The following table provides the annual cost (including costs reported as part of discontinued operations) and changes in Other comprehensive income/(loss) for our benefit plans: | ||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Pension Plans | ||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Qualified(a) | U.S. Supplemental (Non-Qualified)(b) | International(c) | Postretirement Plans(d) | |||||||||||||||||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||||||||||
Service cost | $ | 301 | $ | 357 | $ | 351 | $ | 26 | $ | 35 | $ | 36 | $ | 216 | $ | 215 | $ | 243 | $ | 61 | $ | 68 | $ | 68 | ||||||||||||||||||||||||
Interest cost | 666 | 697 | 734 | 67 | 62 | 72 | 378 | 406 | 443 | 166 | 182 | 195 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (999 | ) | (983 | ) | (871 | ) | — | — | — | (407 | ) | (424 | ) | (437 | ) | (55 | ) | (46 | ) | (35 | ) | |||||||||||||||||||||||||||
Amortization of: | ||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial losses | 355 | 306 | 145 | 51 | 41 | 36 | 129 | 93 | 86 | 46 | 33 | 17 | ||||||||||||||||||||||||||||||||||||
Prior service credits | (7 | ) | (10 | ) | (8 | ) | (2 | ) | (3 | ) | (3 | ) | (5 | ) | (7 | ) | (5 | ) | (44 | ) | (49 | ) | (53 | ) | ||||||||||||||||||||||||
Curtailments | — | (62 | ) | (4 | ) | — | (9 | ) | (1 | ) | (20 | ) | (16 | ) | (14 | ) | (11 | ) | (65 | ) | (68 | ) | ||||||||||||||||||||||||||
Settlements | 113 | 145 | 99 | 40 | 33 | 24 | 22 | 7 | 14 | — | — | — | ||||||||||||||||||||||||||||||||||||
Special termination benefits | — | 8 | 23 | — | 30 | 26 | 4 | 5 | 5 | — | 6 | 3 | ||||||||||||||||||||||||||||||||||||
Net periodic benefit costs reported in Income | 429 | 458 | 469 | 182 | 189 | 190 | 317 | 279 | 335 | 163 | 129 | 127 | ||||||||||||||||||||||||||||||||||||
(Income)/cost reported in Other comprehensive income/(loss) | (3,044 | ) | 461 | 1,879 | (255 | ) | 110 | 36 | (569 | ) | 759 | (365 | ) | (736 | ) | 267 | 421 | |||||||||||||||||||||||||||||||
(Income)/cost recognized in Comprehensive income | $ | (2,615 | ) | $ | 919 | $ | 2,348 | $ | (73 | ) | $ | 299 | $ | 226 | $ | (252 | ) | $ | 1,038 | $ | (30 | ) | $ | (573 | ) | $ | 396 | $ | 548 |
(a) | 2013 v. 2012––The decrease in net periodic benefit cost for our U.S. qualified plans was primarily driven by (i) lower service cost resulting from cost reduction initiatives, (ii) lower settlements and (iii) higher expected return on plan assets resulting from an increased plan asset base partially offset by the curtailment gain in the second quarter of 2012 resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico. Also, the decrease in the discount rate resulted in lower interest costs, as well as an increase in the amounts amortized for actuarial losses. 2012 v. 2011––The decrease in net periodic benefit cost for our U.S. qualified plans was primarily driven by (i) higher expected return on plan assets (resulting from contributions made to the plan in 2011 that increased the plan asset base), (ii) lower interest costs, (iii) a decrease in special termination benefits, and (iv) higher curtailments resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico largely offset by higher settlements and an increase in the amounts amortized for actuarial losses (resulting from a decrease in the discount rate and lower than expected actual returns in 2011). |
(b) | 2013 v. 2012––The decrease in net periodic benefit cost for our U.S. supplemental (non-qualified) pension plans was primarily driven by special termination benefits in 2012, partially offset by an increase in the amounts amortized for actuarial losses resulting from a decrease in the discount rate, and the curtailment gain in the second quarter of 2012 resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico. 2012 v. 2011––The net periodic benefit cost for our U.S. supplemental (non-qualified) pension plans was largely unchanged as the curtailment gain resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico was more than offset by higher settlement activity. |
