The Company sponsors several U.S. defined benefit and defined contribution plans covering substantially all of the Company's U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution plans covering eligible non-U.S. employees. Postretirement benefits other than pensions (OPEB) provide healthcare benefits, and in some instances, life insurance benefits for certain eligible employees.

The noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits on a final average pay formula while plans for most collectively bargained U.S. employees provide benefits on a flat dollar benefit formula or a percentage of pay formula. The non-U.S. pension plans generally provide benefits based on earnings and years of service. The Company also maintains additional other supplemental plans for officers and other key or highly compensated employees.



In millions	2019			2018
Change in benefit obligations:
Benefit obligation at beginning of year	$	3,465.3		$	3,742.2
Service cost	73.6			75.0
Interest cost	119.1			109.7
Employee contributions	1.1			1.1
Amendments	5.7			16.1
Actuarial (gains) losses	422.8			(224.8		)
Benefits paid	(225.3		)	(218.9		)
Currency translation	9.0			(34.8		)
Curtailments, settlements and special termination benefits	(3.1		)	(4.6		)
Other, including expenses paid	(17.0		)	4.3
Benefit obligation at end of year	$	3,851.2		$	3,465.3
Change in plan assets:
Fair value at beginning of year	$	2,766.9		$	3,063.1
Actual return on assets	526.1			(125.9		)
Company contributions	83.1			86.9
Employee contributions	1.1			1.1
Benefits paid	(225.3		)	(218.9		)
Currency translation	12.0			(32.8		)
Settlements	(5.3		)	(9.8		)
Other, including expenses paid	(21.8		)	3.2
Fair value of assets end of year	$	3,136.8		$	2,766.9
Net unfunded liability	$	(714.4	)	$	(698.4	)
Amounts included in the balance sheet:
Other noncurrent assets	$	50.4		$	49.9
Accrued compensation and benefits	(8.7		)	(25.9		)
Postemployment and other benefit liabilities	(756.1		)	(722.4		)
Net amount recognized	$	(714.4	)	$	(698.4	)

It is the Company’s objective to contribute to the pension plans to ensure adequate funds, and no less than required by law, are available in the plans to make benefit payments to plan participants and beneficiaries when required. However, certain plans are not or cannot be funded due to either legal, accounting, or tax requirements in certain jurisdictions. As of December 31, 2019, approximately seven percent of the Company's projected benefit obligation relates to plans that cannot be funded.



In millions	Prior service benefit (cost)			Net actuarial gains (losses)			Total
December 31, 2018	$	(31.2	)	$	(820.6	)	$	(851.8	)
Current year changes recorded to AOCI	(5.7		)	(35.2		)	(40.9		)
Amortization reclassified to earnings	5.0			54.3			59.3
Settlements/curtailments reclassified to earnings	—			2.2			2.2
Currency translation and other	(0.5		)	(0.9		)	(1.4		)
December 31, 2019	$	(32.4	)	$	(800.2	)	$	(832.6	)

The accumulated benefit obligation for all defined benefit pension plans was $3,734.5 million and $3,364.6 million at December 31, 2019 and 2018, respectively. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations more than plan assets were $3,405.7 million, $3,308.2 million and $2,645.1 million, respectively, as of December 31, 2019, and $3,075.2 million, $2,992.0 million and $2,330.4 million, respectively, as of December 31, 2018.



In millions	2019			2018			2017
Service cost	$	73.6		$	75.0		$	70.8
Interest cost	119.1			109.7			109.0
Expected return on plan assets	(138.5		)	(146.6		)	(141.7		)
Net amortization of:
Prior service costs (benefits)	5.0			4.2			3.8
Plan net actuarial (gains) losses	54.3			51.3			56.8
Net periodic pension benefit cost	113.5			93.6			98.7
Net curtailment, settlement, and special termination benefits (gains) losses	4.5			2.3			5.6
Net periodic pension benefit cost after net curtailment and settlement (gains) losses	$	118.0		$	95.9		$	104.3
Amounts recorded in continuing operations:
Operating income	$	69.8		$	72.7		$	68.2
Other income/(expense), net	36.1			14.6			25.4
Amounts recorded in discontinued operations	12.1			8.6			10.7
Total	$	118.0		$	95.9		$	104.3

Net periodic pension benefit cost for 2020 is projected to be approximately $89 million. The amounts expected to be recognized in net periodic pension benefit cost during 2020 for prior service cost and plan net actuarial losses are approximately $5 million and $47 million, respectively.



