17. Retirement and Deferred Compensation Plans

Defined Benefit Pension and Other Postretirement Benefit Plans

We maintain U.S. defined benefit pension plans in which many of our U.S. employees and agents are participants, and a U.K. plan we retained after the sale of the Lincoln UK business. Our defined benefit pension plans are closed to new entrants and existing participants do not accrue any additional benefits. We comply with the minimum funding requirements in both the U.S. and the U.K. In accordance with such practice, we were required to contribute $11 million and $6 million for the years ended December 31, 2015 and 2014, respectively. We elected to contribute an additional $25 million during December 2015. We do not expect to be required to make any contributions to these pension plans in 2016. We sponsor other postretirement benefit plans that provide health care and life insurance to certain retired employees and agents. Total net periodic cost (recovery) for these plans was $(6) million, $(4) million and $(1) million during 2015, 2014 and 2013, respectively. In 2016, we expect to make benefit payments of approximately $132 million for these plans.

Information (in millions) with respect to these plans was as follows:


	As of or For the Years Ended December 31,
	2015			2014			2015			2014

							Other Postretirement
	Pension Plans						Benefit Plans
Fair value of plan assets	$	1,434		$	1,522		$	52		$	48
Projected benefit obligation		1,607			1,708			97			103
Funded status of plan	$	(173	)	$	(186	)	$	(45	)	$	(55	)

Amounts Recognized on the
Consolidated Balance Sheets
Other assets	$	28		$	34		$	2		$	1
Other liabilities		(201	)		(220	)		(47	)		(56	)
Net amount recognized	$	(173	)	$	(186	)	$	(45	)	$	(55	)

Weighted-Average Assumptions
Benefit obligations:
Weighted-average discount rate		4.29%			3.88%			4.50%			4.00%

Net periodic benefit cost:
Weighted-average discount rate		3.88%			4.64%			4.00%			4.50%
Expected return on plan assets		6.87%			6.90%			6.50%			6.50%

The discount rate was determined based on a corporate yield curve as of December 31, 2015, and projected benefit obligation cash flows. The expected return on plan assets was determined based on historical and expected future returns of the various asset categories, using the plans’ target plan allocation. We reevaluate these assumptions each plan year.

In October 2014, the Society of Actuaries published updated mortality tables that were incorporated into our assumptions, resulting in an increase in our pension plans’ benefit obligation of $55 million, pre-tax.

The following summarizes our fair value measurements of our benefit plans’ assets (in millions) on a recurring basis by asset category:


	As of December 31,
	2015		2014

Fixed maturity securities:
Corporate bonds	$	355	$	454
U.S. government bonds		207		161
Foreign government bonds		145		166
State and municipal bonds		32		33
Common and preferred stock		542		554
Cash and invested cash		151		152
Other investments		54		50
Total	$	1,486	$	1,570

See “Fair Value Measurement” in Note 1 for discussion on how we categorize our pension plans’ assets into the three-level fair value hierarchy. See “Financial Instruments Carried at Fair Value” in Note 20 for a summary of our fair value measurement of our pension plans’ assets by the three-level fair value hierarchy.

Defined Contribution Plans

We sponsor tax-qualified defined contribution plans for eligible employees and agents. We administer these plans in accordance with the plan documents and various limitations under section 401(a) of the Internal Revenue Code of 1986. For the years ended December 31, 2015, 2014 and 2013, expenses for these plans were $82 million, $78 million and $72 million, respectively.

Deferred Compensation Plans

We sponsor non-qualified, unfunded, deferred compensation plans for certain current and former employees, agents and non-employee directors. The results of certain notional investment options within some of the plans are hedged by total return swaps. Our expenses increase or decrease in direct proportion to the change in market value of the participants’ investment options. Participants of certain plans are able to select our stock as an investment option; however, it is not hedged by the total return swaps and is a primary source of expense volatility related to these plans. For further discussion of total return swaps related to our deferred compensation plans, see Note 6. For the years ended December 31, 2015, 2014 and 2013, expenses for these plans were $10 million, $23 million and $38 million.

Information (in millions) with respect to these plans was as follows:


	As of December 31,
	2015		2014
Total liabilities (1)	$	483	$	495
Investments dedicated to fund liabilities (2)		151		160

⁽¹⁾

Reported in other liabilities on our Consolidated Balance Sheets.

⁽²⁾

Reported in other assets on our Consolidated Balance Sheets.