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Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
Pensions. The Company sponsors various pension plans covering certain U.S. and non-U.S. employees, and participates in certain multi-employer pension plans. The benefits under the Company plans are based primarily on years of service and either the employees’ remuneration near retirement or a fixed dollar multiple.
 
A measurement date of December 31 was used for all plans presented below.

The components of pension expense were as follows:

U.S. Plans202020192018
Service cost$18 $15 $17 
Interest cost38 50 47 
Expected return on plan assets(73)(70)(85)
Settlements3 — — 
Amortization of actuarial loss56 55 51 
Amortization of prior service cost1 1 1 
Net periodic cost$43 $51 $31 
Non-U.S. Plans202020192018
Service cost$12 $15 $26 
Interest cost53 71 75 
Expected return on plan assets(107)(138)(159)
Settlements63 44 38 
Curtailments— (14)— 
Amortization of actuarial loss28 38 45 
Amortization of prior service credit— (1)(11)
Net periodic cost $49 $15 $14 

The settlement charges in each year arose from the payment of lump sum buy-outs to settle certain pension obligations using plan assets. The Company may incur additional settlement charges in 2021. The curtailment gain in 2019 was to recognize prior service credits that were previously recorded in accumulated other comprehensive income in connection with the closure
of a non-U.S. defined benefit pension plan.

Additional pension expense of $6 in 2020 and $5 in each of 2019 and 2018 was recognized for multi-employer plans.

The projected benefit obligations, accumulated benefit obligations, plan assets and funded status of the Company's U.S. and non-U.S. plans were as follows:
 U.S. PlansNon-U.S. Plans
 2020201920202019
Projected Benefit Obligations
Benefit obligations at January 1$1,440 $1,371 $3,220 $3,102 
Service cost18 15 12 15 
Interest cost38 50 53 71 
Plan participants’ contributions— — 2 2 
Amendments1 (1)— — 
Settlements(7)— (271)(152)
Curtailments— — — (18)
Actuarial loss109 133 278 242 
Benefits paid(94)(128)(151)(152)
Foreign currency translation— — 102 110 
Benefit obligations at December 31$1,505 $1,440 $3,245 $3,220 
Plan Assets
Fair value of plan assets at January 1$1,131 $1,012 $3,480 $3,264 
Actual return on plan assets113 244 334 373 
Employer contributions9 3 18 19 
Plan participants’ contributions— — 2 2 
Settlements(7)— (271)(152)
Acquisitions— — — — 
Benefits paid(94)(128)(152)(152)
Foreign currency translation— — 107 126 
Fair value of plan assets at December 31$1,152 $1,131 $3,518 $3,480 
Funded status$(353)$(309)$273 $260 
Accumulated benefit obligations at December 31$1,445 $1,397 $3,177 $3,182 

For the year ended December 31, 2020, actuarial losses for the Company’s U.S. and non-U.S. pension plans totaled $387. Actuarial gains and losses arise each year primarily due to changes in discount rates, differences in actual plan asset returns compared to expected returns, and changes in actuarial assumptions such as mortality. The loss in 2020 is primarily due to lower discount rates at the end of 2020 compared to 2019, partially offset by a gain of $268 primarily due to actual asset returns higher than expected returns.

U.S. pension plans with accumulated benefit obligations and projected benefit obligations in excess of plan assets were as follows: 

20202019
Projected benefit obligations$1,505 $1,440 
Accumulated benefit obligations1,445 1,397 
Fair value of plan assets1,152 1,131 

Non-U.S. pension plans with accumulated benefit obligations in excess of plan assets were as follows: 

20202019
Projected benefit obligations$428 $399 
Accumulated benefit obligations386 383 
Fair value of plan assets191 187 

Non-U.S. pension plans with projected benefit obligations in excess of plan assets were as follows: 
20202019
Projected benefit obligations$432 $403 
Accumulated benefit obligations389 386 
Fair value of plan assets194 189 

The Company’s investment strategy in its U.S. plan is designed to generate returns that are consistent with providing benefits to plan participants within the risk tolerance of the plan. Asset allocation is the primary determinant of return levels and investment risk exposure. The assets of the plan are broadly diversified in terms of securities and security types in order to limit the potential of large losses from any one security.

