XML 36 R21.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Employee Benefits | 12 Months Ended
--- | ---
Dec. 31, 2018
Retirement Benefits [Abstract] |
Employee Benefits | Employee Benefits Defined Contribution Savings Plans Aon maintains defined contribution savings plans for the benefit of its employees. The expense recognized for these plans is included in Compensation and benefits in the Consolidated Statements of Income. The expense for the significant plans in the U.S., U.K., Netherlands and Canada is as follows (in millions):
Years ended December 31 | 2018 |  | 2017 |  | 2016
U.S. | $ | 98 |  |  | $ | 105 |  |  | $ | 121 |
U.K. | 45 |  |  | 43 |  |  | 43 |
Netherlands and Canada | 25 |  |  | 25 |  |  | 27 |
Total | $ | 168 |  |  | $ | 173 |  |  | $ | 191 |
Pension and Other Postretirement Benefits The Company sponsors defined benefit pension and postretirement health and welfare plans that provide retirement, medical, and life insurance benefits. The postretirement health care plans are contributory, with retiree contributions adjusted annually, and the life insurance and pension plans are generally noncontributory. The significant U.S., U.K., Netherlands and Canadian pension plans are closed to new entrants. Pension Plans The following tables provide a reconciliation of the changes in the projected benefit obligations and fair value of assets for the years ended December 31, 2018 and 2017 and a statement of the funded status as of December 31, 2018 and 2017, for the material U.K., U.S., and other major plans, which are located in the Netherlands, and Canada. These plans represent approximately 90% of the Company’s projected benefit obligations.
| U.K. |  | U.S. |  | Other
(millions) | 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017
Change in projected benefit obligation |  |  |  |  |  |  |  |  |  |  |
At January 1 | $ | 4,893 |  |  | $ | 4,874 |  |  | $ | 3,155 |  |  | $ | 2,902 |  |  | $ | 1,401 |  |  | $ | 1,227 |
Service cost | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Interest cost | 109 |  |  | 123 |  |  | 99 |  |  | 96 |  |  | 27 |  |  | 26 |
Plan amendment | 13 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Settlements | (176 | ) |  | (496 | ) |  | — |  |  | — |  |  | — |  |  | — |
Actuarial loss (gain) | (297 | ) |  | 100 |  |  | (221 | ) |  | 309 |  |  | (47 | ) |  | 49 |
Benefit payments | (160 | ) |  | (146 | ) |  | (156 | ) |  | (152 | ) |  | (43 | ) |  | (39 | )
Foreign currency impact | (253 | ) |  | 438 |  |  | — |  |  | — |  |  | (67 | ) |  | 138 |
At December 31 | $ | 4,129 |  |  | $ | 4,893 |  |  | $ | 2,877 |  |  | $ | 3,155 |  |  | $ | 1,271 |  |  | $ | 1,401 |
Accumulated benefit obligation at end of year | $ | 4,129 |  |  | $ | 4,893 |  |  | $ | 2,877 |  |  | $ | 3,155 |  |  | $ | 1,247 |  |  | $ | 1,373 |
Change in fair value of plan assets |  |  |  |  |  |  |  |  |  |  |
At January 1 | $ | 5,906 |  |  | $ | 5,675 |  |  | $ | 1,958 |  |  | $ | 1,683 |  |  | $ | 1,256 |  |  | $ | 1,076 |
Actual return on plan assets | (125 | ) |  | 274 |  |  | (141 | ) |  | 308 |  |  | (19 | ) |  | 70 |
Employer contributions | 97 |  |  | 86 |  |  | 135 |  |  | 119 |  |  | 20 |  |  | 21 |
Settlements | (176 | ) |  | (496 | ) |  | — |  |  | — |  |  | — |  |  | — |
Benefit payments | (160 | ) |  | (146 | ) |  | (156 | ) |  | (152 | ) |  | (43 | ) |  | (39 | )
Foreign currency impact | (317 | ) |  | 513 |  |  | — |  |  | — |  |  | (59 | ) |  | 128 |
At December 31 | $ | 5,225 |  |  | $ | 5,906 |  |  | $ | 1,796 |  |  | $ | 1,958 |  |  | $ | 1,155 |  |  | $ | 1,256 |
