PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2019

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
	2019			2018			2019			2018
Funded status:
Fair value of plan assets(1)	$	3,719		$	4,930		$	19		$	18
Projected benefit obligations		(4,260	)		(5,263	)		(151	)		(166	)
Funded status		(541	)		(333	)		(132	)		(148	)
Presentation on our Consolidated Balance Sheet:
Noncurrent assets	$	47		$	74		$	—		$	—
Current liabilities		(19	)		(18	)		(8	)		(10	)
Noncurrent liabilities		(569	)		(389	)		(124	)		(138	)
Funded status	$	(541	)	$	(333	)	$	(132	)	$	(148	)

(1) Fair value of plan assets as of December 31, 2018 includes amounts associated with the $300 million voluntary contribution made during 2018 in anticipation of our 2018 term-vested lump sum and 2019 retiree annuity purchase transactions. Refer to the “Actions to Reduce Pension Plan Obligations” section for further details of this contribution and the related transactions.

Changes in Fair Value of Plan Assets

Changes in Fair Value of Plan Assets

DOLLAR AMOUNTS IN MILLIONS
	PENSION						OTHER POSTRETIREMENT BENEFITS
	2019			2018			2019			2018
Fair value of plan assets at beginning of year (estimated)	$	4,930		$	5,514		$	18		$	—
Adjustment for final fair value of plan assets		16			44			—			—
Actual return on plan assets		449			123			1			—
Foreign currency translation		38			(73	)		—			—
Employer contributions and benefit payments		30			345			15			36
Plan participants’ contributions		—			—			2			4
Plan transfers		1			1			—			—
Benefits paid (includes lump sum and annuity transfers)		(1,745	)		(1,024	)		(17	)		(22	)
Fair value of plan assets at end of year (estimated)	$	3,719		$	4,930		$	19		$	18

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
	2019			2018			2019			2018
Projected benefit obligation beginning of year	$	5,263		$	6,795		$	166		$	200
Service cost		32			37			—			—
Interest cost		160			236			6			7
Plan participants’ contributions		—			—			2			4
Actuarial (gains) losses		510			(718	)		(8	)		(18	)
Foreign currency translation		39			(69	)		2			(5	)
Benefits paid (includes lump sum and annuity transfers)		(1,745	)		(1,024	)		(17	)		(22	)
Plan amendments and other		—			5			—			—
Plan transfers		1			1			—			—
Projected benefit obligation at end of year	$	4,260		$	5,263		$	151		$	166

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 NAV as a practical expedient are presented to reconcile with total plan assets.

DOLLAR AMOUNTS IN MILLIONS
2019	LEVEL 1		LEVEL 2			LEVEL 3		NAV		TOTAL
Pension trust investments:
Cash and short-term investments	$	120	$	—		$	—	$	—	$	120
Fixed income investments:
Corporate		—		1,260			—		—		1,260
Government		—		941			—		—		941
Repurchase agreements		—		(176	)		—		—		(176	)
Public equity investments		4		—			—		—		4
Hedge fund and related investments		—		—			13		518		531
Private equity and related investments		—		—			86		942		1,028
Derivative instruments		—		10			—		—		10
Total pension trust investments		124		2,035			99		1,460		3,718
Accrued liabilities, net											(9	)
Pension trust net assets											3,709
Canadian nonregistered plan assets:
Cash and short-term investments		5		—			—		—		5
Public equity investments		5		—			—		—		5
Total Canadian nonregistered plan assets		10		—			—		—		10
Total plan assets										$	3,719

DOLLAR AMOUNTS IN MILLIONS
2018	LEVEL 1		LEVEL 2		LEVEL 3		NAV		TOTAL
Pension trust investments:
Cash and short-term investments	$	275	$	12	$	—	$	—	$	287
Fixed income investments:
Corporate		—		1,054		—		—		1,054
Government		—		426		—		—		426
Hedge fund and related investments		—		—		3		1,811		1,814
Private equity and related investments		—		—		65		1,014		1,079
Derivative instruments		—		15		262		—		277
Total pension trust investments		275		1,507		330		2,825		4,937
Accrued liabilities, net										(17	)
Pension trust net assets										4,920
Canadian nonregistered plan assets:
Cash and short-term investments		5		—		—		—		5
Public equity investments		5		—		—		—		5
Total Canadian nonregistered plan assets		10		—		—		—		10
Total plan assets									$	4,930

