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Retirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2015
Compensation and Retirement Disclosure [Abstract]  
Components of net periodic benefit cost
The cost to the company of its retirement benefit plans is shown in the following table:
 
 
Year Ended December 31
 
 
Pension Benefits
 
Medical and
Life Benefits
$ in millions
 
2015
 
2014
 
2013
 
2015
 
2014
 
2013
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
484

 
$
457

 
$
516

 
$
35

 
$
34

 
$
36

Interest cost
 
1,224

 
1,260

 
1,117

 
94

 
99

 
96

Expected return on plan assets
 
(1,975
)
 
(1,871
)
 
(1,809
)
 
(89
)
 
(83
)
 
(75
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 
(60
)
 
(59
)
 
(58
)
 
(28
)
 
(45
)
 
(51
)
Net loss from previous years
 
682

 
327

 
608

 
27

 
13

 
30

Other
 
—

 
1

 
—

 
—

 
—

 
—

Net periodic benefit cost
 
$
355

 
$
115

 
$
374

 
$
39

 
$
18

 
$
36
Changes in unamortized benefit plan costs
The table below summarizes the components of changes in unamortized benefit plan costs for the years ended December 31, 2015, 2014 and 2013:
$ in millions
 
Pension Benefits
 
Medical and
Life Benefits
 
Total
Changes in unamortized benefit plan costs
 
 
 
 
 
 
Change in net actuarial loss
 
$
(2,158
)
 
$
(280
)
 
$
(2,438
)
Amortization of:
 
 
 
 
 
 
Prior service credit
 
58

 
51

 
109

Net loss from previous years
 
(608
)
 
(30
)
 
(638
)
Tax expense related to above items
 
1,075

 
102

 
1,177

Change in unamortized benefit plan costs – 2013
 
(1,633
)
 
(157
)
 
(1,790
)
Change in net actuarial loss
 
3,833

 
234

 
4,067

Change in prior service cost
 
—

 
(92
)
 
(92
)
Amortization of:
 
 
 
 
 
 
Prior service credit
 
59

 
45

 
104

Net loss from previous years
 
(327
)
 
(13
)
 
(340
)
Tax benefit related to above items
 
(1,357
)
 
(66
)
 
(1,423
)
Change in unamortized benefit plan costs – 2014
 
2,208

 
108

 
2,316

Change in net actuarial loss
 
626

 
(125
)
 
501

Change in prior service cost
 
—

 
—

 
—

Amortization of:
 
 
 
 
 
 
Prior service credit
 
60

 
28

 
88

Net loss from previous years
 
(682
)
 
(27
)
 
(709
)
Tax (benefit) expense related to above items
 
(1
)
 
46

 
45

Change in unamortized benefit plan costs – 2015
 
$
3

 
$
(78
)
 
$
(75
)
Amounts recorded in accumulated other comprehensive loss
 
 
Pension Benefits
 
Medical and
Life Benefits
$ in millions
 
2015
 
2014
 
2015
 
2014
Amounts recorded in accumulated other comprehensive loss
 
 
 
 
 
 
 
 
Net actuarial loss
 
$
(8,741
)
 
$
(8,797
)
 
$
(220
)
 
$
(372
)
Prior service credit
 
304

 
364

 
66

 
94

Income tax benefits related to above items
 
3,286

 
3,285

 
64

 
110

Unamortized benefit plan costs
 
$
(5,151
)
 
$
(5,148
)
 
$
(90
)
 
$
(168
)
Change in plan assets and amounts recognized in the consolidated statements of financial position
 
 
Pension Benefits
 
Medical and
Life Benefits
$ in millions
 
2015
 
2014
 
2015
 
2014
Change in plan assets
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
 
$
25,063

 
$
24,098

 
$
1,216

 
$
1,175

Net gain on plan assets
 
(258
)
 
2,298

 
(5
)
 
108

Employer contributions
 
578

 
78

 
68

 
57

Participant contributions
 
10

 
19

 
22

 
50

Benefits paid
 
(1,428
)
 
(1,409
)
 
(151
)
 
(186
)
Other
 
(15
)
 
(21
)
 
3

 
12

Fair value of plan assets at end of year
 
23,950

 
25,063

 
1,153

 
1,216

Change in projected benefit obligation
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of year
 
30,525

 
25,972

 
2,398

 
2,224

Service cost
 
484

 
457

 
35

 
34

Interest cost
 
1,224

 
1,260

 
94

 
99

Participant contributions
 
10

 
19

 
22

 
50

Plan amendments
 
—

 
—

 
—

 
(92
)
Actuarial (gain) loss
 
(1,602
)
 
4,273

 
(219
)
 
258

Benefits paid
 
(1,428
)
 
(1,409
)
 
(151
)
 
(186
)
Other
 
(31
)
 