(c) | 2013 v. 2012––The increase in net periodic benefit costs for our international pension plans was primarily driven by (i) an increase in the amounts amortized for actuarial losses resulting from changes in assumptions, (ii) lower expected return on plan assets driven by lower expected rate of return in certain significant plans, (iii) higher settlements and (iv) 2012 curtailment gains, partially offset by lower interest costs resulting from the decrease in discount rates. 2012 v. 2011––The decrease in net periodic benefit costs for our international pension plans was primarily driven by restructuring activities in the U.K. and Ireland in 2011. Also, the decrease in discount rates resulted in lower interest costs, as well as an increase in the amounts amortized for actuarial losses. |
(d) | 2013 v. 2012––The increase in net periodic benefit cost for our postretirement plans was primarily driven by 2012 curtailment gains, partially offset by higher expected return on plan assets and 2012 special termination benefits. Also, the decrease in the discount rate resulted in lower interest costs, as well as an increase in the amounts amortized for actuarial losses. 2012 v. 2011––The net periodic benefit cost for our postretirement plans was largely unchanged, as an increase in amounts amortized for actuarial plan losses was partially offset by higher expected return on plan assets. |
The following table provides the amounts in Accumulated other comprehensive loss expected to be amortized into 2014 net periodic benefit costs: | ||||||||||||||||
Pension Plans | ||||||||||||||||
(MILLIONS OF DOLLARS) | U.S. Qualified | U.S. Supplemental (Non-Qualified) | International | Postretirement Plans | ||||||||||||
Actuarial losses | $ | (62 | ) | $ | (30 | ) | $ | (98 | ) | $ | (5 | ) | ||||
Prior service credits and other | 7 | 2 | 7 | 58 | ||||||||||||
Total | $ | (55 | ) | $ | (28 | ) | $ | (91 | ) | $ | 53 |
The following table provides the weighted-average actuarial assumptions of our benefit plans: | |||||||||
(PERCENTAGES) | 2013 | 2012 | 2011 | ||||||
Weighted-average assumptions used to determine benefit obligations | |||||||||
Discount rate: | |||||||||
U.S. qualified pension plans | 5.2 | % | 4.3 | % | 5.1 | % | |||
U.S. non-qualified pension plans | 4.8 | % | 3.9 | % | 5.0 | % | |||
International pension plans | 3.9 | % | 3.8 | % | 4.7 | % | |||
Postretirement plans | 5.1 | % | 4.1 | % | 4.8 | % | |||
Rate of compensation increase: | |||||||||
U.S. qualified pension plans | 2.8 | % | 2.8 | % | 3.5 | % | |||
U.S. non-qualified pension plans | 2.8 | % | 2.8 | % | 3.5 | % | |||
International pension plans | 2.9 | % | 3.1 | % | 3.3 | % | |||
Weighted-average assumptions used to determine net periodic benefit cost | |||||||||
Discount rate: | |||||||||
U.S. qualified pension plans | 4.3 | % | 5.1 | % | 5.9 | % | |||
U.S. non-qualified pension plans | 3.9 | % | 5.0 | % | 5.8 | % | |||
International pension plans | 3.8 | % | 4.7 | % | 4.8 | % | |||
Postretirement plans | 4.1 | % | 4.8 | % | 5.6 | % | |||
Expected return on plan assets: | |||||||||
U.S. qualified pension plans | 8.5 | % | 8.5 | % | 8.5 | % | |||
International pension plans | 5.6 | % | 5.9 | % | 6.0 | % | |||
Postretirement plans | 8.5 | % | 8.5 | % | 8.5 | % | |||
Rate of compensation increase: | |||||||||
U.S. qualified pension plans | 2.8 | % | 3.5 | % | 4.0 | % | |||
U.S. non-qualified pension plans | 2.8 | % | 3.5 | % | 4.0 | % | |||
International pension plans | 3.1 | % | 3.3 | % | 3.5 | % |
The following table provides the healthcare cost trend rate assumptions for our U.S. postretirement benefit plans: | ||||||
2013 | 2012 | |||||
Healthcare cost trend rate assumed for next year | 7.3 | % | 7.5 | % | ||
Rate to which the cost trend rate is assumed to decline | 4.5 | % | 4.5 | % | ||
Year that the rate reaches the ultimate trend rate | 2027 | 2027 |
The following table provides the effects as of December 31, 2013 of a one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits: | ||||||||
