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Employee Benefit Plans

12 Months Ended

Dec. 31, 2019

Note 21. Employee Benefit Plans

Defined Benefit and Other Postretirement Benefit Plans

Venator sponsors defined benefit plans in a number of countries outside of the U.S. in which employees of Venator participate. The availability of these plans and their specific design provisions are consistent with local competitive practices and regulations.

The disclosures for the defined benefit and other postretirement benefit plans within the U.S. are combined with the disclosures of the plans outside of the U.S. Of the total projected benefit obligations for Venator as of December 31, 2019 and December 31, 2018, the amount related to the U.S. benefit plans was $11 million and $10 million, respectively, or 1% each. Of the total fair value of plan assets for Venator, the amount related to the U.S. benefit plans for December 31, 2019 and December 31, 2018 was $8 million and $7 million, respectively, or 1% each.

The following table sets forth the funded status of the plans for Venator and the amounts recognized in the consolidated balance sheets at December 31, 2019 and December 31, 2018:


	Defined Benefit Plans						Other Postretirement Benefit Plans
	2019		2018		2019		2018
Change in benefit obligation
Benefit obligation at beginning of year	$	1,021	$	1,136	$	3	$	3
Service cost	3		5		—		—
Interest cost	24		25		—		—
Actuarial loss (gain)	108		(60)		1		—

Gross benefits paid	(52)		(58)		(1)		—
Plan amendments	—		6		—		—
Exchange rates	17		(56)		—		—
Curtailments	(21)		23		—		—

Benefit obligation at end of year	$	1,100	$	1,021	$	3	$	3
Accumulated benefit obligation at end of year	1,076		983
Change in plan assets
Fair value of plan assets at beginning of year	$	813	$	906	$	—	$	—
Actual return on plan assets	108		(34)		—		—
Employer contribution	40		47		—		—
Gross benefits paid	(52)		(58)		—		—

Exchange rates	24		(48)		—		—
Other	1		—		—		—
Fair value of plan assets at end of year	$	934	$	813	$	—	$	—
Funded status
Fair value of plan assets	$	934	$	813	$	—	$	—
Benefit obligation	(1,100)		(1,021)		(3)		(3)
Accrued benefit cost	$	(166)	$	(208)	$	(3)	$	(3)
Amounts recognized in balance sheet:
Noncurrent asset	$	79	$	46	$	—	$	—
Current liability	(1)		(1)		—		—
Noncurrent liability	(244)		(253)		(3)		(3)
Total	$	(166)	$	(208)	$	(3)	$	(3)
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss (gain)	$	321	$	302	$	(3)	$	(4)
Prior service cost (credit)	5		11		—		(1)
Total	$	326	$	313	$	(3)	$	(5)

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows:


	Defined Benefit Plans		Other Postretirement Benefit Plans
Actuarial loss	$	13	$	—
Prior service cost	1		—
Total	$	14	$	—

Components of net periodic benefit costs for the years ended December 31, 2019, December 31, 2018 and December 31, 2017 were as follows:


	Defined Benefit Plans
	2019		2018		2017
Service cost	$	3	$	5	$	5
Interest cost	24		25		25
Expected return on plan assets	(42)		(47)		(43)
Amortization of actuarial loss	14		15		16
Amortization of prior service cost	1		3		1

Curtailments	(9)		23		(4)
Net periodic benefit cost	$	(9)	$	24	$	—


	Other Postretirement Benefit Plans
	2019		2018		2017


Amortization of actuarial loss	$	—	$	—	$	1
Amortization of prior service credit	—		—		(3)
Curtailments	(1)		—		—
Net periodic benefit cost	$	(1)	$	—	$	(2)

The amounts recognized in net periodic benefit cost and other comprehensive loss for the years ended December 31, 2019, December 31, 2018 and December 31, 2017 were as follows:


	Defined Benefit Plans
	2019		2018		2017
Current year actuarial gain (loss)	$	21	$	45	$	(24)
Amortization of actuarial loss	(14)		(15)		(16)
Current year prior service cost	—		5		—
Amortization of prior service cost	(1)		(3)		(1)
Curtailments	9		(23)		4
Other	—		—		(3)
Total recognized in other comprehensive loss	15		9		(40)


Net periodic benefit cost	(9)		24		—
Total recognized in net periodic benefit cost and other comprehensive loss	$	6	$	33	$	(40)


	Other Postretirement Benefit Plans
	2019		2018		2017
Current year actuarial loss	$	1	$	—	$	(1)
Amortization of actuarial loss	—		—		(1)

