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Benefit Plans | 12 Months Ended
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Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract] |
BENEFIT PLANS | BENEFIT PLANS Defined Contribution Plan — The Company sponsors four defined contribution plans ("the Plans"). Two are for U.S. non-union employees, of which one is for employees of the Parent Company and certain U.S. SBU businesses and one is for DPL employees. One plan includes both union and non-union employees at IPL. One defined contribution plan is for union employees at DPL. The Plans are qualified under section 401 of the Internal Revenue Code. All U.S. employees of the Company are eligible to participate in the appropriate Plan except for those employees who are covered by a collective bargaining agreement, unless such agreement specifically provides that the employee is considered an eligible employee under a Plan. The Plans provide matching contributions in AES common stock or cash, other contributions at the discretion of the Compensation Committee of the Board of Directors in AES common stock or cash and discretionary tax deferred contributions from the participants. Participants are fully vested in their own contributions and the Company's matching contributions. Participants vest in other company contributions ratably over a five-year period ending on the fifth anniversary of their hire date. For the year ended December 31, 2015, the Company's contributions to the defined contribution plans were approximately $18 million, and for the years ended December 31, 2014 and 2013, contributions were $22 million and $23 million per year, respectively. Defined Benefit Plans — Certain of the Company's subsidiaries have defined benefit pension plans covering substantially all of their respective employees. Pension benefits are based on years of credited service, age of the participant and average earnings. Of the 33 active defined benefit plans as of December 31, 2015, 5 are at U.S. subsidiaries and the remaining plans are at foreign subsidiaries . The following table reconciles the Company's funded status, both domestic and foreign, as of the periods indicated:
December 31, |  | 2015 |  | 2014
(in millions) |  | U.S. |  | Foreign |  | U.S. |  | Foreign
CHANGE IN PROJECTED BENEFIT OBLIGATION: |  |  |  |  |  |  |  |
Benefit obligation as of January 1 |  | $ | 1,235 |  |  | $ | 4,363 |  |  | $ | 1,059 |  |  | $ | 4,749 |
Service cost |  | 16 |  |  | 15 |  |  | 14 |  |  | 16 |
Interest cost |  | 48 |  |  | 351 |  |  | 50 |  |  | 489 |
Employee contributions |  | — |  |  | 3 |  |  | — |  |  | 4 |
Plan amendments |  | 5 |  |  | 2 |  |  | 8 |  |  | (3 | )
Plan settlements |  | (3 | ) |  | — |  |  | — |  |  | — |
Benefits paid |  | (61 | ) |  | (300 | ) |  | (59 | ) |  | (415 | )
Actuarial (gain) loss |  | (68 | ) |  | (160 | ) |  | 163 |  |  | 87 |
Effect of foreign currency exchange rate changes |  | — |  |  | (1,301 | ) |  | — |  |  | (564 | )
Benefit obligation as of December 31 |  | $ | 1,172 |  |  | $ | 2,973 |  |  | $ | 1,235 |  |  | $ | 4,363 |
CHANGE IN PLAN ASSETS: |  |  |  |  |  |  |  |
Fair value of plan assets as of January 1 |  | $ | 1,061 |  |  | $ | 3,272 |  |  | $ | 941 |  |  | $ | 3,605 |
Actual return on plan assets |  | (7 | ) |  | 182 |  |  | 123 |  |  | 360 |
Employer contributions |  | 31 |  |  | 89 |  |  | 56 |  |  | 135 |
Employee contributions |  | — |  |  | 3 |  |  | — |  |  | 4 |
Plan settlements |  | (3 | ) |  | — |  |  | — |  |  | — |
Benefits paid |  | (61 | ) |  | (300 | ) |  | (59 | ) |  | (415 | )
Effect of foreign currency exchange rate changes |  | — |  |  | (962 | ) |  | — |  |  | (417 | )
Fair value of plan assets as of December 31 |  | $ | 1,021 |  |  | $ | 2,284 |  |  | $ | 1,061 |  |  | $ | 3,272 |
