PENSIONS AND OTHER POSTRETIREMENT BENEFITS

Defined Contribution Pension Plans

The Company maintains certain defined contribution pension plans for eligible employees. Effective January 1, 2013, the Company amended its U.S. defined contribution plan to allow for an enhanced company match and company provided age-based contributions for eligible U.S. salaried and non-union hourly employees. The total expenses attributable to the Company’s defined contribution savings plan were $45 million, $45 million, and $42 million for the years ended December 31, 2015, 2014 and 2013.

The amounts contributed to defined contribution pension plans include contributions to multi-employer plans in France, Italy and the United States of $1 million during each of the years ended December 31, 2015, 2014 and 2013. None of the multiemployer plans in which the Company participates are individually significant.

Defined Benefit Plans

The Company sponsors defined benefit pension plans and health care and life insurance benefits for certain employees and retirees around the world. Using appropriate actuarial methods and assumptions, the Company’s defined benefit pension plans and post-retirement benefits other than pensions are accounted for in accordance with ASC Topic 715, Compensation – Retirement Benefits. There is also an unfunded nonqualified pension plan primarily covering U.S. executives.

The funding policy for qualified defined benefit pension plans is to contribute the minimum required by applicable laws and regulations or to directly pay benefit payments where appropriate. At December 31, 2015 all legal funding requirements had been met. We expect to contribute $37 million to our U.S. qualified plans, $2 million to our U.S. non-qualified plans, and $33 million to our non-U.S. pension plans in 2016.

Other Postretirement Benefits - U.S. Welfare Benefit Plan

The Company recognized aggregate OPEB curtailment gains of $38 million for the year ended December 31, 2013.

In May 2013, the Company ceased operations at one of its U.S. manufacturing locations. As this location participated in the Company’s U.S. Welfare Benefit Plan, the Company had this plan re-measured due to its curtailment implications. The resulting reduction in the average remaining future service period to the full eligibility date of the remaining active plan participants in the Company’s U.S. Welfare Benefit Plan triggered the recognition of a $19 million OPEB curtailment gain, which was recognized in the consolidated statements of operations for the year ended December 31, 2013.

Additionally, in the third quarter of 2013, the Company completed the sale of its fuel manufacturing facility and research and development center located in the U.S., resulting in the termination of certain employees that participated in the Company's U.S. Welfare Benefit Plan. The resulting reduction in the average remaining future service period to the full eligibility date of the remaining active plan participants triggered the recognition of an additional OPEB curtailment gain of $19 million, which is included in gain on discontinued operations in the consolidated statements of operations for the year ended December 31, 2013.

Other Benefits

The Company accounts for benefits to former or inactive employees paid after employment but before retirement pursuant to ASC Topic 712, Compensation – Nonretirement Postemployment Benefits. The liabilities for such U.S. and European postemployment benefits were $26 million and $25 million at December 31, 2015 and 2014.

The measurement date for all defined benefit plans is December 31. The following provides a reconciliation of the plans’ benefit obligations, plan assets, funded status and recognition in the consolidated balance sheets:



	Pension Benefits												Other Postretirement
	United States Plans						Non-U.S. Plans						Benefits
	2015			2014			2015			2014			2015			2014

Change in benefit obligation:
Benefit obligation, beginning of year	$	1,291		$	1,184		$	575		$	450		$	368		$	335
Service cost	3			3			16			12			—			—
Interest cost	48			52			10			16			13			15
Employee contributions	—			—			—			—			—			—
Benefits paid	(89		)	(96		)	(24		)	(28		)	(23		)	(26		)
Medicare subsidies received	—			—			—			—			3			1
Plan amendments	—			—			—			—			—			8
Curtailments	—			—			(3		)	(1		)	—			—
Settlements	—			(3		)	—			—			—			—
Actuarial losses (gains) and changes in actuarial assumptions	(32		)	151			(75		)	112			(35		)	36
Net transfers (out) in	—			—			45			73			—			—
Currency translation	—			—			(57		)	(59		)	(3		)	(1		)
Benefit obligation, end of year	$	1,221		$	1,291		$	487		$	575		$	323		$	368

Change in plan assets:
Fair value of plan assets, beginning of year	$	912		$	909		$	54		$	55		$	—		$	—
Actual return on plan assets	(27		)	43			2			3			—			—
Employee contributions	—			—			—			—			—			—
Company contributions	74			56			30			30			20			25
Benefits paid	(89		)	(96		)	(24		)	(28		)	(23		)	(26		)
Expenses	—			—			—			—			—			—
Medicare subsidies received	—			—			—			—			3			1
Currency translation	—			—			(5		)	(6		)	—			—
Fair value of plan assets, end of year	$	870		$	912		$	57		$	54		$	—		$	—

Funded status of the plan	$	(351	)	$	(379	)	$	(430	)	$	(521	)	$	(323	)	$	(368	)