(MILLIONS OF DOLLARS) | Increase | Decrease | ||||||
Effect on total service and interest cost components | $ | 15 | $ | (14 | ) | |||
Effect on postretirement benefit obligation | 248 | (222 | ) |
The following table provides an analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans (including those reported as part of discontinued operations): | ||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||
Pension Plans | ||||||||||||||||||||||||||||||||
U.S. Qualified(a) | U.S. Supplemental (Non-Qualified)(b) | International(c) | Postretirement Plans(d) | |||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Change in benefit obligation (e) | ||||||||||||||||||||||||||||||||
Benefit obligation, beginning | $ | 16,268 | $ | 14,835 | $ | 1,549 | $ | 1,431 | $ | 10,227 | $ | 8,891 | $ | 4,165 | $ | 3,900 | ||||||||||||||||
Service cost | 301 | 357 | 26 | 35 | 216 | 215 | 61 | 68 | ||||||||||||||||||||||||
Interest cost | 666 | 697 | 67 | 62 | 378 | 406 | 166 | 182 | ||||||||||||||||||||||||
Employee contributions | — | — | — | — | 10 | 9 | 69 | 58 | ||||||||||||||||||||||||
Plan amendments | — | — | — | — | 1 | (1 | ) | (152 | ) | (24 | ) | |||||||||||||||||||||
Changes in actuarial assumptions and other | (2,257 | ) | 1,926 | (165 | ) | 252 | 229 | 1,232 | (540 | ) | 259 | |||||||||||||||||||||
Foreign exchange impact | — | — | — | — | (66 | ) | (80 | ) | (9 | ) | 1 | |||||||||||||||||||||
Acquisitions/divestitures, net | — | (1 | ) | 37 | 1 | (63 | ) | 71 | — | — | ||||||||||||||||||||||
Curtailments | (8 | ) | (605 | ) | (1 | ) | (80 | ) | (64 | ) | (101 | ) | (8 | ) | (11 | ) | ||||||||||||||||
Settlements | (444 | ) | (485 | ) | (105 | ) | (121 | ) | (156 | ) | (33 | ) | — | — | ||||||||||||||||||
Special termination benefits | — | 8 | — | 30 | 4 | 5 | — | 6 | ||||||||||||||||||||||||
Benefits paid | (550 | ) | (464 | ) | (67 | ) | (61 | ) | (400 | ) | (387 | ) | (314 | ) | (274 | ) | ||||||||||||||||
Benefit obligation, ending(e) | 13,976 | 16,268 | 1,341 | 1,549 | 10,316 | 10,227 | 3,438 | 4,165 | ||||||||||||||||||||||||
Change in plan assets | ||||||||||||||||||||||||||||||||
Fair value of plan assets, beginning | 12,540 | 12,005 | — | — | 7,589 | 6,953 | 644 | 422 | ||||||||||||||||||||||||
Actual gain on plan assets | 1,318 | 1,464 | — | — | 976 | 668 | 98 | 85 | ||||||||||||||||||||||||
Company contributions | 5 | 20 | 172 | 182 | 380 | 383 | 244 | 353 | ||||||||||||||||||||||||
Employee contributions | — | — | — | — | 10 | 9 | 69 | 58 | ||||||||||||||||||||||||
Foreign exchange impact | — | — | — | — | (95 | ) | (35 | ) | — | — | ||||||||||||||||||||||
Acquisitions/divestitures, net | — | — | — | — | (54 | ) | 31 | — | — | |||||||||||||||||||||||
Settlements | (444 | ) | (485 | ) | (105 | ) | (121 | ) | (156 | ) | (33 | ) | — | — | ||||||||||||||||||
Benefits paid | (550 | ) | (464 | ) | (67 | ) | (61 | ) | (400 | ) | (387 | ) | (314 | ) | (274 | ) | ||||||||||||||||
Fair value of plan assets, ending | 12,869 | 12,540 | — | — | 8,250 | 7,589 | 741 | 644 | ||||||||||||||||||||||||
Funded status—Plan assets less than benefit obligation | $ | (1,107 | ) | $ | (3,728 | ) | $ | (1,341 | ) | $ | (1,549 | ) | $ | (2,066 | ) | $ | (2,638 | ) | $ | (2,697 | ) | $ | (3,521 | ) |
(a) | The favorable change in the funded status of our U.S. qualified plans is primarily due to the plan gains resulting from the increase in the discount rate and an increase in plan assets. The curtailments in 2012 resulting from the decision to freeze the defined benefit plans in the U.S. and Puerto Rico had a favorable impact on the 2012 funded status. |
(b) | Our U.S. supplemental (non-qualified) plans are generally not funded and these obligations, which are substantially greater than the annual cash outlay for these liabilities, will be paid from cash generated from operations. |
(c) | The favorable change in the funded status of our international plans is primarily due to an increase in plan assets partially offset by plan losses resulting from changes in actuarial assumptions. Outside the U.S., in general, we fund our defined benefit plans to the extent that tax or other incentives exist or the law requires. |
