We have funded noncontributory defined benefit pension plans for a significant portion of our employees. In addition, we have an unfunded supplemental pension plan covering certain employees, which provides incremental payments that would have been payable from our principal pension plans, were it not for limitations imposed by income tax regulations. The plans provide defined benefits based on years of service and final average salary. Additionally, we maintain an unfunded postretirement medical plan that provides health benefits to certain qualified retirees from ages 55 through 65. The measurement date for all retirement plans is December 31.

The following table summarizes the benefit obligations, the fair value of plan assets, and the funded status of our pension and postretirement medical plans:

	Funded						Unfunded						Postretirement
	Pension Plans						Pension Plan						Medical Plan
	2019			2018			2019			2018			2019			2018
	(In millions)
Change in Benefit Obligation
Balance at January 1,	$	2,492		$	2,765		$	216		$	249		$	59		$	87
Service cost		33			30			11			12			2			2
Interest cost		82			84			7			7			2			3
Actuarial (gains) loss (a)		401			(237	)		22			(29	)		19			(24	)
Single premium annuity contract payment		(249	)		—			—			—			—			—
Benefit payments (b)		(113	)		(110	)		(14	)		(19	)		(7	)		(7	)
Plan curtailments		—			(10	)		—			(4	)		—			(2	)
Plan amendments		—			4			—			—			—			—
Foreign currency exchange rate changes		21			(34	)		—			—			—			—
Balance at December 31, (c)		2,667			2,492			242			216			75			59
Change in Fair Value of Plan Assets
Balance at January 1,	$	2,568		$	2,732		$	—		$	—		$	—		$	—
Actual return on plan assets		462			(77	)		—			—			—			—
Employer contributions		40			59			14			19			7			7
Single premium annuity contract payment		(249	)		—			—			—			—			—
Benefit payments (b)		(113	)		(110	)		(14	)		(19	)		(7	)		(7	)
Foreign currency exchange rate changes		24			(36	)		—			—			—			—
Balance at December 31,		2,732			2,568			—			—			—			—

Funded Status (Plan assets greater (less) than benefit obligations) at December 31,	$	65		$	76		$	(242	)	$	(216	)	$	(75	)	$	(59	)

Unrecognized Net Actuarial (Gains) Losses	$	756		$	778		$	65		$	47		$	(12	)	$	(32	)

Amounts recognized in the Consolidated Balance Sheet at December 31 consisted of the following:

	Funded					Unfunded						Postretirement
	Pension Plans					Pension Plan						Medical Plan
	2019			2018		2019			2018			2019			2018
	(In millions)
Noncurrent assets	$	71		$	76	$	—		$	—		$	—		$	—
Current liabilities		—			—		(32	)		(30	)		(8	)		(9	)
Noncurrent liabilities		(6	)		—		(210	)		(186	)		(67	)		(50	)
Pension assets / (accrued benefit liability)	$	65		$	76	$	(242	)	$	(216	)	$	(75	)	$	(59	)

Accumulated other comprehensive loss, pre-tax (a)	$	756		$	778	$	65		$	47		$	(12	)	$	(32	)

The net periodic benefit cost for funded and unfunded pension plans, and the postretirement medical plan, is as follows:

	Pension Plans									Postretirement Medical Plan
	2019			2018			2017			2019			2018			2017
	(In millions)
Service cost	$	44		$	42		$	49		$	2		$	2		$	4
Interest cost		89			91			102			2			3			3
Expected return on plan assets		(180	)		(194	)		(168	)		—			—			—
Amortization of unrecognized net actuarial losses (gains)		52			39			58			(1	)		(2	)		—
Settlement loss		93			4			19			—			—			—
Curtailment gain		—			—			—			—			(2	)		—
Net Periodic Benefit Cost (a)	$	98		$	(18	)	$	60		$	3		$	1		$	7

In 2019, the trust for the Hess Corporation Employees’ Pension Plan (the “Plan”) purchased a single premium annuity contract at a cost of approximately $250 million using assets of the Plan to settle and transfer certain of its obligations to a third party. The settlement transaction resulted in a noncash charge of $88 million to recognize unamortized pension actuarial losses that is included in Other, net in the Statement of Consolidated Income. In connection with this settlement transaction, as required under U.S. accounting standards, we remeasured the Plan, which resulted in a net increase in Plan liabilities of $239 million driven by a change in the weighted average discount rate used and an update to the fair value of Plan assets.

In 2020, we forecast pension service costs for our pension and postretirement medical plans to be approximately $55 million and net non-service pension costs of approximately $55 million of income, which is comprised of interest cost of approximately $75 million, amortization of unrecognized net actuarial losses of approximately $50 million, and estimated expected return on plan assets of approximately $180 million.