Amounts recognized in the consolidated balance sheets:
Current liabilities	$	(2	)	$	(3	)	$	(14	)	$	(17	)	$	(24	)	$	(26	)
Noncurrent liabilities^(a)	(349		)	(376		)	(416		)	(504		)	(299		)	(342		)
Net amount recognized	$	(351	)	$	(379	)	$	(430	)	$	(521	)	$	(323	)	$	(368	)

Amounts recognized in accumulated other comprehensive loss, inclusive of tax effects:
Net actuarial loss	$	452		$	409		$	72		$	151		$	56		$	95
Prior service cost (credit)	—			—			1			2			(10		)	(14		)
Total	$	452		$	409		$	73		$	153		$	46		$	81

^(a)The "Pension and Other Postemployment Benefits" line in the consolidated balance sheet includes $59 million and $60 million of postemployment benefits which are not included in the table above.

Information for defined benefit plans with projected benefit obligations in excess of plan assets:



	Pension Benefits								Other Postretirement
	United States Plans				Non-U.S. Plans				Benefits
	2015		2014		2015		2014		2015		2014

Projected benefit obligation	$	1,221	$	1,291	$	486	$	574	$	323	$	368
Fair value of plan assets	870		912		56		53		—		—

Information for pension plans with accumulated benefit obligations in excess of plan assets:



	Pension Benefits
	United States Plans				Non-U.S. Plans
	2015		2014		2015		2014

Projected benefit obligation	$	1,221	$	1,291	$	482	$	555
Accumulated benefit obligation	1,221		1,291		445		514
Fair value of plan assets	870		912		53		42

The accumulated benefit obligation for all pension plans is $1,669 million and $1,809 million as of December 31, 2015 and 2014.

The following table summarizes the components of net periodic benefit cost (credit) along with the assumptions used to determine benefit obligations for the years ended December 31:



	Pension Benefits																		Other Postretirement
	United States Plans									Non-U.S. Plans									Benefits
	2015			2014			2013			2015			2014			2013			2015			2014			2013
Components of expense
Service cost	$	3		$	3		$	4		$	16		$	12		$	12		$	—		$	—		$	—
Interest cost	48			52			47			10			16			14			13			15			11
Expected return on plan assets	(59		)	(62		)	(58		)	(2		)	(2		)	(3		)	—			—			—
Amortization of actuarial losses	10			4			14			11			5			8			5			3			6
Amortization of prior service credit	—			—			—			—			—			—			(4		)	(5		)	(9		)
Settlement loss (gain)	—			(3		)	—			—			1			1			—			—			—
Curtailment gain	—			—			—			(2		)	—			—			—			—			(19		)
Net periodic cost (credit)	$	2		$	(6	)	$	7		$	33		$	32		$	32		$	14		$	13		$	(11	)
Weighted-average assumptions used to determine benefit obligations
Discount rate	4.15		%	3.85		%	4.55		%	2.72		%	1.77		%	3.49		%	4.18		%	3.84		%	4.45		%
Rate of compensation increase	n/a			n/a			n/a			3.19		%	3.16		%	3.17		%	n/a			n/a			n/a
Weighted-average assumptions used to determine net expense
Discount rate	3.85		%	4.55		%	3.70		%	1.77		%	3.49		%	2.99		%	3.84		%	4.45		%	3.60		%
Expected rate of return on plan assets	6.55		%	6.95		%	7.45		%	3.52		%	4.18		%	4.62		%	n/a			n/a			n/a
Rate of compensation increase	n/a			n/a			n/a			3.16		%	3.17		%	3.13		%	n/a			n/a			n/a

Estimated amounts to be amortized from accumulated other comprehensive loss into net periodic benefit cost in the year ending December 31, 2016 based on December 31, 2015 plan measurements are $15 million, consisting primarily of amortization of the net actuarial loss in the U.S. pension plans.

Long-term Rate of Return

The Company’s expected return on assets is established annually through analysis of anticipated future long-term investment performance for the plan based upon the asset allocation strategy. While the study gives appropriate consideration to recent fund performance and historical returns, the assumption is primarily a long-term prospective rate.

The study was performed in December 2015 resulting in changes to the expected long-term rate of return on assets. The weighted-average long-term rate of return on assets for the U.S. plans decreased from 6.6% at December 31, 2014 to 5.7% at December 31, 2015. The expected long-term rate of return on plan assets used in determining pension expense for non-U.S. plans is determined in a similar manner to the U.S. plans and decreased from 3.5% at December 31, 2014 to 3.2% at December 31, 2015.

