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Employee Benefits (Tables)
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Schedule of estimated future benefit payments
The Combined Pension Plan payments, post-retirement health care benefit payments and premiums, and life insurance premium payments are either distributed from plan assets or paid by us. The estimated benefit payments provided below are based on actuarial assumptions using the demographics of the employee and retiree populations and have been reduced by estimated participant contributions.
 
Combined Pension Plan
 
Post-Retirement
Benefit Plans
 
Medicare Part D
Subsidy Receipts
 
(Dollars in millions)
Estimated future benefit payments:
 
 
 
 
 
2020
$
971

 
242

 
(6
)
2021
921

 
238

 
(6
)
2022
893

 
232

 
(6
)
2023
868

 
226

 
(5
)
2024
842

 
219

 
(5
)
2025 - 2029
3,813

 
986

 
(20
)
Schedule of actuarial assumptions used to compute net periodic benefit expense
The actuarial assumptions used to compute the net periodic benefit expense for our Combined Pension Plan and post-retirement benefit plans are based upon information available as of the beginning of the year, as presented in the following table.
 
Combined Pension Plan
 
Post-Retirement Benefit Plans
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Actuarial assumptions at beginning of year:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
3.94% - 4.44%

 
3.14% - 3.69%

 
3.25% - 4.14%

 
3.84%- 4.38%

 
4.26
%
 
3.90
%
Rate of compensation increase
3.25
%
 
3.25
%
 
3.25
%
 
N/A

 
N/A

 
N/A

Expected long-term rate of return on plan assets (1)
6.50
%
 
6.50
%
 
6.50
%
 
4.00
%
 
4.00
%
 
5.00
%
Initial health care cost trend rate
N/A

 
N/A

 
N/A

 
6.50% / 5.00%

 
7.00% / 5.00%

 
7.00% / 5.00%

Ultimate health care cost trend rate
N/A

 
N/A

 
N/A

 
4.50
%
 
4.50
%
 
4.50
%
Year ultimate trend rate is reached
N/A

 
N/A

 
N/A

 
2025

 
2025

 
2025

_______________________________________________________________________________

N/A - Not applicable
(1) Rates are presented net of projected fees and administrative costs.
Schedule of components of net periodic pension income and post-retirement benefit expense
Net periodic benefit (income) expense for our combined pension plan includes the following components:
 
Combined Pension Plan
Years Ended December 31,
 
2019
 
2018
 
2017
 
(Dollars in millions)
Service cost
$
56

 
66

 
63

Interest cost
436

 
392

 
409

Expected return on plan assets
(618
)
 
(685
)
 
(666
)
Special termination benefits charge
6

 
15

 
—

Recognition of prior service credit
(8
)
 
(8
)
 
(8
)
Recognition of actuarial loss
223

 
178

 
204

Net periodic pension benefit (income) expense
$
95

 
(42
)
 
2



Net periodic benefit expense for our post-retirement benefit plans includes the following components:
 
Post-Retirement Plans
Years Ended December 31,
 
2019
 
2018
 
2017
 
(Dollars in millions)
Service cost
$
15

 
18

 
18

Interest cost
110

 
97

 
100

Expected return on plan assets
(1
)
 
(1
)
 
(2
)
Recognition of prior service cost
16

 
20

 
20

Net periodic post-retirement benefit expense
$
140

 
134

 
136
Schedule of actuarial assumptions used to compute the funded status for the plans
The actuarial assumptions used to compute the funded status for the plans are based upon information available as of December 31, 2019 and 2018 and are as follows:
 
Combined Pension Plan
 
Post-Retirement Benefit Plans
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Actuarial assumptions at end of year:
 
 
 
 
 
 
 
Discount rate
3.25
%
 
4.29
%
 
3.22
%
 
4.26
%
Rate of compensation increase
3.25
%
 
3.25
%
 
N/A

 
N/A

Initial health care cost trend rate
N/A

 
N/A

 
6.50% / 5.00%

 
7.00% / 5.00%

Ultimate health care cost trend rate
N/A

 
N/A

 
4.50
%
 
4.50
%
Year ultimate trend rate is reached
N/A

 
N/A

 
2025

 
2025

_______________________________________________________________________________
N/A - Not applicable
Schedule of change in benefit obligation
The following tables summarize the change in the benefit obligations for the Combined Pension Plan and post-retirement benefit plans:
 
