Employee Pension and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Employee Pension and Other Postretirement Benefits

Employee Pension and Other Postretirement Benefits

Retirement Plan

The Company maintains the MUFG Union Bank, N.A. Retirement Plan (the Pension Plan), which is a noncontributory qualified defined benefit pension plan covering substantially all of the domestic employees of the Company. The Pension Plan provides retirement benefits based on a cash balance formula, with annual pay credits based on a participant's eligible pay multiplied by a percentage determined by their age and years of service, and with annual interest credit based on 30-year Treasury bond yields. Employees become eligible for the Pension Plan after one year of service, and participants become vested upon completing three years of vesting service. Prior to 2017, certain participants earned retirement benefits based on years of credited service and the final average earnings amount, as defined in the Pension Plan; such benefits became fixed as the effective date of certain Plan amendments implementing the cash balance formula.

The Company's funding policy is to make contributions between the minimum required and the maximum deductible amount as allowed by the Internal Revenue Code. Contributions are intended to provide not only for benefits attributed to services to date, but also for those expected to be earned in the future.

Other Postretirement Benefits

The Company maintains the MUFG Union Bank, N.A. Retiree Health Reimbursement Plan (the HRA Plan), the MUFG Union Bank, N.A. Health Benefit Plan (the Health Plan), and the MUFG Union Bank, N.A. Employee Insurance Plan (the Insurance Plan). Under the HRA Plan, which became effective January 1, 2017, eligible post-65 retirees and dependents receive Company-provided financial support to purchase individual health coverage through annual allocations to a Health Reimbursement Account (HRA) that are designed to keep pace with medical inflation. The Health Plan provides certain healthcare benefits for eligible pre-65 retired employees and dependents; costs are shared between the Company and the retiree at a level of approximately 25% to 50%, depending on the retiree's age and length of service with the Company. The Insurance Plan provides life insurance benefits for those eligible employees who retired prior to January 1, 2001 and is noncontributory. Together, the HRA Plan, the Health Plan, and the Insurance Plan are presented as "Other Benefits Plan." The accounting for the Other Benefits Plan anticipates future cost-sharing changes described above that are consistent with the Company's intent. Assets set aside to cover such obligations are primarily invested in mutual funds and insurance contracts. In April 2014 the Health Benefit Plan was amended to discontinue the availability of retiree health benefits for the majority of employees.

The following table sets forth the fair value of the assets in the Company's Pension Plan and Other Benefits Plan as of December 31, 2017 and 2016.

	Pension Plan						Other Benefits Plan
	Years Ended December 31,						Years Ended December 31,
(Dollars in millions)	2017			2016			2017			2016
Change in plan assets:
Fair value of plan assets, beginning of year	$	3,254		$	2,992		$	260		$	254
Actual return on plan assets	608			221			44			17
Employer contributions	115			150			1			9
Plan participants' contributions	—			—			4			8
Benefits paid	(123		)	(109		)	(21		)	(28		)
Fair value of plan assets, end of year	$	3,854		$	3,254		$	288		$	260

The investment objective for the Company's Pension Plan and Other Benefits Plan, collectively the Plans, is to maximize total return within reasonable and prudent levels of risk. The Plans' asset allocation strategy is the principal determinant in achieving expected investment returns on the Plans' assets. The Pension Plan asset allocation strategy favors equities, with a target allocation of 63% in equity securities, 25% in debt securities, and 12% in real estate investments. Similarly, the Other Benefits Plan asset allocation strategy favors equities with a target allocation of 70% in equity securities and 30% in debt securities. Additionally, the Other Benefits Plan holds an investment in an insurance contract with Hartford Life Insurance Company, the cash value of which is invested in alignment with the target allocation. Actual asset allocations may fluctuate within acceptable ranges due to market value variability. If market fluctuations cause an asset class to fall outside of its strategic asset allocation range, the portfolio will be re-balanced as appropriate. A core equity position of domestic large cap and small cap stocks will be maintained, in conjunction with a diversified portfolio of international equities and fixed income securities. Plan asset performance is compared against established indexes and peer groups to evaluate whether the risk associated with the portfolio is appropriate for the level of return.

The Company periodically reviews the Plans' strategic asset allocation policy and the expected long-term rate of return for plan assets. The investment return volatility of different asset classes and the liability structure of the plans are evaluated to determine whether adjustments are required to the Plans' strategic asset allocation policy, taking into account the principles established in the Company's funding policy. Management periodically reviews and adjusts the long-term rate of return on assets assumption for the Plans based on the expected long-term rate of return for the asset classes and their weightings in the Plans' strategic asset allocation policy and taking into account the prevailing economic and regulatory climate and practices of other companies both within and outside our industry.