Assumptions: The weighted average actuarial assumptions used to determine Benefit obligations at December 31 and Net periodic benefit cost for the three years ended December 31 for our funded and unfunded pension plans were as follows:

The actuarial assumptions used to determine Benefit obligations at December 31 for the postretirement medical plan were as follows:

The assumptions used to determine net periodic benefit cost for each year were established at the end of each previous year while the assumptions used to determine benefit obligations were established at each year‑end. The net periodic benefit cost and the actuarial present value of benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The discount rate is developed based on a portfolio of high‑quality, fixed income debt instruments with maturities that approximate the expected payment of plan obligations. Beginning in 2018, we elected to use a split discount rate approach for all of our retirement plans. This involves the continued use of a single weighted-average discount rate in the calculation of the projected benefit obligation, and separate discount rates for each projected benefit payment in the calculation of service cost and interest cost. In contrast, historically, a single weighted-average discount rate was used in both the calculation of the projected benefit obligation, and service cost and interest cost.

The overall expected return on plan assets is developed from the expected future returns for each asset category, weighted by the target allocation of pension assets to that asset category. The future expected return assumptions for individual asset

categories are largely based on inputs from various investment experts regarding their future return expectations for particular asset categories.

Our investment strategy is to maximize long‑term returns at an acceptable level of risk through broad diversification of plan assets in a variety of asset classes. Asset classes and target allocations are determined by our investment committee and include domestic and foreign equities, fixed income, and other investments, including hedge funds, real estate and private equity. Investment managers are prohibited from investing in securities issued by us unless indirectly held as part of an index strategy. The majority of plan assets are highly liquid, providing ample liquidity for benefit payment requirements. The current target allocations for plan assets are 45% equity securities, 35% fixed income securities (including cash and short‑term investment funds) and 20% to all other types of investments. Asset allocations are rebalanced on a periodic basis throughout the year to bring assets to within an acceptable range of target levels.

Fair value: The following tables provide the fair value of the financial assets of the funded pension plans at December 31, 2019 and 2018 in accordance with the fair value measurement hierarchy described in Note 1, Nature of Operations, Basis of Presentation and Summary of Accounting Policies.

	Level 1		Level 2		Level 3		Net Asset Value (d)		Total
	(In millions)
December 31, 2019
Cash and Short-Term Investment Funds	$	57	$	—	$	—	$	—	$	57
Equities:
U.S. equities (domestic)		638		—		—		—		638
International equities (non-U.S.)		80		37		—		302		419
Global equities (domestic and non-U.S.)		—		8		—		196		204
Fixed Income:
Treasury and government issued (a)		—		210		—		—		210
Government related (b)		—		162		—		56		218
Mortgage-backed securities (c)		—		141		—		30		171
Corporate		—		293		—		82		375
Other:
Hedge funds		—		—		—		65		65
Private equity funds		—		—		—		191		191
Real estate funds		27		—		—		157		184
Total investments	$	802	$	851	$	—	$	1,079	$	2,732

December 31, 2018
Cash and Short-Term Investment Funds	$	3	$	47	$	—	$	—	$	50
Equities:
U.S. equities (domestic)		654		—		—		—		654
International equities (non-U.S.)		92		29		—		288		409
Global equities (domestic and non-U.S.)		2		203		—		—		205
Fixed Income:
Treasury and government issued (a)		—		240		—		—		240
Government related (b)		—		37		—		—		37
Mortgage-backed securities (c)		—		159		—		27		186
Corporate		—		272		—		31		303
Other:
Hedge funds		—		—		—		135		135
Private equity funds		—		—		—		170		170
Real estate funds		49		—		—		111		160
Diversified commodities funds		—		19		—		—		19
Total investments	$	800	$	1,006	$	—	$	762	$	2,568

Cash and short‑term investment funds - Consists of cash on hand and short-term investment funds that provide for daily investments and redemptions which are classified as Level 1.

Equities - Consists of individually held U.S. and International equity securities. This investment category also includes funds that consist primarily U.S. and international equity securities. Equity securities, which are individually held and are traded actively on exchanges, are classified as Level 1. Certain funds, consisting primarily of equity securities, are classified as Level 2 if the NAV is determined and published daily, and is the basis for current transactions. Commingled funds, consisting primarily of equity securities, are valued using the NAV per fund share.

Fixed income investments - Consists of individually held securities issued by the U.S. government, non-U.S. governments, governmental agencies, municipalities and corporations, and agency and non-agency mortgage backed securities. This investment category also includes funds that consist of fixed income securities. Individual fixed income securities are generally priced based on evaluated prices from independent pricing services, which are monitored and provided by the third-party custodial firm responsible for safekeeping assets of the particular plan and are classified as Level 2. Certain funds, consisting primarily of fixed income securities, are classified as Level 2 if the NAV is determined and published daily, and is the basis for current transactions. Commingled funds, consisting primarily of fixed income securities, are valued using the NAV per fund share.

Other investments - Consists of exchange‑traded real estate investment trust securities, which are classified as Level 1. Commingled funds and limited partnership investments in hedge funds, private equity and real estate funds are valued at the NAV per fund share.

Contributions and estimated future benefit payments: We expect to contribute approximately $45 million to our funded pension plans in 2020.

Estimated future benefit payments by the funded and unfunded pension plans, and the postretirement medical plan, which reflect expected future service, are as follows (in millions):

We also have defined contribution plans for certain eligible employees. Employees may contribute a portion of their compensation to these plans and we match a portion of the employee contributions. We recorded expense of $20 million in 2019 for contributions to these plans (2018: $19 million; 2017: $22 million).