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PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)
 12 Months Ended
Dec. 31, 2017
Funded Status of Our Plans
The funded status of the plans we sponsor is determined by comparing the projected benefit obligation with the fair value of plan assets at the end of the year. The following table demonstrates how our plans' funded status is reflected on the Consolidated Balance Sheet.
DOLLAR AMOUNTS IN MILLIONS
  
PENSION
OTHER
POSTRETIREMENT
BENEFITS
  
2017

2016

2017

2016

Funded status:
 
 
 
 
Fair value of plan assets
$
5,514

$
5,351

$
—

$
—

Projected benefit obligations
(6,795
)
(6,469
)
(200
)
(225
)
Funded status
$
(1,281
)
$
(1,118
)
$
(200
)
$
(225
)
Presentation on our Consolidated Balance Sheet:
 
 
 
 
Noncurrent assets
$
45

$
27

$
—

$
—

Current liabilities
(21
)
(28
)
(19
)
(21
)
Noncurrent liabilities
(1,305
)
(1,117
)
(181
)
(204
)
Funded status
$
(1,281
)
$
(1,118
)
$
(200
)
$
(225
)
Changes in Fair Value of Plan Assets
Changes in Fair Value of Plan Assets
DOLLAR AMOUNTS IN MILLIONS
  
PENSION
OTHER
POSTRETIREMENT
BENEFITS
  
2017

2016

2017

2016

Fair value of plan assets at beginning of year (estimated)
$
5,351

$
5,491

$
—

$
—

Adjustment for final fair value of plan assets
18

7

—

—

Actual return on plan assets
553

27

—

—

Foreign currency translation
59

29

—

—

Employer contributions and benefit payments
57

78

20

21

Plan participants’ contributions
—

—

6

7

Plan transfers
3

1

—

—

Plan acquisitions
—

137

—

—

Benefits paid (includes lump sum settlements)
(527
)
(419
)
(26
)
(28
)
Fair value of plan assets at end of year (estimated)
$
5,514

$
5,351

$
—

$
—
Changes in Projected Benefit Obligations of Our Pension and Other Postretirement Benefit Plans
Changes in Projected Benefit Obligations of Our Pension and Other Postretirement Benefit Plans
DOLLAR AMOUNTS IN MILLIONS
  
PENSION
OTHER
POSTRETIREMENT
BENEFITS
  
2017

2016

2017

2016

Reconciliation of projected benefit obligation:
 
 
 
 
Projected benefit obligation beginning of year
$
6,469

$
6,211

$
225

$
240

Service cost
35

48

—

—

Interest cost
264

277

8

8

Plan participants’ contributions
—

—

6

7

Actuarial (gains) losses
489

120

(18
)
(5
)
Foreign currency translation
59

27

5

3

Benefits paid (includes lump sum settlements)
(527
)
(419
)
(26
)
(28
)
Plan amendments and other
3

—

—

—

Plan transfers
3

1

—

—

Plan acquisitions
—

199

—

—

Change in control enhanced benefits
—

5

—

—

Projected benefit obligation at end of year
$
6,795

$
6,469

$
200

$
225
Schedules of Allocation of Our Plans' Assets
The net pension plan assets, when categorized in accordance with this fair value hierarchy, are as follows. Investments valued using net asset value (NAV) as a practical expedient are presented to reconcile with total plan assets.
DOLLAR AMOUNTS IN MILLIONS
2017
LEVEL 1

LEVEL 2

LEVEL 3

NAV

TOTAL

Pension trust investments:
 
 
 
 
 

Cash and short-term investments
$
580

$
2

$
—

$
—

$
582

Common and preferred stock
1

—

—

—

1

Hedge fund and related investments
59

—

10

3,168

3,237

Private equity and related investments
—

—

102

1,120

1,222

Derivative instruments:








 
      Assets
—

31

445

—

476

     Liabilities
—

—

—

—

—

Total pension trust investments
640

33

557

4,288

5,518

Accrued liabilities, net
 
 
 
 
(16
)
Pension trust net assets
 
 
 
 
5,502

Canadian nonregistered plan assets:
 
 
 
 
 
Cash and short-term investments
6

—

—

—

6

Common and preferred stock
6

—

—

—

6

Total Canadian nonregistered plan assets
12

—

—

—

12

Total plan assets
 
 
 
 
$
5,514

DOLLAR AMOUNTS IN MILLIONS
2016
LEVEL 1

LEVEL 2

LEVEL 3

NAV

TOTAL

Pension trust investments:
 
 
 
 
 