(47
)
 
2

 
11

Projected benefit obligation at end of year
 
29,182

 
30,525

 
2,181

 
2,398

Funded status
 
$
(5,232
)
 
$
(5,462
)
 
$
(1,028
)
 
$
(1,182
)
 
 
 
 
 
 
 
 
 
Classification of amounts recognized in the consolidated statements of financial position
 
 
 
 
 
 
 
 
Non-current assets
 
$
18

 
$
3

 
$
79

 
$
80

Current liability
 
(142
)
 
(133
)
 
(43
)
 
(39
)
Non-current liability
 
(5,108
)
 
(5,332
)
 
(1,064
)
 
(1,223
)
Amounts expected to be recognized in 2016 net periodic benefit cost
The following table shows those amounts expected to be recognized in net periodic benefit cost in 2016:
$ in millions
Pension Benefits
 
Medical and
Life Benefits
 
Total
Amounts expected to be recognized in 2016 net periodic benefit cost
 
 
 
 
 
Net actuarial loss
$
714

 
$
16

 
$
730

Prior service credit
(60
)
 
(22
)
 
(82
)
Pension plans with accumulated benefit obligations in excess of fair value of plan assets
Amounts for pension plans with accumulated benefit obligations in excess of fair value of plan assets are as follows:
 
 
December 31
$ in millions
 
2015
 
2014
Projected benefit obligation
 
$
29,131

 
$
30,405

Accumulated benefit obligation
 
28,923

 
30,172

Fair value of plan assets
 
23,882

 
24,940
Weighted-average plan assumptions
On a weighted-average basis, the following assumptions were used to determine benefit obligations and net periodic benefit cost:
 
 
Pension Benefits  
 
Medical and
Life Benefits
  
 
2015
 
2014
 
2015
 
2014
Assumptions used to determine benefit obligation at December 31
 
 
 
 
 
 
 
 
Discount rate
 
4.53
%
 
4.12
%
 
4.47
%
 
4.04
%
Initial cash balance crediting rate assumed for the next year
 
3.00
%
 
2.75
%
 
 
 
 
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate)
 
3.75
%
 
3.50
%
 
 
 
 
Year that the cash balance crediting rate reaches the ultimate rate
 
2021

 
2020

 
 
 
 
Rate of compensation increase
 
3.00
%
 
3.00
%
 
 
 
 
Initial health care cost trend rate assumed for the next year
 
 
 
 
 
7.00
%
 
6.50
%
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate)
 
 
 
 
 
5.00
%
 
5.00
%
Year that the health care cost trend rate reaches the ultimate trend rate
 
 
 
 
 
2020

 
2019

Assumptions used to determine benefit cost for the year ended December 31
 
 
 
 
 
 
 
 
Discount rate
 
4.12
%
 
4.99
%
 
4.04
%
 
4.90
%
Initial cash balance crediting rate assumed for the next year
 
2.75
%
 
3.90
%
 
 
 
 
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate)
 
3.50
%
 
4.70
%
 
 
 
 
Year that the cash balance crediting rate reaches the ultimate rate
 
2020

 
2019

 
 
 
 
Expected long-term return on plan assets
 
8.00
%
 
8.00
%
 
7.58
%
 
7.45
%
Rate of compensation increase
 
3.00
%
 
3.00
%
 
 
 
 
Initial health care cost trend rate assumed for the next year
 
 
 
 
 
6.50
%
 
6.50
%
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate)
 
 
 
 
 
5.00
%
 
5.00
%
Year that the health care cost trend rate reaches the ultimate trend rate
 
 

 
 

 
2019

 
2017
Plan asset allocation
For the majority of the plans’ assets, the investment policies require that the asset allocation be maintained within the following ranges as of December 31, 2015:
  
 
Asset Allocation Ranges
U.S. equities
 
15% - 35%
International equities
 
10% - 30%
Fixed income securities
 
20% - 55%
Alternative investments
 
10% - 30%
The table below provides the fair values of the company’s pension and VEBA trust plan assets at December 31, 2015 and 2014, by asset category. The table also identifies the level of inputs used to determine the fair value of assets in each category (see Note 1 for definition of levels). The significant amount of Level 2 investments in the table results from including in this category investments in pooled funds that contain investments with values based on quoted market prices, but for which the funds are not valued on a quoted market basis, and fixed income securities valued using model-based pricing services.
 
