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Benefit Obligations
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Benefit Obligations Benefit Obligations
Pension Obligations 
The Company sponsors defined benefit pension plans in North America, Europe and Asia. Independent trusts or insurance companies administer the majority of these plans. Pension obligations are established for benefits payable in the form of retirement, disability and surviving dependent pensions. The commitments result from participation in defined contribution and defined benefit plans, primarily in the US. Benefits are dependent on years of service and the employee's compensation. Supplemental retirement benefits provided to certain employees are nonqualified for US tax purposes. Separate nonqualified trusts have been established for certain US nonqualified plan obligations. Pension costs under the Company's retirement plans are actuarially determined.
The Company participates in a multiemployer defined benefit plan and a multiemployer defined contribution plan in Germany covering certain employees. The Company's contributions to the multiemployer defined benefit plan are based on specified percentages of employee contributions as outlined in a works council agreement, covering all German entity employees hired prior to January 1, 2012. As of January 1, 2012, the multiemployer defined benefit pension plan described above was closed to new employees. Qualifying employees hired in Germany after December 31, 2011 are covered by a multiemployer defined contribution plan. The Company's contributions to the multiemployer defined contribution plan are based on specified percentages of employee contributions, similar to the multiemployer defined benefit plan, but at a lower rate.
Statutory regulations and the works council agreement require the contributions to fully fund the multiemployer plans. The risks of participating in the multiemployer plans are different from single-employer plans in the following aspects:
•
Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
•
If a participating employer stops contributing to the plan, any underfunding may be borne by the remaining participants, especially since regulations strictly enforce funding requirements.
•
If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as the withdrawal liability.
Based on the 2019 unaudited and 2018 audited multiemployer defined benefit plan's financial statements, the plan is 100% funded in 2019, 2018 and 2017. The number of employees covered by the Company's multiemployer defined benefit plan remained relatively stable year over year from 2017 to 2019, resulting in minimal changes to employer contributions. Participation in the German multiemployer defined benefit plan is not considered individually significant to the Company.
Contributions made by the Company to the German multiemployer plan are as follows:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(In $ millions)
Multiemployer defined benefit plan
8

 
8

 
7


Other Postretirement Obligations
Certain retired employees receive postretirement health care and life insurance benefits under plans sponsored by the Company, which has the right to modify or terminate these plans at any time. The cost for coverage is shared between the Company and the retiree. The cost of providing retiree health care and life insurance benefits is actuarially determined and accrued over the service period of the active employee group. The Company's policy is to fund benefits as claims and premiums are paid. The US postretirement health care plan was closed to new participants effective January 1, 2006.
Postemployment Obligations
The Company provides benefits to certain employees after employment but prior to retirement, including severance and disability-related benefits offered pursuant to ongoing benefit arrangements. The cost of providing postemployment benefits is actuarially determined and recorded when the obligation is probable of occurring and can be reasonably estimated.
Postemployment obligations are as follows:
 
As of December 31,
 
2019
 
2018
 
(In $ millions)
Postemployment benefits
7

 
8


Defined Contribution Plans
The Company sponsors various defined contribution plans in North America, Europe and Asia covering certain employees. Employees may contribute to these plans and the Company will match these contributions in varying amounts. The Company's matching contribution to the defined contribution plans are based on specified percentages of employee contributions.
The amount of costs recognized for the Company's defined contribution plans are as follows:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(In $ millions)
Defined contribution plans
42

 
40

 
40


Summarized information on the Company's pension and postretirement benefit plans is as follows:
 
Pension Benefits
As of December 31,
 
Postretirement Benefits
As of December 31,
 
2019
 
2018
 
2019
 
2018
 
(In $ millions)
Change in Projected Benefit Obligation
 
 
 
 
 
 
 
Projected benefit obligation as of beginning of period
3,412

 
3,728

 
59

 
66

Service cost
9

 
9

 
—

 
1

Interest cost
115

 
104

 
2

 
2

Net actuarial (gain) loss(1)
377

 
(163
)
 
8

 
(4
)
Settlements
(3
)
 
—

 
—

 
—

Benefits paid
(230
)
 
(235
)
 
(5
)
 
(4
)
Curtailments
—

 
(1
)
 
—

 
—

Special termination benefits
1

 
2

 
—

 
—

Exchange rate changes
(3
)
 
(32
)
 
—

 
(2
)
Other(2)
(68
)
 
—

 
—

 
—

Projected benefit obligation as of end of period
3,610

 
3,412

 
64

 
59

Change in Plan Assets
 
 
 
 
 
 
 