RECONCILIATION OF FUNDED STATUS |  |  |  |  |  |  |  |
Funded status as of December 31 |  | $ | (151 | ) |  | $ | (689 | ) |  | $ | (174 | ) |  | $ | (1,091 | )
The following table summarizes the amounts recognized on the Consolidated Balance Sheets in millions related to the funded status of the plans, both domestic and foreign, as of the periods indicated:
December 31, |  | 2015 |  | 2014
AMOUNTS RECOGNIZED ON THE CONSOLIDATED BALANCE SHEETS |  | U.S. |  | Foreign |  | U.S. |  | Foreign
Noncurrent assets |  | $ | — |  |  | $ | 67 |  |  | $ | — |  |  | $ | 51 |
Accrued benefit liability—current |  | — |  |  | (5 | ) |  | — |  |  | (4 | )
Accrued benefit liability—noncurrent |  | (151 | ) |  | (751 | ) |  | (174 | ) |  | (1,138 | )
Net amount recognized at end of year |  | $ | (151 | ) |  | $ | (689 | ) |  | $ | (174 | ) |  | $ | (1,091 | )
The next table summarizes the Company's U.S. and foreign accumulated benefit obligation as of the periods indicated (in millions):
December 31, | 2015 |  | 2014 |
| U.S. |  | Foreign |  | U.S. |  | Foreign |
Accumulated Benefit Obligation | $ | 1,150 |  |  | $ | 2,931 |  |  | $ | 1,208 |  |  | $ | 4,301 |  |
Information for pension plans with an accumulated benefit obligation in excess of plan assets: |  |  |  |  |  |  |  |
Projected benefit obligation | $ | 1,172 |  |  | $ | 2,683 |  |  | $ | 1,235 |  |  | $ | 4,021 |  |
Accumulated benefit obligation | 1,150 |  |  | 2,656 |  |  | 1,208 |  |  | 3,979 |  |
Fair value of plan assets | 1,021 |  |  | 1,931 |  |  | 1,061 |  |  | 2,885 |  |
Information for pension plans with a projected benefit obligation in excess of plan assets: |  |  |  |  |  |  |  |
Projected benefit obligation | $ | 1,172 |  |  | $ | 2,697 |  | (1) | $ | 1,235 |  |  | $ | 4,038 |  | (1)
Fair value of plan assets | 1,021 |  |  | 1,942 |  | (1) | 1,061 |  |  | 2,897 |  | (1)
(1) | $686 million and $1.1 billion of the total net unfunded projected benefit obligation is due to Eletropaulo in Brazil as of December 31, 2015 and 2014, respectively.
The table below summarizes the significant weighted average assumptions used in the calculation of benefit obligation and net periodic benefit cost, both domestic and foreign, as of the periods indicated:
December 31, | 2015 |  | 2014 |
| U.S. |  | Foreign |  | U.S. |  | Foreign |
Benefit Obligation: |  |  |  |  |  |  |  |
Discount rates | 4.44 | % |  | 11.37 | % | (2) | 4.04 | % |  | 10.47 | % | (2)
Rates of compensation increase | 3.34 | % | (1) | 6.32 | % |  | 3.94 | % | (1) | 6.41 | % |
Periodic Benefit Cost: |  |  |  |  |  |  |  |
Discount rate | 4.04 | % |  | 10.47 | % |  | 4.89 | % |  | 10.80 | % |
Expected long-term rate of return on plan assets | 6.67 | % |  | 9.77 | % |  | 6.92 | % |  | 10.44 | % |
Rate of compensation increase | 3.94 | % | (1) | 6.41 | % |  | 3.94 | % | (1) | 6.44 | % |
(1) | A U.S. subsidiary of the Company has defined benefit obligations of $6 million and $748 million as of December 31, 2015 and 2014, respectively, for which salary bands, rather than rates of compensation increases, are used to determine future benefit costs. Rates of compensation increases in the table above do not include amounts related to these specific defined benefit plans. A plan with a defined benefit obligation of $742 million at December 31, 2014 and which used salary bands at that date is using a rate of compensation increase as at December 31, 2015. The rate of compensation increase for this plan is included in the weighted average in the above table for calculating the benefit obligation as at December 31, 2015, but is not included in the weighted average for calculating the benefit obligation as at December 31, 2014 or the periodic benefit cost for 2014 or 2015.
