Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Information in Curtailment or Settlement of Benefits Requiring Remeasurement, Update to Discount Rates Used to Determine Benefit Obligations of Affected Plans

The following table presents certain information and the financial impacts of these actions on the accompanying Consolidated Financial Statements:

Action #	Number of plans	Number of affected plan participants	Weighted average discount rate as of December 31, 2017	Plan remeasurement date	Weighted average discount rate as of plan remeasurement date	(Decrease) increase to accrued pension benefits liability⁽¹⁾			Decrease to accrued other postretirement benefits liability⁽¹⁾			Curtailment charge (gain)⁽²⁾			Settlement charge⁽²⁾
1	3	~800	3.65%	January 31, 2018	3.80%	$	(57	)	$	—		$	5		$	—
2	1	~700	3.29%	January 31, 2018	3.43%		—			(7	)		(28	)		—
3	2	~2,100	3.43%	March 31, 2018	3.60%		24			—			—			167
4	3	~11,500	3.70%	July 31, 2018	4.39%		(110	)		—			—			230
5	1	~5,500	3.61%	July 31, 2018	4.35%		—			(86	)		—			(56	)
		~20,600				$	(143	)	$	(93	)	$	(23	)	$	341

⁽¹⁾	A negative amount indicates a corresponding decrease to Accumulated other comprehensive loss and a positive amount indicates a corresponding increase to Accumulated other comprehensive loss.

⁽²⁾

These amounts represent the accelerated amortization of a portion of the existing prior service cost or benefit for curtailments and net actuarial loss for settlements and were reclassified from Accumulated other comprehensive loss to Restructuring and other charges (see Note D) on the accompanying Statement of Consolidated Operations.

Schedule of Obligations and Funded Status

Obligations and Funded Status

	Pension benefits						Other postretirement benefits
December 31,	2018			2017			2018			2017
Change in benefit obligation
Benefit obligation at beginning of year	$	7,639		$	7,269		$	1,218		$	1,286
Service cost		60			84			5			5
Interest cost		232			250			34			38
Amendments		-			2			(5	)		—
Actuarial (gains) losses		(346	)		388			(88	)		(1	)
Settlements		(1,009	)		(64	)		(57	)		—
Curtailments		(22	)		—			—			—
Benefits paid, net of participants’ contributions		(407	)		(437	)		(140	)		(116	)
Medicare Part D subsidy receipts		—			—			7			5
Foreign currency translation impact		(150	)		147			(1	)		1
Benefit obligation at end of year*	$	5,997		$	7,639		$	973		$	1,218
Change in plan assets
Fair value of plan assets at beginning of year	$	5,322		$	5,421		$	—		$	—
Actual return on plan assets		(129	)		187			—			—
Employer contributions		996			111			—			—
Participant contributions		12			15			—			—
Benefits paid		(403	)		(432	)		—			—
Administrative expenses		(31	)		(41	)		—			—
Settlements		(1,030	)		(62	)		—			—
Foreign currency translation impact		(127	)		123			—			—
Fair value of plan assets at end of year*	$	4,610		$	5,322		$	—		$	—
Funded status*	$	(1,387	)	$	(2,317	)	$	(973	)	$	(1,218	)
Less: Amounts attributed to joint venture partners		(33	)		(37	)		—			—
Net funded status	$	(1,354	)	$	(2,280	)	$	(973	)	$	(1,218	)
Amounts recognized in the Consolidated Balance Sheet consist of:
Noncurrent assets	$	63		$	72		$	—		$	—
Current liabilities		(10	)		(11	)		(105	)		(118	)
Noncurrent liabilities		(1,407	)		(2,341	)		(868	)		(1,100	)
Net amount recognized	$	(1,354	)	$	(2,280	)	$	(973	)	$	(1,218	)
Amounts recognized in Accumulated Other Comprehensive Loss consist of:
Net actuarial loss	$	3,261		$	3,743		$	176		$	281
Prior service cost (benefit)		21			35			(4	)		(30	)
Total, before tax effect		3,282			3,778			172			251
Less: Amounts attributed to joint venture partners		40			45			—			—
Net amount recognized, before tax effect	$	3,242		$	3,733		$	172		$	251
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) consist of:
Net actuarial loss (benefit)	$	132		$	676		$	(88	)	$	(1	)
Amortization of accumulated net actuarial loss		(614	)		(187	)		(17	)		(13	)
Prior service (benefit) cost		(1	)		2			(62	)		—
Amortization of prior service (cost) benefit		(13	)		(9	)		88			6
Total, before tax effect		(496	)		482			(79	)		(8	)
Less: Amounts attributed to joint venture partners		(5	)		9			—			—
Net amount recognized, before tax effect	$	(491	)	$	473		$	(79	)	$	(8	)

At December 31, 2018, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $4,246, $3,160, and $(1,086), respectively. At December 31, 2017, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $5,093, $3,195, and $(1,898), respectively.