Fair value of plan assets as of beginning of period
2,915

 
3,251

 
—

 
—

Actual return on plan assets
467

 
(124
)
 
—

 
—

Employer contributions
42

 
43

 
5

 
4

Settlements
(3
)
 
—

 
—

 
—

Benefits paid(3)
(230
)
 
(235
)
 
(5
)
 
(4
)
Other(2)
(52
)
 
—

 
—

 
—

Exchange rate changes
2

 
(20
)
 
—

 
—

Fair value of plan assets as of end of period
3,141

 
2,915

 
—

 
—

Funded status as of end of period
(469
)
 
(497
)
 
(64
)
 
(59
)
Amounts Recognized in the Consolidated Balance Sheets Consist of:
 
 
 
 
 
 
 
Noncurrent Other assets
77

 
30

 
—

 
—

Current Other liabilities
(23
)
 
(24
)
 
(4
)
 
(5
)
Benefit obligations
(523
)
 
(503
)
 
(60
)
 
(54
)
Net amount recognized
(469
)
 
(497
)
 
(64
)
 
(59
)
Amounts Recognized in Accumulated Other Comprehensive Income Consist of:
 
 
 
 
 
 
 
Net actuarial (gain) loss(4)
15

 
8

 
—

 
—

Prior service (benefit) cost
—

 
—

 
(1
)
 
—

Net amount recognized(5)
15

 
8

 
(1
)
 
—

______________________________
(1) 
Primarily relates to changes in discount rates.
(2) 
Primarily relates to lump sum offers for certain participants of the US qualified defined benefit pension plan.
(3) 
Includes benefit payments to nonqualified pension plans of $21 million and $22 million as of December 31, 2019 and 2018, respectively.
(4) 
Relates to the pension plans of the Company's equity method investments.
(5) 
Amount shown net of an income tax benefit of $4 million and $5 million as of December 31, 2019 and 2018, respectively, in the consolidated statements of equity (Note 17).
The percentage of US and international projected benefit obligation at the end of the period is as follows:
 
Pension Benefits
As of December 31,
 
Postretirement Benefits
As of December 31,
 
2019
 
2018
 
2019
 
2018
 
(In percentages)
US plans
81
 
82
 
55
 
57
International plans
19
 
18
 
45
 
43
Total
100
 
100
 
100
 
100

The percentage of US and international fair value of plan assets at the end of the period is as follows:
 
Pension Benefits
As of December 31,
 
2019
 
2018
 
(In percentages)
US plans
87
 
88
International plans
13
 
12
Total
100
 
100

Pension plans with projected benefit obligations in excess of plan assets are as follows:
 
As of December 31,
 
2019
 
2018
 
(In $ millions)
Projected benefit obligation
881

 
840

Fair value of plan assets
337

 
314


Pension plans with accumulated benefit obligations in excess of plan assets are as follows:
 
As of December 31,
 
2019
 
2018
 
(In $ millions)
Accumulated benefit obligation
776

 
749

Fair value of plan assets
255

 
243


Other postretirement plans with accumulated postretirement benefit obligations in excess of plan assets are as follows:
 
As of December 31,
 
2019
 
2018
 
(In $ millions)
Accumulated postretirement benefit obligation
64

 
58

Fair value of plan assets
—

 
—


The accumulated benefit obligation for all defined benefit pension plans is as follows:
 
As of December 31,
 
2019
 
2018
 
(In $ millions)
Accumulated benefit obligation
3,584

 
3,390


The components of net periodic benefit cost are as follows:
 
Pension Benefits
Year Ended December 31,
 
Postretirement Benefits
Year Ended December 31,
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
(In $ millions)
Service cost
9

 
9

 
9

 
—

 
1

 
1

Interest cost
115

 
104

 
107

 
2

 
2

 
1

Expected return on plan assets
(185
)
 
(210
)
 
(198
)
 
—

 
—

 
—

Amortization of prior service cost / (credit)
—

 
—

 
—

 
—

 
—

 
(1
)
Recognized actuarial (gain) loss
79

 
169

 
48

 
8

 
(4
)
 
(2
)
Curtailment (gain) loss
—

 
(1
)
 
—

 
—

 
—

 
—

Special termination benefit
1

 
2

 
1

 
—

 
—

 
—

Total
19

 
73

 
(33
)
 
10

 
(1
)
 
(1
)

The Company maintains nonqualified pension plans funded with nonqualified trusts for certain US employees as follows:
 
As of December 31,
 
2019
 
2018
 
(In $ millions)
Nonqualified Trust Assets
 
 
 