The strategic ranges for asset allocation in the U.S. plans are as follows: 

U.S. equities39 %to49 %
International equities12 %to18 %
Fixed income16 %to26 %
Balanced funds7 %to13 %
Real estate7 %to13 %

The Company’s investment strategy in its U.K. plan, the largest non-U.S. plan, is designed to achieve a funding level of 100% within the next 6 years. The Company seeks to achieve this objective with a risk level commensurate with a 5% chance of the funding level falling between 4% and 7% in any one year. The strategic ranges for asset allocation in the U.K. plan are as follows:
 
Investment grade credit30 %to100 %
Equities0 %to30 %
Hedge funds0 %to10 %
Real estate0 %to5 %
Alternative credit0 %to15 %
Other0 %to20 %
 
Pension assets are classified into three levels. Level 1 asset values are derived from quoted prices which are available in active markets as of the report date. Level 2 asset values are derived from other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the report date. Level 3 asset values are derived from unobservable pricing inputs that are not corroborated by market data or other objective sources.

Level 1 Investments

Equity securities are valued at the latest quoted prices taken from the primary exchange on which the security trades. Mutual funds are valued at the net asset value (NAV) of shares held at year-end.

Level 2 Investments

Fixed income securities, including government issued debt, corporate debt, asset-backed and structured debt securities are valued using the latest bid prices or valuations based on a matrix system (which considers such factors as benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and other reference data including market research publications). Derivatives, which consist mainly of interest rate swaps, are valued using a discounted cash flow pricing model based on observable market data.

Level 3 Investments

Hedge funds and private equity funds are valued at the NAV at year-end. The values assigned to private equity funds are based upon assessments of each underlying investment, incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, and performance multiples among other factors. Real estate investments are based on third party appraisals.
Investments Measured Using NAV per Share Practical Expedient

Investments measured using NAV per share as a practical expedient include investment funds that invest in global equity, emerging markets and fixed income. The global equity funds invest in equity securities of various market sectors including industrial materials, consumer discretionary goods and services, financial infrastructure, technology, and health care. The emerging markets funds invest in equity markets within financial services, consumer goods and services, energy, and technology.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair value. Furthermore, while the Company believes its 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 different fair value measurements at the reporting date.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and their placement within the fair value hierarchy. The levels assigned to the defined benefit plan assets as of December 31, 2020 and 2019 are summarized in the tables below: 
 2020
 U.S. plan
assets		Non-U.S. plan
assets		Total
Level 1
Cash and cash equivalents$157 $498 $655 
Global large cap equity— 9 9 
U.S. large cap equity178 4 182 
U.S. mid/small cap equity301 22 323 
Mutual funds – global equity88 — 88 
Mutual funds – U.S. equity56 — 56 
Mutual funds – fixed income75 — 75 
855 533 1,388 
Level 2
Government issued debt securities— 298 $298 
Corporate debt securities58 647 705 
Asset backed securities— 2 2 
Structured debt— 1,034 1,034 
Insurance contracts— 115 115 
Derivatives— 166 166 
Investment funds – fixed income— 128 128 
Investment funds – global equity— 69 69 
58 2,459 2,517 
Level 3
Investment funds – real estate91 181 272 
Hedge funds— 2 2 
Private equity5 46 51 
Real estate – direct23 12 35 
119 241 360 
Total assets in fair value hierarchy1,032 3,233 4,265 
Investments measured at NAV Practical Expedient (a)
Investment funds – fixed income112 25 137 
Investment funds – global equity— 141 141 
Investment funds – emerging markets7 — 7 
Hedge funds— 109 109 
 119 275 394 
Total investments at fair value$1,151 $3,508 $4,659 
 