Amortization of prior service credit	—		—		3
Curtailments	1		—		—
Total recognized in other comprehensive loss	2		—		1
Net periodic benefit cost	(1)		—		(2)
Total recognized in net periodic benefit cost and other comprehensive loss	$	1	$	—	$	(1)

The following weighted-average assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost for the year:


	Defined Benefit Plans
	2019		2018		2017
Projected benefit obligation:
Discount rate	1.60	%	2.38	%	2.21	%
Rate of compensation increase	2.56	%	3.69	%	3.74	%
Net periodic pension cost:
Discount rate	2.38	%	2.21	%	1.86	%
Rate of compensation increase	3.69	%	3.74	%	3.53	%
Expected return on plan assets	5.23	%	5.23	%	5.71	%


	Other Postretirement Benefit Plans
	2019		2018		2017
Projected benefit obligation:
Discount rate	3.27	%	3.50	%	3.38	%
Net periodic pension cost:
Discount rate	3.51	%	3.30	%	3.72	%
Rate of compensation increase	4.35	%	—	%	—	%

At December 31, 2019 and December 31, 2018, the health care trend rate used to measure the expected increase in the cost of benefits was assumed to be 5.80% and 4.90%, respectively, decreasing to 4.53% after 2030. Assumed health care cost trend rates can have a significant effect on the amounts reported for the postretirement benefit plans. A one-percent point change in assumed health care cost trend rates would not have a significant effect.

The projected benefit obligation and fair value of plan assets for the defined benefit plans with projected benefit obligations in excess of plan assets as were as follows:


	December 31,
	2019		2018
Projected benefit obligation	$	407	$	385
Fair value of plan assets	162		131

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the defined benefit plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2019 and December 31, 2018 were as follows:


	December 31,
	2019		2018
Projected benefit obligation	$	386	$	385
Accumulated benefit obligation	383		375
Fair value of plan assets	142		131

Expected future contributions and benefit payments are as follows:


	Defined Benefit Plans		Other Postretirement Benefit Plans
2020 expected employer contributions:
To plan trusts	$	43	$	—
Expected benefit payments:
2020	54		—
2021	43		—
2022	44		—
2023	47		—
2024	48		—
2025 - 2029	241		1

Our investment strategy with respect to pension assets is to pursue an investment plan that, over the long term, is expected to protect the funded status of the plan, enhance the real purchasing power of plan assets and not threaten the plan’s ability to meet currently committed obligations. Additionally, our investment strategy is to achieve returns on plan assets, subject to a prudent level of portfolio risk. Plan assets are invested in a broad range of investments. These investments are diversified in terms of domestic and international equities, both growth and value funds, including small, mid and large capitalization equities; short-term and long-term debt securities; real estate; and cash and cash equivalents. The investments are further diversified within each asset category. The portfolio diversification provides protection against a single investment or asset category having a disproportionate impact on the aggregate performance of the plan assets.

Our pension plan assets are managed by outside investment managers. The investment managers value our plan assets using quoted market prices, other observable inputs or unobservable inputs. For certain assets, the investment managers obtain third-party appraisals at least annually, which use valuation techniques and inputs specific to the applicable property, market or geographic location. We have established target allocations for each asset category. Venator’s pension plan assets are periodically rebalanced based upon our target allocations.

The fair value of plan assets for the pension plans was $934 million and $813 million at December 31, 2019 and December 31, 2018, respectively. The following plan assets are measured at fair value on a recurring basis:


Asset Category	December 31, 2019		Fair Value Amounts Using Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Pension plans:
Equities	$	196	$	179	$	17	$	—
Fixed income	692		42		643		7
Real estate/other	40		—		14		26
Cash and cash equivalents	6		6		—		—
Total pension plan assets	$	934	$	227	$	674	$	33


Asset Category	December 31, 2018		Fair Value Amounts Using Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Pension plans:
Equities	$	213	$	202	$	11	$	—
Fixed income	547		39		501		7
Real estate/other	34		—		6		28
Cash and cash equivalents	19		19		—		—
Total pension plan assets	$	813	$	260	$	518	$	35


	Real Estate/Other Year ended December 31,
	2019		2018
Fair Value Measurements of Plan Assets Using Significant Unobservable Inputs (Level 3)
Balance at the beginning of the period	$	28	$	30
Return on pension plan assets	(1)		(1)
Purchases, sales and settlements	(1)		(1)
Transfers (out of) into Level 3	—		—
Disposals	—		—
Balance at the end of the period	$	26	$	28