Health Care Trend

The assumed health care and drug cost trend rates used to measure next year’s postemployment healthcare benefits are as follows:



	Other Postretirement Benefits
	2015		2014
Initial health care cost trend rate	6.97	%	7.25	%
Ultimate health care cost trend rate	5.00	%	5.00	%
Year ultimate health care cost trend rate reached	2022		2022

The assumed health care cost trend rate has a significant effect on the amounts reported for Other Postretirement Benefits plans. The following table illustrates the sensitivity to a change in the assumed health care cost trend rate:



	Total Service and Interest Cost			APBO

100 basis point (“bp”) increase in health care cost trend rate	$	1		$	28
100 bp decrease in health care cost trend rate	(1		)	(24		)

Projected benefit payments from the plans are estimated as follows:



	Pension Benefits				Other Postretirement Benefits
	United States		Non-U.S. Plans		Other Postretirement Benefits

2016	$	84	$	24	$	24
2017	85		24		24
2018	88		23		24
2019	88		24		24
2020	87		25		24
Years 2021-2025	399		135		110

Plan Assets

Certain pension plans sponsored by the Company invest in a diversified portfolio consisting of an array of asset classes that attempts to maximize returns while minimizing volatility. These asset classes include developed market equities, emerging market equities, private equity, global high quality and high yield fixed income, real estate, and absolute return strategies.

U.S. Plan

As of December 31, 2015, plan assets were comprised of 61% equity investments, 23% fixed income investments, and 16% in other investments which include hedge funds. Approximately 73% of the U.S. plan assets were invested in actively managed investment funds. The Company’s investment strategy includes a target asset allocation of 50% equity investments, 25% fixed income investments and 25% in other investment types including hedge funds.

The U.S. investment strategy mitigates risk by incorporating diversification across appropriate asset classes to meet the plan’s objectives. It is intended to reduce risk, provide long-term financial stability for the plan and maintain funded levels that meet long-term plan obligations while preserving sufficient liquidity for near-term benefit payments. Risk assumed is considered appropriate for the return anticipated and consistent with the diversification of plan assets.

Non-U.S. Plans

The insurance contracts guarantee a minimum rate of return. The Company has no input into the investment strategy of the assets underlying the contracts, but they are typically heavily invested in active bond markets and are highly regulated by local law.

The majority of the assets of the non-U.S. plans are invested through insurance contracts. The insurance contracts guarantee a minimum rate of return. The Company has no input into the investment strategy of the assets underlying the contracts, but they are typically heavily invested in active bond markets and are highly regulated by local law. The target asset allocation for the non-U.S. pension plans is 70% insurance contracts, 25% debt investments and 5% equity investments.

The following table presents the Company’s defined benefit plan assets measured at fair value by asset class:



	December 31, 2015								December 31, 2014
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
U.S. Plans:
Cash	$	26	$	26	$	—	$	—	$	44	$	44	$	—	$	—
Investments with registered investment companies:
Equity securities	310		310		—		—		314		314		—		—
Fixed income securities	149		149		—		—		166		166		—		—
Real estate and other	27		27		—		—		25		25		—		—
Equity securities	220		220		—		—		231		231		—		—
Debt securities:
Corporate and other	22		—		22		—		21		—		21		—
Government	30		17		13		—		20		16		4		—
Hedge funds	86		—		—		86		91		—		—		91
	$	870	$	749	$	35	$	86	$	912	$	796	$	25	$	91
Non-U.S. Plans:
Insurance contracts	$	40	$	—	$	—	$	40	$	41	$	—	$	—	$	41
Investments with registered investment companies:
Fixed income securities	13		13		—		—		10		10		—		—
Equity securities	2		2		—		—		1		1		—		—
Corporate bonds	2		—		2		—		2		—		2		—
	$	57	$	15	$	2	$	40	$	54	$	11	$	2	$	41

The following tables summarize the activity for the U.S. plan assets classified in level 3:



	Balance at December 31, 2014		Net Realized/ Unrealized Gains (Loss)			Purchases, and Settlements, Net		Sales, Net		Transfers Into (Out) of Level 3		Foreign Currency Exchange Rate Movements		Balance at December 31, 2015

Assets
Hedge funds and other	$	91	$	(5	)	$	—	$	—	$	—	$	—	$	86



	Balance at December 31, 2013		Net Realized/ Unrealized Gains (Loss)		Purchases, and Settlements, Net		Sales, Net			Transfers Into (Out) of Level 3		Foreign Currency Exchange Rate Movements		Balance at December 31, 2014

Assets
Hedge funds and other	$	85	$	6	$	47	$	(47	)	$	—	$	—	$	91

The following tables summarize the activity for the non-U.S. plan assets classified in level 3:



	Balance at December 31, 2014		Net Realized/ Unrealized Gains (Loss)		Purchases, and Settlements, Net		Sales, Net			Transfers Into (Out) of Level 3		Foreign Currency Exchange Rate Movements			Balance at December 31, 2015

Assets
Insurance contracts	$	41	$	1	$	6	$	(4	)	$	—	$	(4	)	$	40



	Balance at December 31, 2013		Net Realized/ Unrealized Gains (Loss)		Purchases, and Settlements, Net		Sales, Net			Transfers Into (Out) of Level 3		Foreign Currency Exchange Rate Movements			Balance at December 31, 2014

Assets
Insurance contracts	$	44	$	2	$	6	$	(5	)	$	—	$	(6	)	$	41