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EMPLOYEE RETIREMENT PLANS | 12 Months Ended
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Dec. 31, 2020
Retirement Benefits [Abstract] |
EMPLOYEE RETIREMENT PLANS | EMPLOYEE RETIREMENT PLANS We sponsor qualified defined-benefit and defined-contribution retirement plans for most of our employees. In addition to our qualified defined-benefit pension plans, we have unfunded non-qualified defined-benefit pension plans covering certain employees and former employees, which provide for benefits in addition to those provided by the qualified pension plans. Substantially all salaried employees participate in non-contributory defined-contribution retirement plans, to which payments are determined annually by the Compensation Committee. Pre-tax expense included in income from continuing operations related to our retirement plans was as follows, in millions:
| 2020 |  | 2019 |  | 2018
Defined-contribution plans | $ | 46 |  |  | $ | 40 |  |  | $ | 37 |
Defined-benefit pension plans | 38 |  |  | 24 |  |  | 17 |
| $ | 84 |  |  | $ | 64 |  |  | $ | 54 |
As of January 1, 2010, substantially all our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. In December 2019, our Board of Directors approved a resolution to terminate our qualified domestic defined-benefit pension plans. As a result of this decision, the projected benefit obligations for these plans were increased to reflect the incremental cost to terminate the plans. Changes in the projected benefit obligation and fair value of plan assets, and the funded status of our defined-benefit pension plans were as follows, in millions:
| 2020 |  | 2019
| Qualified |  | Non-Qualified |  | Qualified |  | Non-Qualified
Changes in projected benefit obligation: |  |  |  |  |  |  |
Projected benefit obligation at January 1 | $ | 1,034 |  |  | $ | 161 |  |  | $ | 896 |  |  | $ | 155 |
Service cost | 3 |  |  | — |  |  | 3 |  |  | — |
Interest cost | 23 |  |  | 5 |  |  | 33 |  |  | 6 |
Actuarial loss, net | 85 |  |  | 10 |  |  | 149 |  |  | 13 |
Foreign currency exchange | 18 |  |  | — |  |  | (3) |  |  | — |
Benefit payments | (45) |  |  | (13) |  |  | (44) |  |  | (13) |
Divestitures | — |  |  | (1) |  |  | — |  |  | — |
Projected benefit obligation at December 31 | $ | 1,118 |  |  | $ | 162 |  |  | $ | 1,034 |  |  | $ | 161 |
Changes in fair value of plan assets: |  |  |  |  |  |  |
Fair value of plan assets at January 1 | $ | 780 |  |  | $ | — |  |  | $ | 670 |  |  | $ | — |
Actual return on plan assets | 67 |  |  | — |  |  | 105 |  |  | — |
Foreign currency exchange | 8 |  |  | — |  |  | (1) |  |  | — |
Company contributions | 57 |  |  | 13 |  |  | 56 |  |  | 13 |
Expenses, other | (4) |  |  | — |  |  | (6) |  |  | — |
Benefit payments | (45) |  |  | (13) |  |  | (44) |  |  | (13) |
Fair value of plan assets at December 31 | $ | 863 |  |  | $ | — |  |  | $ | 780 |  |  | $ | — |
Funded status at December 31 | $ | (255) |  |  | $ | (162) |  |  | $ | (254) |  |  | $ | (161) |
N. EMPLOYEE RETIREMENT PLANS (Continued) Amounts in our consolidated balance sheets were as follows, in millions:
| At December 31, 2020 |  | At December 31, 2019
| Qualified |  | Non-Qualified |  | Qualified |  | Non-Qualified
Other assets | $ | 1 |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |
Accrued liabilities (A) | (135) |  |  | (12) |  |  | (1) |  |  | (13) |
Other liabilities (A) | (121) |  |  | (150) |  |  | (254) |  |  | (148) |
Total net liability | $ | (255) |  |  | $ | (162) |  |  | $ | (254) |  |  | $ | (161) |
______________________________ (A)As a result of the planned termination of the qualified domestic defined-benefit pension plans in 2021, the liabilities associated with these plans have been reported as current liabilities at December 31, 2020. Unrealized loss included in accumulated other comprehensive loss before income taxes was as follows, in millions:
| At December 31, 2020 |  | At December 31, 2019
| Qualified |  | Non-Qualified |  | Qualified |  | Non-Qualified
Net loss | $ | 540 |  |  | $ | 65 |  |  | $ | 520 |  |  | $ | 57 |
Net prior service cost | 3 |  |  | — |  |  | 4 |  |  | — |
Total | $ | 543 |  |  | $ | 65 |  |  | $ | 524 |  |  | $ | 57 |
Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions:
| At December 31
| 2020 |  | 2019
| Qualified |  | Non-Qualified |  | Qualified |  | Non-Qualified
Projected benefit obligation | $ | 1,100 |  |  | $ | 162 |  |  | $ | 1,019 |  |  | $ | 161 |
