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BENEFIT PLANS (Tables) | 12 Months Ended
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Dec. 31, 2019
Schedule of Net Funded Status | Information with respect to the Company's benefit plans' assets and obligations as of December 31 was as follows:
|  | Pension Benefits |  | Other
|  | Japan |  | U.S. |  | Postretirement Benefits
(In millions) |  | 2019 | 2018 |  | 2019 | 2018 |  | 2019 | 2018
Projected benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation, beginning of year |  |  | $ | 396 |  |  |  | $ | 341 |  |  |  |  | $ | 875 |  |  |  | $ | 908 |  |  |  |  | $ | 37 |  |  |  | $ | 36 |  |
Service cost |  |  | 22 |  |  |  | 19 |  |  |  |  | 23 |  |  |  | 27 |  |  |  |  | 0 |  |  |  | 0 |  |
Interest cost |  |  | 7 |  |  |  | 7 |  |  |  |  | 20 |  |  |  | 31 |  |  |  |  | 1 |  |  |  | 1 |  |
Actuarial (gain) loss |  |  | 17 |  |  |  | 35 |  |  |  |  | 163 |  | (3) |  | (69 | ) |  |  |  | 4 |  |  |  | 4 |  |
Benefits and expenses paid |  |  | (11 | ) |  |  | (11 | ) |  |  |  | (23 | ) |  |  | (22 | ) |  |  |  | (3 | ) |  |  | (4 | ) |
Effect of foreign exchange rate changes |  |  | 5 |  |  |  | 5 |  |  |  |  | 0 |  |  |  | 0 |  |  |  |  | 0 |  |  |  | 0 |  |
Benefit obligation, end of year |  |  | 436 |  |  |  | 396 |  |  |  |  | 1,058 |  |  |  | 875 |  |  |  |  | 39 |  |  |  | 37 |  |
Plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets, beginning of year |  |  | 289 |  |  |  | 270 |  |  |  |  | 465 |  |  |  | 448 |  |  |  |  | 0 |  |  |  | 0 |  |
Actual return on plan assets |  |  | 24 |  |  |  | (9 | ) |  |  |  | 98 |  |  |  | (30 | ) |  |  |  | 0 |  |  |  | 0 |  |
Employer contributions |  |  | 38 |  |  |  | 34 |  |  |  |  | 104 |  |  |  | 69 |  |  |  |  | 3 |  |  |  | 4 |  |
Benefits and expenses paid |  |  | (11 | ) |  |  | (11 | ) |  |  |  | (23 | ) |  |  | (22 | ) |  |  |  | (3 | ) |  |  | (4 | ) |
Effect of foreign exchange rate changes |  |  | 4 |  |  |  | 5 |  |  |  |  | 0 |  |  |  | 0 |  |  |  |  | 0 |  |  |  | 0 |  |
Fair value of plan assets, end of year |  |  | 344 |  |  |  | 289 |  |  |  |  | 644 |  |  |  | 465 |  |  |  |  | 0 |  |  |  | 0 |  |
Funded status of the plans(1) |  |  | $ | (92 | ) |  |  | $ | (107 | ) |  |  |  | $ | (414 | ) |  |  | $ | (410 | ) |  |  |  | $ | (39 | ) |  |  | $ | (37 | ) |
Amounts recognized in accumulated other comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net actuarial (gain) loss |  |  | $ | 92 |  |  |  | $ | 95 |  |  |  |  | $ | 259 |  |  |  | $ | 174 |  |  |  |  | $ | 12 |  |  |  | $ | 9 |  |
Prior service (credit) cost |  |  | (2 | ) |  |  | (2 | ) |  |  |  | (4 | ) |  |  | (4 | ) |  |  |  | 0 |  |  |  | 0 |  |
Total included in accumulated other comprehensive income |  |  | $ | 90 |  |  |  | $ | 93 |  |  |  |  | $ | 255 |  |  |  | $ | 170 |  |  |  |  | $ | 12 |  |  |  | $ | 9 |  |
Accumulated benefit obligation |  |  | $ | 390 |  |  |  | $ | 356 |  |  |  |  | $ | 886 |  |  |  | $ | 746 |  |  |  |  | N/A |  | (2) |  | N/A |  | (2)
(1) Recognized in other liabilities in the consolidated balance sheets (2) Not applicable (3) Actuarial losses increased due to lower discount rates at the end of 2019. Also, additional funds were contributed to the U.S. funded defined benefit plan in 2019. The Company contributed $95 million in 2019 compared to $60 million in 2018.
Information for Pension Plans with Accumulated Benefit Obligation in Excess of Plan Assets | Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets
|  | Pension Benefits
|  | Japan |  |  |  | U.S.