Market related value at end of year | $ | 5,225 |  |  | $ | 5,906 |  |  | $ | 1,981 |  |  | $ | 1,926 |  |  | $ | 1,155 |  |  | $ | 1,256 |
Amount recognized in Statement of Financial Position at December 31 |  |  |  |  |  |  |  |  |  |  |
Funded status | $ | 1,096 |  |  | $ | 1,013 |  |  | $ | (1,081 | ) |  | $ | (1,197 | ) |  | $ | (116 | ) |  | $ | (145 | )
Unrecognized prior-service cost | 30 |  |  | 19 |  |  | 3 |  |  | 5 |  |  | (7 | ) |  | (7 | )
Unrecognized loss | 1,106 |  |  | 1,217 |  |  | 1,705 |  |  | 1,701 |  |  | 440 |  |  | 459 |
Net amount recognized | $ | 2,232 |  |  | $ | 2,249 |  |  | $ | 627 |  |  | $ | 509 |  |  | $ | 317 |  |  | $ | 307 |
In September 2018, the Company made a cash contribution of $100 million to the qualified U.S. pension plan, which allowed the pension contribution tax deduction to be taken at the 2017 federal tax rate of 35%. In July 2017, the Company made a non-cash contribution of approximately $80 million to its U.S. pension plan. Amounts recognized in the Consolidated Statements of Financial Position consist of (in millions):
| U.K. |  | U.S. |  | Other
| 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017
Prepaid benefit cost (1) | $ | 1,113 |  |  | $ | 1,034 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Accrued benefit liability - current(2) | (1 | ) |  | (1 | ) |  | (46 | ) |  | (43 | ) |  | (5 | ) |  | (5 | )
Accrued benefit liability - non-current(3) | (16 | ) |  | (20 | ) |  | (1,035 | ) |  | (1,154 | ) |  | (111 | ) |  | (140 | )
Accumulated other comprehensive loss | 1,136 |  |  | 1,236 |  |  | 1,708 |  |  | 1,706 |  |  | 433 |  |  | 452 |
Net amount recognized | $ | 2,232 |  |  | $ | 2,249 |  |  | $ | 627 |  |  | $ | 509 |  |  | $ | 317 |  |  | $ | 307 |
(1) | Included in Prepaid pension
(2) | Included in Other current liabilities
(3) | Included in Pension, other postretirement, and postemployment liabilities
Amounts recognized in Accumulated other comprehensive loss (income) that have not yet been recognized as components of net periodic benefit cost at December 31, 2018 and 2017 consist of (in millions):
| U.K. |  | U.S. |  | Other
| 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017
Net loss | $ | 1,106 |  |  | $ | 1,217 |  |  | $ | 1,705 |  |  | $ | 1,701 |  |  | $ | 440 |  |  | $ | 459 |
Prior service cost (income) | 30 |  |  | 19 |  |  | 3 |  |  | 5 |  |  | (7 | ) |  | (7 | )
Total | $ | 1,136 |  |  | $ | 1,236 |  |  | $ | 1,708 |  |  | $ | 1,706 |  |  | $ | 433 |  |  | $ | 452 |
In 2018, U.S. plans with a projected benefit obligation (“PBO”) and an accumulated benefit obligation (“ABO”) in excess of the fair value of plan assets had a PBO of $2.9 billion, an ABO of $2.9 billion, and plan assets with a fair value of $1.8 billion. U.K. plans with a PBO in excess of the fair value of plan assets had a PBO of $47 million and plan assets with a fair value of $30 million, and U.K. plans with an ABO in excess of the fair value of plan assets had an ABO of $47 million and plan assets with a fair value of $30 million. Other plans with a PBO in excess of the fair value of plan assets had a PBO of $1.2 billion and plan assets with a fair value of $1.1 billion, and other plans with an ABO in excess of the fair value of plan assets had an ABO of $363 million and plan assets with a fair value of $271 million. In 2017, U.S. plans with a PBO and an ABO in excess of the fair value of plan assets had a PBO of $3.2 billion, an ABO of $3.2 billion, and plan assets of $2.0 billion. U.K. plans with a PBO