	2019		2018		2017
Discount rate:
U.S. plans
Service cost	4.24	%	3.70	%	4.18	%
Interest cost	3.88	%	3.24	%	3.36	%
Non-U.S. plans
Service cost	2.81	%	2.52	%	2.66	%
Interest cost	2.83	%	2.46	%	2.50	%
Rate of compensation increase:
U.S. plans	4.00	%	4.00	%	4.00	%
Non-U.S. plans	4.00	%	4.00	%	4.00	%
Expected return on plan assets:
U.S. plans	5.75	%	5.50	%	5.50	%
Non-U.S. plans	3.25	%	3.25	%	3.25	%

The expected long-term rate of return on plan assets reflects the average rate of returns expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. The expected long-term rate of return on plan assets is based on what is achievable given the plan’s investment policy, the types of assets held and target asset allocations. The expected long-term rate of return is determined as of the measurement date. The Company reviews each plan and its historical returns and target asset allocations to determine the appropriate expected long-term rate of return on plan assets to be used.

The Company's objective in managing its defined benefit plan assets is to ensure that all present and future benefit obligations are met as they come due. It seeks to achieve this goal while trying to mitigate volatility in plan funded status, contribution, and expense by better matching the characteristics of the plan assets to that of the plan liabilities. The Company utilizes a dynamic approach to asset allocation whereby a plan's allocation to fixed income assets increases as the plan's funded status improves. The Company monitors plan funded status and asset allocation regularly in addition to investment manager performance.



	Fair value measurements						Net asset value		Total fair value
In millions	Level 1		Level 2		Level 3		Net asset value		Total fair value
Cash and cash equivalents	$	7.0	$	26.3	$	—	$	—	$	33.3
Equity investments:
Registered mutual funds – equity specialty	—		—		—		61.5		61.5
Commingled funds – equity specialty	—		—		—		665.2		665.2
	—		—		—		726.7		726.7
Fixed income investments:
U.S. government and agency obligations	—		528.5		—		—		528.5
Corporate and non-U.S. bonds^(a)	—		1,393.0		0.4		—		1,393.4
Asset-backed and mortgage-backed securities	—		70.9		—		—		70.9
Registered mutual funds – fixed income specialty	—		—		—		103.3		103.3
Commingled funds – fixed income specialty	—		—		—		127.6		127.6
Other fixed income^(b)	—		—		26.0		—		26.0
	—		1,992.4		26.4		230.9		2,249.7
Derivatives	—		0.4		—		—		0.4
Real estate^(c)	—		—		3.4		—		3.4
Other^(d)	—		—		114.1		—		114.1
Total assets at fair value	$	7.0	$	2,019.1	$	143.9	$	957.6	$	3,127.6
Receivables and payables, net									9.2
Net assets available for benefits									$	3,136.8



	Fair value measurements							Net asset value		Total fair value
In millions	Level 1		Level 2			Level 3		Net asset value		Total fair value
Cash and cash equivalents	$	4.0	$	26.8		$	—	$	—	$	30.8
Equity investments:
Registered mutual funds – equity specialty	—		—			—		51.1		51.1
Commingled funds – equity specialty	—		—			—		520.7		520.7
	—		—			—		571.8		571.8
Fixed income investments:
U.S. government and agency obligations	—		476.2			—		—		476.2
Corporate and non-U.S. bonds^(a)	—		1,225.8			—		—		1,225.8
Asset-backed and mortgage-backed securities	—		67.3			—		—		67.3
Registered mutual funds – fixed income specialty	—		—			—		135.1		135.1
Commingled funds – fixed income specialty	—		—			—		117.7		117.7
Other fixed income^(b)	—		—			24.8		—		24.8
	—		1,769.3			24.8		252.8		2,046.9
Derivatives	—		(0.4		)	—		—		(0.4		)
Real estate^(c)	—		—			4.1		—		4.1
Other^(d)	—		—			101.6		—		101.6
Total assets at fair value	$	4.0	$	1,795.7		$	130.5	$	824.6	$	2,754.8
Receivables and payables, net										12.1
Net assets available for benefits										$	2,766.9

Cash equivalents are valued using a market approach with inputs including quoted market prices for either identical or similar instruments. Fixed income securities are valued through a market approach with inputs including, but not limited to, benchmark yields, reported trades, broker quotes and issuer spreads. Commingled funds are valued at their daily net asset value (NAV) per share or the equivalent. NAV per share or the equivalent is used for fair value purposes as a practical expedient. NAVs are calculated by the investment manager or sponsor of the fund. Private real estate fund values are reported by the fund manager and are based on valuation or appraisal of the underlying investments. Refer to Note 10, "Fair Value Measurements" for additional information related to the fair value hierarchy defined by ASC 820. There have been no significant transfers between levels of the fair value hierarchy.