Accumulated benefit obligation | 1,100 |  |  | 162 |  |  | 1,019 |  |  | 161 |
Fair value of plan assets | 844 |  |  | — |  |  | 763 |  |  | — |
The projected benefit obligation was in excess of plan assets for all of our qualified defined-benefit pension plans at December 31, 2020 and 2019 which had an accumulated benefit obligation in excess of plan assets. Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions:
| 2020 |  | 2019 |  | 2018
| Qualified |  | Non-Qualified |  | Qualified |  | Non-Qualified |  | Qualified |  | Non-Qualified
Service cost | $ | 3 |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |
Interest cost | 28 |  |  | 5 |  |  | 39 |  |  | 6 |  |  | 36 |  |  | 6 |
Expected return on plan assets | (24) |  |  | — |  |  | (44) |  |  | — |  |  | (48) |  |  | — |
Recognized prior service cost | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Recognized net loss | 22 |  |  | 3 |  |  | 18 |  |  | 2 |  |  | 17 |  |  | 3 |
Net periodic pension cost | $ | 30 |  |  | $ | 8 |  |  | $ | 16 |  |  | $ | 8 |  |  | $ | 8 |  |  | $ | 9 |
N. EMPLOYEE RETIREMENT PLANS (Continued) We expect to recognize $464 million of pre-tax net loss from accumulated other comprehensive loss into net periodic pension cost in 2021 related to our defined-benefit pension plans. This includes the full recognition of accumulated actuarial losses for our qualified domestic defined-benefit pension plans upon its expected termination. For plans in which almost all of the plan's participants are inactive, pre-tax net loss within accumulated other comprehensive loss is amortized using the straight-line method over the remaining life expectancy of the inactive plan participants. For plans which do not have almost all inactive participants, pre-tax net loss within accumulated other comprehensive loss is amortized using the straight-line method over the average remaining service period of the active employees expected to receive benefits from the plan. Plan Assets. Our qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows:
| 2020 |  | 2019
Equity securities | 15 | % |  | 41 | %
Debt securities | 49 | % |  | 54 | %
Other | 36 | % |  | 5 | %
Total | 100 | % |  | 100 | %
For our qualified defined-benefit pension plans, we have adopted accounting guidance that defines fair value, establishes a framework for measuring fair value and prescribes disclosures about fair value measurements. Accounting guidance defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2020 compared to December 31, 2019. Common and Preferred Stocks and Short-Term and Other Investments: Valued at the closing price reported on the active market on which the individual securities are traded or based on the active market for similar securities. Certain investments are valued based on net asset value ("NAV"), which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. Private Equity and Hedge Funds: Valued based on an estimated fair value using either a market approach or an income approach, both of which require a significant degree of judgment. There is no active trading market for these investments and they are generally illiquid. Due to the significant unobservable inputs, the fair value measurements used to estimate fair value are a Level 3 input. Corporate, Government and Other Debt Securities: Valued based on either the closing price reported on the active market on which the individual securities are traded or using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. Certain investments are valued based on NAV, which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. Common Collective Trust Fund: Valued based on an amortized cost basis, which approximates fair value. Such basis is determined by reference to the respective fund's underlying assets, which are primarily cash equivalents. There are no unfunded commitments or other restrictions associated with this fund. Buy-in Annuity: Valued based on the associated benefit obligation for which the buy-in annuity covers the benefits, which approximates fair value. Such basis is determined based on various assumptions, including the discount rate, long-term rate of return on plan assets and mortality rate. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. N. EMPLOYEE RETIREMENT PLANS (Continued) The following tables set forth, by level within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2020 and 2019, as well as those valued at NAV using the practical expedient, which approximates fair value, in millions.