Combined Pension Plan
Years Ended December 31,
 
2019
 
2018
 
2017
 
(Dollars in millions)
Change in benefit obligation
 
 
 
 
 
Benefit obligation at beginning of year
$
11,594

 
13,064

 
13,244

Service cost
56

 
66

 
63

Interest cost
436

 
392

 
409

Plan amendments
(9
)
 
—

 
—

Special termination benefits charge
6

 
15

 
—

Actuarial (gain) loss
1,249

 
(765
)
 
586

Benefits paid from plan assets
(1,115
)
 
(1,178
)
 
(1,238
)
Benefit obligation at end of year
$
12,217

 
11,594

 
13,064



 
Post-Retirement Benefit Plans
Years Ended December 31,
 
2019
 
2018
 
2017
 
(Dollars in millions)
Change in benefit obligation
 
 
 
 
 
Benefit obligation at beginning of year
$
2,977

 
3,375

 
3,413

Service cost
15

 
18

 
18

Interest cost
110

 
97

 
100

Participant contributions
52

 
54

 
54

Direct subsidy receipts
7

 
8

 
7

Plan Amendment
—

 
(36
)
 
—

Actuarial (gain) loss
180

 
(224
)
 
112

Benefits paid by company
(300
)
 
(311
)
 
(298
)
Benefits paid from plan assets
(4
)
 
(4
)
 
(31
)
Benefit obligation at end of year
$
3,037

 
2,977

 
3,375
Schedule of change in plan assets The following tables summarize the change in the fair value of plan assets for the Combined Pension Plan and post-retirement benefit plans:
 
Combined Pension Plan
Years Ended December 31,
 
2019
 
2018
 
2017
 
(Dollars in millions)
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
$
10,033

 
11,060

 
10,892

Return on plan assets
1,575

 
(349
)
 
1,306

Employer contributions
—

 
500

 
100

Benefits paid from plan assets
(1,115
)
 
(1,178
)
 
(1,238
)
Fair value of plan assets at end of year
$
10,493

 
10,033

 
11,060


 
Post-Retirement Benefit Plans
Years Ended December 31,
 
2019
 
2018
 
2017
 
(Dollars in millions)
Change in plan assets
 
 
 
 
 
Fair value of plan assets at beginning of year
$
18

 
23

 
53

Return on plan assets
(1
)
 
(1
)
 
1

Benefits paid from plan assets
(4
)
 
(4
)
 
(31
)
Fair value of plan assets at end of year
$
13

 
18

 
23
Schedule of fair value of the plans' assets by asset category
The tables below present the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2019. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivables, pending trades and accrued expenses.
 
Fair Value of Combined Pension Plan Assets at December 31, 2019
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Assets
 
 
 
 
 
 
 
Investment grade bonds (a)
$
828

 
3,197

 
—

 
$
4,025

High yield bonds (b)
—

 
232

 
5

 
237

Emerging market bonds (c)
203

 
84

 
—

 
287

U.S. stocks (d)
756

 
3

 
1

 
760

Non-U.S. stocks (e)
592

 
—

 
—

 
592

Private debt (h)
—

 
—

 
16

 
16

Multi-asset strategies (l)
257

 
—

 
—

 
257

Repurchase agreements (n)
—

 
39

 
—

 
39

Cash equivalents and short-term investments (o)
—

 
433

 
—

 
433

Total investments, excluding investments valued at NAV
$
2,636

 
3,988

 
22

 
6,646

Liabilities
 
 
 
 
 
 
 
Derivatives (m)
$
1

 
(18
)
 
—

 
(17
)
Investments valued at NAV
 
 
 
 
 
 
3,864

Total pension plan assets
 
 
 
 
 
 
$
10,493


 
Fair Value of Post-Retirement Plan Assets at December 31, 2019
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Total investments, excluding investments valued at NAV
$
—

 
—

 
—

 
—

Investments valued at NAV
 
 
 
 
 
 
13

Total post-retirement plan assets
 
 
 
 
 
 
$
13



The tables below present the fair value of plan assets by category and the input levels used to determine those fair values at December 31, 2018. It is important to note that the asset allocations do not include market exposures that are gained with derivatives. Investments include dividend and interest receivable, pending trades and accrued expenses.
 