The Company made required and discretionary contributions to its pension plans of $83.1 million in 2019, $86.9 million in 2018, and $101.4 million in 2017 and currently projects that it will contribute approximately $90 million to its plans worldwide in 2020. The Company’s policy allows it to fund an amount, which could be in excess of or less than the pension cost expensed, subject to the limitations imposed by current tax regulations. However, the Company anticipates funding the plans in 2020 in accordance with contributions required by funding regulations or the laws of each jurisdiction.

Most of the Company’s U.S. employees are covered by defined contribution plans. Employer contributions are determined based on criteria specific to the individual plans and amounted to approximately $140.2 million, $131.9 million, and $118.7 million in 2019, 2018 and 2017, respectively. The Company’s contributions relating to non-U.S. defined contribution plans and other non-U.S. benefit plans were $56.7 million, $52.0 million and $47.7 million in 2019, 2018 and 2017, respectively.

The Company also participates in a number of multiemployer defined benefit pension plans related to collectively bargained U.S. employees of Trane. The Company's contributions, and the administration of the fixed retirement payments, are determined by the terms of the related collective-bargaining agreements. These multiemployer plans pose different risks to the Company than single-employer plans, including:

As of December 31, 2019, the Company does not participate in any plans that are individually significant, nor is the Company an individually significant participant to any of these plans. Total contributions to multiemployer plans for the years ended December 31 were as follows:

The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances, life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets, but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally, postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are primarily noncontributory.



In millions	2019			2018
Benefit obligation at beginning of year	$	442.7		$	528.0
Service cost	2.6			2.8
Interest cost	14.8			14.4
Plan participants’ contributions	7.7			9.1
Actuarial (gains) losses	6.7			(60.4		)
Benefits paid, net of Medicare Part D subsidy ⁽¹⁾	(45.6		)	(50.2		)
Other	(0.1		)	(1.0		)
Benefit obligations at end of year	$	428.8		$	442.7

The benefit plan obligations are reflected in the Consolidated Balance Sheets as follows:



In millions	December 31, 2019			December 31, 2018
Accrued compensation and benefits	$	(41.0	)	$	(45.1	)
Postemployment and other benefit liabilities	(387.8		)	(397.6		)
Total	$	(428.8	)	$	(442.7	)



In millions	Prior service benefit (cost)			Net actuarial gains (losses)			Total
Balance at December 31, 2018	$	0.3		$	90.4		$	90.7
Gain (loss) in current period	—			(6.7		)	(6.7		)
Amortization reclassified to earnings	(0.3		)	(10.9		)	(11.2		)
Balance at December 31, 2019	$	—		$	72.8		$	72.8



In millions	2019			2018			2017
Service cost	$	2.6		$	2.8		$	3.1
Interest cost	14.8			14.4			15.7
Net amortization of:
Prior service costs (benefits)	(0.3		)	(3.8		)	(8.6		)
Net actuarial (gains) losses	(10.9		)	(1.0		)	0.1
Net periodic postretirement benefit cost	$	6.2		$	12.4		$	10.3
Amounts recorded in continuing operations:
Operating income	$	2.6		$	2.8		$	3.1
Other income/(expense), net	3.2			7.3			5.6
Amounts recorded in discontinued operations	0.4			2.3			1.6
Total	$	6.2		$	12.4		$	10.3

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 are as follows:



	2019		2018		2017
Discount rate:
Benefit obligations at December 31	2.99	%	4.05	%	3.38	%
Net periodic benefit cost
Service cost	4.13	%	3.47	%	3.82	%
Interest cost	3.67	%	2.94	%	2.99	%
Assumed health-care cost trend rates at December 31:
Current year medical inflation	6.75	%	6.45	%	6.85	%
Ultimate inflation rate	4.75	%	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2028		2023		2023