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, 2017	$	10		$	102		$	445		$	557
Net realized gains (losses)		—			—			238			238
Net change in unrealized gains (losses)		1			(5	)		(184	)		(188	)
Purchases		—			5			—			5
Sales		—			(2	)		—			(2	)
Settlements		—			—			(237	)		(237	)
Transfers into Level 3		—			18			—			18
Transfers out of Level 3		(8	)		(53	)		—			(61	)
Balance as of December 31, 2018		3			65			262			330
Net realized gains (losses)		1			(1	)		237			237
Net change in unrealized gains (losses)		(1	)		—			(262	)		(263	)
Purchases		—			—			—			—
Sales		(3	)		(3	)		—			(6	)
Settlements		—			—			(237	)		(237	)
Transfers into Level 3		13			28			—			41
Transfers out of Level 3		—			(3	)		—			(3	)
Balance as of December 31, 2019	$	13		$	86		$	—		$	99

Assumptions We Use in Estimating Health Care Benefit Costs

Assumptions We Use in Estimating Health Care Benefit Obligations

	2019				2018
	U.S.		CANADA		U.S.		CANADA
Weighted health care cost trend rate assumed for next year	7.30% for Pre- Medicare and 4.50% for HRA		5.40%		7.80% for Pre- Medicare and 4.50% for HRA		4.90%
Rate that the cost trend rate gradually declines to	4.50%		4.00%		4.50%		4.00%
Year the cost trend rate is reached		2037		2039		2037		2039

Net Periodic Benefit Cost (Credit)

Net Periodic Benefit Cost (Credit)

DOLLAR AMOUNTS IN MILLIONS
	PENSION									OTHER POSTRETIREMENT BENEFITS
	2019			2018			2017			2019			2018			2017
Net periodic benefit cost (credit):
Service cost	$	32		$	37		$	35		$	—		$	—		$	—
Interest cost		160			236			264			6			7			8
Expected return on plan assets		(223	)		(399	)		(409	)		—			—			—
Amortization of actuarial loss		112			225			195			7			8			8
Amortization of prior service cost (credit)		4			3			4			(5	)		(8	)		(8	)
Settlement charges		455			200			—			—			—			—
Net periodic benefit cost (credit)	$	540		$	302		$	89		$	8		$	7		$	8

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
2020	$	237	$	14
2021	$	235	$	13
2022	$	236	$	13
2023	$	238	$	12
2024	$	237	$	11
2025-2029	$	1,176	$	47

Pension

Rates We Use in Estimating Our Benefit Obligations

Rates We Use in Estimating Our Benefit Obligations

	PENSION
	DECEMBER 31, 2019	DECEMBER 31, 2018
Discount rates:
United States	3.40%	4.40%
Canada	3.10%	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%	3.25%
Hourly:
United States	13.00% to 2.30% decreasing with participant age	13.00% to 2.30% decreasing with participant age
Canada	3.00%	3.00%
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.

(2) U.S. qualified salaried and nonqualified plans only.

Estimating Our Net Periodic Benefit Costs

Estimating Our Net Periodic Benefit Costs

	PENSION
	2019	2018	2017
Discount rates:
United States(1)	4.30%	3.70%	4.30%
Canada	3.70%	3.50%	3.70%
Lump sum distributions(2)(3)	PPA Table	PPA Table	PPA Table
Expected return on plan assets:
Qualified/registered plans	7.00%	8.00%	8.00%
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	13.00% to 2.00% decreasing with participant age
Canada	3.25%	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	13.00% to 2.30% decreasing with participant age
Canada	3.00%	3.00%	3.25%
Lump sum distributions election(3)	60.00%	60.00%	60.00%

(1) In January 2019, we transferred approximately $1.5 billion of U.S. qualified pension plan assets and liabilities to an insurance company through the purchase of a group annuity contract. The settlement of this liability triggered a plan remeasurement, which caused a change in our 2019 pension plan discount rate. The initial discount rate used to estimate our net periodic benefit costs from January 1, 2019 through January 31, 2019 was 4.40 percent. As a result of the remeasurement, the discount rate was updated to 4.30 percent for the remainder of 2019. Refer to the “Actions to Reduce Pension Plan Obligations” section above for more details of this transaction.

(2) PPA Phased Table: Interest and mortality assumptions as mandated by Pension Protection Act of 2006.

(3) U.S. qualified salaried and nonqualified plans only.

Qualified and Registered Plans

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, 2019			DECEMBER 31, 2018
Cash and short-term investments	3.2%			5.8%
Fixed income investments:
Corporate		33.9			21.5
Government		25.4			8.6
Repurchase agreements		(4.7	)		—
Public equity investments		0.1			—
Hedge funds and related investments		14.3			36.9
Private equity and related investments		27.7			21.9
Derivative instruments, net		0.3			5.6
Accrued liabilities		(0.2	)		(0.3	)
Total	100.0%			100.0%

Qualified and Registered Plans | Derivative instruments

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, 2019		DECEMBER 31, 2018		DECEMBER 31, 2019		DECEMBER 31, 2018
Foreign currency derivatives, net	$	—	$	—	$	—	$	13
Futures contracts, net		10		15		813		1,073
Total return swaps, net		—		262		—		558
Total	$	10	$	277	$	813	$	1,644