Fair Value of Combined Pension Plan Assets at December 31, 2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Investment grade bonds (a)
$
458

 
1,393

 
—

 
$
1,851

High yield bonds (b)
—

 
277

 
7

 
284

Emerging market bonds (c)
151

 
181

 
—

 
332

U.S. stocks (d)
764

 
2

 
2

 
768

Non-U.S. stocks (e)
601

 
—

 
—

 
601

Private debt (h)
—

 
—

 
15

 
15

Multi-asset strategies (l)
342

 
—

 
—

 
342

Derivatives (m)
7

 
(2
)
 
—

 
5

Cash equivalents and short-term investments (o)
3

 
907

 
—

 
910

Total investments, excluding investments valued at NAV
$
2,326

 
2,758

 
24

 
5,108

Investments valued at NAV
 
 
 
 
 
 
4,925

Total pension plan assets
 

 
 

 
 

 
$
10,033


 
Fair Value of Post-Retirement Plan Assets
at December 31, 2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(Dollars in millions)
Total investments, excluding investments valued at NAV
$
—

 
—

 
—

 
—

Investments valued at NAV
 
 
 
 
 
 
18

Total post-retirement plan assets
 
 
 
 
 
 
$
18



The table below presents the fair value of plan assets valued at NAV by category for our pension and post-retirement plans at December 31, 2019 and 2018.
 
Fair Value of Plan Assets Valued at NAV
 
Combined Pension Plan at
December 31,
 
Post-Retirement Benefit Plans at
December 31,
 
2019
 
2018
 
2019
 
2018
 
(Dollars in millions)
Investment grade bonds (a)
$
211

 
109

 
—

 
—

High yield bonds (b)
39

 
388

 
—

 
—

U.S. stocks (d)
169

 
150

 
—

 
—

Non-U.S. stocks (e)
467

 
500

 
—

 
—

Emerging market stocks (f)
92

 
75

 
—

 
—

Private equity (g)
322

 
347

 
4

 
6

Private debt (h)
483

 
452

 
—

 
1

Market neutral hedge funds (i)
433

 
746

 
—

 
—

Directional hedge funds (j)
443

 
512

 
—

 
—

Real estate (k)
635

 
821

 
—

 
—

Multi-asset strategies (l)
449

 
763

 
—

 
—

Cash equivalents and short-term investments (o)
121

 
62

 
9

 
11

Total investments valued at NAV
$
3,864

 
4,925

 
13

 
18
Schedule of gross notional exposure of the derivative instruments directly held by the plans
 
Gross Notional Exposure
 
Combined Pension Plan
 
Years Ended December 31,
 
2019
 
2018
 
(Dollars in millions)
Derivative instruments:
 
 
 
Exchange-traded U.S. equity futures
$
184

 
300

Exchange-traded Treasury and other interest rate futures
1,253

 
3,901

Exchange-traded EURO futures
10

 
—

Interest rate swaps
44

 
83

Credit default swaps
205

 
66

Index swaps
2,058

 
—

Foreign exchange forwards
508

 
295

Options
146

 
192
Summary of changes in fair value of defined benefit plans' Level 3 assets
The table below presents a rollforward of the pension plan assets valued using Level 3 inputs:
 
Combined Pension Plan Assets Valued Using Level 3 Inputs
 
High
Yield
Bonds
 
Emerging Market Bonds
 
U.S. Stocks
 
Private Debt
 
Cash
 
Total
 
(Dollars in millions)
Balance at December 31, 2017
$
7

 
1

 
3

 
15

 
1

 
27

Acquisitions (dispositions)
—

 
—

 
(2
)
 
—

 
(1
)
 
(3
)
Actual return on plan assets
—

 
(1
)
 
1

 
—

 
—

 
—

Balance at December 31, 2018
7

 
—

 
2

 
15

 
—

 
24

Acquisitions (dispositions)
(2
)
 
—

 
—

 
1

 
—

 
(1
)
Actual return on plan assets
—

 
—

 
(1
)
 
—

 
—

 
(1
)
Balance at December 31, 2019
$
5

 
—

 
1

 
16

 
—

 
22
Schedule of the unfunded status of the benefit plans
The following table presents the unfunded status of the Combined Pension Plan and post-retirement benefit plans:
 