in excess of the fair value of plan assets had a PBO of $52 million and plan assets with a fair value of $30 million, and plans with an ABO in excess of the fair value of plan assets had an ABO of $52 million and plan assets with a fair value of $30 million. Other plans with a PBO in excess of the fair value of plan assets had a PBO of $1.4 billion and plan assets with a fair value of $1.2 billion, and plans with an ABO in excess of the fair value of plan assets had an ABO of $1.3 billion and plan assets with a fair value of $1.2 billion. Service cost is reported in Compensation and benefits and all other components are reported in Other income (expense) as follows (in millions):
| U.K. |  | U.S. |  | Other
| 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Service cost | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest cost | 109 |  |  | 123 |  |  | 158 |  |  | 99 |  |  | 96 |  |  | 111 |  |  | 27 |  |  | 26 |  |  | 29 |
Expected return on plan assets, net of administration expenses | (192 | ) |  | (199 | ) |  | (243 | ) |  | (144 | ) |  | (140 | ) |  | (156 | ) |  | (45 | ) |  | (47 | ) |  | (48 | )
Amortization of prior-service cost | 1 |  |  | 1 |  |  | 2 |  |  | 2 |  |  | 2 |  |  | 2 |  |  | — |  |  | — |  |  | — |
Amortization of net actuarial loss | 28 |  |  | 31 |  |  | 31 |  |  | 59 |  |  | 50 |  |  | 50 |  |  | 12 |  |  | 11 |  |  | 10 |
Net periodic benefit (income) cost | (54 | ) |  | (44 | ) |  | (52 | ) |  | 16 |  |  | 8 |  |  | 7 |  |  | (6 | ) |  | (10 | ) |  | (9 | )
Settlement expense | 37 |  |  | 125 |  |  | 61 |  |  | — |  |  | — |  |  | 158 |  |  | — |  |  | — |  |  | — |
Total net periodic benefit cost (income) | $ | (17 | ) |  | $ | 81 |  |  | $ | 9 |  |  | $ | 16 |  |  | $ | 8 |  |  | $ | 165 |  |  | $ | (6 | ) |  | $ | (10 | ) |  | $ | (9 | )
The Company uses a full-yield curve approach in the estimation of the service and interest cost components of net periodic pension and postretirement benefit cost for its major pension and other postretirement benefit plans; this was obtained by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. In March 2017, the Company approved a plan to offer a voluntary one-time lump sum payment option to certain eligible employees of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during 2018. As of December 31, 2018, lump sum payments from plan assets of £139 million ($176 million using December 31, 2018 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the fourth quarter of 2018, which in aggregate resulted in a reduction to the projected benefit obligation of £122 million ($154 million using December 31, 2018 exchange rates) as well as a non-cash settlement charge of £28 million ($37 million using average exchange rates) for the year ended December 31, 2018. In total for 2017, lump sum payments from plan assets of £371 million ($496 million using December 31, 2017 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the fourth quarter of 2017, which in aggregate resulted in a reduction to the projected benefit obligation of £325 million ($434 million using December 31, 2017 exchange rates) as well as a non-cash settlement charge of £93 million ($125 million using average December 31, 2017 exchange rate) in the fourth quarter of 2017. In March 2016, the Company announced a plan to offer a voluntary one-time lump sum payment option to certain eligible former employees under one of the Company’s U.K. pension plans that, if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during the second quarter of 2016. In