(In millions) |  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018 |
Accumulated benefit obligation |  |  | $ | 390 |  |  |  |  | $ | 356 |  |  |  |  |  | $ | 886 |  |  |  |  | $ | 746 |  |
Fair value of plan assets |  |  | 344 |  |  |  |  | 289 |  |  |  |  |  | 644 |  |  |  |  | 465 |  |
Information for Pension Plans with a Projected Benefit Obligation in Excess of Plan Assets | Information for Pension Plans with a Projected Benefit Obligation in Excess of Plan Assets
|  | Pension Benefits
|  | Japan (1) |  |  |  | U.S.(2)
(In millions) |  | 2019 |  | 2018 |  |  |  | 2019 |  | 2018 |
Projected benefit obligation |  |  | $ | 436 |  |  |  |  | $ | 396 |  |  |  |  |  | $ | 1,058 |  |  |  |  | $ | 875 |  |
Fair value of plan assets |  |  | 344 |  |  |  |  | 289 |  |  |  |  |  | 644 |  |  |  |  | 465 |  |
(1) The net amount of projected benefit obligation and plan assets for the underfunded (including unfunded) Japan pension plan was $92 and $107 at December 31, 2019 and 2018, respectively, and was classified as liabilities on the statement of financial position. (2) The net amount of projected benefit obligation and plan assets for the underfunded (including unfunded) U.S. pension plan was $414 and $410 at December 31, 2019 and 2018, respectively, and was classified as liabilities on the statement of financial position.
Schedule of Assumptions Used |
| Pension Benefits |  | Other
| Japan |  |  | U.S. |  |  | Postretirement Benefits
| 2019 |  | 2018 |  | 2017 |  |  | 2019 |  | 2018 |  | 2017 |  |  | 2019 |  | 2018 |  | 2017 |
Weighted-average actuarial assumptions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate - net periodic benefit cost | 1.25 | % |  | 1.25 | % |  | 1.25 | % |  |  | 4.25 | % |  | 3.75 | % |  | 4.25 | % |  |  | 4.25 | % |  | 3.75 | % |  | 4.25 | % |
Discount rate - benefit obligations | .75 |  |  | 1.25 |  |  | 1.25 |  |  |  | 3.25 |  |  | 4.25 |  |  | 3.75 |  |  |  | 3.25 |  |  | 4.25 |  |  | 3.75 |  |
Expected long-term return on plan assets | 2.00 |  |  | 2.00 |  |  | 2.00 |  |  |  | 6.25 |  |  | 6.50 |  |  | 6.75 |  |  |  | N/A | (1) | N/A | (1) | N/A | (1)
Rate of compensation increase | N/A | (1) | N/A | (1) | N/A | (1) |  | 4.00 |  |  | 4.00 |  |  | 4.00 |  |  |  | N/A | (1) | N/A | (1) | N/A | (1)
Health care cost trend rates | N/A | (1) | N/A | (1) | N/A | (1) |  | N/A | (1) | N/A |  | N/A | (1) |  | 7.50 |  | (2) | 7.40 |  | (2) | 5.40 |  | (2)
(1) Not applicable (2)For the years 2019, 2018 and 2017, the health care cost trend rates are expected to trend down to 3.8% in 54 years, 4.1% in 61 years, and 4.5% in 77 years, respectively.
Schedule of Net Benefit Costs | Total net periodic benefit cost includes the following components:
|  | Pension Benefits |  | Other
|  |  | Japan |  |  | U.S. |  | Postretirement Benefits
(In millions) |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Service cost |  |  | $ | 22 |  |  |  |  | $ | 19 |  |  |  |  | $ | 20 |  |  |  |  | $ | 23 |  |  |  |  | $ | 27 |  |  |  |  | $ | 24 |  |  |  |  | $ | 0 |  |  |  |  | $ | 0 |  |  |  |  | $ | 0 |  |
Interest cost |  |  | 7 |  |  |  |  | 7 |  |  |  |  | 6 |  |  |  |  | 20 |  |  |  |  | 31 |  |  |  |  | 40 |  |  |  |  | 1 |  |  |  |  | 1 |  |  |  |  | 1 |  |
Expected return on plan assets |  |  | (6 | ) |  |  |  | (6 | ) |  |  |  | (5 | ) |  |  |  | (29 | ) |  |  |  | (26 | ) |  |  |  | (24 | ) |  |  |  | 0 |  |  |  |  | 0 |  |  |  |  | 0 |  |
Amortization of net actuarial loss |  |  | 4 |  |  |  |  | 1 |  |  |  |  | 2 |  |  |  |  | 10 |  |  |  |  | 16 |  |  |  |  | 14 |  |  |  |  | 1 |  |  |  |  | 1 |  |  |  |  | 1 |  |