The following table provides the fair value by level within the fair value hierarchy of the Company's period-end assets by major asset category for the Pension Plan and Other Benefits Plan. For information about the fair value hierarchy levels, refer to Note 11 to these consolidated financial statements. The Plans do not hold any equity or debt securities issued by the Company or any related parties.

	December 31, 2017
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Pension Plan Investments:
Cash and cash equivalents	$	—	$	26	$	—	$	26
U.S. government securities	—		195		—		195
Fixed and variable income securities	—		638		—		638
Equity securities	381		7		—		388
Mutual funds	830		—		—		830
Municipal bonds	—		43		—		43
Other	5		11		—		16
Total investments in the fair value hierarchy	$	1,216	$	920	$	—	$	2,136
Investments measured at net asset value (1)							1,704
Investments at fair value							3,840
Accrued dividends and interest receivable							8
Net pending trades							6
Total plan assets							$	3,854

(1) In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets.

	December 31, 2016
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Pension Plan Investments:
Cash and cash equivalents	$	—	$	9	$	—	$	9
U.S. government securities	—		219		—		219
Fixed and variable income securities	—		476		—		476
Equity securities	333		6		—		339
Mutual funds	685		—		—		685
Municipal bonds	—		22		—		22
Other	2		11		—		13
Total investments in the fair value hierarchy	$	1,020	$	743	$	—	$	1,763
Investments measured at net asset value (1)							1,493
Investments at fair value							3,256
Accrued dividends and interest receivable							7
Net pending trades							(9		)
Total plan assets							$	3,254

(1) In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets.

	December 31, 2017
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Other Postretirement Benefits Plan Investments:
Cash and cash equivalents	$	—	$	3	$	—	$	3
U.S. government securities	—		44		—		44
Fixed and variable income securities	—		29		—		29
Municipal bonds	—		1		—		1
Mutual funds	66		—		—		66
Total investments in the fair value hierarchy	$	66	$	77	$	—	$	143
Investments measured at net asset value (1)							157
Investments at fair value							300
Net pending trades							(12		)
Total plan assets							$	288

(1) In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets.

	December 31, 2016
(Dollars in millions)	Level 1		Level 2		Level 3		Total
Other Postretirement Benefits Plan Investments:
U.S. government securities	$	—	$	40	$	—	$	40
Fixed and variable income securities	—		26		—		26
Mutual funds	128		—		—		128
Total investments in the fair value hierarchy	$	128	$	66	$	—	$	194
Investments measured at net asset value (1)							72
Investments at fair value							266
Net pending trades							(6		)
Total plan assets							$	260

(1) In accordance with ASU No. 2015-07, investments in which fair value was measured based on net asset value per share (or its equivalent) using the practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to total plan assets.

The following tables as of December 31, 2017 and 2016 present the Company's Pension Plan and Other Benefits Plan investments in which fair value is measured using net asset value per share (or its equivalent) as a practical expedient.

	December 31, 2017
(Dollars in millions)	Fair Value		Unfunded Commitment		Redemption Frequency	Other Redemption Restrictions	Redemption Notice Period
Pension Plan Investments
Domestic equity funds	$	1,101	$	—	Daily	None	None
Real estate funds	343		—		Quarterly	Availability of fund's liquid assets and approval of the board of directors	45-90 days
Real estate funds	13		5		None	Hold until dissolution; approximately four to six years from original final closing date	None
International equity funds	228		—		Monthly	None	15 days
Money market funds	19		—		Immediate	None	None
Total	$	1,704	$	5

	December 31, 2016
(Dollars in millions)	Fair Value		Unfunded Commitment		Redemption Frequency	Other Redemption Restrictions	Redemption Notice Period
Pension Plan Investments
Domestic equity funds	$	936	$	—	Daily	None	None
Real estate funds	329		—		Quarterly	Availability of fund's liquid assets and approval of the board of directors	45-90 days
Real estate funds	20		7		None	Hold until dissolution; approximately five to seven years from original final closing date	None
International equity funds	173		—		Monthly	None	15 days
Money market funds	35		—		Immediate	None	None
Total	$	1,493	$	7

	December 31, 2017
(Dollars in millions)	Fair Value		Unfunded Commitment		Redemption Frequency	Other Redemption Restrictions	Redemption Notice Period
Other Postretirement Benefits Plan Investments
Domestic equity funds	$	100	$	—	Daily	None	None
Pooled separate account - variable life insurance policies	52		—		Quarterly	Proof of death for death claim redemptions	7 business days
Money market funds	5		—		Immediate	None	None
Total	$	157	$	—