 2019
 U.S. plan
assets		Non-U.S. plan
assets		Total
Level 1
Cash and cash equivalents$23 $190 $213 
Global large cap equity— 7 7 
U.S. large cap equity155 4 159 
U.S. mid/small cap equity218 27 245 
Mutual funds – global equity144 — 144 
Mutual funds – U.S. equity206 — 206 
Mutual funds – fixed income67 — 67 
813 228 1,041 
Level 2
Government issued debt securities— 260 $260 
Corporate debt securities52 332 384 
Asset backed securities— 2 2 
Structured debt— 811 811 
Insurance contracts— 105 105 
Derivatives— 194 194 
Investment funds – fixed income— 373 373 
Investment funds – global equity— 297 297 
Investment funds – emerging markets— 33 33 
52 2,407 2,459 
Level 3
Investment funds – real estate96 220 316 
Hedge funds— 43 43 
Private equity5 70 75 
Real estate – direct21 9 30 
122 342 464 
Total assets in fair value hierarchy987 2,977 3,964 
Investments measured at NAV Practical Expedient (a)
Investment funds – fixed income102 91 193 
Investment funds – global equity18 78 96 
Investment funds – emerging markets23 — 23 
Hedge funds— 328 328 
143 497 640 
Total investments at fair value$1,130 $3,474 $4,604 

(a) Certain investments that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy.

Accrued income excluded from the tables above was as follows:
20202019
U.S. plan assets$1 $1 
Non-U.S. plan assets10 6 

Plan assets include $323 and $244 of the Company’s common stock at December 31, 2020 and 2019.
The following tables reconcile the beginning and ending balances of plan assets measured using significant unobservable inputs (Level 3).
Hedge
funds		Private
equity		Real
estate		Total
Balance at January 1, 2019$113 $103 $317 $533 
Foreign currency translation4 4 8 16 
Asset returns – assets held at reporting date(6)(22)25 (3)
Asset returns – assets sold during the period7 17 6 30 
Purchases, sales and settlements, net(75)(27)(10)(112)
Balance at December 31, 201943 75 346 464 
Foreign currency translation1 2 7 10 
Asset returns – assets held at reporting date3 6 (15)(6)
Asset returns – assets sold during the period(12)(9)3 (18)
Purchases, sales and settlements, net(33)(23)(34)(90)
Balance at December 31, 2020$2 $51 $307 $360 

The following table presents additional information about the pension plan assets valued using net asset value as a practical expedient:
Fair ValueRedemption FrequencyRedemption Notice Period
Balance at December 31, 2020
Investment funds – fixed income$137 Semi-monthly
1- 5 days
Investment funds – global equity141 Monthly
1 - 15 days
Investment funds – emerging markets7 Daily30 days
Hedge funds109 Monthly
1 - 30 days
Balance at December 31, 2019
Investment funds – fixed income$193 Semi-monthly
1- 5 days
Investment funds – global equity96 Monthly
1 - 15 days
Investment funds – emerging markets23 Daily30 days
Hedge funds328 Monthly
1 - 30 days

The pension plan assets valued using net asset value as a practical expedient do not have any unfunded commitments.

Pension assets and liabilities included in the Consolidated Balance Sheets were: 
20202019
Non-current assets$532 $491 
Current liabilities8 13 
Non-current liabilities610 533 

The Company’s current liability at December 31, 2020, represents the expected required payments to be made for unfunded plans over the next twelve months. Total estimated 2021 employer contributions are $22 for the Company’s pension plans.