 
Level 1
 
Level 2
 
Level 3
 
Total
$ in millions
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents(1)
 

$ 37

 

$ 38

 

$ 1,471

 

$ 1,737

 
 
 
 
 

$ 1,508

 

$ 1,775

U.S. equities(2)
 
4,043

 
4,729

 
593

 
147

 
$
2

 

$ 2

 
4,638

 
4,878

International equities(2)
 
2,300

 
2,675

 
2,551

 
2,062

 
 
 
 
 
4,851

 
4,737

Fixed income securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasuries
 
 
 
 
 
530

 
957

 
 
 
 
 
530

 
957

U.S. Government Agency
 
 
 
 
 
717

 
909

 
 
 
 
 
717

 
909

Non-U.S. Government
 
 
 
 
 
309

 
440

 
 
 
 
 
309

 
440

Corporate debt
 
 
 
 
 
4,919

 
5,710

 
 
 
 
 
4,919

 
5,710

Asset backed
 
 
 
 
 
392

 
604

 
1

 
4

 
393

 
608

High yield debt
 
 
 
 
 
1,719

 
586

 


 


 
1,719

 
586

Bank loans
 
 
 
 
 
261

 
228

 
 
 
 
 
261

 
228

Alternative Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hedge funds
 
 
 
 
 
 
 
 
 
497

 
632

 
497

 
632

Private equities
 
 
 
 
 
 
 
 
 
1,850

 
2,030

 
1,850

 
2,030

Real estate
 
 
 
 
 
 
 
 
 
2,886

 
2,759

 
2,886

 
2,759

Other(3)
 
20

 
32

 
5

 
(2
)
 
  

 
  

 
25

 
30

Fair value of plan assets at the end of the year
 

$6,400

 

$7,474

 

$13,467

 

$13,378

 

$5,236

 

$5,427

 

$25,103

 

$26,279


(1) 
Cash and cash equivalents are predominantly held in money market or short-term investment funds.
(2) U.S. and international equities represent private investment funds that primarily hold diversified investments in underlying equity securities. These funds are structured as limited partnerships, one of which has an unfunded commitment of $25 million. Redemption periods are monthly with a notice requirement less than 30 days.
(3) Other assets include derivative assets with a fair value of $40 million and $84 million, derivative liabilities with a fair value of $25 million and $59 million, and net notional amounts of $3.2 billion and $3.0 billion, as of December 31, 2015 and 2014, respectively. Derivative instruments may include exchange traded futures contracts, interest rate swaps, options on futures and swaps, currency contracts, total return swaps and credit default swaps. Notional amounts do not quantify risk or represent assets or liabilities of the pension and VEBA trusts, but are used in the calculation of cash settlement under the contracts. The volume of derivative activity is commensurate with the amounts disclosed at year-end. Certain derivative financial instruments within the pension trust are subject to master netting agreements with certain counterparties.
Changes in fair value of plan assets, significant unobservable inputs
The changes in the fair value of the pension and VEBA plan trust assets measured using Level 3 significant unobservable inputs during 2015 and 2014, are as follows:
$ in millions
 
Hedge funds and High-yield debt
 
Private equities
 
Real Estate
 
Other
 
Total
Balance as of December 31, 2013
 
$
822

 
$
2,075

 
$
2,767

 
$
6

 
$
5,670

Actual return on plan assets:
 
 
 
 
 
 
 
 
 
 
Unrealized (losses) gains, net
 
(46
)
 
(60
)
 
173

 
—

 
67

Realized gains, net
 
89

 
10

 
71

 
—

 
170

Purchases
 
21

 
431

 
61

 
—

 
513

Sales
 
(254
)
 
(426
)
 
(313
)
 
—

 
(993
)
Balance as of December 31, 2014
 
632

 
2,030

 
2,759

 
6

 
5,427

Actual return on plan assets:
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses), net
 
(55
)
 
(193
)
 
235

 
—

 
(13
)
Realized gains (losses), net
 
50

 
(2
)
 
(7
)
 
—

 
41

Purchases
 
87

 
225

 
52

 
—

 
364

Sales
 
(217
)
 
(210
)
 
(153
)
 
(3
)
 
(583
)
Balance as of December 31, 2015
 
$
497

 
$
1,850

 
$
2,886

 
$
3

 
$
5,236

 
 
 
 
 
 
 
 
 
 
 
The amount of total gains and (losses) for the period attributable to the change in unrealized gains or (losses) related to assets held at year-end
 
$
(55
)
 
$
(172
)
 
$
310

 
$
—

 
$
83
Estimated benefit payments
The following table reflects estimated future benefit payments for the next ten years, based upon the same assumptions used to measure the benefit obligation, and includes expected future employee service, as of December 31, 2015:
$ in millions
 
Pension Plans
 
Medical and
Life Plans
 
Total
Year Ending December 31
 
 
 
 
 
 
2016
 
$
1,469

 
$
151

 
$
1,620

2017
 
1,513

 
155

 
1,668

2018
 
1,563

 
158

 
1,721

2019
 
1,614

 
160

 
1,774

2020
 
1,664

 
161

 
1,825

2021 through 2025
 
9,065

 
788

 
9,853