Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2016

General Discussion of Pension and Other Postretirement Benefits [Abstract]

The projected benefit obligations, plan assets and funded status of PMI’s pension plans, and the accumulated benefit obligation and net amount accrued for PMI's postretirement health care plans, at December 31, 2016 and 2015, were as follows:



	Pension
	U.S. Plans						Non-U.S. Plans						Postretirement
(in millions)	2016			2015			2016			2015			2016			2015
Benefit obligation at January 1,	$	389		$	438		$	7,697		$	7,638		$	211		$	238
Service cost	5			5			202			200			3			4
Interest cost	17			17			129			139			9			9
Benefits paid	(18		)	(51		)	(222		)	(225		)	(10		)	(11		)
Settlement and curtailment	—			—			(1		)	(16		)	—			—
Actuarial losses (gains)	12			(20		)	415			261			15			(12		)
Currency	—			—			(329		)	(365		)	(2		)	(17		)
Other	—			—			91			65			1			—
Benefit obligation at December 31,	405			389			7,982			7,697			227			211
Fair value of plan assets at January 1,	298			312			6,106			6,410
Actual return on plan assets	13			—			309			56
Employer contributions	4			37			187			117
Employee contributions	—			—			39			37
Benefits paid	(18		)	(51		)	(222		)	(225		)
Settlement and curtailment	—			—			—			(14		)
Currency	—			—			(259		)	(275		)
Fair value of plan assets at December 31,	297			298			6,160			6,106
Net pension and postretirement liability recognized at December 31,	$	(108	)	$	(91	)	$	(1,822	)	$	(1,591	)	$	(227	)	$	(211	)

Pension and Postretirement Liabilities Recognized in Consolidated Balance Sheets

At December 31, 2016 and 2015, the amounts recognized on PMI's consolidated balance sheets for the combined U.S. and non-U.S. pension plans, and postretirement plans were as follows:



	Pension						Postretirement
(in millions)	2016			2015			2016			2015
Other assets	$	33		$	47
Accrued liabilities — employment costs	(23		)	(23		)	$	(10	)	$	(9	)
Long-term employment costs	(1,940		)	(1,706		)	(217		)	(202		)
	$	(1,930	)	$	(1,682	)	$	(227	)	$	(211	)

Schedule of Assumptions Used

The following weighted-average assumptions were used to determine PMI’s net pension and postretirement health care costs:



	Pension
	U.S. Plans						Non-U.S. Plans						Postretirement
	2016		2015		2014		2016		2015		2014		2016		2015		2014
Discount rate	4.30	%	3.95	%	4.80	%	1.68	%	1.92	%	3.09	%	4.45	%	4.20	%	5.01	%
Expected rate of return on plan assets	4.60		5.10		5.70		5.39		5.38		5.63
Rate of compensation increase	3.00		3.00		3.00		1.98		2.06		2.34
Health care cost trend rate													6.23		6.62		6.60

The following weighted-average assumptions were used to determine PMI’s pension and postretirement benefit obligations at December 31:



	Pension
	U.S. Plans				Non-U.S. Plans				Postretirement
	2016		2015		2016		2015		2016		2015
Discount rate	4.07	%	4.30	%	1.39	%	1.68	%	3.68	%	4.45	%
Rate of compensation increase	3.00		3.00		1.61		1.98
Health care cost trend rate assumed for next year									7.15		6.23
Ultimate trend rate									5.08		4.75
Year that rate reaches the ultimate trend rate									2029		2029

Components of Net Periodic Benefit Cost

Net periodic pension and postretirement health care costs consisted of the following for the years ended December 31, 2016, 2015 and 2014:



	Pension
	U.S. Plans									Non-U.S. Plans									Postretirement
(in millions)	2016			2015			2014			2016			2015			2014			2016		2015		2014
Service cost	$	5		$	5		$	5		$	202		$	200		$	211		$	3	$	4	$	4
Interest cost	17			17			17			129			139			205			9		9		10
Expected return on plan assets	(14		)	(15		)	(16		)	(332		)	(325		)	(357		)	—		—		—
Amortization:
Net losses	9			14			6			177			180			115			2		4		2
Prior service cost	—			—			1			4			4			5			—		—		(1		)
Settlement and curtailment	—			1			5			4			2			1			—		—		—
Net periodic pension and postretirement costs	$	17		$	22		$	18		$	184		$	200		$	180		$	14	$	17	$	15

Fair Value of Pension Plan Assets

The fair value of PMI’s pension plan assets at December 31, 2016 and 2015, by asset category was as follows:



Asset Category (in millions)	At December 31, 2016		Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	8	$	8
Equity securities:
U.S. securities	131		131
International securities	432		432
Investment funds^(a)	5,270		3,530		$	1,740
International government bonds	309		309
Other	10		10
Total assets in the fair value hierarchy	$	6,160	$	4,420	$	1,740	$	—
Investment funds measured at net asset value^(b)	297
Total assets	$	6,457

^(a) Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan; Russell 3000; S&P 500 for equities, and Citigroup EMU and Barclays Capital U.S. for bonds), primarily consist of mutual funds, common trust funds and commingled funds. Of these funds, 60% are invested in U.S. and international equities; 19% are invested in U.S. and international government bonds; 11% are invested in real estate and other money markets, and 10% are invested in corporate bonds.

^(b) In accordance with FASB ASC Subtopic 820-10, certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.



