 6,480 |  |  | $ | 1,410 |  |  | $ | 4,146 |  |  | $ | 924 |
Investments measured at net asset value |  |  | 2,422 |  |  |  |  |  |  |  |  |  |  |  |  |
Total investments at fair value |  | $ | 8,902 |  |  |  |  |  |  |  |  |  |  |  |  |
We excluded plan assets of $62 million at December 31, 2016 and $66 million at December 31, 2015 from the above tables related to certain insurance contracts as they are reported at contract value, in accordance with authoritative guidance. Fair value measurements:
| • |  | Level 1 – includes primarily U.S and non-U.S. equity securities and government bonds valued using quoted prices in active markets.
| • |  | Level 2 – includes primarily pooled funds, including assets in real estate pooled funds, valued using net asset values of participation units held in common collective trusts, as reported by the managers of the trusts and as supported by the unit prices of actual purchase and sale transactions. Level 2 plan assets also include corporate bonds and other fixed-income securities, valued using independent observable market inputs, such as matrix pricing, yield curves and indices.
| • |  | Level 3 – includes investments valued using unobservable inputs that reflect the plans’ assumptions that market participants would use in pricing the assets, based on the best information available.
| • |  | Fair value estimates for pooled funds are calculated by the investment advisor when reliable quotations or pricing services are not readily available for certain underlying securities. The estimated value is based on either cost or last sale price for most of the securities valued in this fashion.
| • |  | Fair value estimates for private equity investments are calculated by the general partners using the market approach to estimate the fair value of private investments. The market approach utilizes prices and other relevant information generated by market transactions, type of security, degree of liquidity, restrictions on the disposition, latest round of financing data, company financial statements, relevant valuation multiples and discounted cash flow analyses.
| • |  | Fair value estimates for real estate investments are calculated by the investment managers using the present value of future cash flows expected to be received from the investments, based on valuation methodologies such as appraisals, local market conditions, and current and projected operating performance.
| • |  | Fair value estimates for investments in hedge fund-of-funds are calculated by the investment managers using the net asset value per share of the investment as reported by the money managers of the underlying funds.
| • |  | Fair value estimates for certain fixed-income securities such as insurance contracts are calculated based on the future stream of benefit payments discounted using prevailing interest rates based on the valuation date.
| • |  | Net asset value – primarily includes real estate funds, hedge funds and private equity investments for which net asset values are normally used.
Changes in our Level 3 plan assets, which are recorded in other comprehensive earnings / (losses), included:
Asset Category |  | January 1, 2016 Balance |  |  | Net Realized and Unrealized Gains/ (Losses) |  |  | Net Purchases, Issuances and Settlements |  |  | Net Transfers Into/(Out of) Level 3 |  |  | Currency Impact |  |  | December 31, 2016 Balance |
|  | (in millions) |
Non-U.S. equity |  | $ | – |  |  | $ | – |  |  | $ | – |  |  | $ | 3 |  |  | $ | – |  |  |  | 3 |
Pooled funds- fixed-income securities |  |  | 26 |  |  |  | 6 |  |  |  | 15 |  |  |  | (7 | ) |  |  | (5 | ) |  |  | 35 |
Corporate bond and other fixed-income securities |  |  | 665 |  |  |  | 21 |  |  |  | (41 | ) |  |  | – |  |  |  | (107 | ) |  |  | 538 |
Real estate |  |  | 230 |  |  |  | – |  |  |  | (184 | ) |  |  | (3 | ) |  |  | (21 | ) |  |  | 22 |
Hedge funds |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Private equity |  |  | 3 |  |  |  | – |  |  |  | – |  |  |  | 1 |  |  |  | – |  |  |  | 4 |
Total Level 3 investments |  | $ | 924 |  |  | $ | 27 |  |  | $ | (210 | ) |  | $ | (6 | ) |  | $ | (133 | ) |  | $ | 602 |
Asset Category |  | January 1, 2015 Balance |  |  | Net Realized and Unrealized Gains/ (Losses) |  |  | Net Purchases, Issuances and Settlements |  |  | Net Transfers Into/(Out of) Level 3 |  |  | Currency Impact |  |  | December 31, 2015 Balance |
|  | (in millions) |
Pooled funds- fixed-income securities |  | $ | 97 |  |  | $ | (1 | ) |  | $ | 25 |  |  | $ | (89 | ) |  | $ | (6 | ) |  | $ | 26 |
Corporate bond and other fixed-income securities |  |  | 749 |  |  |  | 4 |  |  |  | (50 | ) |  |  | – |  |  |  | (38 | ) |  |  | 665 |
Real estate |  |  | 292 |  |  |  | 19 |  |  |  | 61 |  |  |  | (125 | ) |  |  | (17 | ) |  |  | 230 |
Hedge funds |  |  | 829 |  |  |  | 13 |  |  |  | (312 | ) |  |  | (499 | ) |  |  | (31 | ) |  |  | – |
Private equity |  |  | 240 |  |  |  | 17 |  |  |  | (36 | ) |  |  | (206 | ) |  |  | (12 | ) |  |  | 3 |
Total Level 3 investments |  | $ | 2,207 |  |  | $ | 52 |  |  | $ | (312 | ) |  | $ | (919 | ) |  | $ | (104 | ) |  | $ | 924 |