total, lump sum payments from plan assets of £116 million ($159 million using June 30, 2016 exchange rates) were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.K. pension plan during the second quarter of 2016, which in aggregate resulted in a reduction to the projected benefit obligation of £103 million ($141 million using June 30, 2016 Exchange rates) as well as a non-cash settlement charge of £42 million ($61 million using average June 30, 2016 exchange rate) in the second quarter of 2016. In August 2016, the Company announced a plan to offer a voluntary one-time lump sum payment option to certain eligible former employees under one of the Company’s U.S. pension plans, that if accepted, would settle the Company’s pension obligations to them. The lump sum cash payment offer closed during the fourth quarter of 2016. In total, lump sum payments from plan assets of $281 million were paid. As a result of this settlement, the Company remeasured the assets and liabilities of the U.S. pension plan during the fourth quarter of 2016, which in aggregate resulted in a reduction to the projected benefit obligation of $325 million as well as a non-cash settlement charge of $158 million in the fourth quarter of 2016. The weighted-average assumptions used to determine benefit obligations are as follows:
| U.K. |  | U.S. (1) |  | Other
| 2018 |  | 2017 |  | 2018 |  | 2017 |  | 2018 |  | 2017
Discount rate | 2.95% |  | 2.63% |  | 3.92 - 4.26% |  | 3.27 - 3.61% |  | 1.89 - 3.88% |  | 1.78 - 3.39%
Rate of compensation increase | 3.73 - 4.23% |  | 3.70 - 4.20% |  | N/A |  | N/A |  | 1.00 - 3.00% |  | 1.00 - 3.00%
Underlying price inflation | 1.88% |  | 1.87% |  | N/A |  | N/A |  | 2.00% |  | 2.00%
(1) | U.S. pension plans are frozen and therefore not impacted by compensation increases or price inflation.
The weighted-average assumptions used to determine the net periodic benefit cost are as follows:
| U.K. |  | U.S. |  | Other
| 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Discount rate | 2.63% |  | 2.77% |  | 3.96% |  | 3.27 - 3.61% |  | 3.53 - 4.11% |  | 3.69 - 4.43% |  | 1.78 - 3.39% |  | 1.85 - 3.81% |  | 2.43 - 3.96%
Expected return on plan assets, net of administration expenses | 3.34% |  | 3.36% |  | 4.55% |  | 7.71% |  | 7.88% |  | 7.81% |  | 1.70 - 4.85% |  | 2.68 - 5.15% |  | 3.47 - 4.95%
Rate of compensation increase | 3.70 - 4.20% |  | 3.70 - 4.20% |  | 3.63 - 4.13% |  | N/A |  | N/A |  | N/A |  | 1.00 - 3.00% |  | 1.00 - 3.50% |  | 2.00 - 3.50%
The amounts in Accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2019, not including voluntary one-time lump sum payments, are $55 million in the U.S. and $42 million outside the U.S. Expected Return on Plan Assets To determine the expected long-term rate of return on plan assets, the historical performance, investment community forecasts and current market conditions are analyzed to develop expected returns for each asset class used by the plans. The expected returns for each asset class are weighted by the target allocations of the plans. The expected return of 7.71% on U.S. plan assets reflects a portfolio that is seeking asset growth through a higher equity allocation while maintaining prudent risk levels. The portfolio contains certain assets that have historically resulted in higher returns, as well as other financial instruments to minimize downside risk. No plan assets are expected to be returned to the Company during 2019. Fair value of plan assets The Company determined the fair value of plan assets through numerous procedures based on the asset class and available information. Refer to Note 16 “Fair Value Measurements and Financial Instruments” for a description of the procedures performed to determine the fair value of the plan assets. The fair values of the Company’s U.S. pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):