(d) | The favorable change in the funded status of our postretirement plans is primarily due to the plan gains resulting from the increase in the discount rate and the impact of a decision to move participants to Medicare Advantage effective January 1, 2015. |
(e) | For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the benefit obligation is the accumulated postretirement benefit obligation (ABO). The ABO for all of our U.S. qualified pension plans was $13.7 billion in 2013 and $15.9 billion in 2012. The ABO for our U.S. supplemental (non-qualified) pension plans was $1.3 billion in 2013 and $1.5 billion 2012. The ABO for our international pension plans was $9.7 billion in 2013 and $9.4 billion in 2012. |
The following table provides information as to how the funded status is recognized in our consolidated balance sheets: | ||||||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||||||
Pension Plans | ||||||||||||||||||||||||||||||||
U.S. Qualified | U.S. Supplemental (Non-Qualified) | International | Postretirement Plans | |||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Noncurrent assets(a) | $ | — | $ | — | $ | — | $ | — | $ | 318 | $ | 124 | $ | — | $ | — | ||||||||||||||||
Current liabilities(b) | — | — | (151 | ) | (162 | ) | (46 | ) | (95 | ) | (29 | ) | (30 | ) | ||||||||||||||||||
Noncurrent liabilities(c) | (1,107 | ) | (3,728 | ) | (1,190 | ) | (1,387 | ) | (2,338 | ) | (2,667 | ) | (2,668 | ) | (3,491 | ) | ||||||||||||||||
Funded status | $ | (1,107 | ) | $ | (3,728 | ) | $ | (1,341 | ) | $ | (1,549 | ) | $ | (2,066 | ) | $ | (2,638 | ) | $ | (2,697 | ) | $ | (3,521 | ) |
(a) | Included primarily in Other noncurrent assets. |
(b) | Included in Accrued compensation and related items and Liabilities of discontinued operations, as appropriate. |
(c) | Included in Pension benefit obligations, net and Postretirement benefit obligations, net, as appropriate. |
The following table provides the pre-tax components of cumulative amounts recognized in Accumulated other comprehensive loss: | ||||||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||||||
Pension Plans | ||||||||||||||||||||||||||||||||
U.S. Qualified | U.S. Supplemental (Non-Qualified) | International | Postretirement Plans | |||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Actuarial losses(a) | $ | (1,974 | ) | $ | (5,027 | ) | $ | (406 | ) | $ | (664 | ) | $ | (2,213 | ) | $ | (2,780 | ) | $ | (292 | ) | $ | (932 | ) | ||||||||
Prior service (costs)/credits and other | 42 | 51 | 11 | 14 | (18 | ) | (20 | ) | 470 | 374 | ||||||||||||||||||||||
Total | $ | (1,932 | ) | $ | (4,976 | ) | $ | (395 | ) | $ | (650 | ) | $ | (2,231 | ) | $ | (2,800 | ) | $ | 178 | $ | (558 | ) |
(a) | The accumulated actuarial losses primarily represent the impact of changes in discount rates and other assumptions that result in cumulative changes in our projected benefit obligations as well as the cumulative difference between the expected return and actual return on plan assets. These accumulated actuarial losses are recognized in Accumulated other comprehensive loss and are amortized into net periodic benefit costs primarily over the average remaining service period for active participants, using the corridor approach. The average amortization periods utilized are 9.6 years for our U.S. qualified plans, 9.5 years for our U.S. supplemental (non-qualified) plans, 18.2 years for our international plans and 10.8 years for our postretirement plans. |
The following table provides information related to the funded status of selected benefit plans (including those reported as part of Liabilities of discontinued operations): | ||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||
Pension Plans | ||||||||||||||||||||||||
U.S. Qualified | U.S. Supplemental (Non-Qualified) | International | ||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Pension plans with an accumulated benefit obligation in excess of plan assets: | ||||||||||||||||||||||||