Asset Category (in millions)	At December 31, 2015		Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	225	$	225
Equity securities:
U.S. securities	120		120
International securities	409		409
Investment funds^(a)	5,039		3,446		1,593
International government bonds	289		289
Other	24		24
Total assets in the fair value hierarchy	$	6,106	$	4,513	$	1,593	$	—
Investment funds measured at net asset value^(b)	298
Total assets	$	6,404

^(a)Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan; Russell 3000; S&P 500 for equities, and Citigroup EMU and Barclays Capital U.S. for bonds), primarily consist of mutual funds, common trust funds and commingled funds. Of these funds, 61% were invested in U.S. and international equities; 18% were invested in U.S. and international government bonds; 11% were invested in real estate and other money markets, and 10% were invested in corporate bonds.

Estimated Future Benefit Payments

The estimated future benefit payments from PMI pension plans at December 31, 2016, are as follows:



(in millions)	U.S. Plans		Non-U.S. Plans
2017	$	18	$	247
2018	18		272
2019	24		265
2020	22		280
2021	21		300
2022 - 2026	124		1,675

Defined Benefit Plan Assumed Health Care Trend Rates

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care trend rates would have the following effects as of December 31, 2016:



	One-Percentage-Point Increase		One-Percentage-Point Decrease
Effect on total service and interest cost	23.9	%	(18.1	)%
Effect on postretirement benefit obligation	19.4		(15.3	)

Amounts Recorded in Accumulated Other Comprehensive Losses

The amounts recorded in accumulated other comprehensive losses at December 31, 2016, consisted of the following:



(in millions)	Pension			Post- retirement			Post- employment			Total
Net losses	$	(3,314	)	$	(73	)	$	(713	)	$	(4,100	)
Prior service cost	(53		)	4			—			(49		)
Net transition obligation	(5		)	—			—			(5		)
Deferred income taxes	350			24			215			589
Losses to be amortized	$	(3,022	)	$	(45	)	$	(498	)	$	(3,565	)

The amounts recorded in accumulated other comprehensive losses at December 31, 2015, consisted of the following:



(in millions)	Pension			Post- retirement			Post- employment			Total
Net losses	$	(3,074	)	$	(61	)	$	(710	)	$	(3,845	)
Prior service cost	(40		)	5			—			(35		)
Net transition obligation	(5		)	—			—			(5		)
Deferred income taxes	320			20			213			553
Losses to be amortized	$	(2,799	)	$	(36	)	$	(497	)	$	(3,332	)

The amounts recorded in accumulated other comprehensive losses at December 31, 2014, consisted of the following:



(in millions)	Pension			Post- retirement			Post- employment			Total
Net losses	$	(2,760	)	$	(77	)	$	(721	)	$	(3,558	)
Prior service cost	(45		)	6			—			(39		)
Net transition obligation	(6		)	—			—			(6		)
Deferred income taxes	342			25			216			583
Losses to be amortized	$	(2,469	)	$	(46	)	$	(505	)	$	(3,020	)

Movements in Other Comprehensive Earnings (Losses)

The movements in other comprehensive earnings (losses) during the year ended December 31, 2016, were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts transferred to earnings as components of net periodic benefit cost:
Amortization:
Net losses	$	193		$	2		$	62		$	257
Prior service cost	6			—			—			6
Other income/expense:
Net losses	4			—			—			4
Prior service cost	—			—			—			—
Deferred income taxes	(26		)	—			(17		)	(43		)
	177			2			45			224
Other movements during the year:
Net losses	(437		)	(15		)	(65		)	(517		)
Prior service cost	(18		)	—			—			(18		)
Deferred income taxes	55			4			19			78
	(400		)	(11		)	(46		)	(457		)
Total movements in other comprehensive earnings (losses)	$	(223	)	$	(9	)	$	(1	)	$	(233	)

The movements in other comprehensive earnings (losses) during the year ended December 31, 2015, were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts transferred to earnings as components of net periodic benefit cost:
Amortization:
Net losses	$	194		$	4		$	69		$	267
Prior service cost	4			—			—			4
Other income/expense:
Net losses	3			—			—			3
Prior service cost	1			—			—			1
Deferred income taxes	(26		)	(2		)	(20		)	(48		)
	176			2			49			227
Other movements during the year:
Net losses	(510		)	12			(58		)	(556		)
Deferred income taxes	4			(4		)	17			17
	(506		)	8			(41		)	(539		)
Total movements in other comprehensive earnings (losses)	$	(330	)	$	10		$	8		$	(312	)

The movements in other comprehensive earnings (losses) during the year ended December 31, 2014, were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts transferred to earnings as components of net periodic benefit cost:
Amortization:
Net losses	$	121		$	2		$	66		$	189
Prior service cost	6			(1		)	—			5
Other income/expense:
Net losses	14			2			—			16
Prior service cost	5			—			—			5
Deferred income taxes	(21		)	(1		)	(20		)	(42		)
	125			2			46			173
Other movements during the year:
Net losses	(1,149		)	(34		)	(126		)	(1,309		)
Prior service cost	(5		)	—			—			(5		)
Deferred income taxes	118			12			37			167
	(1,036		)	(22		)	(89		)	(1,147		)
Total movements in other comprehensive earnings (losses)	$	(911	)	$	(20	)	$	(43	)	$	(974	)