Net periodic (benefit) cost |  |  | $ | 27 |  |  |  |  | $ | 21 |  |  |  |  | $ | 23 |  |  |  |  | $ | 24 |  |  |  |  | $ | 48 |  |  |  |  | $ | 54 |  |  |  |  | $ | 2 |  |  |  |  | $ | 2 |  |  |  |  | $ | 2 |  |
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | The following table summarizes the amounts recognized in other comprehensive loss (income) for the years ended December 31:
|  | Pension Benefits |  | Other
|  | Japan |  | U.S. |  | Postretirement Benefits
(In millions) |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Net actuarial loss (gain) |  |  | $ | 1 |  |  |  |  | $ | 52 |  |  |  |  | $ | (21 | ) |  |  |  | $ | 95 |  |  |  |  | $ | (13 | ) |  |  |  | $ | 28 |  |  |  |  | $ | 4 |  |  |  |  | $ | 4 |  |  |  |  | $ | 0 |  |
Amortization of net actuarial loss |  |  | (4 | ) |  |  |  | (1 | ) |  |  |  | (2 | ) |  |  |  | (10 | ) |  |  |  | (16 | ) |  |  |  | (14 | ) |  |  |  | (1 | ) |  |  |  | (1 | ) |  |  |  | (1 | ) |
Total |  |  | $ | (3 | ) |  |  |  | $ | 51 |  |  |  |  | $ | (23 | ) |  |  |  | $ | 85 |  |  |  |  | $ | (29 | ) |  |  |  | $ | 14 |  |  |  |  | $ | 3 |  |  |  |  | $ | 3 |  |  |  |  | $ | (1 | ) |
Schedule of Expected Benefit Payments | The following table provides expected benefit payments, which reflect expected future service, as appropriate.
|  | Pension Benefits |  | Other
(In millions) |  | Japan | U.S. |  | Postretirement Benefits
2020 |  |  | $ | 13 |  |  |  | $ | 25 |  |  |  |  | $ | 3 |  |
2021 |  |  | 12 |  |  |  | 27 |  |  |  |  | 4 |  |
2022 |  |  | 17 |  |  |  | 29 |  |  |  |  | 4 |  |
2023 |  |  | 14 |  |  |  | 30 |  |  |  |  | 4 |  |
2024 |  |  | 16 |  |  |  | 31 |  |  |  |  | 4 |  |
2025-2029 |  |  | 84 |  |  |  | 203 |  |  |  |  | 16 |  |
Schedule of Allocation of Plan Assets | Asset allocation targets as of December 31, 2019 were as follows:
|  | Japan Pension |  | U.S. Pension
Domestic equities |  |  | 5 | % |  |  |  | 40 | % |
International equities |  |  | 20 |  |  |  |  | 20 |  |
Fixed income securities |  |  | 66 |  |  |  |  | 40 |  |
Other |  |  | 9 |  |  |  |  | 0 |  |
Total |  |  | 100 | % |  |  |  | 100 | % |
Plan Assets |
Fair Value, Assets Measured on Recurring Basis | The following table presents the fair value of Aflac Japan's pension plan assets that are measured at fair value on a recurring basis as of December 31. All of these assets are classified as Level 2 in the fair value hierarchy.
(In millions) | 2019 |  | 2018
Japan pension plan assets: |  |  |  |  |  |  |
Equities: |  |  |  |  |  |  |
Japanese equity securities |  | $ | 17 |  |  |  |  | $ | 14 |  |
International equity securities |  | 67 |  |  |  |  | 50 |  |
Fixed income securities: |  |  |  |  |  |  |
Japanese bonds |  | 20 |  |  |  |  | 34 |  |
International bonds |  | 207 |  |  |  |  | 160 |  |
Insurance contracts |  | 33 |  |  |  |  | 31 |  |
Total |  | $ | 344 |  |  |  |  | $ | 289 |  |
The following table presents the fair value of Aflac U.S.'s pension plan assets that are measured at fair value on a recurring basis as of December 31. All of these assets are classified as Level 1 in the fair value hierarchy.
(In millions) | 2019 |  | 2018
U.S. pension plan assets: |  |  |  |  |  |  |
Mutual funds: |  |  |  |  |  |  |
Large cap equity funds |  | $ | 179 |  |  |  |  | $ | 120 |  |
Mid cap equity funds |  | 22 |  |  |  |  | 17 |  |
Real estate equity funds |  | 16 |  |  |  |  | 13 |  |
International equity funds |  | 112 |  |  |  |  | 92 |  |
Fixed income bond funds |  | 209 |  |  |  |  | 179 |  |
Aflac Incorporated common stock |  | 6 |  |  |  |  | 5 |  |
Cash and cash equivalents |  | 100 |  |  |  |  | 39 |  |
Total |  | $ | 644 |  |  |  |  | $ | 465 |  |

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