Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2018

The changes in benefit obligation, the changes in fair value of plan assets, and the funded status of our pension plans and other postretirement benefit plans

The changes in benefit obligation related to all of our defined benefit plans, the changes in fair value of plan assets^(a), and the funded status of our defined benefit plans as of and for the years ended were as follows (in millions):



	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2018			2017			2018			2017
Changes in benefit obligation:
Benefit obligation as of beginning of year	$	2,926		$	2,567		$	306		$	302
Service cost	133			123			6			6
Interest cost	91			86			10			10
Participant contributions	—			—			10			9
Benefits paid	(207		)	(158		)	(28		)	(28		)
Actuarial (gain) loss	(285		)	286			(9		)	6
Other	(19		)	22			(3		)	1
Benefit obligation as of end of year	$	2,639		$	2,926		$	292		$	306

Changes in plan assets (a):
Fair value of plan assets as of beginning of year	$	2,428		$	2,097		$	—		$	—
Actual return on plan assets	(130		)	363			—			—
Valero contributions	156			110			18			19
Participant contributions	—			—			10			9
Benefits paid	(207		)	(158		)	(28		)	(28		)
Other	(11		)	16			—			—
Fair value of plan assets as of end of year	$	2,236		$	2,428		$	—		$	—

Reconciliation of funded status (a):
Fair value of plan assets as of end of year	$	2,236		$	2,428		$	—		$	—
Less benefit obligation as of end of year	2,639			2,926			292			306
Funded status as of end of year	$	(403	)	$	(498	)	$	(292	)	$	(306	)

Accumulated benefit obligation	$	2,492		$	2,746		n/a			n/a

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(a)

Plan assets include only the assets associated with pension plans subject to legal minimum funding standards. Plan assets associated with U.S. nonqualified pension plans are not included here because they are not protected from our creditors and therefore cannot be reflected as a reduction from our obligations under the pension plans. As a result, the reconciliation of funded status does not reflect the effect of plan assets that exist for all of our defined benefit plans. See Note 19 for the assets associated with certain U.S. nonqualified pension plans.

Schedule of amounts recognized in balance sheet

Amounts recognized in our balance sheet for our pension and other postretirement benefits plans include (in millions):



	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2018			2017			2018			2017
Deferred charges and other assets, net	$	2		$	5		$	—		$	—
Accrued expenses	(22		)	(14		)	(21		)	(19		)
Other long-term liabilities	(383		)	(489		)	(271		)	(287		)
	$	(403	)	$	(498	)	$	(292	)	$	(306	)

Projected benefit obligations in excess of fair value of plan assets

The following table presents information for our pension plans with projected benefit obligations in excess of plan assets (in millions).



	December 31,
	2018		2017
Projected benefit obligation	$	2,564	$	2,872
Fair value of plan assets	2,160		2,369

Accumulated benefit obligations in excess of fair value of plan assets

The following table presents information for our pension plans with accumulated benefit obligations in excess of plan assets (in millions).



	December 31,
	2018		2017
Accumulated benefit obligation	$	2,253	$	2,526
Fair value of plan assets	1,974		2,180

Expected benefit payments

Benefit payments that we expect to pay, including amounts related to expected future services that we expect to receive, are as follows for the years ending December 31 (in millions):



	Pension Benefits		Other Postretirement Benefits
2019	$	169	$	21
2020	193		21
2021	175		21
2022	180		20
2023	194		20
2024-2028	1,043		95

Components of net periodic benefit costs

The components of net periodic benefit cost (credit) related to our defined benefit plans were as follows (in millions):



	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2018			2017			2016			2018			2017			2016
Service cost	$	133		$	123		$	111		$	6		$	6		$	7
Interest cost	91			86			84			10			10			12
Expected return on plan assets	(163		)	(150		)	(139		)	—			—			—
Amortization of:
Net actuarial (gain) loss	65			53			49			(2		)	(3		)	(1		)
Prior service credit	(18		)	(20		)	(20		)	(11		)	(16		)	(16		)
Special charges (credits)	7			4			(7		)	—			—			—
Net periodic benefit cost (credit)	$	115		$	96		$	78		$	3		$	(3	)	$	2

Pre-tax amounts recognized in other comprehensive income

Pre-tax amounts recognized in other comprehensive income (loss) were as follows (in millions):



	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2018			2017			2016			2018			2017			2016
Net gain (loss) arising during the year:
Net actuarial gain (loss)	$	(8	)	$	(73	)	$	(145	)	$	9		$	(6	)	$	35
Prior service (cost) credit	7			(4		)	—			—			—			—
Net (gain) loss reclassified into income:
Net actuarial (gain) loss	65			53			49			(2		)	(3		)	(1		)
Prior service credit	(18		)	(20		)	(20		)	(11		)	(16		)	(16		)
Curtailment and settlement loss	7			4			—			—			—			—
Total changes in other comprehensive income (loss)	$	53		$	(40	)	$	(116	)	$	(4	)	$	(25	)	$	18

