Employee Benefits

Pension and Postretirement Benefit Plans

We have a defined benefit pension plan covering certain U.S. employees (the “Domestic Pension Plan”) that consists of approximately 3,500 participants and is closed to new participants. We also have numerous funded and unfunded plans outside the U.S. The Interpublic Limited Pension Plan in the U.K. (the "U.K. Pension Plan") is a defined benefit plan and is our most material foreign pension plan in terms of the benefit obligation and plan assets. The domestic postretirement benefit plan is our most material postretirement benefit plan in terms of the benefit obligation. This plan consists of approximately 1,700 participants, is closed to new participants and is unfunded.

Differences between the aggregate income statement and balance sheet amounts listed in the tables below and the totals reported in our Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income and Consolidated Balance Sheets relate to non-material foreign pension and postretirement benefit plans.

From time to time, we evaluate the foreign plans to be included in the below disclosure based upon significance to our overall operations. Our evaluation consists of reviewing the Projected Benefit Obligation, Plan Assets and Funded Status of our plans to determine significance. As of December 31, 2017, the Funded Status of foreign plans that are not included in the below disclosure was in a deficit position of $56.2. The plans excluded from the below disclosure are comprised of numerous individually insignificant pension, postretirement and executive retirement plans, many of which are not required to be funded, in various foreign jurisdictions in which we operate. The effect of the change in scoping is noted within the Other caption within the tables below.

Pension and Postretirement Benefit Obligation

The change in the benefit obligation, the change in plan assets, the funded status and amounts recognized for the Domestic Pension Plan, the significant foreign pension plans and the domestic postretirement benefit plan are listed below.



	Domestic Pension Plan						Foreign Pension Plans						Domestic Postretirement Benefit Plan
	Domestic Pension Plan						Foreign Pension Plans						Domestic Postretirement Benefit Plan
Years ended December 31,	2017			2016			2017			2016			2017			2016
Benefit Obligation
Projected benefit obligation as of January 1	$	126.6		$	126.9		$	530.6		$	537.9		$	32.3		$	33.9
Service cost	0.0			0.0			4.9			6.7			0.0			0.0
Interest cost	5.1			5.9			13.5			15.1			1.3			1.5
Benefits paid	(11.4		)	(13.6		)	(19.0		)	(25.7		)	(5.9		)	(5.8		)
Plan participant contributions	0.0			0.0			0.2			0.2			1.6			1.6
Actuarial losses	5.1			7.4			20.3			115.6			2.5			1.1
Settlements and curtailments	0.0			0.0			(19.8		)	(6.3		)	0.0			0.0
Foreign currency effect	0.0			0.0			50.4			(84.2		)	0.0			0.0
Other	0.0			0.0			1.2			(28.7		)	0.0			0.0

Projected benefit obligation as of December 31	$	125.4		$	126.6		$	582.3		$	530.6		$	31.8		$	32.3

Fair Value of Plan Assets
Fair value of plan assets as of January 1	$	95.2		$	101.1		$	365.9		$	399.6		$	0.0		$	0.0
Actual return on plan assets	12.4			7.7			25.1			47.9			0.0			0.0
Employer contributions	2.6			0.0			17.5			23.2			4.3			4.2
Plan participant contributions	0.0			0.0			0.2			0.2			1.6			1.6
Benefits paid	(11.4		)	(13.6		)	(19.0		)	(25.7		)	(5.9		)	(5.8		)
Settlements	0.0			0.0			(19.1		)	(2.2		)	0.0			0.0
Foreign currency effect	0.0			0.0			33.2			(68.6		)	0.0			0.0
Other	0.0			0.0			0.4			(8.5		)	0.0			0.0
																0.0
Fair value of plan assets as of December 31	$	98.8		$	95.2		$	404.2		$	365.9		$	0.0		$	0.0

Funded status of the plans at December 31	$	(26.6	)	$	(31.4	)	$	(178.1	)	$	(164.7	)	$	(31.8	)	$	(32.3	)



	Domestic Pension Plan						Foreign Pension Plans						Domestic Postretirement Benefit Plan
December 31,	2017			2016			2017			2016			2017			2016
Amounts recognized in Consolidated Balance Sheets
Non-current asset	$	0.0		$	0.0		$	9.0		$	7.6		$	0.0		$	0.0
Current liability	0.0			0.0			(6.5		)	(5.5		)	(3.1		)	(3.2		)
Non-current liability	(26.6		)	(31.4		)	(180.6		)	(166.8		)	(28.7		)	(29.1		)

Net liability recognized	$	(26.6	)	$	(31.4	)	$	(178.1	)	$	(164.7	)	$	(31.8	)	$	(32.3	)

Accumulated benefit obligation	$	125.4		$	126.6		$	577.9		$	526.2

Amounts recognized in Accumulated Other Comprehensive Loss, net
Net actuarial loss	$	52.2		$	54.9		$	201.6		$	183.4		$	4.2		$	1.7
Prior service cost (credit)	0.0			0.0			1.1			0.9			(0.4		)	(0.6		)

Total amount recognized	$	52.2		$	54.9		$	202.7		$	184.3		$	3.8		$	1.1

In 2018, we estimate that we will recognize $1.5 and $6.0 of net actuarial losses from accumulated other comprehensive loss, net into net periodic cost related to our domestic pension plan and significant foreign pension plans, respectively.



	Domestic Pension Plan				Foreign Pension Plans
December 31,	2017		2016		2017		2016
Pension plans with underfunded or unfunded accumulated benefit obligation
Aggregate projected benefit obligation	$	125.4	$	126.6	$	576.6	$	525.3
Aggregate accumulated benefit obligation	125.4		126.6		575.2		523.8
Aggregate fair value of plan assets	98.8		95.2		389.5		352.9

Net Periodic Cost

The components of net periodic benefit cost and key assumptions are listed below.



	Domestic Pension Plan									Foreign Pension Plans									Domestic Postretirement Benefit Plan
Years ended December 31,	2017			2016			2015			2017			2016			2015			2017			2016			2015
Service cost	$	0.0		$	0.0		$	0.0		$	4.9		$	6.7		$	11.1		$	0.0		$	0.0		$	0.0
Interest cost	5.1			5.9			0.3			13.5			15.1			18.9			1.3			1.5			1.5
Expected return on plan assets	(6.2		)	(6.6		)	(7.6		)	(17.7		)	(18.7		)	(20.6		)	0.0			0.0			0.0
Settlement and curtailment losses (gains)	0.0			0.0			0.0			6.8			0.4			(0.2		)	0.0			0.0			0.0
Amortization of:
Prior service cost (credit)	0.0			0.0			0.0			0.1			0.1			0.1			(0.2		)	(0.2		)	(0.1		)
Net actuarial losses	1.5			1.3			6.5			5.5			4.2			4.1			0.0			0.0			0.0
Net periodic cost	$	0.4		$	0.6		$	(0.8	)	$	13.1		$	7.8		$	13.4		$	1.1		$	1.3		$	1.4

Assumptions



	Domestic Pension Plan						Foreign Pension Plans						Domestic Postretirement Benefit Plan
Years ended December 31,	2017		2016		2015		2017		2016		2015		2017		2016		2015

Net periodic cost
Discount rate	4.20	%	4.80	%	4.15	%	2.52	%	3.61	%	3.41	%	4.05	%	4.65	%	4.00	%
Rate of compensation increase	N/A		N/A		N/A		2.36	%	3.18	%	2.99	%	N/A		N/A		N/A
Expected return on plan assets	7.00	%	7.00	%	7.00	%	4.66	%	5.38	%	5.01	%	N/A		N/A		N/A

Benefit obligation
Discount rate	3.70	%	4.20	%	4.80	%	2.36	%	2.52	%	3.61	%	3.65	%	4.05	%	4.65	%
Rate of compensation increase	N/A		N/A		N/A		2.37	%	2.36	%	3.25	%	N/A		N/A		N/A

Health care cost trend rate assumed for next year
Initial rate (weighted-average)													6.50	%	6.75	%	7.00	%
Year ultimate rate is reached													2024		2024		2024
Ultimate rate													5.00	%	5.00	%	5.00	%

Discount Rates – At December 31, 2017, 2016 and 2015, we determined our discount rates for our Domestic Pension Plan, foreign pension plans and domestic postretirement benefit plan based on either a bond selection/settlement approach or bond yield curve approach. Using the bond selection/settlement approach, we determine the discount rate by selecting a portfolio of corporate bonds appropriate to provide for the projected benefit payments. Using the bond yield curve approach, we determine the discount rate by matching the plans' cash flows to spot rates developed from a yield curve. Both approaches utilize high-quality AA-rated corporate bonds and the plans' projected cash flows to develop a discounted value of the benefit payments, which is then used to develop a single discount rate. In countries where markets for high-quality long-term AA corporate bonds are not well developed, a portfolio of long-term government bonds is used as a basis to develop hypothetical corporate bond yields, which serve as a basis to derive the discount rate.

Expected Return on Assets – Our expected rate of return is determined at the beginning of each year and considers asset class index returns over various market and economic conditions, current and expected market conditions, risk premiums associated with asset classes and long-term inflation rates. We determine both a short-term and long-term view and then select a long-term rate of return assumption that matches the duration of our liabilities.

Fair Value of Pension Plan Assets

The following table presents the fair value of our domestic and foreign pension plan assets as of December 31, 2017 and 2016, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value. See Note 10 for a description of the fair value hierarchy.



	December 31, 2017								December 31, 2016
Plan assets subject to fair value hierarchy	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Registered investment companies	$	14.7	$	0.0	$	0.0	$	14.7	$	14.4	$	0.0	$	0.0	$	14.4
Limited partnerships	0.0		0.0		29.5		29.5		0.0		0.0		28.0		28.0
Fixed income securities	23.4		0.0		0.0		23.4		22.6		0.3		0.0		22.9
Insurance contracts	0.0		7.9		0.0		7.9		0.0		7.8		0.0		7.8
Other	27.7		0.0		0.0		27.7		20.1		0.0		0.0		20.1
Total plan assets, subject to leveling	$	65.8	$	7.9	$	29.5	$	103.2	$	57.1	$	8.1	$	28.0	$	93.2
Plan assets measured at net asset value
Other investments measured at net asset value ¹							399.8								367.9
Total plan assets							$	503.0							$	461.1


1	Certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy but are included to reconcile to the amounts presented in the fair value of plan assets table above.

Registered investment companies, which are publicly traded, are primarily valued using recently reported sales prices. Limited partnerships are invested primarily in equity and fixed income securities. Fixed income securities include government and investment-grade corporate bonds. Insurance contracts are valued based on the cash surrender value of the contract. Other investments primarily include cash and cash equivalents, equity securities and derivatives. Other investments measured at net asset value include common/collective trusts, hedge funds and other commingled assets that are invested primarily in equity and fixed income securities. These investments are not publicly traded and are valued based on the net asset value of shares held by the plan at year end, which reflects the fair value of the underlying investments.

The following table presents additional information about our significant foreign pension plan assets for which we utilize Level 3 inputs to determine fair value.



	Years ended December 31,
Plan assets subject to fair value hierarchy, level 3	2017		2016
Balance at beginning of period	$	28.0	$	31.0
Actual return on plan assets	1.5		(3.0		)
Balance at end of period	$	29.5	$	28.0

Asset Allocation

The primary investment goal for our plans’ assets is to maximize total asset returns while ensuring the plans’ assets are available to fund the plans’ liabilities as they become due. The plans’ assets in aggregate and at the individual portfolio level are invested so that total portfolio risk exposure and risk-adjusted returns best achieve this objective. The aggregate amount of our own stock held as investment for our domestic and foreign pension funds is considered negligible relative to the total fund assets. As of December 31, 2017, the weighted-average target and actual asset allocations relating to our domestic and foreign pension plans' assets are listed below.



			December 31,
Asset Class	2018 Target Allocation		2017		2016
Alternative investments ¹	27	%	27	%	21	%
Equity securities	23	%	23	%	23	%
Fixed income securities	21	%	21	%	26	%
Liability driven investments ²	14	%	14	%	14	%
Real estate	6	%	6	%	6	%
Other	9	%	9	%	10	%
Total	100	%	100	%	100	%


1	Alternative investments have the flexibility to dynamically invest across a broad range of asset classes including bonds, equity, cash, property and commodities.


2	Liability driven investment strategies use government bonds as well as derivative instruments to hedge a portion of the impact of interest rates and inflation movements on the long-term liabilities.

Cash Flows

During 2017, we contributed $2.6 and $17.5 of cash to our domestic and foreign pension plans, respectively. For 2018, we expect to contribute approximately $10.0 and $18.0 of cash to our domestic and foreign pension plans, respectively.

The estimated future benefit payments expected to be paid are presented below.



Years	Domestic Pension Plan		Foreign Pension Plans		Domestic Postretirement Benefit Plan
2018	$	13.7	$	22.3	$	3.2
2019	8.5		23.8		3.0
2020	8.6		21.6		2.8
2021	8.0		22.3		2.6
2022	8.4		23.5		2.4
2023 - 2027	37.2		124.0		10.4

The estimated future payments for our domestic postretirement benefit plan are net of any estimated U.S. federal subsidies expected to be received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which total no more than $0.3 in any individual year.

Savings Plans

We sponsor defined contribution plans (the “Savings Plans”) that cover substantially all domestic employees. The Savings Plans permit participants to make contributions on a pre-tax and/or after-tax basis and allow participants to choose among various investment alternatives. We match a portion of participant contributions based upon their years of service. Amounts expensed for the Savings Plans for 2017, 2016 and 2015 were $47.2, $47.0 and $44.5, respectively. Expenses include a discretionary Company contribution of $3.6, $6.1 and $5.8 offset by participant forfeitures of $4.6, $4.4 and $3.8 in 2017, 2016 and 2015, respectively. In addition, we maintain defined contribution plans in various foreign countries and contributed $47.4, $44.5 and $43.9 to these plans in 2017, 2016 and 2015, respectively.

Deferred Compensation and Benefit Arrangements

We have deferred compensation arrangements which (i) permit certain of our key officers and employees to defer a portion of their salary or incentive compensation or (ii) require us to contribute an amount to the participant’s account. The arrangements typically provide that the participant will receive the amounts deferred plus interest upon attaining certain conditions, such as completing a certain number of years of service or upon retirement or termination. As of December 31, 2017 and 2016, the deferred compensation liability balance was $96.2 and $92.4, respectively. Amounts expensed for deferred compensation arrangements in 2017, 2016 and 2015 were $11.2, $9.7 and $6.3, respectively.

We have deferred benefit arrangements with certain key officers and employees that provide participants with an annual payment, payable when the participant attains a certain age and after the participant’s employment has terminated. The deferred benefit liability was $117.0 and $129.1 as of December 31, 2017 and 2016, respectively. Amounts expensed for deferred benefit arrangements in 2017, 2016 and 2015 were $7.3, $8.8 and $9.7, respectively.

We have purchased life insurance policies on participants’ lives to assist in the funding of the related deferred compensation and deferred benefit liabilities. As of December 31, 2017 and 2016, the cash surrender value of these policies was $177.4 and $171.5, respectively. In addition to the life insurance policies, certain investments are held for the purpose of paying the deferred compensation and deferred benefit liabilities. These investments, along with the life insurance policies, are held in a separate revocable trust for the purpose of paying the deferred compensation and the deferred benefit arrangement liabilities. As of December 31, 2017 and 2016, the value of such investments in the trust was $15.9 and $12.9, respectively. The short-term investments are included in cash and cash equivalents, and the long-term investments and cash surrender value of the policies are included in other assets.

Long-Term Disability Plan

We have a long-term disability plan which provides income replacement benefits to eligible participants who are unable to perform their job duties or any job related to his or her education, training or experience. As all income replacement benefits are fully insured, no related obligation is required as of December 31, 2017 and 2016. In addition to income replacement benefits, plan participants may remain covered for certain health and life insurance benefits up to normal retirement age, and accordingly, we have recorded an obligation of $8.4 and $8.2 as of December 31, 2017 and 2016, respectively.