Employee Retirement Benefits

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Retirement Benefits

Employee Retirement Benefits

Qualified U.S. employees, after completion of specified periods of service, are eligible to participate in The Hertz Corporation Account Balance Defined Benefit Pension Plan (the “Hertz Retirement Plan”) a cash balance plan. Under this qualified Hertz Retirement Plan, the Company pays the entire cost and employees are not required to contribute. Some of its international subsidiaries have defined benefit retirement plans or participate in various insured or multiemployer plans. In certain countries, when the subsidiaries make the required funding payments, they have no further obligations under such plans. Company plans are generally funded, except for certain nonqualified U.S. defined benefit plans and in Germany and France, where unfunded liabilities are recorded. The Company also sponsors defined contribution plans for certain eligible U.S. and non-U.S. employees, where contributions are matched based on specific guidelines in the plans.

Effective December 31, 2014, the Company amended the Hertz Retirement Plan to permanently discontinue future benefit accruals and participation under the plan for non-union employees. Compensation credits will no longer be provided under the Hertz Retirement Plan after 2014 for affected participants. Interest credits will continue to be credited on existing participant account balances under the plan until benefits are distributed and service will continue to be recognized for vesting and retirement eligibility requirements.

In connection with the freezing of the Hertz Retirement Plan, the Company plans to increase employer contributions under the Company’s qualified 401(k) savings plan (the “401(k) Plan”). Effective January 1, 2015, eligible participants under the 401(k) Plan will receive a matching employer contribution to their 401(k) Plan account equal to (i) 100% of the first 3% of employee contributions made by such participant and (ii) 50% of the next 2% of employee contributions, with the total amount of such matching employer contribution to be completely vested, subject to applicable limits under the United States Internal Revenue Code. Certain eligible participants under the 401(k) Plan will also receive additional employer contribution amounts to their 401(k) Plan account depending on their years of service and age. The Company reserves the right to change its benefit offerings, at any time, at its discretion.

On October 22, 2014, the Company amended two non-qualified, unfunded pension plans. These two plans are The Hertz Corporation Benefit Equalization Plan (“BEP”) and The Hertz Corporation Supplemental Executive Retirement Plan ("SERP II”). Effective as of December 31, 2014, the Company permanently discontinued future benefit accruals and participation under the BEP and the SERP II. Service will continue to be recognized for vesting and retirement eligibility requirements under the BEP and SERP II.

Effective January 1, 2014, the Hertz Retirement Plan was amended to provide a maximum annual compensation credit equal to 5% of eligible compensation paid to all plan members who are hired or rehired before January 1, 2014, unless as of December 31, 2013 the member has at least 120 months of continuous service, in which case the member continues with an annual credit of 6.5%. All Hertz employees who are hired on or after January 1, 2014 and Dollar Thrifty employees who become plan members on or after January 1, 2014 were eligible for a flat 3% annual compensation credit, regardless of the member's number of months of continuous service.

The Company also sponsors postretirement health care and life insurance benefits for a limited number of employees with hire dates prior to January 1, 1990. The postretirement health care plan is contributory with participants' contributions adjusted annually. An unfunded liability is recorded. The Company also has a key officer postretirement car benefit plan that provides the use of a vehicle for retired Executive Vice Presidents and above who have a minimum of 20 years of service and who retired at age 58 or above. The assigned car benefit is available for 15 years postretirement or until the participant reaches the age of 80, whichever occurs last.

The following tables set forth the funded status and the net periodic pension cost of the Hertz Retirement Plan and other U.S. based retirement plans, other postretirement benefit plans including health care and life insurance plans covering domestic (“U.S.”) employees and the retirement plans for international operations (“Non-U.S.”), together with amounts included in its consolidated balance sheets and statements of operations:

	Pension Benefits												Postretirement
	U.S.						Non-U.S.						Benefits (U.S.)
(In millions)	2015			2014			2015			2014			2015			2014
Change in Benefit Obligation
Benefit obligation at January 1	$	726		$	671		$	274		$	243		$	15		$	16
Service cost	3			28			1			2			—			—
Interest cost	27			31			8			10			1			—
Employee contributions	—			—			—			—			—			1
Plan curtailments	(1		)	(42		)	—			—			—			—
Plan settlements	(21		)	(11		)	(6		)	—			—			—
Benefits paid	(29		)	(23		)	(5		)	(5		)	(1		)	(2		)
Foreign exchange translation	—			—			(16		)	(22		)	—			—
Actuarial loss (gain)	(18		)	72			(22		)	46			—			—
Other	—			—			1			—			—			—
Benefit obligation at December 31	$	687		$	726		$	235		$	274		$	15		$	15
Change in Plan Assets
Fair value of plan assets at January 1	$	619		$	563		$	212		$	207		$	—		$	—
Actual return on plan assets	(16		)	55			4			19			—			—
Company contributions	22			35			5			5			1			1
Employee contributions	—			—			—			—			—			1
Plan settlements	(21		)	(11		)	(6		)	—			—			—
Benefits paid	(29		)	(23		)	(5		)	(5		)	(1		)	(2		)
Foreign exchange translation	—			—			(10		)	(14		)	—			—
Fair value of plan assets at December 31	$	575		$	619		$	200		$	212		$	—		$	—
Funded Status of the Plan
Plan assets less than benefit obligation	$	(112	)	$	(107	)	$	(35	)	$	(62	)	$	(15	)	$	(15	)

	Pension Benefits												Postretirement
	U.S.						Non-U.S.						Benefits (U.S.)
(In millions)	2015			2014			2015			2014			2015			2014
Amounts recognized in balance sheet:
Prepaid expenses and other assets	$	—		$	—		$	29		$	—		$	—		$	—
Accrued liabilities	$	(112	)	$	(107	)	$	(64	)	$	(62	)	$	(15	)	$	(15	)
Net obligation recognized in the balance sheet	$	(112	)	$	(107	)	$	(35	)	$	(62	)	$	(15	)	$	(15	)
Prior service credit	$	1		$	2		$	—		$	—		$	—		$	—
Net gain (loss)	(128		)	(97		)	(33		)	(50		)	1			1
Accumulated other comprehensive gain (loss)	(127		)	(95		)	(33		)	(50		)	1			1
Funded/(Unfunded) accrued pension or postretirement benefit	15			(12		)	(2		)	(12		)	(16		)	(16		)
Net obligation recognized in the balance sheet	$	(112	)	$	(107	)	$	(35	)	$	(62	)	$	(15	)	$	(15	)
Total recognized in other comprehensive (income) loss	$	31		$	14		$	(17	)	$	38		$	—		$	—
Total recognized in net periodic benefit cost and other comprehensive (income) loss	$	27		$	33		$	(20	)	$	35		$	1		$	1
Estimated amounts that will be amortized from accumulated other comprehensive (income) loss over the next fiscal year:
Net loss	$	(8	)	$	(2	)	$	—		$	(2	)	$	—		$	—
Accumulated Benefit Obligation at December 31	$	683		$	720		$	234		$	272		N/A			N/A
Weighted-average assumptions as of December 31
Discount rate	4.3		%	3.9		%	3.6		%	4.4		%	4.2		%	3.6		%
Expected return on assets	7.2		%	7.4		%	6.1		%	7.4		%	—		%	—		%
Average rate of increase in compensation	4.3		%	4.0		%	2.6		%	2.6		%	—		%	—		%
Initial health care cost trend rate	N/A			N/A			N/A			N/A			6.9		%	7.3		%
Ultimate health care cost trend rate	N/A			N/A			N/A			N/A			4.5		%	4.5		%
Number of years to ultimate trend rate	N/A			N/A			N/A			N/A			23			15

N/A - Not applicable

The discount rate used to determine the December 31, 2015 benefit obligations for U.S. pension plans is based on the rate from the Mercer Pension Discount Curve-Above Mean Yield that is appropriate for the duration of the Company's plan liabilities. For its plans outside the U.S., the discount rate reflects the market rates for an optimized subset of high-quality corporate bonds currently available. The discount rate in a country was determined based on a yield curve constructed from high quality corporate bonds in that country. The rate selected from the yield curve has a duration that matches its plan.

The expected return on plan assets for each funded plan is based on expected future investment returns considering the target investment mix of plan assets.

The following table sets forth the net periodic pension and postretirement (including health care, life insurance and auto) expense:

	Pension Benefits																		Postretirement Benefits (U.S.)
	U.S.									Non-U.S.
	Years Ended December 31,
(In millions)	2015			2014			2013			2015			2014			2013			2015			2014			2013
Components of Net Periodic
Service cost	$	3		$	28		$	27		$	1		$	2		$	3		$	—		$	—		$	—
Interest cost	27			31			28			8			10			9			1			1			1
Expected return on plan assets	(40		)	(40		)	(36		)	(15		)	(15		)	(13		)	—			—			—
Net amortizations	2			2			7			2			—			—			—			—			—
Settlement loss	4			4			—			1			—			—			—			—			—
Curtailment gain	—			(10		)	—			—			—			—			—			—			—
Special termination cost	—			4			—			—			—			—			—			—			—
Net pension and postretirement expense	$	(4	)	$	19		$	26		$	(3	)	$	(3	)	$	(1	)	$	1		$	1		$	1
Weighted-average discount rate for expense (January 1)	3.9		%	4.8		%	4.0		%	3.3		%	3.2		%	4.3		%	3.8		%	4.4		%	3.6		%
Weighted-average assumed long-term rate of return on assets (January 1)	7.4		%	7.6		%	7.6		%	7.3		%	7.4		%	7.4		%	N/A			N/A			N/A
Initial health care cost trend rate	N/A			N/A			N/A			N/A			N/A			N/A			7.3		%	7.5		%	7.8		%
Ultimate health care cost trend rate	N/A			N/A			N/A			N/A			N/A			N/A			4.5		%	4.5		%	4.5		%
Number of years to ultimate trend rate	N/A			N/A			N/A			N/A			N/A			N/A			14			15			16

N/A - Not applicable

The net of tax loss in “Accumulated other comprehensive income (loss)” at December 31, 2015 and 2014 relating to pension benefits was $102 million and $101 million, respectively.

Changing the assumed health care cost trend rates by one percentage point is not expected to have a material impact on the total of service and interest cost components or on the postretirement benefit obligation.

The provisions charged to income for the years ended December 31, 2015, 2014 and 2013 for all other pension plans were approximately $12 million, $10 million and $10 million, respectively.

The provisions charged to income for the years ended December 31, 2015, 2014 and 2013 for the defined contribution plans were approximately $30 million, $18 million and $18 million, respectively.

Plan Assets

The Company has a long-term investment outlook for the assets held in the Company sponsored plans, which is consistent with the long-term nature of each plan's respective liabilities. The Company has two major plans which reside in the U.S. and the U.K.

The U.S. Plan (the “Plan”) currently has a target asset allocation of 65% equity and 35% fixed income. The equity portion of the Plan is invested in one passively managed S&P 500 index fund, one passively managed U.S. small/midcap fund, one actively managed international fund and one actively managed emerging markets fund. The fixed income portion of the Plan is actively managed by professional investment managers and is benchmarked to the Barclays Long Govt/Credit Index. The Plan assumes a 7.2% rate of return on assets expected long-term annual weighted-average for the Plan in total.

The U.K. Plan has a target allocation of 37.5% actively managed multi-asset funds, 27.5% passive equity funds and 35% passive bond funds.  The actively managed multi-asset funds are intended to deliver a long-term equity-like return but with reduced levels of volatility.  The target allocation for the passive bonds is 70% in index-linked government bonds and 30% in corporate bonds.  The target allocation for the equity funds are that 45% are held in U.K. Equities and the remainder diversified across global markets.  All of the invested assets of the U.K. Plan are held via pooled funds managed by professional investment managers. The U.K. Plan assumes a 6.1% rate of return on assets expected long-term weighted-average for the Plan in total.

The fair value measurements of the Company's U.S. pension plan assets are based upon significant observable inputs (Level 2) that reflect quoted prices for similar assets or liabilities in active markets. The fair value measurements of its U.S. pension plan assets relate to common collective trusts and other pooled investment vehicles consisting of the following asset categories:

(In millions)	December 31, 2015		December 31, 2014
Asset Category
Short Term Investments	$	7	$	13
Equity Securities:
U.S. Large Cap	158		171
U.S. Mid Cap	36		50
U.S. Small Cap	45		38
International Large Cap	96		99
International Emerging Markets	29		29
Asset-Backed Securities	5		4
Fixed Income Securities:
U.S. Treasuries	61		63
Corporate Bonds	110		123
Government Bonds	9		10
Municipal Bonds	10		10
Real Estate (REITs)	9		9
Total fair value of pension plan assets	$	575	$	619

The Company's U.K. Plan accounts for $195 million of the $200 million in fair value of Non-U.S. plan assets at December 31, 2015. The fair value measurements of its U.K. pension plan assets are based upon significant observable inputs (Level 2) and relate to common collective trusts and other pooled investment vehicles consisting of the following asset categories:

(In millions)	December 31, 2015				December 31, 2014
Asset Category	Level 1		Level 2		Level 1		Level 2
Actively Managed Multi-Asset Funds:
Diversified Growth Funds	$	—	$	75	$	74	$	—
Passive Equity Funds:
U.K. Equities	25		—		25		—
Overseas Equities	31		—		31		—
Passive Bond Funds:
Corporate Bonds	—		20		—		21
Index-Linked Gilts	—		44		—		50
Total fair value of pension plan assets	$	56	$	139	$	130	$	71

Contributions

The Company's policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations and union agreements. From time to time, the Company makes contributions beyond those legally required. In 2015, the Company did not make any cash contributions to its U.S. qualified pension plan. In 2014, the Company made cash contributions to its U.S. qualified pension plan of $22 million.

In 2015, the Company made benefit payments to its U.S. non-qualified pension plans of $22 million. In 2014, the Company made benefit payments to its U.S. non-qualified pension plans of $13 million. The Company made a $3 million discretionary contribution to its United Kingdom defined benefit pension plan (the "U.K. Plan") during each of the years ended December 31, 2015 and 2014.

The Company does not anticipate contributing to the U.S. qualified pension plan during 2016. For the international plans the Company anticipates contributing $3 million during 2016. The level of 2016 and future contributions will vary, and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation.

Estimated Future Benefit Payments

The following table presents estimated future benefit payments:

(In millions)	Pension Benefits		Postretirement Benefits (U.S.)
2016	$	48	$	1
2017	48		1
2018	51		1
2019	54		1
2020	56		2
After 2020	302		6
	$	559	$	12

Multiemployer Pension Plans

The Company contributed to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of its union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:

a) Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

b) If a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c) If the Company ceases to have an obligation to contribute to the multiemployer plan in which the Company had been a contributing employer, the Company may be required to pay to the plan an amount based on the underfunded status of the plan and on the history of its participation in the plan prior to the cessation of its obligation to contribute. The amount that an employer that has ceased to have an obligation to contribute to a multiemployer plan is required to pay to the plan is referred to as a withdrawal liability.

The Company's participation in multiemployer plans for the annual period ended December 31, 2015 is outlined in the table below. For each plan that is individually significant to the Company, the following information is provided:

The “EIN / Pension Plan Number” column provides the Employer Identification Number and the three-digit plan number assigned to a plan by the Internal Revenue Service. The most recent Pension Protection Act Zone Status available is for plan year that ended in 2014. The zone status is based on information provided to the Company and other participating employers by each plan and is certified by the plan's actuary. A plan in the “red” zone has been determined to be in “critical status”, based on criteria established under the Internal Revenue Code (the “Code”) and is generally less than 65% funded. A plan in the “yellow” zone has been determined to be in “endangered status”, based on criteria established under the Code, and is generally less than 80% funded. A plan in the “green” zone has been determined to be neither in “critical status” nor in “endangered status,” and is generally at least 80% funded.

The “FIP/RP Status Pending/Implemented” column indicates whether a Funding Improvement Plan, as required under the Code to be adopted by plans in the “yellow” zone, or a Rehabilitation Plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the plan year that ended in 2015.

The “Surcharge Imposed” column indicates whether the Company's contribution rate for 2015 included an amount in addition the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status,” in accordance with the requirements of the Code. The last column lists the expiration dates of the collective bargaining agreements pursuant to which the Company contributed to the plans.

For plans that are not individually significant to the Company, the total amount of contributions is presented in the aggregate.

	EIN /Pension Plan Number	Pension Protection Act Zone Status		FIP / RP Status Pending /Implemented	Contributions by The Hertz Corporation (In millions)						Surcharge Imposed	Expiration Dates of Collective Bargaining Agreements
Pension Fund		2015	2014		2015		2014		2013
Western Conference of Teamsters	91-6145047	Green	Green	NA	$	6	$	6	$	4	N/A	1/31/2014* - 10/1/2017
Other Plans*					6		4		4
Total Contributions					$	12	$	10	$	8

N/A    Not applicable

* Included in the Other Plans are contributions to the Local 1034 Pension Fund. The amount contributed by Hertz to the Local 1034 Pension Fund was reported as being more than 5% of total contributions to the plan, on the fund's Form 5500 for the year ended December 31, 2014.