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Employee Benefits (Tables)
 12 Months Ended
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]  
Summary of the benefit obligation and the fair value of plan assets, as well as the funded status for the retirement and post-retirement plans
A summary of the benefit obligation and the fair value of plan assets, as well as the funded status for the retirement and postretirement plans as of December 31, is as follows (benefits paid in the table below include only those amounts contributed directly to or paid directly from plan assets): 
(in millions)
Retirement Plans
 
Postretirement Plans
 
2014
 
2013
 
2014
 
2013
Net benefit obligation at beginning of year
$
2,004

 
$
2,171

 
$
103

 
$
129

Service cost
5

 
10

 
1

 
2

Interest cost
99

 
91

 
4

 
5

Plan participants’ contributions
—

 
—

 
4

 
4

Actuarial loss (gain)
504

 
(178
)
 
5

 
(13
)
Gross benefits paid
(125
)
 
(77
)
 
(13
)
 
(13
)
Foreign currency effect
(25
)
 
8

 
—

 
—

Curtailment 1
—

 
(26
)
 
—

 
(11
)
Other adjustments
—

 
5

 
(8
)
 
—

Net benefit obligation at end of year
2,462

 
2,004

 
96

 
103

Fair value of plan assets at beginning of year
2,088

 
1,851

 
—

 
—

Actual return on plan assets
270

 
281

 
—

 
—

Employer contributions
22

 
27

 
9

 
9

Plan participants’ contributions
—

 
—

 
4

 
4

Gross benefits paid
(125
)
 
(77
)
 
(13
)
 
(13
)
Foreign currency effect
(19
)
 
6

 
—

 
—

Fair value of plan assets at end of year
2,236

 
2,088

 
—

 
—

Funded status
$
(226
)
 
$
84

 
$
(96
)
 
$
(103
)
Amounts recognized in consolidated balance sheets:
 
 
 
 
 
 
 
Non-current assets
$
28

 
$
261

 
$
—

 
$
—

Current liabilities
(8
)
 
(7
)
 
(9
)
 
(9
)
Non-current liabilities
(246
)
 
(170
)
 
(87
)
 
(94
)

$
(226
)
 
$
84

 
$
(96
)
 
$
(103
)
Accumulated benefit obligation
$
2,440

 
$
2,004

 
 
 
 
Plans with accumulated benefit obligation in excess of the fair value of plan assets:
 
 
 
 
 
 
 
Projected benefit obligation
$
2,046

 
$
176

 
 
 
 
Accumulated benefit obligation
$
2,024

 
$
158

 
 
 
 
Fair value of plan assets
$
1,792

 
$
—

 
 
 
 
Amounts recognized in accumulated other comprehensive loss, net of tax:
 
 
 
 
 
 
 
Net actuarial loss (gain)
$
452

 
$
227

 
$
(8
)
 
$
(11
)
Prior service credit
1

 
1

 
(5
)
 
(1
)
Total recognized
$
453

 
$
228

 
$
(13
)
 
$
(12
)

1 
The curtailment gain for our retirement plans in 2013 relates to a freeze of pension accruals for MHE employees as well as all remaining active employees in the United Kingdom ("U.K."). The curtailment gain for our postretirement plans relates to the sale of MHE on March 22, 2013.

Components of net periodic cost for defined benefit plans and post-retirement healthcare and other benefits plan
A summary of net periodic benefit cost for our retirement and postretirement plans for the years ended December 31, is as follows: 
(in millions)
Retirement Plans
 
Postretirement Plans
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Service cost
$
5

 
$
10

 
$
24

 
$
1

 
$
2

 
$
3

Interest cost
99

 
91

 
93

 
4

 
5

 
5

Expected return on assets
(138
)
 
(129
)
 
(124
)
 
—

 
—

 
—

Amortization of:

 

 

 

 

 

Actuarial loss (gain)
11

 
26

 
32

 
(1
)
 
—

 
—

Prior service cost (credit)
—

 
5

 
(1
)
 
—

 
(1
)
 
(1
)
Curtailment 1
—

 
(8
)
 
—

 
(1
)
 
(12
)
 
—

Net periodic benefit cost
$
(23
)
 
$
(5
)
 
$
24

 
$
3

 
$
(6
)
 
$
7


1 
The curtailment gain for our retirement plans in 2013 relates to a freeze of pension accruals for MHE employees as well as all remaining active employees in the United Kingdom ("U.K."). The curtailment gain for our postretirement plans in 2014 is a result of plan changes effective October 31, 2014 eliminating retiree medical and life insurance benefits for active employees not retiring by July 1, 2016. The curtailment gain for our postretirement plans in 2013 relates to the sale of MHE on March 22, 2013.
Other changes in plan assets and benefit obligations recognized in other comprehensive income, net of tax
Other changes in plan assets and benefit obligations recognized in other comprehensive income, net of tax for the years ended December 31, are as follows: 
(in millions)
Retirement Plans
 
Postretirement Plans
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Net actuarial loss (gain)
$
232

 
$
(213
)
 
$
116

 
$
3

 
$
(8
)
 
$
2

Recognized actuarial (gain) loss
(7
)
 
(15
)
 
(20
)
 
1

 
—

 
—

Prior service cost (credit)
—

 
5

 
2

 
(5
)
 
—

 
1

Total recognized
$
225

 
$
(223
)
 
$
98

 
$
(1
)
 
$
(8
)
 
$
3
Assumptions
Assumptions
 
Retirement Plans
 
Postretirement Plans
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.15
%
 
5.00
%
 
4.10
%
 
3.60
%
 
4.20
%
 
3.45
%
Net periodic cost:
 