Marketable securities
24

 
31

Noncurrent Other assets, consisting of insurance contracts
35

 
37

Nonqualified Pension Obligations
 
 
 
Current Other liabilities
20

 
21

Benefit obligations
219

 
213


(Income) expense relating to the nonqualified pension plans included in net periodic benefit cost, excluding returns on the assets held by the nonqualified trusts, is as follows:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(In $ millions)
Total
26

 
(3
)
 
18


Valuation
The principal weighted average assumptions used to determine benefit obligation are as follows:
 
Pension Benefits
As of December 31,
 
Postretirement Benefits
As of December 31,
 
2019
 
2018
 
2019
 
2018
 
(In percentages)
Discount Rate Obligations
 
 
 
 
 
 
 
US plans
3.2
 
4.2
 
3.1
 
4.1
International plans
1.4
 
2.1
 
2.7
 
3.4
Combined
2.8
 
3.8
 
2.9
 
3.8
Rate of Compensation Increase
 
 
 
 
 
 
 
US plans
N/A
 
N/A
 
 
 
 
International plans
2.6
 
2.8
 
 
 
 
Combined
2.6
 
2.8
 
 
 
 
The principal weighted average assumptions used to determine net periodic benefit cost are as follows:
 
Pension Benefits
Year Ended December 31,
 
Postretirement Benefits
Year Ended December 31,
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
(In percentages)
Discount Rate Obligations
 
 
 
 
 
 
 
 
 
 
 
US plans
4.2
 
3.5
 
3.9
 
4.1
 
3.4
 
3.8
International plans
2.1
 
2.1
 
2.1
 
3.4
 
3.2
 
3.3
Combined
3.8
 
3.3
 
3.7
 
3.8
 
3.2
 
3.4
Discount Rate Service Cost
 
 
 
 
 
 
 
 
 
 
 
US plans
3.1
 
1.9
 
1.2
 
4.6
 
3.7
 
4.0
International plans
2.5
 
2.3
 
2.5
 
3.4
 
3.3
 
3.4
Combined
2.5
 
2.2
 
2.5
 
3.4
 
2.9
 
2.9
Discount Rate Interest Cost
 
 
 
 
 
 
 
 
 
 
 
US plans
3.9
 
3.1
 
3.3
 
3.8
 
3.0
 
3.1
International plans
1.8
 
1.7
 
1.7
 
3.2
 
2.9
 
2.9
Combined
3.5
 
2.9
 
3.1
 
3.5
 
2.9
 
2.9
Expected Return on Plan Assets
 
 
 
 
 
 
 
 
 
 
 
US plans
6.7
 
6.8
 
7.5
 
 
 
 
 
 
International plans
5.6
 
5.9
 
5.9
 
 
 
 
 
 
Combined
6.5
 
6.7
 
7.3
 
 
 
 
 
 
Rate of Compensation Increase
 
 
 
 
 
 
 
 
 
 
 
US plans
N/A
 
N/A
 
N/A
 
 
 
 
 
 
International plans
2.8
 
2.8
 
2.8
 
 
 
 
 
 
Combined
2.8
 
2.8
 
2.8
 
 
 
 
 
 
Interest Crediting Rate
 
 
 
 
 
 
 
 
 
 
 
US plans
3.0
 
2.8
 
2.3
 
 
 
 
 
 
International plans
N/A
 
N/A
 
N/A
 
 
 
 
 
 
Combined
3.0
 
2.8
 
2.3
 
 
 
 
 
 

The Company's health care cost trend assumptions for US postretirement medical plan's net periodic benefit cost are as follows:
 
As of December 31,
 
2019
 
2018
 
2017
 
(In percentages, except year)
Health care cost trend rate assumed for next year
8.0
 
8.5
 
9.0
Health care cost trend ultimate rate
5.0
 
5.0
 
5.0
Health care cost trend ultimate rate year
2026
 
2026
 
2026

Plan Assets
The weighted average target asset allocations for the Company's pension plans in 2019 are as follows:
 
