Pension, Other Post-Retirement Benefits and Employee Benefit Plans.

Federal-Mogul, ARI and Viskase each sponsor several defined benefit pension plans (the ''Pension Benefits'') (and, in the case of Federal-Mogul and Viskase, its pension plans include defined contribution plans). Additionally, Federal-Mogul and Viskase each sponsors health care and life insurance benefits (''Other Post-Retirement Benefits'') for certain employees and retirees around the world. The Pension Benefits are funded based on the funding requirements of federal and international laws and regulations, as applicable, in advance of benefit payments and the other benefits as benefits are provided to participating employees. As prescribed by U.S. GAAP, Federal-Mogul, ARI and Viskase each uses, as applicable, appropriate actuarial methods and assumptions in accounting for its defined benefit pension plans, non-pension post-retirement benefits, and disability, early retirement and other post-retirement benefits. The measurement date for all defined benefit plans is December 31 of each year.

Components of net periodic benefit cost (credit) for the years ended December 31, 2017, 2016 and 2015 are as follows:



	Pension Benefits									Other Post-Retirement Benefits
	Year Ended December 31,									Year Ended December 31,
	2017			2016			2015			2017			2016			2015
	(in millions)
Service cost	$	18		$	18		$	19		$	—		$	—		$	—
Interest cost	63			70			66			12			14			13
Expected return on plan assets	(58		)	(59		)	(71		)	—			—			—
Amortization of actuarial losses	26			22			26			—			2			5
Amortization of prior service credit	—			—			—			(4		)	(4		)	(4		)
Curtailment gain	—			—			(2		)	—			—			—
	$	49		$	51		$	38		$	8		$	12		$	14

Automotive

Defined Benefit Plans

The following provides disclosures for our Automotive segment's benefit obligations, plan assets, funded status, recognition in the consolidated balance sheets and inputs and valuation assumptions:



	Pension Benefits												Other Post-Retirement Benefits
	United States Plans						Non-U.S. Plans						Other Post-Retirement Benefits
	2017			2016			2017			2016			2017			2016
	(in millions)
Change in benefit obligation:
Benefit obligation, beginning of year	$	1,167		$	1,221		$	510		$	487		$	295		$	323
Service cost	2			3			15			14			—			—
Interest cost	44			49			11			13			12			14
Benefits paid	(73		)	(98		)	(22		)	(21		)	(23		)	(24		)
Medicare subsidies received	—			—			—			—			2			2
Curtailments	—			—			—			(1		)	—			—
Settlements	—			—			(1		)	(4		)	—			—
Actuarial losses (gains)	41			(8		)	(17		)	39			(1		)	(21		)
Business combinations	—			—			1			—			—			—
Currency translation	—			—			68			(17		)	1			1
Benefit obligation, end of year	1,181			1,167			565			510			286			295

Change in plan assets:
Fair value of plan assets, beginning of year	856			870			63			57			—			—
Actual return on plan assets	116			45			3			3			—			—
Settlements	—			—			(1		)	(4		)	—			—
Company contributions	44			39			30			30			21			22
Benefits paid	(73		)	(98		)	(22		)	(21		)	(23		)	(24		)
Business combinations	—			—			—			1			—			—
Medicare subsidies received	—			—			—			—			2			2
Currency translation	—			—			8			(3		)	—			—
Fair value of plan assets, end of year	943			856			81			63			—			—
Funded status of the plan and amounts recognized in the consolidated balance sheets	$	(238	)	$	(311	)	$	(484	)	$	(447	)	$	(286	)	$	(295	)

Amounts recognized in accumulated other comprehensive loss, inclusive of tax impacts:
Net actuarial loss	$	393		$	435		$	87		$	93		$	32		$	34
Prior service cost (credit)	—			—			1			1			(2		)	(6		)
	$	393		$	435		$	88		$	94		$	30		$	28

Weighted-average assumptions used to determine the benefit obligation as of December 31, 2017, 2016 and 2015.