|  |  | Fair Value Measurements Using
Asset Category | Balance at December 31, 2018 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents (1) | $ | 130 |  |  | $ | 130 |  |  | $ | — |  |  | $ | — |
Equity investments: |  |  |  |  |  |  |
Large cap domestic | 294 |  |  | 294 |  |  | — |  |  | — |
Small cap domestic | 14 |  |  | 14 |  |  | — |  |  | — |
International | 76 |  |  | 76 |  |  | — |  |  | — |
Equity derivatives | (14 | ) |  | — |  |  | (14 | ) |  | — |
Pooled funds: |  |  |  |  |  |  |
International (2) | 235 |  |  | — |  |  | — |  |  | — |
Large cap domestic (2) | 8 |  |  | — |  |  | — |  |  | — |
Small cap domestic (2) | 42 |  |  | — |  |  | — |  |  | — |
Fixed income investments: (3) |  |  |  |  |  |  |
Corporate bonds | 111 |  |  | — |  |  | 111 |  |  | — |
Government and agency bonds | 126 |  |  | 95 |  |  | 31 |  |  | — |
Asset-backed securities | 2 |  |  | — |  |  | 2 |  |  | — |
Pooled funds: |  |  |  |  |  |  |  |  |  |  |
Government and agency bonds (2) | 95 |  |  | — |  |  | — |  |  | — |
Corporate bonds (2) | 322 |  |  | — |  |  | — |  |  | — |
Other investments: |  |  |  |  |  |  |
Real estate and REITs (4) | 78 |  |  | 78 |  |  | — |  |  | — |
Alternative investments (2) (5) | 277 |  |  | — |  |  | — |  |  | — |
Total | $ | 1,796 |  |  | $ | 687 |  |  | $ | 130 |  |  | $ | — |
(1) | Consists of cash and institutional short-term investment funds.
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3) | Consists of corporate and government bonds, asset-backed securities, and fixed-income derivatives.
(4) | Consists of exchange traded real estate investment trusts (“REITs”).
(5) | Consists of limited partnerships, private equity, and hedge funds.
|  |  | Fair Value Measurements Using
Asset Category | Balance at December 31, 2017 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents (1) | $ | 56 |  |  | $ | 56 |  |  | $ | — |  |  | $ | — |
Equity investments: |  |  |  |  |  |  |
Large cap domestic | 313 |  |  | 313 |  |  | — |  |  | — |
Small cap domestic | 17 |  |  | 17 |  |  | — |  |  | — |
International | 90 |  |  | 90 |  |  | — |  |  | — |
Equity derivatives | 111 |  |  | — |  |  | 111 |  |  | — |
Pooled funds: |  |  |  |  |  |  |
International (2) | 270 |  |  | — |  |  | — |  |  | — |
Large cap domestic (2) | 12 |  |  | — |  |  | — |  |  | — |
Small cap domestic (2) | 114 |  |  | — |  |  | — |  |  | — |
Fixed income investments: (3) |  |  |  |  |  |  |
Corporate bonds | 110 |  |  | — |  |  | 110 |  |  | — |
Government and agency bonds | 148 |  |  | 114 |  |  | 34 |  |  | — |
Pooled funds: |  |  |  |  |  |  |
Corporate bonds (2) | 290 |  |  | — |  |  | — |  |  | — |
Other investments: |  |  |  |  |  |  |
Real estate and REITs (4) | 82 |  |  | 82 |  |  | — |  |  | — |
Alternative investments (2) (5) | 345 |  |  | — |  |  | — |  |  | — |
Total | $ | 1,958 |  |  | $ | 672 |  |  | $ | 255 |  |  | $ | — |
(1) | Consists of cash and institutional short-term investment funds.
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3) | Consists of corporate and government bonds, asset-backed securities, and fixed-income derivatives.
(4) | Consists of exchange traded REITs.
(5) | Consists of limited partnerships, private equity, and hedge funds.