Fair value of plan assets | $ | 12,869 | $ | 12,540 | $ | — | $ | — | $ | 1,309 | $ | 2,776 | ||||||||||||
Accumulated benefit obligation | 13,704 | 15,870 | 1,294 | 1,465 | 3,348 | 5,056 | ||||||||||||||||||
Pension plans with a projected benefit obligation in excess of plan assets: | ||||||||||||||||||||||||
Fair value of plan assets | 12,869 | 12,540 | — | — | 2,499 | 6,432 | ||||||||||||||||||
Projected benefit obligation | 13,976 | 16,268 | 1,341 | 1,549 | 4,883 | 9,194 |
The following table provides the components of plan assets (including those reported as part of Liabilities of discontinued operations): | ||||||||||||||||||||||||||||||||
Fair Value(a) | Fair Value(a) | |||||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | As of December 31, 2013 | Level 1 | Level 2 | Level 3 | As of December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
U.S. qualified pension plans | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 360 | $ | — | $ | 360 | $ | — | $ | 368 | $ | — | $ | 368 | $ | — | ||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Global equity securities | 4,335 | 4,328 | 7 | — | 3,536 | 3,519 | 17 | — | ||||||||||||||||||||||||
Equity commingled funds | 2,294 | — | 2,294 | — | 2,215 | — | 2,215 | — | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||
Fixed income commingled funds | 675 | — | 675 | — | 943 | — | 943 | — | ||||||||||||||||||||||||
Government bonds | 971 | — | 971 | — | 1,093 | — | 1,093 | — | ||||||||||||||||||||||||
Corporate debt securities | 2,306 | — | 2,306 | — | 2,414 | — | 2,411 | 3 | ||||||||||||||||||||||||
Other investments: | ||||||||||||||||||||||||||||||||
Private equity funds | 822 | — | — | 822 | 866 | — | — | 866 | ||||||||||||||||||||||||
Insurance contracts | 281 | — | 281 | — | 348 | — | 348 | — | ||||||||||||||||||||||||
Other | 825 | — | — | 825 | 757 | — | — | 757 | ||||||||||||||||||||||||
Total | 12,869 | 4,328 | 6,894 | 1,647 | 12,540 | 3,519 | 7,395 | 1,626 | ||||||||||||||||||||||||
International pension plans | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | 229 | — | 229 | — | 299 | — | 299 | — | ||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Global equity securities | 1,833 | 1,832 | 1 | — | 1,723 | 1,638 | 85 | — | ||||||||||||||||||||||||
Equity commingled funds | 2,446 | — | 2,446 | — | 2,194 | — | 2,194 | — | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||
Fixed income commingled funds | 967 | — | 967 | — | 825 | — | 825 | — | ||||||||||||||||||||||||
Government bonds | 812 | — | 812 | — | 914 | — | 914 | — | ||||||||||||||||||||||||
Corporate debt securities | 615 | — | 615 | — | 613 | — | 613 | — | ||||||||||||||||||||||||
Other investments: | ||||||||||||||||||||||||||||||||
Private equity funds | 54 | — | 10 | 44 | 110 | — | 14 | 96 | ||||||||||||||||||||||||
Insurance contracts | 421 | — | 121 | 300 | 465 | — | 117 | 348 | ||||||||||||||||||||||||
Other | 873 | — | 353 | 520 | 446 | — | 57 | 389 | ||||||||||||||||||||||||
Total | 8,250 | 1,832 | 5,554 | 864 | 7,589 | 1,638 | 5,118 | 833 | ||||||||||||||||||||||||
U.S. postretirement plans(b) | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | 29 | — | 29 | — | 28 | — | 28 | — | ||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Global equity securities | 105 | 105 | — | — | 79 | 79 | — | — | ||||||||||||||||||||||||
Equity commingled funds | 56 | — | 56 | — | 50 | — | 50 | — | ||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||
Fixed income commingled funds | 16 | — | 16 | — | 20 | — | 20 | — | ||||||||||||||||||||||||
Government bonds | 24 | — | 24 | — | 25 | — | 25 | — | ||||||||||||||||||||||||
Corporate debt securities | 56 | — | 56 | — | 55 | — | 55 | — | ||||||||||||||||||||||||
Other investments: | ||||||||||||||||||||||||||||||||
Insurance contracts | 415 | — | 415 | — | 350 | — | 350 | — | ||||||||||||||||||||||||
Other | 40 | — | 40 | — | 37 | — | 37 | — | ||||||||||||||||||||||||