	Pension Benefits												Other Post-Retirement Benefits
	United States Plans						Non-U.S. Plans						Other Post-Retirement Benefits
	December 31,												December 31,
	2017		2016		2015		2017		2016		2015		2017		2016		2015
	(in millions)
Discount rate	3.50	%	3.90	%	4.15	%	2.26	%	2.03	%	2.72	%	3.68	%	3.98	%	4.18	%
Rate of compensation increase	n/a		n/a		n/a		2.97	%	2.96	%	3.19	%	n/a		n/a		n/a

Weighted-average assumptions used to determine net periodic benefit cost (credit) for the years ended December 31, 2017, 2016 and 2015:



	Pension Benefits												Other Post-Retirement Benefits
	United States Plans						Non-U.S. Plans						Other Post-Retirement Benefits
	Year Ended December 31,												Year Ended December 31,
	2017		2016		2015		2017		2016		2015		2017		2016		2015
	(in millions)
Discount rate	3.90	%	4.15	%	3.85	%	2.03	%	2.72	%	1.77	%	3.98	%	4.18	%	3.84	%
Expected return on plan assets	5.55	%	5.65	%	6.55	%	3.05	%	3.22	%	3.52	%	n/a		n/a		n/a
Rate of compensation increase	n/a		n/a		n/a		2.96	%	3.19	%	3.16	%	n/a		n/a		n/a

Long-term Rate of Return

Federal-Mogul’s expected return on assets is established annually through analysis of anticipated future long-term investment performance for the plan based upon the asset allocation strategy and is primarily a long-term prospective rate.

An analysis was performed in December 2017 resulting in changes to the expected long-term rate of return on assets. The weighted-average long-term rate of return on assets for the United States pension plans decreased from 5.55% at December 31, 2016 to 5.50% at December 31, 2017. The expected long-term rate of return on plan assets used in determining pension expense for non-U.S. plans is determined in a similar manner to the U.S. plans and decreased from 3.05% at December 31, 2016 to 3.26% at December 31, 2017.

Information for defined benefit plans with projected benefit obligations in excess of plan assets:



	Pension Benefits								Other Post-Retirement Benefits
	United States Plans				Non-U.S. Plans				Other Post-Retirement Benefits
	December 31,								December 31,
	2017		2016		2017		2016		2017		2016
	(in millions)
Projected benefit obligation	$	1,181	$	1,167	$	565	$	509	$	286	$	295
Fair value of plan assets	943		856		81		62		—		—

Information for pension plans with accumulated benefit obligations in excess of plan assets:



	Pension Benefits
	United States Plans				Non-U.S. Plans
	December 31,
	2017		2016		2017		2016
	(in millions)
Projected benefit obligation	$	1,181	$	1,167	$	548	$	494
Accumulated benefit obligation	1,181		1,167		510		459
Fair value of plan assets	943		856		66		50

The accumulated benefit obligation for all pension plans was approximately $1.7 billion and $1.6 billion as of December 31, 2017 and 2016, respectively.

Health Care Trend

The assumed health care and drug cost trend rates used to measure next year's post-employment healthcare benefits are as follows:



	Other Post-Retirement Benefits
	2017	2016
Initial health care cost trend rate	6.41%	6.69%
Ultimate health care cost trend rate	5.00%	5.00%
Year ultimate health care cost trend rate reached	2022	2022

The assumed health care cost trend rate has a significant impact on the amounts reported for OPEB plans. The following table illustrates the sensitivity to a change in the assumed health care cost trend rate:



	Total Service and Interest Cost			APBO
	(in millions)
100 basis point (“bp”) increase in health care cost trend rate	$	1		$	23
100 bp decrease in health care cost trend rate	(1		)	(20		)

Estimated amounts to be amortized from accumulated other comprehensive loss into net period benefit cost for 2018 based on 2017 plan measurements are $14 million, consisting primarily of amortization of net actuarial loss in the U.S. pension plans.

Federal-Mogul's projected benefit payments from the plans are estimated as follows:



	Pension Benefits				Other Post-Retirement Benefits
	United States Plans		Non-U.S. Plans		Other Post-Retirement Benefits
	(in millions)
2018	$	85	$	25	$	23
2019	85		27		22
2020	86		27		22
2021	87		27		22
2022	87		29		21
2023-2027	379		151		96

Federal-Mogul expects to contribute approximately $75 million to its pension plans in 2018.