The fair values of the Company’s major U.K. pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):
|  |  | Fair Value Measurements Using
| Balance at December 31, 2018 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents (1) | $ | 96 |  |  | $ | 96 |  |  | $ | — |  |  | $ | — |
Equity investments: |  |  |  |  |  |  |  |
Pooled funds: |  |  |  |  |  |  |
Global (2) | 209 |  |  | — |  |  | — |  |  | — |
Europe (2) | 3 |  |  | — |  |  | — |  |  | — |
Fixed income investments: (3) |  |  |  |  |  |  |
Derivatives (4) | (949 | ) |  | — |  |  | (949 | ) |  | — |
Fixed income securities (5) | 2,446 |  |  | 2,079 |  |  | 367 |  |  | — |
Annuities | 1,688 |  |  | — |  |  | — |  |  | 1,688 |
Pooled funds: |  |  |  |  |  |  |
Derivatives (2) | 39 |  |  | — |  |  | — |  |  | — |
Fixed income securities (2) | 850 |  |  | — |  |  | — |  |  | — |
Other investments: |  |  |  |  |  |  |
Real estate (2) (6) | 149 |  |  | — |  |  | — |  |  | — |
Alternative investments (2) (7) | 694 |  |  | — |  |  | — |  |  | — |
Total | $ | 5,225 |  |  | $ | 2,175 |  |  | $ | (582 | ) |  | $ | 1,688 |
(1) | Consists of cash and institutional short-term investment funds.
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3) | Consists of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles.
(4) | Consists of equity securities and equity derivatives, including repurchase agreements.
(5) | Consists of corporate and government bonds.
(6) | Consists of property funds and trusts holding direct real estate investments.
(7) | Consists of limited partnerships, private equity, and hedge funds.
|  |  | Fair Value Measurements Using
| Balance at December 31, 2017 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents (1) | $ | 209 |  |  | $ | 209 |  |  | $ | — |  |  | $ | — |
Equity investments: |  |  |  |  |  |  |
Pooled funds: |  |  |  |  |  |  |  |  |  |  |
Global (2) | 401 |  |  | — |  |  | — |  |  | — |
Europe (2) | 6 |  |  | — |  |  | — |  |  | — |
Fixed income investments: (3) |  |  |  |  |  |  |  |  |  |  |
Derivatives (4) | (771 | ) |  | — |  |  | (771 | ) |  | — |
Fixed income securities (5) | 2,787 |  |  | 2,362 |  |  | 425 |  |  | — |
Annuities | 1,909 |  |  | — |  |  | — |  |  | 1,909 |
Pooled funds: |  |  |  |  |  |  |  |  |  |  |
Derivatives (2) | 57 |  |  | — |  |  | — |  |  | — |
Fixed income securities (2) | 251 |  |  | — |  |  | — |  |  | — |
Other investments: |  |  |  |  |  |  |
Real estate (2) (6) | 146 |  |  | — |  |  | — |  |  | — |
Alternative investments (2) (7) | 911 |  |  | — |  |  | — |  |  | — |
Total | $ | 5,906 |  |  | $ | 2,571 |  |  | $ | (346 | ) |  | $ | 1,909 |
(1) | Consists of cash and institutional short-term investment funds.
(2) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(3) | Consists of various equity, fixed income, commodity, and real estate mutual fund type investment vehicles.
(4) | Consists of equity securities and equity derivatives, including repurchase agreements.
(5) | Consists of corporate and government bonds.
(6) | Consists of property funds and trusts holding direct real estate investments.
(7) | Consists of limited partnerships, private equity, and hedge funds.
