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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2020
Retirement Benefits [Abstract] |
Employee Benefit Plans | Employee Benefit Plans Defined Contribution Plans The Company and its subsidiaries maintain defined contribution savings plans covering the majority of their employees. Under the plans, eligible participants may elect to contribute a specified percentage of their salaries and the Company makes matching contributions, each subject to certain limitations. The plans provide tax-deferred amounts for each participant, consisting of employee elective contributions, company matching and discretionary company contributions. In response to the COVID-19 pandemic, the Company has taken several actions since the onset of the pandemic to manage discretionary costs, including the temporary suspension of certain employee-related benefits such as company matching contributions to the plans during most of 2020. Expenses for company contributions under these plans totaled $38 million, $65 million and $44 million in 2020, 2019 and 2018, respectively. Effective January 1, 2021, company matching contributions were re-established to equal 100% on the first 1% contributed and 25% on the next 4% contributed for eligible participants. In connection with the acquisition of First Data (see Note 4), the Company assumed defined contribution savings plans and defined contribution pension plans covering substantially all employees of the former First Data. Effective January 1, 2020, the 401(k) Savings Plan of Fiserv, Inc. (the “Plan”) was amended to freeze the Plan to new participants and contributions and to allow for the merger of the Plan into the surviving Fiserv 401(k) Savings Plan (f/k/a the First Data Corporation Incentive Savings Plan) (“New Fiserv Plan”) for the purpose of providing a single plan covering current and former employees of both companies and their affiliates. Participants in the Plan became eligible to make salary reduction contributions in the New Fiserv Plan effective January 1, 2020. The merger of the Plan into the New Fiserv Plan was completed in the third quarter of 2020. Defined Benefit Plans The Company maintains noncontributory defined benefit pension plans covering a portion of the employees in the United Kingdom (“U.K.”), the U.S., Germany and Austria. The majority of these plans are frozen and provide benefits to eligible employees based on an employee’s average final compensation and years of service. The following table provides a reconciliation of benefit obligations, plan assets and the funded status of these defined benefit plans as of and for the years ended December 31:
|  | U.K. plan |  | U.S. and other plans
(In millions) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Change in projected benefit obligations: |  |  |  |  |  |  |  |
Balance at beginning of year |  | $ | (672) |  |  | $ | — |  |  | $ | (225) |  |  | $ | — |
Acquired First Data plans (see Note 4) |  | — |  |  | (687) |  |  | — |  |  | (219) |
Interest cost |  | (14) |  |  | (6) |  |  | (6) |  |  | (3) |
Actuarial gain (loss) |  | (93) |  |  | 28 |  | (18) |  |  | (15) |
Benefits paid |  | 30 |  |  | 12 |  | 13 |  |  | 12 |
Foreign currency translation |  | (28) |  |  | (19) |  |  | (2) |  |  | — |
Balance at end of year |  | $ | (777) |  |  | $ | (672) |  |  | $ | (238) |  |  | $ | (225) |
Change in fair value of plan assets: |  |  |  |  |  |  |  |
Balance at beginning of year |  | $ | 860 |  |  | $ | — |  |  | $ | 167 |  |  | $ | — |
Acquired First Data plans (see Note 4) |  | — |  |  | 866 |  | — |  |  | 160 |
Actual return on plan assets |  | 110 |  |  | (19) |  |  | 22 |  |  | 19 |
Company contribution |  | — |  |  | — |  |  | 5 |  |  | — |
Benefits paid |  | (30) |  |  | (12) |  |  | (13) |  |  | (12) |
Foreign currency translation |  | 34 |  |  | 25 |  | — |  |  | — |
Balance at end of year |  | $ | 974 |  |  | $ | 860 |  |  | $ | 181 |  |  | $ | 167 |
Funded status of the plans |  | $ | 197 |  |  | $ | 188 |  |  | $ | (57) |  |  | $ | (58) |
The funded status of the defined benefit plans is recognized as an asset or a liability within other long-term assets or within other long-term liabilities in the consolidated balance sheets. Projected Benefit Obligations The Company records amounts relating to its defined benefit pension plan obligations and their associated expenses based on calculations which include actuarial assumptions, including the discount rate and the expected rate of return on plan assets. Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience will affect the amount of pension expense in future periods. The Company reviews its actuarial assumptions at least annually and modifies the assumptions based on current rates and trends, as appropriate. The effects of modifications are recognized immediately within the consolidated balance sheets, and are generally amortized to operating income over future periods, with the deferred amount recorded in accumulated other comprehensive loss within the consolidated balance sheets. The Company’s funding policy is to contribute quarterly an amount as recommended by the plans’ independent actuaries. Company contributions under these plans totaled $5 million in 2020 and are expected to be nominal in 2021. The Company employs a building block approach in determining the expected long-term rate of return for plan assets with proper consideration of diversification and re-balancing. Historical markets are studied and long-term historical relationships between equities and fixed-income securities are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. Peer data and historical returns are reviewed to check for reasonableness and appropriateness. The weighted-average rate assumptions used in the measurement of the Company’s projected benefit obligations and net periodic benefit expense as of and for the years ended December 31 were as follows:
|  | Projected Benefit Obligations |  | Net Periodic Benefit Expense
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Discount rate |  | 1.56 | % |  | 2.28 | % |  | 1.95 | % |  | 2.16 | %
Expected long-term return on plan assets |  | n/a |  | n/a |  | 2.84 | % |  | 2.83 | %
The estimated future benefit payments are expected to be as follows:
(In millions) |  |
Year Ending December 31, |  |
2021 |  | $ | 32 |
2022 |  | 33 |
2023 |  | 36 |
2024 |  | 36 |
2025 |  | 37 |
2026-2030 |  | 200 |
Plan Assets The Company’s investment strategy for the U.K. plan is to allocate the assets into two pools: (i) off-risk assets whereby the focus is risk management, protection and insurance relative to the liability target invested in, but not limited to, debt, U.K. government bonds and U.K. government index-linked bonds; and (ii) on-risk assets whereby the focus is on return generation and taking risk in a controlled manner. Such assets could include equities, government bonds, high-yield bonds, property, commodities or hedge funds. The Company’s target allocation for the U.K. plan is 50% on-risk assets and 50% off-risk assets. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset and liability studies. The Company’s investment strategy for the U.S. plan employs a total return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. The investment portfolio contains a diversified blend of equity and fixed-income investments. The Company sets an allocation mix necessary to support the underlying plan liabilities as influenced significantly by the demographics of the participants and the frozen nature of the plan. The Company’s target allocation for the U.S. plan based on the investment policy at December 31, 2020 was 50% on-risk assets and 50% off-risk assets. The following table sets forth the Company’s plan assets carried and measured at fair value on a recurring basis at December 31:
(In millions) |  |  |  |  |
2020 | Level 1 |  | Level 2 |  | Level 3
Cash and cash equivalents | $ | 24 |  |  | $ | — |  |  | $ | — |
Equity securities (1) | 20 |  |  | 175 |  |  | — |
Fixed income securities (2) | 213 |  |  | 165 |  |  | — |
Other investments (3) | 326 |  |  | (4) |  |  | 9 |
Total investments at fair value | $ | 583 |  |  | $ | 336 |  |  | $ | 9 |
(In millions) |  |  |  |  |
2019 | Level 1 |  | Level 2 |  | Level 3
Cash and cash equivalents | $ | 17 |  |  | $ | — |  |  | $ | — |
Equity securities (1) | 134 |  |  | 123 |  |  | — |
Fixed income securities (2) | 188 |  |  | 214 |  |  | — |
Other investments (3) | 315 |  |  | (22) |  |  | 10 |
Total investments at fair value | $ | 654 |  |  | $ | 315 |  |  | $ | 10 |
(1)Equity securities primarily consist of domestic, international and global equity pooled funds. (2)Fixed income securities primarily consist of debt securities issued by U.S. and foreign government agencies and debt obligations issued by a variety of private and public corporations. (3)Other investments primarily consist of index linked government bonds, derivatives and other investments. In addition to the investments presented within the fair value hierarchy table above, the Company’s plan assets include investments in various hedge funds that are measured at fair value using the net asset value per share (or its equivalent) practical expedient. Such investments totaled $227 million and $48 million at December 31, 2020 and 2019, respectively. Net Periodic Benefit Cost The components of net periodic benefit expense were as follows for the years ended December 31:
(In millions) |  | 2020 |  | 2019
Interest cost |  | $ | 20 |  |  | $ | 9 |
Expected return on plan assets |  | (24) |  |  | (10) |
Net periodic benefit income |  | $ | (4) |  |  | $ | (1) |

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