The decreases in Level 3 pension plan investments during 2016 were primarily due to net settlements in real estate funds and the effects of currency. The decreases in Level 3 pension plan investments during 2015 were primarily due to net settlements in hedge funds and the effects of currency. The percentage of fair value of pension plan assets was:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | As of December 31, |  |  | As of December 31, |
Asset Category |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Equity securities |  |  | 33% |  |  |  | 32% |  |  |  | 29% |  |  |  | 32% |
Fixed-income securities |  |  | 63% |  |  |  | 65% |  |  |  | 57% |  |  |  | 50% |
Real estate |  |  | 4% |  |  |  | 3% |  |  |  | 5% |  |  |  | 6% |
Hedge funds |  |  | – |  |  |  | – |  |  |  | 6% |  |  |  | 7% |
Private equity |  |  | – |  |  |  | – |  |  |  | 2% |  |  |  | 3% |
Cash |  |  | – |  |  |  | – |  |  |  | 1% |  |  |  | 1% |
Other |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 1% |
Total |  |  | 100% |  |  |  | 100% |  |  |  | 100% |  |  |  | 100% |
For our U.S. plans, our investment strategy is to reduce the risk of underfunded plans in part through appropriate asset allocation within our plan assets. We attempt to maintain our target asset allocation by rebalancing between asset classes as we make contributions and monthly benefit payments. The strategy involves using indexed U.S. equity and international equity securities and actively managed U.S. investment grade fixed-income securities (which constitute 95% or more of fixed-income securities) with smaller allocations to high yield fixed-income securities. For our non-U.S. plans, the investment strategy is subject to local regulations and the asset / liability profiles of the plans in each individual country. In aggregate, the asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 34% equity securities (including investments in real estate), approximately 64% fixed-income securities and approximately 2% other alternative securities. Our investment strategy for our largest non-U.S. plan, which comprises 63% of our non-U.S. pension assets, is designed to balance risk and return by diversifying across a wide range of return-seeking and liability matching assets, invested in a range of both active and passive mandates. We target an allocation of approximately 24% in equity securities, 21% credit, 6% private markets, 9% other diversifying assets, and 40% liability matching assets. The strategy uses indexed global developed equities, actively managed global investment grade and alternative credit, global private equity and real estate, other diversifying assets including hedge funds, and other liability matching assets including a buy-in annuity policy. Employer Contributions: In 2016, we contributed $378 million (of which, $350 million was voluntarily contributed) to our U.S. pension plans and $403 million (of which, $100 million was a non-recurring contribution related to merging our legacy Cadbury plans in the United Kingdom) to our non-U.S. pension plans. In addition, employees contributed $16 million to our non-U.S. plans. We make contributions to our U.S. and non-U.S. pension plans primarily to the extent that they are tax deductible and do not generate an excise tax liability. In 2017, we estimate that our pension contributions will be $13 million to our U.S. plans and $455 million to our non-U.S. plans based on current tax laws. Of the total 2017 pension contributions, $250 million is expected to be non-recurring. Our actual contributions may be different due to many factors, including changes in tax and other benefit laws, significant differences between expected and actual pension asset performance or interest rates. Future Benefit Payments: The estimated future benefit payments from our pension plans at December 31, 2016 were (in millions):
Year ending: |  | 2017 |  |  | 2018 |  |  | 2019 |  |  | 2020 |  |  | 2021 |  |  | 2022-2026 |
U.S. Plans |  | $ | 89 |  |  | $ | 97 |  |  | $ | 103 |  |  | $ | 107 |  |  | $ | 108 |  |  | $ | 568 |
Non-U.S. Plans |  |  | 357 |  |  |  | 356 |  |  |  | 363 |  |  |  | 378 |  |  |  | 400 |  |  |  | 2,138 |
Multiemployer Pension Plans: In accordance with obligations we have under collective bargaining agreements, we made contributions to multiemployer pension plans of $25 million in 2016, $31 million in 2015 and $32 million in 2014. There are risks of participating in multiemployer pension plans that are different from single employer plans. Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan are borne by the remaining participating employers. If the Company stops participating in its multi-employer pension plans, the Company may be required to pay those plans an amount based on its allocable share of the unfunded vested benefits of the plans, referred to as a withdrawal liability. The only individually significant multiemployer plan we participate in as of December 31, 2016 is the Bakery and Confectionery Union and Industry International Pension Fund (the “Fund”). Our contributions to the Fund exceeded 5% of total contributions to the Fund for fiscal years 2016, 2015 and 2014. Our contributions to the Fund were $21 million in 2016, $27 million in 2015 and $25 million in 2014. Our contributions to other multiemployer pension plans that were not individually significant were $4 million in 2016, $4 million in 2015 and $7 million in 2014. Our contributions are based on our contribution rates under our collective bargaining agreements, the number of our eligible employees and Fund surcharges.