	December 31, 2016
(Dollars in millions)	Fair Value		Unfunded Commitment		Redemption Frequency	Other Redemption Restrictions	Redemption Notice Period
Other Postretirement Benefits Plan Investments
Domestic equity funds	$	20	$	—	Daily	None	None
Pooled separate account - variable life insurance policies	48		—		Quarterly	Proof of death for death claim redemptions	7 business days
Money market funds	4		—		Immediate	None	None
Total	$	72	$	—

A description of the valuation methodologies used to determine the fair value of the Plans' assets included within the tables above is as follows:

Cash and Cash Equivalents

Cash and cash equivalents include short-term investments of government securities and other debt securities with remaining maturities of less than three months. These short-term investments are classified as Level 2 based on unadjusted prices in active markets for similar securities. Money market funds were measured at net asset value (NAV) per share and are included in the tables above showing Plan investments that are measured using NAV per share (or its equivalent) as a practical expedient.

U.S. Government Securities

U.S. government securities include U.S. Treasury securities and U.S. agency mortgage-backed securities. U.S. Treasury securities are fixed income securities that are debt instruments issued by the United States Department of the Treasury. U.S. agency mortgage-backed securities are collateralized by residential mortgage loans and may be prepaid at par prior to maturity. U.S. government securities are classified as Level 2 based on valuations provided by third-party pricing services using quoted market prices in active markets for similar securities.

Fixed and Variable Income Securities

Fixed and variable income securities include a variety of debt instruments, including corporate bonds, private placements and asset-backed securities. These securities are classified as Level 2 based on valuations provided by a third-party pricing services using quoted market prices in active markets for similar securities.

Equity Securities

Equity securities are comprised of common stock and preferred securities. The fair value of common stock is recorded based on quoted market prices obtained from an exchange. These securities are classified as Level 1 based on unadjusted prices for identical instruments in active markets. The fair value of preferred securities is based on discounted cash flow models. These securities are classified as Level 2 based on valuations provided by third-party pricing services using observable market data.

Real Estate Funds

Real estate funds invest in real estate property with a focus on apartment, office, industrial and retail properties. These investments were measured at NAV per share and are included in the tables above showing Plan investments that are measured using NAV per share (or its equivalent) as a practical expedient.

International Equity Funds

International equity funds invest in equity securities of foreign companies in developed and emerging markets across diverse industries. These investments were measured at NAV per share and are included in the tables above showing Plan investments that are measured using NAV per share (or its equivalent) as a practical expedient.

Domestic Equity Funds

Domestic equity funds invest in equity securities that seek to track the performance of market indexes including the S&P 500, MSCI EAFE® and MSCI All-Country World ex-US indices. These funds are valued using NAV at the end of the period. Mutual funds are classified as Level 1 based on unadjusted prices for identical instruments in active markets. Collective investment funds are included in the tables above showing Plan investments that are measured using NAV per share (or its equivalent) as a practical expedient.

Pooled Separate Account

The pooled separate account refers to private placement, variable life insurance policies with Hartford Life Insurance Company. The cash value of the life insurance is invested in four managed divisions that seek to track the S&P 500, Russell 2000, MSCI EAFE® and Bloomberg Barclays U.S. Aggregate Bond indexes. Each division is valued using quoted market prices of its underlying investments to derive the division's NAV at the end of the period. This investment was measured at NAV per share and is included in the tables above showing Plan investments that are measured using NAV per share (or its equivalent) as a practical expedient.

The following table sets forth the benefit obligation activity and the funded status for each of the Company's plans at December 31, 2017 and 2016. In addition, the table sets forth the over (under) funded status at December 31, 2017 and 2016. This pension benefits table does not include the obligations for Executive Supplemental Benefit Plans (ESBPs).

	Pension Benefits						Other Postretirement Benefits
	Years Ended December 31,						Years Ended December 31,
(Dollars in millions)	2017			2016			2017			2016
Accumulated benefit obligation	$	3,101		$	2,850
Change in benefit obligation
Benefit obligation, beginning of year	$	2,942		$	2,816		$	261		$	305
Service cost	71			91			6			8
Interest cost	100			103			8			9
Plan participants' contributions	—			—			4			8
Actuarial loss/(gain)	252			117			6			5
Effect of plan amendments	—			(76		)	—			(47		)
Medicare Part D subsidy	—			—			1			1
Benefits paid	(123		)	(109		)	(21		)	(28		)
Benefit obligation, end of year	3,242			2,942			265			261
Fair value of plan assets, end of year	3,854			3,254			288			260
Over (Under) funded status	$	612		$	312		$	23		$	(1	)

The following table illustrates the changes that were reflected in AOCI during 2017, 2016 and 2015. Pension benefits do not include the ESBPs.