Changes in the net loss and prior service cost (credit) for the Company’s pension plans were: 
 202020192018
 Net lossPrior
service		Net lossPrior
service		Net lossPrior
service
Balance at January 1$1,808 $8 $1,962 $(6)$2,057 $(16)
Reclassification to net periodic benefit cost(150)(1)(137)14 (134)10 
Current year gain / (loss)118 — (53)— 103 — 
Amendments— 1 — — — — 
Foreign currency translation26 — 36 — (64)— 
Balance at December 31$1,802 $8 $1,808 $8 $1,962 $(6)
Expected future benefit payments as of December 31, 2020 are: 
U.S.
plans		Non-U.S.
plans
2021$95 $166 
202297 161 
2023100 159 
202498 159 
202593 159 
2026 - 2030429 777 

The weighted average actuarial assumptions used to calculate the benefit obligations at December 31 were: 
U.S. Plans202020192018
Discount rate2.5 %3.2 %4.3 %
Compensation increase4.7 %4.7 %4.5 %

Non-U.S. Plans202020192018
Discount rate1.4 %2.1 %2.9 %
Compensation increase3.0 %3.0 %3.2 %

The weighted average actuarial assumptions used to calculate pension expense for each year were: 
U.S. Plans202020192018
Discount rate - service cost3.6 %4.7 %3.9 %
Discount rate - interest cost2.8 %3.9 %3.2 %
Compensation increase4.7 %4.5 %4.7 %
Long-term rate of return6.8 %7.3 %7.3 %
 
Non-U.S. Plans202020192018
Discount rate - service cost2.6 %3.0 %2.6 %
Discount rate - interest cost1.9 %2.7 %2.2 %
Compensation increase3.0 %3.2 %3.2 %
Long-term rate of return3.3 %4.3 %4.4 %

The expected long-term rate of return on plan assets is determined by taking into consideration expected long-term returns associated with each major asset class based on long-term historical ranges, inflation assumptions and the expected net value from active management of the assets based on actual results.

Other Postretirement Benefit Plans. The Company sponsors unfunded plans to provide health care and life insurance benefits to certain pensioners and survivors. Generally, the medical plans pay a stated percentage of medical expenses reduced by deductibles and other coverages. Life insurance benefits are generally provided by insurance contracts. The Company reserves the right, subject to existing agreements, to change, modify or discontinue the plans. A measurement date of December 31 was used for the plans presented below.

The components of net postretirement benefits cost were as follows:
Other Postretirement Benefits202020192018
Service cost$1 $1 $4 
Interest cost5 6 6 
Amortization of prior service credit(26)(34)(37)
Amortization of actuarial loss4 3 4 
Net periodic benefit credit$(16)$(24)$(23)
Changes in the benefit obligations were:
20202019
Benefit obligations at January 1$164 $147 
Service cost1 1 
Interest cost5 6 
Amendments— 6 
Actuarial loss 7 14 
Benefits paid(11)(13)
Foreign currency translation— 3 
Benefit obligations at December 31$166 $164 

Changes in the net loss and prior service credit for the Company’s postretirement benefit plans were: 
 202020192018
 Net
loss		Prior
service		Net
loss		Prior
service		Net
loss		Prior
service
Balance at January 1$42 $(72)$31 $(105)$49 $(142)
Reclassification to net periodic benefit cost(4)26 (3)34 (4)37 
Current year gain / (loss)7 — 14 — (14)— 
Amendments— — — (1)— — 
Balance at December 31$45 $(46)$42 $(72)$31 $(105)

Expected future benefit payments are as follows:
 Benefit Payments
2021$15 
202213 
202312 
202412 
202511 
2026 - 203048 

The assumed health care cost trend rates at December 31, 2020 were as follows: 
Health care cost trend rate assumed for 20205.2 %
Rate that the cost trend rate gradually declines to4.0 %
Year that the rate reaches the rate it is assumed to remain2035

Weighted average discount rates used to calculate the benefit obligations at the end of each year and the cost for each year are presented below. 
202020192018
Benefit obligations2.8 %3.5 %4.5 %
Service cost4.1 %4.8 %4.9 %
Interest cost3.3 %4.2 %4.1 %
Defined Contribution Benefit Plans. The Company also sponsors defined contribution benefit plans in certain jurisdictions including the U.S. and the U.K. In 2020, the Company recognized expense of $13 related to these plans.