| At December 31, 2020
| Level 1 |  | Level 2 |  | Level 3 |  | Valued at NAV |  | Total
Plan Assets |  |  |  |  |  |  |  |  |
Common and Preferred Stocks: |  |  |  |  |  |  |  |  |
United States | $ | 26 |  |  | $ | — |  |  | $ | — |  |  | $ | 87 |  |  | $ | 113 |
International | 15 |  |  | — |  |  | — |  |  | — |  |  | 15 |
Private Equity and Hedge Funds – International | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Corporate Debt Securities: |  |  |  |  |  |  |  |  |
United States | — |  |  | 143 |  |  | — |  |  | — |  |  | 143 |
International | — |  |  | 23 |  |  | — |  |  | — |  |  | 23 |
Government and Other Debt Securities: |  |  |  |  |  |  |  |  |
United States | — |  |  | 214 |  |  | — |  |  | — |  |  | 214 |
International | — |  |  | 46 |  |  | — |  |  | — |  |  | 46 |
Common Collective Trust Fund – United States | — |  |  | 292 |  |  | — |  |  | — |  |  | 292 |
Buy-in Annuity - International | — |  |  | 14 |  |  | — |  |  | — |  |  | 14 |
Short-Term and Other Investments – International | 2 |  |  | — |  |  | — |  |  | — |  |  | 2 |
Total Plan Assets | $ | 43 |  |  | $ | 732 |  |  | $ | 1 |  |  | $ | 87 |  |  | $ | 863 |
| At December 31, 2019
| Level 1 |  | Level 2 |  | Level 3 |  | Valued at NAV |  | Total
Plan Assets |  |  |  |  |  |  |  |  |
Common and Preferred Stocks: |  |  |  |  |  |  |  |  |
United States | $ | 85 |  |  | $ | — |  |  | $ | — |  |  | $ | 82 |  |  | $ | 167 |
International | 47 |  |  | — |  |  | — |  |  | 110 |  |  | 157 |
Private Equity and Hedge Funds: |  |  |  |  |  |  |  |  |
United States | — |  |  | — |  |  | 2 |  |  | — |  |  | 2 |
International | — |  |  | — |  |  | 17 |  |  | — |  |  | 17 |
Corporate Debt Securities: |  |  |  |  |  |  |  |  |
United States | 74 |  |  | — |  |  | — |  |  | 124 |  |  | 198 |
International | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
Government and Other Debt Securities: |  |  |  |  |  |  |  |  |
United States | — |  |  | 3 |  |  | — |  |  | 148 |  |  | 151 |
International | 29 |  |  | 38 |  |  | — |  |  | — |  |  | 67 |
Common Collective Trust Fund – United States | — |  |  | 4 |  |  | — |  |  | — |  |  | 4 |
Buy-in Annuity - International | — |  |  | 12 |  |  | — |  |  | — |  |  | 12 |
Short-Term and Other Investments: |  |  |  |  |  |  |  |  |
United States | 2 |  |  | — |  |  | — |  |  | — |  |  | 2 |
International | 2 |  |  | — |  |  | — |  |  | — |  |  | 2 |
Total Plan Assets | $ | 239 |  |  | $ | 58 |  |  | $ | 19 |  |  | $ | 464 |  |  | $ | 780 |
N. EMPLOYEE RETIREMENT PLANS (Continued) Changes in the fair value of the qualified defined-benefit pension plan Level 3 assets, were as follows, in millions:
| 2020 |  | 2019
Fair Value, January 1 | $ | 19 |  |  | $ | 59 |
Purchases | — |  |  | 4 |
Sales | (18) |  |  | (41) |
Unrealized losses | — |  |  | (3) |
Fair Value, December 31 | $ | 1 |  |  | $ | 19 |
Assumptions. Weighted average major assumptions used in accounting for our defined-benefit pension plans were as follows:
| 2020 |  | 2019 |  | 2018
Discount rate for obligations | 1.70 | % |  | 2.50 | % |  | 3.80 | %
Expected return on plan assets | 2.00 | % |  | 3.00 | % |  | 7.00 | %
Rate of compensation increase | — | % |  | — | % |  | — | %
Discount rate for net periodic pension cost | 2.50 | % |  | 3.80 | % |  | 3.30 | %
The discount rate for obligations for 2020, 2019 and 2018 is based primarily upon the expected duration of each defined-benefit pension plan's liabilities matched to the December 31, 2020, 2019 and 2018 Willis Towers Watson Rate Link Curve. At December 31, 2020, such rates for our defined-benefit pension plans ranged from 0.7 percent to 2.1 percent, with the most significant portion of the liabilities having a discount rate for obligations of 1.6 percent or higher. At December 31, 2019, such rates for our defined-benefit pension plans ranged from 1.1 percent to 3.0 percent, with the most significant portion of the liabilities having a discount rate for obligations of 2.4 percent or higher. At December 31, 2018, such rates for our defined‑benefit pension plans ranged from 1.5 percent to 4.2 percent, with the most significant portion of the liabilities having a discount rate for obligations of 4.1 percent or higher. The decrease in the weighted average discount rate from 2019 to 2020 is principally due to lower long-term interest rates in the bond markets. The decrease in the weighted average discount rate from 2018 to 2019 is principally the corresponding cost to terminate the domestic qualified defined-benefit pension plans, as well as, lower long-term interest rates in the bond markets. For 2020, we chose to set the expected long-term rate of return on plan assets equal to the discount rate for each domestic qualified defined-benefit pension plan, net of investment fees but not administrative expenses. The discount rate approximated the long-term expected rate of return provided by our investment consultants as a result of the decision to terminate these plans in 2021 and the plan assets comprised