Combined Pension Plan
 
Post-Retirement
Benefit Plans
 
Years Ended December 31,
 
Years Ended December 31,
 
2019
 
2018
 
2019
 
2018
 
(Dollars in millions)
Benefit obligation
$
(12,217
)
 
(11,594
)
 
(3,037
)
 
(2,977
)
Fair value of plan assets
10,493

 
10,033

 
13

 
18

Unfunded status
(1,724
)
 
(1,561
)
 
(3,024
)
 
(2,959
)
Current portion of unfunded status
—

 
—

 
(224
)
 
(252
)
Non-current portion of unfunded status
$
(1,724
)
 
(1,561
)
 
(2,800
)
 
(2,707
)
Schedule of items not recognized as a component of net periodic benefits expense
The following table presents cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2018, items recognized as a component of net periodic benefits expense in 2019, additional items deferred during 2019 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2019. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
 
As of and for the Years Ended December 31,
 
2018
 
Recognition
of Net
Periodic
Benefits
Expense
 
Deferrals
 
Net
Change in
AOCL
 
2019
 
(Dollars in millions)
Accumulated other comprehensive loss:
 
 
 
 
 
 
 
 
 
Pension plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
$
(2,973
)
 
224

 
(297
)
 
(73
)
 
(3,046
)
Prior service benefit (cost)
46

 
(8
)
 
9

 
1

 
47

Deferred income tax benefit (expense)
754

 
(53
)
 
69

 
16

 
770

Total pension plans
(2,173
)
 
163

 
(219
)
 
(56
)
 
(2,229
)
Post-retirement benefit plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
7

 
—

 
(182
)
 
(182
)
 
(175
)
Prior service (cost) benefit
(87
)
 
16

 
—

 
16

 
(71
)
Deferred income tax benefit (expense)
22

 
(4
)
 
44

 
40

 
62

Total post-retirement benefit plans
(58
)
 
12

 
(138
)
 
(126
)
 
(184
)
Total accumulated other comprehensive loss
$
(2,231
)
 
175

 
(357
)
 
(182
)
 
(2,413
)


The following table presents cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2017, items recognized as a component of net periodic benefits expense in 2018, additional items deferred during 2018 and cumulative items not recognized as a component of net periodic benefits expense as of December 31, 2017. The items not recognized as a component of net periodic benefits expense have been recorded on our consolidated balance sheets in accumulated other comprehensive loss:
 
As of and for the Years Ended December 31,
 
2017
 
Recognition
of Net
Periodic
Benefits
Expense
 
Deferrals
 
Net
Change in
AOCL
 
2018
 
(Dollars in millions)
Accumulated other comprehensive loss:
 
 
 
 
 
 
 
 
 
Pension plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
$
(2,892
)
 
179

 
(260
)
 
(81
)
 
(2,973
)
Prior service benefit (cost)
54

 
(8
)
 
—

 
(8
)
 
46

Deferred income tax benefit (expense)(1)
1,107

 
(418
)
 
65

 
(353
)
 
754

Total pension plans
(1,731
)
 
(247
)
 
(195
)
 
(442
)
 
(2,173
)
Post-retirement benefit plans:
 
 
 
 
 
 
 
 
 
Net actuarial (loss) gain
(250
)
 
—

 
257

 
257

 
7

Prior service (cost) benefit
(107
)
 
20

 
—

 
20

 
(87
)
Deferred income tax benefit (expense)(2)
122

 
(37
)
 
(63
)
 
(100
)
 
22

Total post-retirement benefit plans
(235
)
 
(17
)
 
194

 
177

 
(58
)
Total accumulated other comprehensive loss
$
(1,966
)
 
(264
)
 
(1
)
 
(265
)
 
(2,231
)

_______________________________________________________________________________
(1) Amounts currently recognized in net periodic benefits expense include $375 million of benefit arising from the adoption of ASU 2018-02. See Note 1— Background and Summary of Significant Accounting Policies for further detail.
(2) Amounts currently recognized in net periodic benefits expense include $32 million arising from the adoption of ASU 2018-02. See Note 1— Background and Summary of Significant Accounting Policies for further detail.