The following table presents the changes in the Level 3 fair-value category in the Company’s U.K. pension plans for the years ended December 31, 2018 and December 31, 2017 (in millions):
Fair Value Measurements Using Level 3 Inputs | Annuities
Balance at January 1, 2017 | $ | 1,773 |
Actual return on plan assets: |
Relating to assets still held at December 31, 2017 | (66 | )
Purchases, sales and settlements—net | 45 |
Foreign exchange | 157 |
Balance at December 31, 2017 | 1,909 |
Actual return on plan assets: |
Relating to assets still held at December 31, 2018 | (122 | )
Purchases, sales and settlements—net | 7 |
Foreign exchange | (106 | )
Balance at December 31, 2018 | $ | 1,688 |
The fair values of the Company’s other major pension plan assets at December 31, 2018 and December 31, 2017, by asset category, are as follows (in millions):
|  |  | Fair Value Measurements Using
| Balance at December 31, 2018 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents | $ | 10 |  |  | $ | 10 |  |  | $ | — |  |  | $ | — |
Equity investments: |  |  |  |  |  |  |
Pooled funds: |  |  |  |  |  |  |
Global (1) | 281 |  |  | — |  |  | — |  |  | — |
Fixed income investments: |  |  |  |  |  |  |
Derivatives (2) | 9 |  |  | — |  |  | 9 |  |  | — |
Pooled funds: |  |  |  |  |  |  |
Fixed income securities (1) | 766 |  |  | — |  |  | — |  |  | — |
Derivatives (1)(2) | 16 |  |  | — |  |  | — |  |  | — |
Other investments: |  |  |  |  |  |  |
Alternative investments (1) (3) | 63 |  |  | — |  |  | — |  |  | — |
Pooled funds: |  |  |  |  |  |  |
REITs (1) (4) | 10 |  |  | — |  |  | — |  |  | — |
Total | $ | 1,155 |  |  | $ | 10 |  |  | $ | 9 |  |  | $ | — |
(1) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(2) | Consists of corporate and government bonds and fixed-income derivatives.
(3) | Consists of limited partnerships, private equity, and hedge funds.
(4) | Consists of property funds and trusts holding direct real estate investments.
|  |  | Fair Value Measurements Using
| Balance at December 31, 2017 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents | $ | 11 |  |  | $ | 11 |  |  | $ | — |  |  | $ | — |
Equity investments: |  |  |  |  |  |  |
Pooled funds: |  |  |  |  |  |  |
Global (1) | 370 |  |  | — |  |  | — |  |  | — |
North America (1) | 26 |  |  | — |  |  | — |  |  | — |
Fixed income investments: |  |  |  |  |  |  |  |  |  |
Fixed income securities (2) | 211 |  |  | — |  |  | 211 |  |  | — |
Derivatives (2) | 40 |  |  | — |  |  | 40 |  |  | — |
Pooled funds: |  |  |  |  |  |  |  |  |  |
Fixed income securities (1) | 566 |  |  | — |  |  | — |  |  | — |
Other investments: |  |  |  |  |  |  |  |  |  |
Alternative investments (1) (3) | 26 |  |  | — |  |  | — |  |  | — |
Pooled funds: |  |  |  |  |  |  |  |  |  |
REITs (1) (4) | 6 |  |  | — |  |  | — |  |  | — |
Total | $ | 1,256 |  |  | $ | 11 |  |  | $ | 251 |  |  | $ | — |
(1) | Certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the above table are intended to permit reconciliation of the fair values to the amounts presented in the plan assets contained in this Note.
(2) | Consists of corporate and government bonds and fixed-income derivatives.
(3) | Consists of limited partnerships, private equity, and hedge funds.
(4) | Consists of property funds and trusts holding direct real estate investments.