mostly of fixed income and cash. For 2020 our weighted average projected long-term rate of return on plan assets for the foreign qualified defined-benefit pension plans was 2.9 percent. For 2019 and 2018, our projected long-term rate of return on plan assets were 3.00 percent and 7.00 percent, respectively. The actual annual rate of return on our pension plan assets was positive 9.7 percent, positive 17.7 percent and negative 4.9 percent in 2020, 2019 and 2018, respectively. For the 10-year period ended December 31, 2020, the actual annual rate of return on our pension plan assets was 7.2 percent. The investment objectives seek to minimize the volatility of the value of our plan assets relative to pension liabilities and to ensure plan assets are sufficient to pay plan benefits. In 2020, we made substantial progress toward achieving our targeted asset allocation: 60 percent fixed-income and 40 percent cash, as we prepare to distribute funds for the upcoming settlement of the qualified domestic defined-benefit pension plans. In the first quarter of 2021 we anticipate that a lump sum payment window will open and following that any remaining liabilities of the plan are anticipated to be transferred to an insurer through the purchase of an annuity contract by a third party administrator. N. EMPLOYEE RETIREMENT PLANS (Concluded) The asset allocation of the investment portfolio was developed with the objective of achieving our expected rate of return and reducing volatility of asset returns, and considered the freezing of future benefits. The fixed-income portfolio is invested in corporate bonds, bond index funds and U.S. Treasury securities. Although we would expect alternative investments to yield a higher rate of return than the targeted overall long-term return, these investments are subject to greater volatility and would be less liquid than financial instruments that trade on public markets. As such, and as a result of the decision to terminate the domestic qualified defined-benefit pension plans, we sold most of our alternative investments. The fair value of our plan assets is subject to risk including significant concentrations of risk in our plan assets related to equity, interest rate and operating risk. In order to ensure plan assets are sufficient to pay benefits, a portion of our foreign qualified plans' assets are allocated to equity investments that are expected, over time, to earn higher returns with more volatility than fixed-income investments which more closely match pension liabilities. Within equity, risk is mitigated by targeting a portfolio that is broadly diversified by geography, market capitalization, manager mandate size, investment style and process. In order to minimize asset volatility relative to the liabilities, a significant portion of plan assets are allocated to fixed-income investments that are exposed to interest rate risk. Rate increases generally will result in a decline in fixed-income assets, while reducing the present value of the liabilities. Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities. Potential events or circumstances that could have a negative effect on estimated fair value include the risks of inadequate diversification and other operating risks. To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives. Policies and practices to address operating risks include ongoing manager oversight, plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance and audit reviews to ensure adherence to these policies. In addition, we periodically seek the input of our independent advisor to ensure the investment policy is appropriate. Other. We sponsor certain post-retirement benefit plans that provide medical, dental and life insurance coverage for eligible retirees and dependents based upon age and length of service. Substantially all of these plans were frozen as of January 1, 2010. The aggregate present value of the unfunded accumulated post-retirement benefit obligation was $10 million at both December 31, 2020 and 2019. Cash Flows. At December 31, 2020, we expect to contribute approximately $140 million to our domestic qualified defined-benefit pension plans in 2021, which will exceed ERISA requirements and effectively settle these plans. We also expect to contribute approximately $1 million and $12 million in 2021 to our foreign and non-qualified (domestic) defined-benefit pension plans, respectively. At December 31, 2020, the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to our defined-benefit pension plans, were as follows, in millions:
| Qualified Plans |  | Non-Qualified Plans
2021 (A) | $ | 895 |  |  | $ | 12 |
2022 | 5 |  |  | 12 |
2023 | 6 |  |  | 12 |
2024 | 6 |  |  | 12 |
2025 | 6 |  |  | 12 |
2026 - 2030 | 38 |  |  | 50 |
_______________________ (A)The qualified benefit payments include the projected benefit obligations of the qualified domestic defined-benefit pension plans we plan to settle in 2021.

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