|  |  |  |  |  |  |  |  |  |  |  | Expiration Date |
|  |  |  |  | Pension |  | FIP / RP |  |  |  |  | of Collective- |
|  | EIN / Pension |  |  | Protection Act |  | Status Pending / |  |  | Surcharge |  | Bargaining |
Pension Fund |  | Plan Number |  |  | Zone Status |  | Implemented |  |  | Imposed |  | Agreements |
Bakery and Confectionery Union and Industry International Pension Fund |  |  | 526118572 |  |  | Red |  |  | Implemented |  |  | Yes |  |  | 2/29/2016 |
Effective January 1, 2012, the Fund’s zone status changed to “Red”. As a result of this certification, beginning in July 2012, we were charged a 10% surcharge on our contribution rates. The Fund subsequently adopted a rehabilitation plan on November 7, 2012 that required contribution increases and reductions to benefit provisions. Although our collective bargaining agreements with the Fund expired during 2016, we are obligated to make contributions to the Fund and we continue to work with the union toward reaching an agreement. The Fund’s actuarial valuation was last completed as of January 1, 2016. As of August 28, 2016, the 10% surcharge is no longer applicable but we are required to pay higher contributions under the Fund’s rehabilitation plan. Other Costs: We sponsor and contribute to employee defined contribution plans. These plans cover eligible salaried, non-union and union employees. Our contributions and costs are determined by the matching of employee contributions, as defined by the plans. Amounts charged to expense in continuing operations for defined contribution plans totaled $44 million in 2016, $45 million in 2015 and $46 million in 2014. Postretirement Benefit Plans Obligations: Our postretirement health care plans are not funded. The changes in and the amount of the accrued benefit obligation were:
|  | As of December 31, |
|  | 2016 |  |  | 2015 |
|  | (in millions) |
Accrued benefit obligation at January 1 |  | $ | 511 |  |  | $ | 538 |
Service cost |  |  | 12 |  |  |  | 15 |
Interest cost |  |  | 20 |  |  |  | 22 |
Benefits paid |  |  | (14 | ) |  |  | (10 | )
Plan amendments (1) |  |  | (149 | ) |  |  | – |
Currency |  |  | 3 |  |  |  | (22 | )
Assumption changes |  |  | 34 |  |  |  | (30 | )
Actuarial (gains) / losses |  |  | (23 | ) |  |  | (2 | )
Accrued benefit obligation at December 31 |  | $ | 394 |  |  | $ | 511 |
| (1) | Plan amendments included a change in eligibility requirements related to medical and life insurance benefits and a change in benefits for Medicare-eligible participants.