Schedule of Pension Plan Benefit Obligations

Pension Plan Benefit Obligations

	Pension benefits
	2018		2017
The aggregate projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows:
Projected benefit obligation	$	5,997	$	7,639
Accumulated benefit obligation		5,792		7,426
The aggregate projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets was as follows:
Projected benefit obligation		5,502		7,061
Fair value of plan assets		4,051		4,671
The aggregate accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets was as follows:
Accumulated benefit obligation		5,380		6,885
Fair value of plan assets		4,051		4,671

Components of Net Periodic Benefit Cost

	Pension benefits⁽¹⁾									Other postretirement benefits⁽²⁾
	2018			2017			2016			2018			2017			2016
Service cost	$	54		$	71		$	61		$	5		$	5		$	2
Interest cost⁽³⁾		227			244			138			34			38			16
Expected return on plan assets⁽³⁾		(341	)		(398	)		(242	)		—			—			—
Recognized net actuarial loss⁽³⁾		198			185			102			13			13			8
Amortization of prior service cost (benefit)⁽³⁾		8			9			7			—			(6	)		(5	)
Settlements⁽⁴⁾		410			5			16			(56	)		—			—
Curtailments⁽⁵⁾		5			—			—			(28	)		—			—
Special termination benefits⁽⁶⁾		—			3			1			—			—			—
Net periodic benefit cost⁽⁷⁾	$	561		$	119		$	83		$	(32	)	$	50		$	21

⁽¹⁾	In 2018, 2017, and 2016, net periodic benefit cost for U.S pension plans was $358, $74, and $21, respectively.

⁽²⁾	In 2018, 2017, and 2016, net periodic benefit cost for other postretirement benefits reflects a reduction of $8, $8 and $6, respectively, related to the recognition of the federal subsidy awarded under Medicare Part D.

⁽³⁾	These amounts were reported in Other expenses (income), net on the accompanying Statement of Consolidated Operations (see Notes B (Recently Adopted Accounting Guidance) and S).

⁽⁴⁾

These amounts were reported in Restructuring and other charges on the accompanying Statement of Consolidated Operations (see Note D). In 2018, settlements were due to management actions (see Plan Actions above) ($341) and payment of lump sum benefits ($13). In 2017, settlements were due to payment of lump sum benefits. In 2016, settlements were due to workforce reductions and payment of lump sum benefits.

⁽⁵⁾	These amounts were reported in Restructuring and other charges on the accompanying Statement of Consolidated Operations (see Note D). In 2018, curtailments were due to management actions (see Plan Actions above).

⁽⁶⁾	These amounts were reported in Restructuring and other charges on the accompanying Statement of Consolidated Operations (see Note D). In 2017 and 2016, special termination benefits were due to workforce reductions.

⁽⁷⁾	Amounts attributed to joint venture partners are not included.

Schedule of Amounts Expected to be Recognized in Net Periodic Benefit Cost

Amounts Expected to be Recognized in Net Periodic Benefit Cost

	Pension benefits		Other postretirement benefits
	2019		2019
Net actuarial loss recognition	$	167	$	10
Prior service cost recognition		6		1

Schedule of Assumed Health Care Cost Trend Rates

Assumed health care cost trend rates for U.S. other postretirement benefit plans were as follows (non-U.S. plans are not material):

	2018			2017			2016
Health care cost trend rate assumed for next year		5.5	%		5.5	%		5.5	%
Rate to which the cost trend rate gradually declines		4.5	%		4.5	%		4.5	%
Year that the rate reaches the rate at which it is assumed to remain	2022			2021			2020

Schedule of One-Percentage Point Change in Assumed Rates of Health Care Cost Trend Rates

Assumed health care cost trend rates have an effect on the amounts reported for a health care plan. A one-percentage point change in these assumed rates would have the following effects:

increase

decrease

Effect on other postretirement benefit obligations

(58

)

Effect on total of service and interest cost components

)

Schedule of Pension and Postretirement Plans Investment Policy and Weighted Average Asset Allocations

Plan Assets. Alcoa Corporation’s pension plan investment policy and weighted average asset allocations at December 31, 2018 and 2017, by asset class, were as follows:

		Plan assets at December 31,
Asset class	Policy range	2018			2017
Equities	10–60%		36	%		40	%
Fixed income	10–65%		51			35
Other investments	0–35%		13			25
Total			100	%		100	%