	Pension Benefits						Other Postretirement Benefits
(Dollars in millions)	Net Actuarial (Gain) Loss			Prior Service Credit			Net Actuarial (Gain) Loss			Prior Service Credit
Amounts Recognized in Other Comprehensive Loss:
Balance, December 31, 2014	$	1,044		$	(138	)	$	62		$	(23	)
Arising during the year	89			—			32			—
Recognized in net income during the year	(106		)	17			(12		)	8
Balance, December 31, 2015	$	1,027		$	(121	)	$	82		$	(15	)
Arising during the year	133			(76		)	6			(47		)
Recognized in net income during the year	(75		)	18			(10		)	12
Balance, December 31, 2016	$	1,085		$	(179	)	$	78		$	(50	)
Arising during the year	(101		)	—			(19		)	—
Recognized in net income during the year	(79		)	27			(8		)	21
Balance, December 31, 2017	$	905		$	(152	)	$	51		$	(29	)

At December 31, 2017 and 2016, the following amounts were recognized in accumulated other comprehensive loss for pension, including ESBPs, and other benefits.

	December 31, 2017
	Pension Benefits									Other Postretirement Benefits
(Dollars in millions)	Gross			Tax			Net of Tax			Gross			Tax			Net of Tax
Net actuarial loss	$	905		$	356		$	549		$	51		$	21		$	30
Prior service credit	(152		)	(60		)	(92		)	(29		)	(12		)	(17		)
Pension and other postretirement benefits	753			296			457			22			9			13
Executive Supplemental Benefits Plans
Net actuarial loss	40			16			24			—			—			—
Prior service credit	—			—			—			—			—			—
Executive supplemental benefits plans adjustment	40			16			24			—			—			—
Pension and other postretirement benefits, as adjusted	$	793		$	312		$	481		$	22		$	9		$	13

	December 31, 2016
	Pension Benefits									Other Postretirement Benefits
(Dollars in millions)	Gross			Tax			Net of Tax			Gross			Tax			Net of Tax
Net actuarial loss	$	1,085		$	427		$	658		$	78		$	32		$	46
Prior service credit	(179		)	(70		)	(109		)	(50		)	(20		)	(30		)
Pension and other postretirement benefits	906			357			549			28			12			16
Executive Supplemental Benefits Plans
Net actuarial loss	40			15			25			—			—			—
Prior service credit	—			—			—			—			—			—
Executive supplemental benefits plans adjustment	40			15			25			—			—			—
Pension and other postretirement benefits, as adjusted	$	946		$	372		$	574		$	28		$	12		$	16

Pension Benefits

Our pre-tax net actuarial losses decreased$153 million in 2017 from 2016.  At December 31, 2017, the net actuarial loss totaled $753 million, which is net of $152 million in prior service credits.  In addition, $190 million, representing the excess of the fair value of plan assets over the market-related value of plan assets, is recognized separately through the asset smoothing method over four years.  $729 million of loss is subject to amortization over approximately nine years, and the prior service credits are being amortized until 2022 and 2025. The cumulative net actuarial loss resulted primarily from differences between expected and actual rate of return on plan assets and the discount rate. Included in our 2018 net periodic pension cost will be $88 million of amortization related to net actuarial losses. We estimate that our total 2018 net periodic pension cost will be a credit of approximately $29 million, assuming no contributions in 2018. The 2018 estimate for net periodic pension cost was actuarially determined using the individual spot rates of 3.26% for service cost and 3.16% for interest cost, an expected return on plan assets of 7.5% and an expected compensation increase assumption of 4.7%.

A 50 basis point increase in the discount rate or in the expected return on plan assets would decrease the 2018 periodic pension cost by $20 million and $18 million, respectively, while a 50 basis point increase in the rate of future compensation levels would increase the 2018 periodic pension cost by $2 million. A 50 basis point decrease in the discount rate or in the expected return on plan assets would increase the 2018 periodic pension cost by $22 million and $18 million, respectively, while a 50 basis point decrease in the rate of future compensation levels would decrease the 2018 periodic pension cost by $2 million.

Estimated Future Benefit Payments and Subsidies

The following pension and postretirement benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next 10 years. This table does not include the ESBPs.

(Dollars in millions)	Pension Benefits		Postretirement Benefits
Years ending December 31,
2018	$	147	$	16
2019	157		16
2020	163		17
2021	169		17
2022	175		18
Years 2023 - 2027	977		86

The following tables summarize the weighted average assumptions used in computing the present value of the benefit obligations and the net periodic benefit cost.