The current portion of our accrued postretirement benefit obligation of $12 million at December 31, 2016 and $11 million at December 31, 2015 was included in other accrued liabilities. We used the following weighted-average assumptions to determine our postretirement benefit obligations:
|  | U.S. Plans |  |  | Non-U.S. Plans |
|  | As of December 31, |  |  | As of December 31, |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Discount rate |  |  | 4.14% |  |  |  | 4.60% |  |  |  | 4.55% |  |  |  | 4.77% |
Health care cost trend rate assumed for next year |  |  | 6.50% |  |  |  | 6.50% |  |  |  | 5.50% |  |  |  | 5.37% |
Ultimate trend rate |  |  | 5.00% |  |  |  | 5.00% |  |  |  | 5.68% |  |  |  | 5.55% |
Year that the rate reaches the ultimate trend rate |  |  | 2020 |  |  |  | 2020 |  |  |  | 2018 |  |  |  | 2018 |
Year-end discount rates for our U.S., Canadian and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our expected health care cost trend rate is based on historical costs. At the end 2015, we changed the approach used to measure service and interest costs for other postretirement benefits. For 2015, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. For 2016, we measured service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. We believe the new approach provided a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. The impact of this change was a decrease in net periodic postretirement cost of approximately $4 million for the year ended December 31, 2016. This change does not affect the measurement of our plan obligations. We accounted for this change as a change in accounting estimate and, accordingly, accounted for it on a prospective basis. Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
|  |  |  |  | As of December 31, 2016 |
|  |  |  |  | One-Percentage-Point |
|  |  |  |  | Increase |  |  | Decrease |
|  |  |  |  | (in millions) |
Effect on postretirement benefit obligation |  |  |  |  |  | $ | 41 |  |  | $ | (33 | )
Effect on annual service and interest cost |  |  |  |  |  |  | 3 |  |  |  | (2 | )
Components of Net Periodic Postretirement Health Care Costs: Net periodic postretirement health care costs consisted of the following:
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Service cost |  | $ | 12 |  |  | $ | 15 |  |  | $ | 13 |
Interest cost |  |  | 20 |  |  |  | 22 |  |  |  | 22 |
Amortization: |  |  |  |  |  |  |  |  |  |  |  |
Net loss from experience differences |  |  | 10 |  |  |  | 13 |  |  |  | 5 |
Prior service credit (1) |  |  | (20 | ) |  |  | (7 | ) |  |  | (10 | )
Net periodic postretirement health care costs |  | $ | 22 |  |  | $ | 43 |  |  | $ | 30 |
| (1) | For the year ended December 31, 2016, amortization of prior service credit includes $9 million of curtailment gain related to a change in the eligibility requirement.
As of December 31, 2016, we expected to amortize from accumulated other comprehensive earnings / (losses) into pre-tax net periodic postretirement health care costs during 2017:
| • |  | an estimated $15 million of net loss from experience differences, and
| • |  | an estimated $40 million of prior service credit.
We used the following weighted-average assumptions to determine our net periodic postretirement health care cost:
|  | U.S. Plans |  | Non-U.S. Plans
|  | For the Years Ended December 31, |  | For the Years Ended December 31,
|  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Discount rate |  | 4.60% |  | 4.20% |  | 5.10% |  | 4.77% |  | 4.52% |  | 5.17%
Health care cost trend rate |  | 6.50% |  | 6.50% |  | 7.00% |  | 5.50% |  | 5.18% |  | 5.11%
Future Benefit Payments: Our estimated future benefit payments for our postretirement health care plans at December 31, 2016 were (in millions):
Year ending: |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | 2022-2026
U.S. Plans |  | $8 |  | $10 |  | $11 |  | $12 |  | $13 |  | $80
Non-U.S. Plans |  | 5 |  | 5 |  | 5 |  | 6 |  | 6 |  | 34
Other Costs: We made contributions to multiemployer medical plans totaling $19 million in 2016, $20 million in 2015 and $18 million in 2014. These plans provide medical benefits to active employees and retirees under certain collective bargaining agreements. Postemployment Benefit Plans Obligations: Our postemployment plans are primarily not funded. The changes in and the amount of the accrued benefit obligation at December 31, 2016 and 2015 were:
|  | 2016 |  |  | 2015 |
|  | (in millions) |
Accrued benefit obligation at January 1 |  | $ | 95 |  |  | $ | 94 |
Service cost |  |  | 7 |  |  |  | 7 |
Interest cost |  |  | 6 |  |  |  | 5 |
Benefits paid |  |  | (9 | ) |  |  | (7 | )
Assumption changes |  |  | (21 | ) |  |  | (3 | )
Actuarial gains |  |  | (7 | ) |  |  | (1 | )
Accrued benefit obligation at December 31 |  | $ | 71 |  |  | $ | 95 |
The accrued benefit obligation was determined using a weighted-average discount rate of 6.2% in 2016 and 2015, an assumed weighted-average ultimate annual turnover rate of 0.3% in 2016 and 2015, assumed compensation cost increases of 4.0% in 2016 and 2015 and assumed benefits as defined in the respective plans. Postemployment costs arising from actions that offer employees benefits in excess of those specified in the respective plans are charged to expense when incurred. Components of Net Periodic Postemployment Costs: Net periodic postemployment costs consisted of the following:
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in millions) |
Service cost |  | $ | 7 |  |  | $ | 7 |  |  | $ | 9 |
Interest cost |  |  | 6 |  |  |  | 5 |  |  |  | 6 |
Amortization of net gains |  |  | (1 | ) |  |  | – |  |  |  | – |
Net periodic postemployment costs |  | $ | 12 |  |  | $ | 12 |  |  | $ | 15 |
As of December 31, 2016, the estimated net gain for the postemployment benefit plans that we expected to amortize from accumulated other comprehensive earnings / (losses) into net periodic postemployment costs during 2017 was approximately $4 million.

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