Cash and short-term investments
$
715

$
16

$
—

$
—

$
731

Common and preferred stock
7

—

—

—

7

Hedge fund and related investments
62

—

4

2,957

3,023

Private equity and related investments
—

—

75

1,138

1,213

Derivative instruments:










     Assets
—

10

376

—

386

     Liabilities
—

(8
)
—

—

(8
)
Total pension trust investments
784

18

455

4,095

5,352

Accrued liabilities, net
 
 
 
 
(11
)
Pension trust net investments
 
 
 
 
5,341

Canadian nonregistered plan assets:
 
 
 
 
 
Cash and short-term investments
5

—

—

—

5

Common and preferred stock
5

—

—

—

5

Total Canadian nonregistered plan assets
10

—

—

—

10

Total plan assets
 
 
 
 
$
5,351
Reconciliation of Pension Plan Assets Measured at Level 3 Fair Value
A reconciliation of the beginning and ending balances of the pension plan assets measured at fair value using significant unobservable inputs (Level 3) is presented below:
DOLLAR AMOUNTS IN MILLIONS
  
INVESTMENTS
 
  
Hedge funds and related investments

Private equity and related investments

Derivative instruments, net

Total

Balance as of December 31, 2015
$
3

$
52

$
491

$
546

Net realized gains (losses)
(1
)
(2
)
134

131

Net change in unrealized gains (losses)
2

(3
)
(121
)
(122
)
Purchases
—

21

—

21

Sales
—

(18
)
—

(18
)
Settlements
—

—

(128
)
(128
)
Transfers into Level 3
—

25

—

25

Transfers out of Level 3
—

—

—

—

Balance as of December 31, 2016
4

75

376

455

Net realized gains (losses)
(1
)
(30
)
15

(16
)
Net change in unrealized gains (losses)
2

41

67

110

Purchases
—

14

—

14

Sales
(1
)
—

—

(1
)
Settlements
—

—

(13
)
(13
)
Transfers into Level 3
6

19

—

25

Transfers out of Level 3
—

(17
)
—

(17
)
Balance as of December 31, 2017
$
10

$
102

$
445

$
557
Actual Returns on Assets Held by Our Pension Trusts
Actual Returns Between Assets Held by Our Pension Trusts
The percentage of actual return on assets held by our pension trusts in 2017 based on valuations as of year-end is as follows:
 
  
2017

2016

2015

Direct investments
72
%
44
%
77
%
Derivative instruments
28
%
56
%
23
%
Total
100
%
100
%
100
%
Assumptions We Use in Estimating Health Care Benefit Costs
Assumptions We Use in Estimating Health Care Benefit Cost Trends
  
2017
2016
  
U.S.

CANADA

U.S.

CANADA

Weighted health care cost trend rate assumed for next year
8.40% for Pre-Medicare and 4.50% for HRA

5.10
%
8.90% for Pre-Medicare and 4.50% for HRA

4.90
%
Rate that the cost trend rate gradually declines to
4.50
%
4.30
%
4.50
%
4.30
%
Year the cost trend rate is reached
2037

2028

2037

2028
Effect of a One Percent Change in Health Care Costs
Effect of a One Percent Change in Health Care Costs
AS OF DECEMBER 31, 2017 (DOLLAR AMOUNTS IN MILLIONS)
  
1% INCREASE

1% DECREASE

Effect on total service and interest cost components
less than $1

less than $(1)

Effect on accumulated postretirement benefit obligation
$
7

$
(7
)
Net Periodic Benefit Cost (Credit)
Net Periodic Benefit Cost (Credit)
DOLLAR AMOUNTS IN MILLIONS
  
PENSION
OTHER POSTRETIREMENT
BENEFITS
  
2017

2016

2015

2017

2016

2015

Net periodic benefit cost (credit):
 
 
 
 
 
 
Service cost(1)
$
35

$
48

$
57

$
—

$
—

$
—

Interest cost
264

277

265

8

8

9

Expected return on plan assets
(409
)
(495
)
(476
)
—

—

—

Amortization of actuarial loss
195

156

182

8

9

10

Amortization of prior service cost (credit)
4

4

4

(8
)
(7
)
(9
)
Accelerated pension costs for Plum Creek merger-related change-in-control provisions
—

5

—

—

—

—

Net periodic benefit cost (credit)
$
89

$
(5
)
$
32

$
8

$
10

$
10

(1) Service cost includes $13 million in 2016 and $17 million in 2015 for employees that were part of our Cellulose Fibers divestitures. These charges are included in our results of discontinued operations. Curtailment and special termination benefits are related to involuntary terminations due to restructuring activities.
Estimated Amortization from Cumulative Other Comprehensive Loss
Estimated Amortization from Cumulative Other Comprehensive Loss in 2018
DOLLAR AMOUNTS IN MILLIONS
  