	Fixed Income Year ended December 31,
	2019		2018
Fair Value Measurements of Plan Assets Using Significant Unobservable Inputs (Level 3)
Balance at the beginning of the period	$	7	$	7
Return on pension plan assets	—		—
Purchases, sales and settlements	—		—
Transfers (out of) into Level 3	—		—
Balance at the end of the period	$	7	$	7

Based upon historical returns, the expectations of our investment committee and outside advisors, the expected long-term rate of return on the pension assets is estimated to be between 5.71% and 5.23%. The asset allocation for our pension plans at December 31, 2019 and December 31, 2018 and the target allocation for 2019, by asset category, are as follows:


Asset category	Target allocation 2020		Allocated at December 31, 2019		Allocated at December 31, 2018
Pension plans:
Equities	20	%	19	%	26	%
Fixed income	72	%	73	%	64	%
Real estate/other	1	%	1	%	1	%
Cash	7	%	7	%	9	%
Total pension plans	100	%	100	%	100	%

Equity securities in Venator’s pension plans did not include any equity securities of Huntsman Corporation or Venator and its affiliates at the end of 2019.

U.S. Benefit Plans

Venator’s U.S. employees participated in a trusteed, non-contributory defined benefit pension plan (the "Plan") that covered substantially all of Huntsman International’s full-time U.S. employees. In July 2004, the Plan formula for employees not covered by a collective bargaining agreement was converted to a cash balance design. For represented employees, participation in the cash balance design was subject to the terms of negotiated contracts. For participating employees, benefits accrued under the prior formula were converted to opening cash balance accounts. The new cash balance benefit formula provides annual pay credits from 4% to 12% of eligible pay, depending on age and service, plus accrued interest. Participants in the plan as of July 1, 2004 were eligible for additional annual pay credits from 1% to 8%, depending on their age and service as of that date, for up to 5 years. Beginning July 1, 2014, the Huntsman Defined Benefit Pension Plan was closed to new, non-union entrants and as of April 1, 2015, it was closed to new union entrants. After closure, new hires were provided with a defined contribution plan with a non-discretionary employer contribution of 6% of pay and a company match of up to 4% of pay, for a total company contribution of up to 10% of pay. In connection with the separation, Venator adopted a non-contributory defined benefit pension plan for union entrants prior to April 2015.

Our eligible employees (who were employed by Huntsman prior to August 1, 2015) also participate in an unfunded postretirement benefit plan, which provides medical and life insurance benefits. This plan is sponsored by Venator.

Our U.S. employees participate in a postretirement benefit plan that provides a fully insured Medicare Part D plan including prescription drug benefits affected by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). Venator has not determined whether the medical benefits provided by these postretirement benefit plans are actuarially equivalent to those provided by the Act. Venator does not collect a subsidy, and our net periodic postretirement benefits cost, and related benefit obligation, do not reflect an amount associated with the subsidy.

Non-U.S. Defined Contribution Plans

We have defined contribution plans in a variety of non-U.S. locations. Venator’s combined expense for these defined contribution plans for the years ended December 31, 2019, December 31, 2018 and December 31, 2017 was $9 million, $8 million and $8 million, respectively, primarily related to the U.K. Pension Plan.

All U.K. associates are eligible to participate in the Huntsman U.K. Pension Plan, a contract-based arrangement with a third party. Company contributions vary by business during a 5 year transition period. Plan participants elect to make voluntary contributions to this plan up to a specified amount of their compensation. We contribute a matching amount not to exceed 12% of the participant’s salary for new hires and 15% of the participant’s salary for all other participants.

U.S. Defined Contribution Plans

Huntsman provided a money purchase pension plan covering substantially all of its domestic employees who were hired prior to January 1, 2004. Employer contributions were made based on a percentage of employees’ earnings (ranging up to 8%). During 2014, Huntsman closed this plan to non-union participants and in 2015 Huntsman closed this plan to union associates. We continue to provide equivalent benefits to those who were covered under this plan into their salary deferral accounts.

We also have a salary deferral plan covering substantially all U.S. employees. Plan participants may elect to make voluntary contributions to this plan up to a specified amount of their compensation. New hires are provided a defined contribution plan with a non-discretionary employer contribution of 6% of pay and a company match of up to 4% of pay, for a total company contribution of up to 10% of pay.

Along with the introduction of the cash balance formula within the defined benefit pension plan, the money purchase pension plan was closed to new hires. At the same time, the employer match in the salary deferral plan was increased, for new hires, to a 100% match, not to exceed 4% of the participant’s compensation.

Our total combined expense for the above defined contribution plans was $2 million, $3 million and $3 million for the years ended December 31, 2019, December 31, 2018 and December 31, 2017, respectively.