Plan Assets

Certain pension plans sponsored by Federal-Mogul invest in a diversified portfolio consisting of an array of asset classes that attempts to maximize returns while minimizing volatility. These asset classes include developed market equities, emerging market equities, private equity, global high quality and high yield fixed income, real estate, and absolute return strategies.

As of December 31, 2017, plan assets were comprised of 65% equity investments, 23% fixed income investments, and 12% in other investments which include hedge funds. Approximately 57% of the U.S. plan assets were invested in actively managed investment funds. Federal-Mogul’s investment strategy includes a target asset allocation of 50% equity investments, 25% fixed income investments and 25% in other investment types including hedge funds.

The U.S. investment strategy mitigates risk by incorporating diversification across appropriate asset classes to meet the plan’s objectives. It is intended to reduce risk, provide long-term financial stability for the plan, and maintain funded levels that meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments. Risk assumed is considered appropriate for the return anticipated and consistent with the diversification of plan assets.

For Non-U.S. plans, the insurance contracts guarantee a minimum rate of return. Federal-Mogul has no input into the investment strategy of the assets underlying the contracts, but they are typically heavily invested in active bond markets and are highly regulated by local law. The majority of the assets of the non-U.S. plans are invested through insurance contracts. The target asset allocation for the non-U.S. pension plans is 67% insurance contracts, 31% debt investments and 2% equity investments.

Refer to Note 5, “Fair Value Measurements,” for discussion of the fair value of each major category of plan assets, including the inputs and valuation techniques used to develop the fair value measurements of the plans' assets, at December 31, 2017 and 2016.

Defined Contribution Pension Plans

Federal-Mogul also maintains certain defined contribution pension plans for eligible employees. Effective January 1, 2013, Federal-Mogul amended its U.S. defined contribution plan to allow for an enhanced company match and company provided age-based contributions for eligible U.S. salaried and non-union hourly employees. The total expenses attributable to Federal-Mogul's defined contribution savings plan were $46 million, $43 million and $45 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Other Benefits

Federal-Mogul accounts for benefits to former or inactive employees paid after employment but before retirement. The liabilities for such U.S. and European post-employment benefits were $67 million and $60 million at December 31, 2017 and 2016, respectively.

Railcar and Food Packaging

ARI is the sponsor of three defined benefit pension plans, two of which cover certain employees at designated repair facilities. All three of ARI's defined benefit pension plans are frozen and no additional benefits are accruing thereunder. Viskase and its subsidiaries have defined contribution and defined benefit plans varying by country and subsidiary. Viskase's operations in the United States, France, Germany and Canada have historically offered defined benefit retirement plans and post-retirement health care and life insurance benefits to their employees. Most of these benefits have been terminated, resulting in reductions in various liabilities.

The following table provides disclosures for ARI's and Viskase's benefit obligations, plan assets, funded status, and recognition in the consolidated balance sheets. As pension costs for ARI and Viskase are not material to our consolidated financial position and results of operations, we do not provide information regarding their inputs and valuation assumptions.



	Pension Benefits
	2017			2016
	(in millions)
Change in benefit obligation:
Benefit obligation, beginning of year	$	189		$	191
Service cost	1			1
Interest cost	8			8
Benefits paid	(10		)	(15		)
Actuarial gain	9			4
Adjustment to benefits	15			—
Currency translation	1			—
Benefit obligation, end of year	213			189
Change in plan assets:
Fair value of plan assets, beginning of year	126			133
Actual return on plan assets	16			8
Benefits paid	(10		)	(15		)
Fair value of plan assets, end of year	132			126
Funded status of the plan	$	(81	)	$	(63	)
Amounts recognized in the consolidated balance sheets:
Net liability recognized	$	(81	)	$	(63	)
Amounts recognized in accumulated other comprehensive loss, inclusive of tax impacts:
Net actuarial loss	$	(81	)	$	(63	)
Total	$	(81	)	$	(63	)