Pre-tax amounts in accumulated other comprehensive income not yet recognized

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost (credit) were as follows (in millions):



	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2018			2017			2018			2017
Net actuarial (gain) loss	$	828		$	894		$	(64	)	$	(57	)
Prior service credit	(108		)	(121		)	(31		)	(42		)
Total	$	720		$	773		$	(95	)	$	(99	)

Weighted-average assumptions used to determine the benefit obligations and net periodic benefit cost

The weighted-average assumptions used to determine the benefit obligations were as follows:



	Pension Plans				Other Postretirement Benefit Plans
	December 31,				December 31,
	2018		2017		2018		2017
Discount rate	4.25	%	3.58	%	4.40	%	3.72	%
Rate of compensation increase	3.78	%	3.86	%	n/a		n/a
Interest crediting rate for cash balance plans	3.04	%	3.04	%	n/a		n/a

The weighted-average assumptions used to determine the net periodic benefit cost were as follows:



	Pension Plans						Other Postretirement Benefit Plans
	Year Ended December 31,						Year Ended December 31,
	2018		2017		2016		2018		2017		2016
Discount rate	3.59	%	4.08	%	4.45	%	3.72	%	4.26	%	4.53	%
Expected long-term rate of return on plan assets	7.24	%	7.29	%	7.28	%	n/a		n/a		n/a
Rate of compensation increase	3.86	%	3.81	%	3.79	%	n/a		n/a		n/a
Interest crediting rate for cash balance plans	3.04	%	3.04	%	3.10	%	n/a		n/a		n/a

Assumed health care cost trend rates

The assumed health care cost trend rates were as follows:



	December 31,
	2018		2017
Health care cost trend rate assumed for the next year	7.29	%	7.30	%
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2026		2026

Fair value of pension plan assets by level of fair value hierarchy

The following tables present the fair values of the assets of our pension plans (in millions) as of December 31, 2018 and 2017 by level of the fair value hierarchy. Assets categorized in Level 1 of the hierarchy are measured at fair value using a market approach based on unadjusted quoted prices from national securities exchanges. Assets categorized in Level 2 of the hierarchy are measured at net asset value in a market that is not active. As previously noted, we do not fund or fully fund U.S. nonqualified and certain international pension plans that are not subject to funding requirements, and we do not fund our other postretirement benefit plans.



	Fair Value Hierarchy							Total as of December 31, 2018
	Level 1			Level 2		Level 3		Total as of December 31, 2018
Equity securities:
U.S. companies (a)	$	497		$	—	$	—	$	497
International companies	159			1		—		160
Preferred stock	4			—		—		4
Mutual funds:
International growth	97			—		—		97
Index funds (b)	76			—		—		76
Corporate debt instruments	—			284		—		284
Government securities:
U.S. Treasury securities	45			—		—		45
Other government securities	—			138		—		138
Common collective trusts (c)	—			609		—		609
Pooled separate accounts (d)	—			190		—		190
Private funds	—			87		—		87
Insurance contract	—			18		—		18
Interest and dividends receivable	5			—		—		5
Cash and cash equivalents	40			—		—		40
Securities transactions payable, net	(14		)	—		—		(14		)
Total pension plan assets	$	909		$	1,327	$	—	$	2,236

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See notes on page 110.



	Fair Value Hierarchy							Total as of December 31, 2017
	Level 1			Level 2		Level 3		Total as of December 31, 2017
Equity securities:
U.S. companies (a)	$	571		$	—	$	—	$	571
International companies	187			1		—		188
Preferred stock	4			—		—		4
Mutual funds:
International growth	118			—		—		118
Index funds (b)	85			—		—		85
Corporate debt instruments	—			272		—		272
Government securities:
U.S. Treasury securities	45			—		—		45
Other government securities	—			144		—		144
Common collective trusts (c)	—			621		—		621
Pooled separate accounts (d)	—			192		—		192
Private funds	—			101		—		101
Insurance contract	—			18		—		18
Interest and dividends receivable	5			—		—		5
Cash and cash equivalents	85			1		—		86
Securities transactions payable, net	(22		)	—		—		(22		)
Total pension plan assets	$	1,078		$	1,350	$	—	$	2,428

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(a)	Equity securities are held in a wide range of industrial sectors, including consumer goods, information technology, healthcare, industrials, and financial services.


(b)	This class includes primarily investments in approximately 60 percent equities and 40 percent bonds as of December 31, 2018. As of December 31, 2017, this class included primarily investments in approximately 70 percent equities and 30 percent bonds.


(c)	This class includes primarily investments in approximately 70 percent equities and 30 percent bonds as of December 31, 2018. As of December 31, 2017, this class included primarily investments in approximately 80 percent equities and 20 percent bonds.


(d)	This class includes primarily investments in approximately 50 percent equities and 50 percent bonds as of December 31, 2018 and 2017.