(2) | Includes an inflation factor that is used to calculate future periodic benefit cost, but is not used to calculate the benefit obligation.
The Company establishes its estimated long-term return on plan assets considering various factors, which include the targeted asset allocation percentages, historic returns and expected future returns. The measurement of pension obligations, costs and liabilities is dependent on a variety of assumptions. These assumptions include estimates of the present value of projected future pension payments to all plan participants, taking into consideration the likelihood of potential future events such as salary increases and demographic experience. These assumptions may have an effect on the amount and timing of future contributions. The assumptions used in developing the required estimates include the following key factors: discount rates; salary growth; retirement rates; inflation; expected return on plan assets; and mortality rates. The effects of actual results differing from the Company's assumptions are accumulated and amortized over future periods and, therefore, generally affect the Company's recognized expense in such future periods. Effective January 1, 2016 the Company will apply a disaggregated discount rate approach for determining service cost and interest cost for its defined benefit pension plans and post-retirement plans in the U.S. and U.K. Refer to Note 1—General and Summary of Significant Accounting Policies for further information relating to this change in estimate. Sensitivity of the Company's pension funded status to the indicated increase or decrease in the discount rate and long-term rate of return on plan assets assumptions is shown below. Note that these sensitivities may be asymmetric and are specific to the base conditions at year-end 2015. They also may not be additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities shown. The funded status as of December 31, 2015 is affected by the assumptions as of that date. Pension expense for 2015 is affected by the December 31, 2014 assumptions. The impact on pension expense from a one percentage point change in these assumptions is shown in the table below (in millions):
Increase of 1% in the discount rate |  | $ | (32 | )
Decrease of 1% in the discount rate |  | 27 |
Increase of 1% in the long-term rate of return on plan assets |  | (36 | )
Decrease of 1% in the long-term rate of return on plan assets |  | 36 |
The following table summarizes the components of the net periodic benefit cost in millions, both domestic and foreign, for the years indicated:
December 31, |  | 2015 |  | 2014 |  | 2013
Components of Net Periodic Benefit Cost: |  | U.S. |  | Foreign |  | U.S. |  | Foreign |  | U.S. |  | Foreign
Service cost |  | $ | 16 |  |  | $ | 15 |  |  | $ | 14 |  |  | $ | 16 |  |  | $ | 16 |  |  | $ | 26 |
Interest cost |  | 48 |  |  | 351 |  |  | 50 |  |  | 489 |  |  | 46 |  |  | 515 |
Expected return on plan assets |  | (70 | ) |  | (247 | ) |  | (67 | ) |  | (362 | ) |  | (64 | ) |  | (484 | )
Amortization of prior service cost |  | 7 |  |  | — |  |  | 6 |  |  | (1 | ) |  | 5 |  |  | — |
Amortization of net loss |  | 20 |  |  | 28 |  |  | 13 |  |  | 37 |  |  | 23 |  |  | 77 |
Settlement gain recognized |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |
Total pension cost |  | $ | 21 |  |  | $ | 147 |  |  | $ | 16 |  |  | $ | 180 |  |  | $ | 26 |  |  | $ | 134 |