Total | $ | 741 | $ | 105 | $ | 636 | $ | — | $ | 644 | $ | 79 | $ | 565 | $ | — |
(a) | Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 1E. Basis of Presentation and Significant Accounting Policies: Fair Value). |
(b) | Reflects postretirement plan assets, which support a portion of our U.S. retiree medical plans. |
The following table provides an analysis of the changes in our more significant investments valued using significant unobservable inputs (including those reported as part of Liabilities of discontinued operations): | ||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||
U.S. Qualified Pension Plans | International Pension Plans | |||||||||||||||||||||||||||||||
Private Equity Funds | Other | Insurance Contracts | Other | |||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Fair value, beginning | $ | 866 | $ | 920 | $ | 757 | $ | 656 | $ | 348 | $ | 366 | $ | 389 | $ | 348 | ||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||||||||||
Assets held, ending | 75 | 4 | 29 | 61 | 15 | 8 | 8 | (14 | ) | |||||||||||||||||||||||
Assets sold during the period | — | — | (6 | ) | — | — | — | — | 5 | |||||||||||||||||||||||
Purchases, sales and settlements, net | (119 | ) | (58 | ) | 45 | 40 | (41 | ) | (5 | ) | 63 | 50 | ||||||||||||||||||||
Transfer into/(out of) Level 3 | — | — | — | — | (16 | ) | (5 | ) | 58 | — | ||||||||||||||||||||||
Exchange rate changes | — | — | — | — | (6 | ) | (16 | ) | 2 | — | ||||||||||||||||||||||
Fair value, ending | $ | 822 | $ | 866 | $ | 825 | $ | 757 | $ | 300 | $ | 348 | $ | 520 | $ | 389 |
• | Cash and cash equivalents, Equity commingled funds, Fixed-income commingled funds––observable prices. |
• | Global equity securities—quoted market prices. |
• | Government bonds, Corporate debt securities—observable market prices. |
• | Other investments—principally unobservable inputs that are significant to the estimation of fair value. These unobservable inputs could include, for example, the investment managers’ assumptions about earnings multiples and future cash flows. |
The following table provides the long-term target asset allocations ranges and the percentage of the fair value of plan assets for benefit plans: | |||||||||
As of December 31, | |||||||||
Target Allocation Percentage | Percentage of Plan Assets | ||||||||
(PERCENTAGES) | 2013 | 2013 | 2012 | ||||||
U.S. qualified pension plans | |||||||||
Cash and cash equivalents | 0-10 | 2.8 | % | 2.9 | % | ||||
Equity securities | 35-55 | 51.5 | % | 45.9 | % | ||||
Debt securities | 30-55 | 30.7 | % | 35.5 | % | ||||
Real estate and other investments | 5-18 | 15.0 | % | 15.7 | % | ||||
Total | 100 | % | 100 | % | 100 | % | |||
International pension plans | |||||||||
Cash and cash equivalents | 0-10 | 2.8 | % | 3.9 | % | ||||
Equity securities | 35-55 | 51.9 | % | 51.6 | % | ||||
Debt securities | 30-55 | 29.0 | % | 31.0 | % | ||||
Real estate and other investments | 5-18 | 16.3 | % | 13.5 | % | ||||
Total | 100 | % | 100 | % | 100.0 | % | |||
U.S. postretirement plans | |||||||||
Cash and cash equivalents | 0-5 | 4.0 | % | 4.4 | % | ||||
Equity securities | 10-35 | 21.7 | % | 20.1 | % | ||||
Debt securities | 5-30 | 13.0 | % | 15.5 | % | ||||
Real estate, insurance contracts and other investments | 55-70 | 61.3 | % | 60.0 | % | ||||
Total | 100 | % | 100 | % | 100 | % |
The following table provides the expected future cash flow information related to our benefit plans: | ||||||||||||||||
Pension Plans | ||||||||||||||||
(MILLIONS OF DOLLARS) | U.S. Qualified | U.S. Supplemental (Non-Qualified) | International | Postretirement Plans | ||||||||||||
Expected employer contributions: | ||||||||||||||||
2014 | $ | 6 | $ | 150 | $ | 305 | $ | 246 | ||||||||
Expected benefit payments: | ||||||||||||||||
2014 | $ | 828 | $ | 150 | $ | 390 | $ | 286 | ||||||||
2015 | 792 | 123 | 398 | 285 | ||||||||||||
2016 | 803 | 107 | 410 | 293 | ||||||||||||
2017 | 868 | 110 | 418 | 303 | ||||||||||||
2018 | 958 | 124 | 429 | 311 | ||||||||||||
2019–2023 | 4,579 | 490 | 2,314 | 1,661 |