US
Plans
 
International
Plans
 
(In percentages)
Bonds - domestic to plans
80
 
58
Equities - domestic to plans
10
 
15
Equities - international to plans
10
 
—
Other
—
 
27
Total
100
 
100

On average, the actual return on the US qualified defined pension plans' assets over the long-term (20 years) has exceeded the expected long-term rate of asset return assumption. The US qualified defined benefit plans' actual return on assets for the year ended December 31, 2019 was 16.6% versus an expected long-term rate of asset return assumption of 6.7%. The expected long-term rate of asset return assumption used to determine 2020 net periodic benefit cost is 6.7% for the US qualified defined benefit plans.
The Company's defined benefit plan assets are measured at fair value on a recurring basis (Note 2) as follows:
Cash and Cash Equivalents: Foreign and domestic currencies as well as short term securities are valued at cost plus accrued interest, which approximates fair value.
Equity securities, treasuries and corporate debt: Valued at the closing price reported on the active market in which the individual securities are traded. Automated quotes are provided by multiple pricing services and validated by the plan custodian. These securities are traded on exchanges as well as in the over the counter market.
Registered Investment Companies: Composed of various mutual funds and other investment companies whose diversified portfolio is comprised of foreign and domestic equities, fixed income securities, and short-term investments. Investments are valued at the net asset value of units held by the plan at year-end.
Common/Collective Trusts: Composed of various funds whose diversified portfolio is comprised of foreign and domestic equities, fixed income securities, and short-term investments. Investments are valued at the net asset value of units held by the plan at year-end.
Derivatives: Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 fair value measurement inputs such as interest rates and foreign currency exchange rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps, foreign currency forwards and swaps, and options are observable in the active markets and are classified as Level 2 in the fair value measurement hierarchy.
Mortgage backed securities: Fair value is estimated based on valuations obtained from third-party pricing services for identical or comparable assets. Mortgage Backed Securities are traded in the over the counter broker/dealer market.
Insurance contracts: Valued at contributions made, plus earnings, less participant withdrawals and administrative expenses, which approximates fair value.
Short-term investment funds: Composed of various funds whose portfolio is comprised of foreign and domestic currencies as well as short-term securities. Investments are valued at the net asset value of units held by the plan at year-end.
Other: Composed of real estate investment trust common stock valued at closing price as reported on the active market in which the individual securities are traded.
 
Fair Value Measurement
 
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Total
 
As of December 31,
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
 
(In $ millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
8

 
2

 
—

 
—

 
8

 
2

Derivatives
 
 
 
 
 
 
 
 
 
 
 
Swaps
—

 
—

 
7

 
3

 
7

 
3

Equity securities
 
 
 
 
 
 
 
 
 
 
 
International companies
77

 
59

 
—

 
—

 
77

 
59

Fixed income
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
—

 
—

 
762

 
691

 
762

 
691

Treasuries, other debt
35

 
127

 
1,403

 
1,293

 
1,438

 
1,420

Mortgage backed securities
—

 
—

 
15

 
8

 
15

 
8

Insurance contracts
—

 
—

 
47

 
35

 
47

 
35

Other
4

 
4

 
1

 
1

 
5

 
5

Total investments, at fair value(1)
124

 
192

 
2,235

 
2,031

 
2,359

 
2,223

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
Swaps
—

 
—

 
7

 
3

 
7

 
3

Total liabilities
—

 
—

 
7

 
3

 
7

 
3

Total net assets(2)
124

 
192

 
2,228

 
2,028

 
2,352

 
2,220

______________________________
(1) 
Certain investments that are measured at fair value using the NAV per share practical expedient have not been classified in the fair value hierarchy. Total investments, at fair value, for the year ended December 31, 2019 excludes investments in common/collective trusts, registered investment companies and short-term investment funds with fair values of $689 million, $62 million and $35 million, respectively. Total investments, at fair value, for the year ended December 31, 2018 excludes investments in common/collective trusts, registered investment companies and short-term investment funds with fair values of $595 million, $54 million and $29 million, respectively.
(2) 
Total net assets excludes non-financial plan receivables and payables of $29 million and $26 million, respectively, as of December 31, 2019 and $36 million and $19 million, respectively, as of December 31, 2018. Non-financial items include due to/from broker, interest receivables and accrued expenses.
Benefit obligation funding is as follows:
 
Total
Expected
2020
 
(In $ millions)
Cash contributions to defined benefit pension plans
23

Benefit payments to nonqualified pension plans
20

Benefit payments to other postretirement benefit plans
5


The Company's estimates of its US defined benefit pension plan contributions reflect the provisions of the Pension Protection Act of 2006.
Pension and postretirement benefits expected to be paid are as follows:
 
Pension
Benefit
Payments(1)
 
Company Portion
of Postretirement
Benefit Cost(2)
 
(In $ millions)
2020
238

 
5

2021
228

 
4

2022
225

 
4

2023
223

 
4

2024
219

 
4

2025-2029
1,038

 
17

______________________________
(1) 
Payments are expected to be made primarily from plan assets.
(2) 
Payments are expected to be made primarily from Company assets.