Schedule of Fair Value of Pension Plan Assets

The following table presents the fair value of pension plan assets classified under either the appropriate level of the fair value hierarchy or net asset value:

December 31, 2018	Level 1		Level 2		Level 3		Net Asset Value		Total
Equities:
Equity securities	$	662	$	—	$	—	$	813	$	1,475
Long/short equity hedge funds		—		—		—		6		6
Private equity		—		—		—		186		186
	$	662	$	—	$	—	$	1,005	$	1,667
Fixed income:
Intermediate and long duration government/credit	$	925	$	697	$	—	$	327	$	1,949
Cash and cash equivalent funds		56		—		—		325		381
Other		—		14		—		—		14
	$	981	$	711	$	—	$	652	$	2,344
Other investments:
Real estate	$	230	$	—	$	—	$	318	$	548
Other		—		—		—		32		32
	$	230	$	—	$	—	$	350	$	580
Total⁽¹⁾	$	1,873	$	711	$	—	$	2,007	$	4,591
December 31, 2017	Level 1		Level 2		Level 3		Net Asset Value		Total
Equities:
Equity securities	$	906	$	—	$	—	$	869	$	1,775
Long/short equity hedge funds		—		—		—		152		152
Private equity		—		—		—		226		226
	$	906	$	—	$	—	$	1,247	$	2,153
Fixed income:
Intermediate and long duration government/credit	$	95	$	378	$	—	$	264	$	737
Cash and cash equivalent funds		313		—		—		742		1,055
Other		—		56		—		—		56
	$	408	$	434	$	—	$	1,006	$	1,848
Other investments:
Real estate	$	241	$	—	$	—	$	365	$	606
Discretionary and systematic macro hedge funds		—		—		—		581		581
Other		—		—		—		132		132
	$	241	$	—	$	—	$	1,078	$	1,319
Total⁽²⁾	$	1,555	$	434	$	—	$	3,331	$	5,320

⁽¹⁾	As of December 31, 2018, the total fair value of pension plan assets excludes a net receivable of $19, which represents securities not yet settled plus interest and dividends earned on various investments.

⁽²⁾

As of December 31, 2017, the total fair value of pension plan assets excludes a net receivable of $2, which represents securities not yet settled plus interest and dividends earned on various investments, less an amount due to Arconic pension plans from Alcoa Corporation pension plans related to the separation of certain plans between the two companies.

Schedule of Benefit Payments Expected to be Paid and Expected Medicare Part D Subsidy Receipts

Benefit payments expected to be paid to pension and other postretirement benefit plan participants and expected Medicare Part D subsidy receipts are as follows:

Year ended December 31,	Pension benefits		Gross Other postretirement benefits		Medicare Part D subsidy receipts		Net Other postretirement benefits
2019	$	420	$	110	$	10	$	100
2020		420		110		10		100
2021		425		110		5		105
2022		425		105		5		100
2023		425		105		5		100
2024 through 2028		2,060		340		25		315
	$	4,175	$	880	$	60	$	820

Benefit Obligation [Member]

Schedule of Total Expenses Related to All Pension and Other Postretirement Benefits

The following table summarizes the total expenses recognized by the Company related to all pension and other postretirement benefits:

		Pension benefits						Other postretirement benefits
Type of Plan	Type of Expense	2018		2017		2016		2018			2017		2016
Cumulative Direct Plans	Net periodic benefit cost	$	561	$	119	$	83	$	(32	)	$	50	$	21
Shared Plans	Multiemployer contribution expense		—		—		28		—			—		12
Shared Plans	Cost allocation		—		—		25		—			—		8
		$	561	$	119	$	136	$	(32	)	$	50	$	41

Schedule of Weighted Average Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost

Assumptions. Weighted average assumptions used to determine benefit obligations for pension and other postretirement benefit plans were as follows:

December 31,	2018			2017
Discount rate—pension plans		4.21	%		3.68	%
Discount rate—other postretirement benefit plans		4.25			3.54
Rate of compensation increase—pension plans		3.26			3.28

Net Periodic Benefit Cost [Member]

Schedule of Weighted Average Assumptions Used to Determine Benefit Obligations and Net Periodic Benefit Cost

Weighted average assumptions used to determine net periodic benefit cost for pension and other postretirement benefit plans were as follows:

	2018			2017			2016
Discount rate—pension plans		3.59	%		3.61	%		3.45	%
Discount rate—other postretirement benefit plans		3.18			3.30			2.90
Expected long-term rate of return on plan assets—pension plans		6.89			7.47			7.31
Rate of compensation increase—pension plans		3.28			3.61			3.65