The following table summarizes in millions the amounts reflected in AOCL including AOCL attributable to noncontrolling interests, on the Consolidated Balance Sheet as of December 31, 2015, that have not yet been recognized as components of net periodic benefit cost and amounts expected to be reclassified to earnings in the next fiscal year:
December 31, 2015 | Accumulated Other Comprehensive Income (Loss) |  | Amounts expected to be reclassified to earnings in next fiscal year
| U.S. |  | Foreign |  | U.S. |  | Foreign
Prior service cost | $ | — |  |  | $ | (5 | ) |  | $ | — |  |  | $ | — |
Unrecognized net actuarial gain (loss) | (6 | ) |  | (1,092 | ) |  | — |  |  | (18 | )
Total | $ | (6 | ) |  | $ | (1,097 | ) |  | $ | — |  |  | $ | (18 | )
The following table summarizes the Company's target allocation for 2015 and pension plan asset allocation, both domestic and foreign, as of the periods indicated:
|  |  |  |  | Percentage of Plan Assets as of December 31,
| Target Allocations |  | 2015 |  | 2014
Asset Category | U.S. |  | Foreign |  | U.S. |  | Foreign |  | U.S. |  | Foreign
Equity securities | 46 | % |  | 15% -29% |  | 44.76 | % |  | 13.23 | % |  | 44.02 | % |  | 16.28 | %
Debt securities | 50 | % |  | 60% - 85% |  | 50.05 | % |  | 81.10 | % |  | 50.90 | % |  | 78.85 | %
Real estate | 2 | % |  | 0% - 3% |  | 2.94 | % |  | 3.24 | % |  | 2.45 | % |  | 3.15 | %
Other | 2 | % |  | 0% - 5% |  | 2.25 | % |  | 2.43 | % |  | 2.63 | % |  | 1.72 | %
Total pension assets |  |  |  |  | 100.00 | % |  | 100.00 | % |  | 100.00 | % |  | 100.00 | %
The U.S. plans seek to achieve the following long-term investment objectives:
• | maintenance of sufficient income and liquidity to pay retirement benefits and other lump sum payments;
• | long-term rate of return in excess of the annualized inflation rate;
• | long-term rate of return, net of relevant fees, that meets or exceeds the assumed actuarial rate; and
• | long-term competitive rate of return on investments, net of expenses, that equals or exceeds various benchmark rates.
The asset allocation is reviewed periodically to determine a suitable asset allocation which seeks to manage risk through portfolio diversification and takes into account, among other possible factors, the above-stated objectives, in conjunction with current funding levels, cash flow conditions and economic and industry trends. The following table summarizes the Company's U.S. plan assets by category of investment and level within the fair value hierarchy in millions as of the periods indicated:
|  | December 31, 2015 |  | December 31, 2014
U.S. Plans |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Equity securities — | Mutual funds | 457 |  |  | — |  |  | — |  |  | 457 |  |  | 467 |  |  | — |  |  | — |  |  | 467 |
Debt securities — | Government debt securities | 53 |  |  | — |  |  | — |  |  | 53 |  |  | 67 |  |  | — |  |  | — |  |  | 67 |
| Mutual funds(1) | 458 |  |  | — |  |  | — |  |  | 458 |  |  | 473 |  |  | — |  |  | — |  |  | 473 |
Real Estate — | Real Estate | — |  |  | 30 |  |  | — |  |  | 30 |  |  | — |  |  | 26 |  |  | — |  |  | 26 |
Other — | Cash and cash equivalents | — |  |  | — |  |  | — |  |  | — |  |  | 4 |  |  | — |  |  | — |  |  | 4 |
| Other investments | — |  |  | 23 |  |  | — |  |  | 23 |  |  | — |  |  | 24 |  |  | — |  |  | 24 |
| Total plan assets | $ | 968 |  |  | $ | 53 |  |  | $ | — |  |  | $ | 1,021 |  |  | $ | 1,011 |  |  | $ | 50 |  |  | $ | — |  |  | $ | 1,061 |
(1) | Mutual funds categorized as debt securities consist of mutual funds for which debt securities are the primary underlying investment.