Investment Policy and Strategy The U.S. investment policy, as established by the Aon Retirement Plan Governance and Investment Committee (“RPGIC”), seeks reasonable asset growth at prudent risk levels within target allocations, which are 50% equity investments, 27% fixed income investments, and 23% other investments. Aon believes that plan assets are well-diversified and are of appropriate quality. The investment portfolio asset allocation is reviewed quarterly and re-balanced to be within policy target allocations. The investment policy is reviewed at least annually and revised, as deemed appropriate by the RPGIC. The investment policies for international plans are generally established by the local pension plan trustees and seek to maintain the plans’ ability to meet liabilities and to comply with local minimum funding requirements. Plan assets are invested in diversified portfolios that provide adequate levels of return at an acceptable level of risk. The investment policies are reviewed at least annually and revised, as deemed appropriate to ensure that the objectives are being met. At December 31, 2018, the weighted average targeted allocation for the U.K. and non-U.S. plans was 12% for equity investments, 79% for fixed income investments, and 9% for other investments. Cash Flows Contributions Based on current assumptions, in 2019, the Company expects to contribute approximately $80 million, $46 million, and $19 million to its U.K., U.S. and other significant international pension plans, respectively. Estimated Future Benefit Payments Estimated future benefit payments for plans, not including voluntary one-time lump sum payments, are as follows at December 31, 2018 (in millions):
|  | U.K. |  | U.S. |  | Other
2019 |  | $ | 137 |  |  | $ | 178 |  |  | $ | 42 |
2020 |  | 139 |  |  | 182 |  |  | 43 |
2021 |  | 144 |  |  | 185 |  |  | 44 |
2022 |  | 149 |  |  | 187 |  |  | 45 |
2023 |  | 152 |  |  | 177 |  |  | 46 |
2024 – 2028 |  | 795 |  |  | 879 |  |  | 248 |
U.S. and Canadian Other Postretirement Benefits The following table provides an overview of the accumulated projected benefit obligation, fair value of plan assets, funded status and net amount recognized as of December 31, 2018 and 2017 for the Company’s other significant postretirement benefit plans located in the U.S. and Canada (in millions):
| 2018 |  | 2017
Accumulated projected benefit obligation | $ | 91 |  |  | $ | 99 |
Fair value of plan assets | 14 |  |  | 17 |
Funded status | (77 | ) |  | (82 | )
Unrecognized prior-service credit | (1 | ) |  | (1 | )
Unrecognized (gain) loss | (6 | ) |  | (3 | )
Net amount recognized | $ | (84 | ) |  | $ | (86 | )
Other information related to the Company’s other postretirement benefit plans are as follows:
| 2018 |  | 2017 |  | 2016
Net periodic benefit cost recognized (millions) | $3 |  | $1 |  | $5
Weighted-average discount rate used to determine future benefit obligations | 3.91 - 4.26% |  | 3.32 - 3.64% |  | 3.71 - 4.15%
Weighted-average discount rate used to determine net periodic benefit costs | 3.32 - 3.64% |  | 3.71 - 4.15% |  | 3.99 - 4.33%
Amounts recognized in Accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost at December 31, 2018 are $1 million and $6 million of prior service credit and net gain, respectively. The amount in Accumulated other comprehensive income expected to be recognized as a component of net periodic benefit cost during 2019 is $1.7 million and $0.1 million of net gain and prior service credit, respectively. Based on current assumptions, the Company expects:
• | To contribute $5 million to fund significant other postretirement benefit plans during 2019.
• | Estimated future benefit payments will be approximately $5 million each year for 2019 through 2023, and $25 million in aggregate for 2024-2028.
The accumulated postretirement benefit obligation is increased by $5 million and decreased by $5 million by a respective 1% increase or decrease to the assumed health care trend rate. The service cost and interest cost components of net periodic benefits cost is increased by $0.5 million and decreased by $0.4 million by a respective 1% increase or decrease to the assumed health care trend rate. For most of the participants in the U.S. plan, Aon’s liability for future plan cost increases for pre-65 and Medical Supplement plan coverage is limited to 5% per annum. Although the net employer trend rates range from 4% to 7% per year, because of this cap, these plans are effectively limited to 5% per year in the future.

X
- References No definition available. + Details
Name: | us-gaap_CompensationAndRetirementDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration