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Pension and Other Postemployment Benefits | 12 Months Ended
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Dec. 31, 2017
Pension and Other Postemployment Benefits [Abstract] |
Pension and Other Postemployment Benefits | Pension and Other Postemployment Benefits Defined Contribution Plans Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution profit sharing and savings plans. Contributions to the plans vary by subsidiary and have generally been in amounts up to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes. Contribution expense was $112.9 million, $108.5 million and $105.7 million in 2017, 2016 and 2015, respectively. Defined Benefit Pension Plans Two of our U.S. businesses and several of our non-U.S. businesses sponsor noncontributory defined benefit pension plans. These plans provide benefits to employees based on formulas recognizing length of service and earnings. The U.S. plans cover approximately 900 participants, are closed to new participants and do not accrue future benefit credits. The non-U.S. plans, which include plans required by local law, cover approximately 6,200 participants and are not subject to ERISA. We have a Senior Executive Restrictive Covenant and Retention Plan, or Retention Plan, for certain executive officers selected by the Compensation Committee. The Retention Plan is a non-qualified deferred compensation severance plan that was adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such executive officers and to strengthen the retention aspect of executive officer compensation. The Retention Plan provides annual payments upon termination following at least seven years of service with Omnicom or its subsidiaries to the participants or to their beneficiaries. A participant’s annual benefit is payable for 15 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the executive’s years of service as an executive officer, not to exceed 35% or (ii) $1.5 million adjusted for cost-of-living, beginning with the second annual payment, not to exceed 2.5% per year. The Retention Plan is not funded and benefits are paid when due. The components of net periodic benefit expense for the three years ended December 31, 2017 were (in millions):
| 2017 |  | 2016 |  | 2015
Service cost | $ | 10.1 |  |  | $ | 7.8 |  |  | $ | 5.3 |
Interest cost | 7.9 |  |  | 7.8 |  |  | 7.6 |
Expected return on plan assets | (3.6 | ) |  | (3.7 | ) |  | (4.0 | )
Amortization of prior service cost | 4.6 |  |  | 4.5 |  |  | 4.3 |
Amortization of actuarial losses | 7.0 |  |  | 5.3 |  |  | 5.7 |
| $ | 26.0 |  |  | $ | 21.7 |  |  | $ | 18.9 |
Included in accumulated other comprehensive income at December 31, 2017 and 2016 were unrecognized actuarial losses and unrecognized prior service cost of $90.0 million ($56.0 million net of income taxes) and $98.0 million ($60.0 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost. The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2018 is $11.4 million. The weighted average assumptions used to determine net periodic benefit expense for the three years ended December 31, 2017 were:
| 2017 |  | 2016 |  | 2015
Discount rate | 3.5 | % |  | 3.7 | % |  | 3.5 | %
Compensation increases | 2.0 | % |  | 2.0 | % |  | 1.9 | %
Expected return on plan assets | 5.3 | % |  | 4.8 | % |  | 5.7 | %
The expected long-term rate of return for plan assets for the U.S. plans is based on several factors, including current and expected asset allocations, historical and expected returns on various asset classes and current and future market conditions. A total return investment approach using a mix of equities and fixed income investments maximizes the long-term return. This strategy is intended to minimize plan expense by achieving long-term returns in excess of the growth in plan liabilities over time. The discount rate used to compute net periodic benefit cost is based on yields of available high-quality bonds and reflects the expected cash flow as of the measurement date. The expected returns on plan assets and discount rates for the non-U.S. plans are based on local factors, including each plan’s investment approach, local interest rates and plan participant profiles. Experience gains and losses and the effects of changes in actuarial assumptions are generally amortized over a period no longer than the expected average future service of active employees. Our funding policy is to contribute amounts sufficient to meet minimum funding requirements in accordance with the applicable employee benefit and tax laws that the plans are subject to, plus such additional amounts as we may determine to be appropriate. We contributed $8.3 million, $6.6 million and $4.2 million in 2017, 2016 and 2015, respectively, to our defined benefit pension plans. We do not expect our contributions for 2018 to differ materially from our 2017 contributions. At December 31, 2017 and 2016, the benefit obligation, fair value of plan assets and funded status of our defined benefit pension plans were (in millions):
| 2017 |  | 2016
Benefit Obligation: |  |  |
January 1 | $ | 251.1 |  |  | $ | 234.8 |
Service cost | 10.1 |  |  | 7.8 |
Interest cost | 7.9 |  |  | 7.8 |
Amendments, curtailments and settlements | 0.3 |  |  | — |
Actuarial losses | 6.8 |  |  | 13.3 |
Benefits paid | (9.1 | ) |  | (9.4 | )
Foreign currency translation | 9.9 |  |  | (3.2 | )
December 31 | $ | 277.0 |  |  | $ | 251.1 |
Fair Value of Plan Assets: |  |  |
January 1 | $ | 68.6 |  |  | $ | 68.9 |
Actual return on plan assets | 6.3 |  |  | 4.9 |
Employer contributions | 8.3 |  |  | 6.6 |
Benefits paid | (9.1 | ) |  | (9.4 | )
Foreign currency translation and other | 6.2 |  |  | (2.4 | )
December 31 | $ | 80.3 |  |  | $ | 68.6 |
Funded Status December 31 | $ | (196.7 | ) |  | $ | (182.5 | )
At December 31, 2017 and 2016, the funded status was classified as follows (in millions):
| 2017 |  | 2016
Other assets | $ | 6.0 |  |  | $ | 4.2 |
Other current liabilities | (5.1 | ) |  | (5.1 | )
Long-term liabilities | (197.6 | ) |  | (181.6 | )
| $ | (196.7 | ) |  | $ | (182.5 | )
The accumulated benefit obligation for our defined benefit pension plans at December 31, 2017 and 2016, was $264.5 million and $240.8 million, respectively. At December 31, 2017 and 2016, plans with benefit obligations in excess of plan assets were (in millions):
| 2017 |  | 2016
Benefit obligation | $ | 253.8 |  |  | $ | 241.3 |
Plan assets | 51.1 |  |  | 54.6 |
| $ | 202.7 |  |  | $ | 186.7 |
The weighted average assumptions used to determine the benefit obligation at December 31, 2017 and 2016, were:
| 2017 |  | 2016
Discount rate | 3.1 | % |  | 3.5 | %
Compensation increases | 2.0 | % |  | 2.0 | %
At December 31, 2017, the estimated benefits expected to be paid over the next 10 years are (in millions):
2018 | $ | 9.7 |
2019 | 10.8 |
2020 | 12.3 |
2021 | 16.1 |
2022 | 16.8 |
2023 - 2027 | 99.6 |
The fair value of plan assets at December 31, 2017 and 2016 was (in millions):
2017 | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash | $ | 1.0 |  |  |  |  |  |  | $ | 1.0 |
Mutual funds | 41.5 |  |  |  |  |  |  | 41.5 |
Unit trusts | 28.2 |  |  |  |  |  |  | 28.2 |
Insurance contracts |  |  |  |  | $ | 8.6 |  |  | 8.6 |
Other |  |  | $ | 1.0 |  |  |  |  | 1.0 |
| $ | 70.7 |  |  | $ | 1.0 |  |  | $ | 8.6 |  |  | $ | 80.3 |
2016 |  |  |  |  |  |  |
Cash | $ | 1.6 |  |  |  |  |  |  | $ | 1.6 |
Mutual funds | 39.0 |  |  |  |  |  |  | 39.0 |
Unit trusts | 23.5 |  |  |  |  |  |  | 23.5 |
Insurance contracts |  |  |  |  | $ | 4.3 |  |  | 4.3 |
Other |  |  | $ | 0.2 |  |  |  |  | 0.2 |
| $ | 64.1 |  |  | $ | 0.2 |  |  | $ | 4.3 |  |  | $ | 68.6 |
Mutual funds and unit trusts are publicly traded and are valued using quoted market prices. The mutual funds and unit trusts include investments in equity and fixed income securities. Insurance contracts primarily consist of guaranteed investment contracts. Other investments primarily consist of commingled short-term investment funds. Changes in the fair value of plan assets measured using Level 3 inputs at December 31, 2017 and 2016 were (in millions):
| 2017 |  | 2016
January 1 | $ | 4.3 |  |  | $ | 4.2 |
Actual return on assets | 0.2 |  |  | 0.2 |
Purchases, sales and settlements, net | 4.1 |  |  | (0.1 | )
December 31 | $ | 8.6 |  |  | $ | 4.3 |
The weighted average asset allocations at December 31, 2017 and 2016 were:
| 2017 |  | 2016
| Target Allocation |  | Actual Allocation |  | Actual Allocation
Cash | 4 | % |  | 1 | % |  | 3 | %
Mutual funds | 48 | % |  | 52 | % |  | 57 | %
Unit trusts | 34 | % |  | 35 | % |  | 34 | %
Insurance contracts | 11 | % |  | 11 | % |  | 6 | %
Other | 3 | % |  | 1 | % |  | — | %
| 100 | % |  | 100 | % |  | 100 | %
Risk tolerance for these plans is established through consideration of plan liabilities, funded status and evaluation of the overall investment environment. The investment portfolios comprise a mix of equity and fixed-income investments. Equity investments are diversified across geography and market capitalization through investment in large and medium capitalization U.S. and international equities. Fixed income investments include a mix of U.S. and international debt securities. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, and periodic asset/liability studies and investment portfolio reviews. Postemployment Arrangements We have executive retirement agreements under which benefits will be paid to participants or to their beneficiaries over periods up to ten years beginning after cessation of full-time employment. Our postemployment arrangements are unfunded and benefits are paid when due. The components of net periodic benefit expense for the three years ended December 31, 2017 were (in millions):
| 2017 |  | 2016 |  | 2015
Service cost | $ | 4.4 |  |  | $ | 3.9 |  |  | $ | 4.8 |
Interest cost | 3.7 |  |  | 3.5 |  |  | 4.3 |
Amortization of prior service cost | 3.5 |  |  | 3.1 |  |  | 3.2 |
Amortization of actuarial losses | 1.0 |  |  | 1.1 |  |  | 1.6 |
| $ | 12.6 |  |  | $ | 11.6 |  |  | $ | 13.9 |
Included in accumulated other comprehensive income at December 31, 2017 and 2016 were unrecognized actuarial losses and unrecognized prior service cost of $54.0 million ($33.0 million net of income taxes) and $51.0 million ($30.0 million net of income taxes), respectively, that have not yet been recognized in the net periodic benefit cost. The unrecognized actuarial gains and losses and unrecognized prior service cost included in accumulated other comprehensive income and expected to be recognized in net periodic benefit cost in 2018 is $5.2 million. The weighted average assumptions used to determine net periodic benefit expense for the three years ended December 31, 2017 were:
| 2017 |  | 2016 |  | 2015
Discount rate | 3.9 | % |  | 4.1 | % |  | 3.8 | %
Compensation increases | 3.5 | % |  | 3.5 | % |  | 3.5 | %
Experience gains and losses and effects of changes in actuarial assumptions are amortized over a period no longer than the expected average future service of active employees. At December 31, 2017 and 2016, the benefit obligation was (in millions):
| 2017 |  | 2016
January 1 | $ | 120.3 |  |  | $ | 115.9 |
Service cost | 4.4 |  |  | 3.9 |
Interest cost | 3.7 |  |  | 3.5 |
Amendments | — |  |  | 5.6 |
Actuarial (gain) loss | 8.1 |  |  | 0.6 |
Benefits paid | (8.8 | ) |  | (9.2 | )
December 31 | $ | 127.7 |  |  | $ | 120.3 |
At December 31, 2017 and 2016, the liability was classified as follows (in millions):
| 2017 |  | 2016
Other current liabilities | $ | 9.3 |  |  | $ | 8.1 |
Long-term liabilities | 118.4 |  |  | 112.2 |
| $ | 127.7 |  |  | $ | 120.3 |
The weighted average assumptions used to determine the benefit obligation at December 31, 2017 and 2016 were:
| 2017 |  | 2016
Discount rate | 3.4 | % |  | 3.9 | %
Compensation increases | 3.5 | % |  | 3.5 | %
At December 31, 2017, the estimated benefits expected to be paid over the next 10 years are (in millions):
2018 | $ | 9.3 |
2019 | 7.4 |
2020 | 6.6 |
2021 | 6.1 |
2022 | 6.5 |
2023 - 2027 | 33.2 |

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- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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