 
 
 
 
 
 
 
 
 
 
Weighted-average healthcare cost rate 1
 
 
 
 
 
 
7.0
%
 
7.0
%
 
7.5
%
Discount rate - U.S. plan 2
5.0
%
 
4.1
%
 
5.1
%
 
4.125
%
 
3.45
%
 
4.45
%
Discount rate - U.K. plan 2
4.5
%
 
4.8
%
 
5.1
%
 
 
 
 
 
 
Compensation increase factor - U.S. plan
N/A

 
N/A

 
4.5
%
 
 
 
 
 
 
Compensation increase factor - U.K. plan
N/A

 
5.75
%
 
5.85
%
 
 
 
 
 
 
Return on assets 3
7.125
%
 
7.25
%
 
7.75
%
 
 
 
 
 
 

1 
The assumed weighted-average healthcare cost trend rate will decrease ratably from 7% in 2014 to 5% in 2020 and remain at that level thereafter. Assumed healthcare cost trends have an effect on the amounts reported for the healthcare plans. A one percentage point change in assumed healthcare cost trend creates the following effects:
(in millions)
1% point
increase
 
1% point
decrease
Effect on postretirement obligation
$
5

 
$
(4
)

2 
Effective January 1, 2015, we changed our discount rate assumption on our U.S. retirement plans to 4.15% from 5.0% in 2014 and changed our discount rate assumption on our U.K. plan to 3.8% from 4.5% in 2014.
3 
The expected return on assets assumption is calculated based on the plan’s asset allocation strategy and projected market returns over the long-term. Effective January 1, 2015, we changed our return on assets assumption to 6.25% from 7.125% for the U.S. plan in 2014 and to 6.25% from 6.75% for the U.K. plan in 2014.
Effects created by one percentage point change in assumed healthcare cost trend
A one percentage point change in assumed healthcare cost trend creates the following effects:
(in millions)
1% point
increase
 
1% point
decrease
Effect on postretirement obligation
$
5

 
$
(4
)
Information about the expected cash flows for retirement and post-retirement plans and impact of the Medicare subsidy
Information about the expected cash flows for our retirement and postretirement plans and the impact of the Medicare subsidy is as follows: 
(in millions)
 
 
Postretirement Plans 2
 
Retirement 1
Plans
 
Gross
payments
 
Retiree
contributions
 
Medicare
subsidy
 
Net
payments
2015
$
84

 
$
15

 
$
(5
)
 
$
(1
)
 
$
9

2016
88

 
15

 
(5
)
 
(1
)
 
9

2017
92

 
15

 
(5
)
 
(1
)
 
9

2018
96

 
15

 
(5
)
 
(1
)
 
9

2019
100

 
14

 
(5
)
 
(1
)
 
8

2020-2024
553

 
52

 
(15
)
 
(3
)
 
34

1 
Reflects the total benefits expected to be paid from the plans or from our assets including both our share of the benefit cost and the participants’ share of the cost.
2 
Reflects the total benefits expected to be paid from our assets.
Fair value of defined benefit plans assets by asset class
The fair value of our defined benefit plans assets as of December 31, 2014 and 2013, by asset class is as follows:
(in millions)
December 31, 2014
 
Total
 
Level 1
 
Level 2
 
Level 3
Cash and short-term investments
$
176

 
$
17

 
$
159

 
$
—

Equities:

 

 

 

U.S. indexes 1
293

 
88

 
205

 
—

U.S. growth and value
204

 
147

 
57

 
—

U.K.
67

 
56

 
11

 
—

International, excluding U.K.
139

 
42

 
97

 
—

Fixed income:

 

 

 

Long duration strategy 2
1,165

 
—

 
1,165

 
—

Intermediate duration securities
25

 
—

 
25

 
—

Agency mortgage backed securities
6

 
—

 
6

 
—

Asset backed securities
18

 
—

 
18

 
—

Non-agency mortgage backed securities 3
37

 
—

 
37

 
—

U.K. 4
7

 
—

 
7

 
—

International, excluding U.K.
85

 
—

 
85

 
—

Other
14

 
—

 
14

 
—

Total
$
2,236

 
$
350

 
$
1,886

 
$
—

(in millions)
December 31, 2013
 
Total
 
Level 1
 
Level 2
 
Level 3
Cash, short-term investments, and other
$
68

 
$
20

 
$
48

 
$
—

Equities:

 

 

 

U.S. indexes 1
514

 
145

 
369

 
—

U.S. growth and value
373

 
325

 
48

 
—

U.K.
183

 
101

 
82

 
—

International, excluding U.K.
227

 
131

 
96

 
—

Fixed income:

 

 

 

Long duration strategy 2
517

 
—

 
517

 
—

Intermediate duration securities
11

 
—

 
11

 
—

Agency mortgage backed securities
7

 
—

 
7

 
—

Asset backed securities
16

 
—

 
16

 
—

Non-agency mortgage backed securities 3
45

 
—

 
45

 
—

U.K. 4
66

 
—

 
66

 
—

International, excluding U.K.
61

 
—

 
61

 
—

Total
$
2,088

 
$
722

 
$
1,366

 
$
—

1 
Includes securities that are tracked in the following indexes: S&P 500, S&P MidCap 400, S&P MidCap 400 Growth and S&P Smallcap 600.
2 
Includes securities that are investment grade obligations of issuers in the U.S.
3 
Includes U.S. mortgage-backed securities that are not backed by the U.S. government.
4 
Includes securities originated by the government of and other issuers from the U.K.