PENSION

OTHER POSTRETIREMENT BENEFITS

TOTAL

Net actuarial loss
$
242

$
8

$
250

Prior service cost (credit)
3

(8
)
(5
)
Net effect cost
$
245

$
—

$
245
Estimated Projected Benefit Payments for the Next 10 Years
Estimated Projected Benefit Payments for the Next 10 Years
DOLLAR AMOUNTS IN MILLIONS
 
 
  
PENSION

OTHER
POSTRETIREMENT
BENEFITS

2018
$
369

$
19

2019
371

18

2020
374

17

2021
374

16

2022
376

15

2023-2027
1,902

65
Qualified and Registered Plans [Member]  
Schedules of Allocation of Our Plans' Assets
Assets within our qualified and registered pension plans in our U.S. and Canadian pension trusts were invested as follows:
 
DECEMBER 31, 2017

DECEMBER 31, 2016

Cash and short-term investments
10.6
 %
13.7
 %
Common and preferred stock
—

0.1

Hedge funds and related investments
58.8

56.6

Private equity and related investments
22.2

22.7

Derivative instruments, net
8.7

7.1

Accrued liabilities
(0.3
)
(0.2
)
Total
100.0
 %
100.0
 %
Pension  
Rates We Use in Estimating Our Benefit Obligations
Rates We Use in Estimating Our Benefit Obligations
  
PENSION
  
DECEMBER 31,
2017

DECEMBER 31,
2016

Discount rates:
 

 

United States
3.70
%
4.30
%
Canada
3.50
%
3.70
%
Lump sum distributions(1)(2)
PPA Table

PPA Table

Rate of compensation increase:
 

 

Salaried:
 

 

United States
13.00% to 2.00% decreasing with participant age

13.00% to 2.00% decreasing with participant age

Canada
3.25
%
3.50
%
Hourly:
 

 

United States
13.00% to 2.30% decreasing with participant age

13.00% to 2.30% decreasing with participant age

Canada
3.00
%
3.25
%
Lump sum or installment distributions election(2)
60.00
%
60.00
%
(1) PPA Phased Table: Interest and mortality assumptions as mandated by Pension Protection Act of 2006 including the phase out of the prior interest rate basis in 2013.
(2) U.S. qualified salaried and nonqualified plans only
Estimating Our Net Periodic Benefit Costs
Estimating Our Net Periodic Benefit Costs
  
PENSION
  
2017

2016

2015

Discount rates:
 

 

 

United States
4.30
%
4.50
%
4.10
%
Canada
3.70
%
4.00
%
3.90
%
Lump sum distributions(1)(2)
PPA Table

PPA Table

PPA Table

Expected return on plan assets:
 

 

 

Qualified/registered plans(3)
8.00
%
9.00% for all plans except 7.00% for plans assumed from Plum Creek

9.00
%
Nonregistered plans
3.50
%
3.50
%
3.50
%
Rate of compensation increase:
 

 

 

Salaried:
 

 

 

United States
13.00% to 2.00% decreasing with participant age

13.00% to 2.00% decreasing with participant age

2.50% for 2015
and 3.50% thereafter

Canada
3.50
%
3.50
%
2.50% for 2015
and 3.50% thereafter

Hourly:
 

 

 

United States
13.00% to 2.30% decreasing with participant age

13.00% to 2.30% decreasing with participant age

3.00
%
Canada
3.25
%
3.25
%
3.25
%
Lump sum distributions election(2)
60.00
%
60.00
%
60.00
%
(1) PPA Phased Table: Interest and mortality assumptions as mandated by Pension Protection Act of 2006 including the phase out of the prior interest rate basis in 2013.
(2) U.S. qualified salaried and nonqualified plans only
(3) Beginning in 2017 and continuing in 2018 we will use an assumed expected return on plan assets of 8.00 percent for qualified and registered pension plans.
Derivative instruments | Qualified and Registered Plans [Member]  
Schedules of Allocation of Our Plans' Assets
The table below shows the fair value and aggregate notional amount of the derivative instruments held by our pension trusts at the end of the last two years.
DOLLAR AMOUNTS IN MILLIONS
 
FAIR VALUE
NOTIONAL
  
DECEMBER 31,
2017

DECEMBER 31,
2016

DECEMBER 31,
2017

DECEMBER 31,
2016

Equity and fixed income index derivatives, net
$
19

$
10

$
501

$
405

Foreign currency derivatives, net
12

(5
)
1,413

2,811

Total return swaps, net
445

373

1,443

1,515

Total
$
476

$
378

$
3,357

$
4,731