	Pension Benefits				Other Postretirement Benefits
	Years Ended December 31,				Years Ended December 31,
	2017		2016		2017		2016
Discount rate in determining net periodic benefit cost prior to Plan amendments
For service cost	n/a		n/a		n/a		4.23	%
For interest cost	n/a		n/a		n/a		3.43
Discount rate in determining net periodic benefit cost after Plan amendments
For service cost	3.79	%	4.13	%	3.97	%	3.22	%
For interest cost	3.42		3.72		3.19		2.43
Discount rate in determining benefit obligations at year end	3.48		3.98		3.37		3.81
Rate of increase in future compensation levels for determining net periodic benefit cost	4.70		4.70		n/a		n/a
Rate of increase in future compensation levels for determining benefit obligations at year end	4.70		4.70		n/a		n/a
Expected return on plan assets	7.50		7.50		7.50		7.50

	Pension Benefits									Other Postretirement Benefits									ESBPs
	Years Ended December 31,									Years Ended December 31,									Years Ended December 31,
(Dollars in millions)	2017			2016			2015			2017			2016			2015			2017		2016			2015
Components of net periodic benefit cost:
Service cost	$	71		$	91		$	96		$	6		$	8		$	10		$	—	$	2		$	1
Interest cost	100			103			110			8			9			12			3		2			2
Expected return on plan assets	(254		)	(235		)	(216		)	(19		)	(19		)	(19		)	—		—			—
Amortization of prior service credit	(27		)	(18		)	(17		)	(21		)	(12		)	(8		)	—		—			—
Recognized net actuarial loss	79			75			106			8			10			12			4		3			3
Curtailment gain	—			—			—			—			—			—			—		(2		)	—
Total net periodic benefit cost	$	(31	)	$	16		$	79		$	(18	)	$	(4	)	$	7		$	7	$	5		$	6

At December 31, 2017 and 2016, the following amounts were forecasted to be recognized in 2018 and 2017 net periodic benefit cost.

	Years Ended December 31,
	2018						2017
(Dollars in millions)	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
Net actuarial loss	$	88		$	5		$	77		$	12
Prior service credit	(27		)	(15		)	(27		)	(21		)
Amounts to be reclassified from AOCI	$	61		$	(10	)	$	50		$	(9	)

The Company's assumed weighted-average healthcare cost trend rates are as follows.

	Years Ended December 31,
	2017		2016		2015
Healthcare cost trend rate assumed for next year	4.44	%	4.64	%	6.29	%
Rate to which cost trend rate is assumed to decline (the ultimate trend rate)	3.94	%	3.96	%	4.50	%
Year the rate reaches the ultimate trend rate	2026		2026		2026

The healthcare cost trend rate assumptions have a significant effect on the amounts reported for the Health Plan. A one-percentage-point change in assumed healthcare cost trend rates would have the following effects:

(Dollars in millions)	One-Percentage- Point Increase		One-Percentage- Point Decrease
Effect on total of service and interest cost components in 2018	$	2	$	(2	)
Effect on postretirement benefit obligation at December 31, 2017	33		(28		)

Executive Supplemental Benefit Plans

The Company has several ESBPs, which provide eligible employees with supplemental retirement benefits. The plans are nonqualified defined benefit plans and unfunded. The accrued liability for ESBPs included in other liabilities on the Company's consolidated balance sheets was $98 million at December 31, 2017 and 2016. In October 2016, the Company announced amendments to certain ESBPs such that all ESBPs were frozen to future service accruals effective December 31, 2016.

Section 401(k) Savings Plans

The Company has a defined contribution plan authorized under Section 401(k) of the Internal Revenue Code. All benefits-eligible employees are eligible to participate in the plan. Employees may contribute up to 75% of their eligible compensation on a pre-tax or Roth basis, or up to 10% of their eligible compensation on an after-tax basis, through payroll deductions, to a combined maximum of 75% of eligible compensation, subject to statutory limits. The Company contributes 100% of every pre-tax or Roth dollar an employee contributes up to the first 3% of the employee's eligible compensation and 50% of every pre-tax or Roth dollar an employee contributes on the next 2% of the employee's eligible compensation, for a maximum matching opportunity of 4%. Company matching contributions are credited to eligible participants' accounts annually following year-end. Matching contributions are fully vested when credited. All employer contributions are tax deductible by the Company. The Company's combined matching contribution expense was $55 million, $48 million and $47 million for the years ended December 31, 2017, 2016 and 2015, respectively.