The investment strategy of the foreign plans seeks to maximize return on investment while minimizing risk. The assumed asset allocation has less exposure to equities in order to closely match market conditions and near term forecasts. The following table summarizes the Company's foreign plan assets by category of investment and level within the fair value hierarchy in millions as of the periods indicated:
|  | December 31, 2015 |  | December 31, 2014
Foreign Plans |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Equity securities — | Common stock | $ | 9 |  |  | $ | — |  |  | $ | — |  |  | $ | 9 |  |  | $ | 21 |  |  | $ | — |  |  | $ | — |  |  | $ | 21 |
| Mutual funds | 167 |  |  | — |  |  | — |  |  | 167 |  |  | 274 |  |  | — |  |  | — |  |  | 274 |
| Private equity(1) | — |  |  | — |  |  | 126 |  |  | 126 |  |  | — |  |  | — |  |  | 237 |  |  | 237 |
Debt securities — | Certificates of deposit | — |  |  | 2 |  |  | — |  |  | 2 |  |  | — |  |  | 3 |  |  | — |  |  | 3 |
| Unsecured debentures | — |  |  | 5 |  |  | — |  |  | 5 |  |  | — |  |  | 10 |  |  | — |  |  | 10 |
| Government debt securities | 11 |  |  | 79 |  |  | — |  |  | 90 |  |  | 12 |  |  | 98 |  |  | — |  |  | 110 |
| Mutual funds(2) | 218 |  |  | 1,535 |  |  | — |  |  | 1,753 |  |  | 215 |  |  | 2,236 |  |  | — |  |  | 2,451 |
| Other debt securities | — |  |  | 2 |  |  | — |  |  | 2 |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
Real estate — | Real estate(1) | — |  |  | — |  |  | 74 |  |  | 74 |  |  | — |  |  | — |  |  | 103 |  |  | 103 |
Other — | Cash and cash equivalents | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | 1 |
| Participant loans(3) | — |  |  | — |  |  | 37 |  |  | 37 |  |  | — |  |  | — |  |  | 52 |  |  | 52 |
| Other assets | 16 |  |  | — |  |  | 3 |  |  | 19 |  |  | — |  |  | — |  |  | 4 |  |  | 4 |
| Total plan assets | $ | 421 |  |  | $ | 1,623 |  |  | $ | 240 |  |  | $ | 2,284 |  |  | $ | 523 |  |  | $ | 2,353 |  |  | $ | 396 |  |  | $ | 3,272 |
(1) | Plan assets of our Brazilian subsidiaries are invested in private equities and commercial real estate through the plan administrator in Brazil. The fair value of these assets is determined using the income approach through annual appraisals based on a discounted cash flow analysis.
(2) | Mutual funds categorized as debt securities consist of mutual funds for which debt securities are the primary underlying investment.
(3) | Loans to participants are stated at cost, which approximates fair value.
The following table presents a reconciliation of all plan assets measured at fair value using significant unobservable inputs (Level 3) in millions for the periods indicated:
December 31, |  | 2015 |  | 2014
Balance at January 1 |  | $ | 396 |  |  | $ | 530 |
Actual return on plan assets: |  |  |  |
Returns relating to assets still held at reporting date |  | (36 | ) |  | (87 | )
Purchases, sales and settlements, net |  | — |  |  | 1 |
Transfers of (assets) liabilities into Level 3 |  | — |  |  | 5 |
Change due to exchange rate changes |  | (120 | ) |  | (53 | )
Balance at December 31 |  | $ | 240 |  |  | $ | 396 |
The following table summarizes the estimated cash flows for U.S. and foreign expected employer contributions and expected future benefit payments, both domestic and foreign in millions:
|  | U.S. |  | Foreign
Expected employer contribution in 2016 |  | $ | 22 |  |  | $ | 100 |
Expected benefit payments for fiscal year ending: |  |  |  |
2016 |  | 65 |  |  | 268 |
2017 |  | 67 |  |  | 277 |
2018 |  | 69 |  |  | 289 |
2019 |  | 71 |  |  | 299 |
2020 |  | 73 |  |  | 309 |
2021 - 2025 |  | 380 |  |  | 1,686 |

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