Employee Benefits

We maintain a number of active defined contribution retirement plans for our employees. The majority of our defined benefit plans are frozen. As a result, no new employees will be permitted to enter these plans and no additional benefits for current participants in the frozen plans will be accrued.

We also have supplemental benefit plans that provide senior management with supplemental retirement, disability and death benefits. Certain supplemental retirement benefits are based on final monthly earnings. In addition, we sponsor voluntary 401(k) plans under which we may match employee contributions up to certain levels of compensation as well as profit-sharing plans under which we contribute a percentage of eligible employees' compensation to the employees' accounts.

We also provide certain medical, dental and life insurance benefits for active and retired employees and eligible dependents. The medical and dental plans and supplemental life insurance plan are contributory, while the basic life insurance plan is noncontributory. We currently do not prefund any of these plans.

We recognize the funded status of our retirement and postretirement plans in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income, net of taxes. The amounts in accumulated other comprehensive income represent net unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic pension cost pursuant to our accounting policy for amortizing such amounts.

Benefit Obligation

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
	2016			2015			2016			2015
Net benefit obligation at beginning of year	$	2,199		$	2,462		$	80		$	96
Service cost	3			6			—			—
Interest cost	78			96			2			3
Plan participants’ contributions	—			—			4			4
Actuarial loss (gain)	196			(189		)	(6		)	(12		)
Gross benefits paid	(121		)	(150		)	(10		)	(12		)
Foreign currency effect	(75		)	(26		)	—			—
Other adjustments	(20		)	—			(13		)	1
Net benefit obligation at end of year	2,260			2,199			57			80
Fair value of plan assets at beginning of year	2,023			2,236			—			—
Actual return on plan assets	259			(57		)	—			—
Employer contributions	8			15			6			8
Plan participants’ contributions	—			—			4			4
Gross benefits paid	(121		)	(150		)	(10		)	(12		)
Foreign currency effect	(74		)	(21		)	—			—
Other adjustments	(22		)	—			—			—
Fair value of plan assets at end of year	2,073			2,023			—			—
Funded status	$	(187	)	$	(176	)	$	(57	)	$	(80	)
Amounts recognized in consolidated balance sheets:
Non-current assets	$	46		$	36		$	—		$	—
Current liabilities	(8		)	(8		)	(8		)	(8		)
Non-current liabilities	(225		)	(204		)	(49		)	(72		)
	$	(187	)	$	(176	)	$	(57	)	$	(80	)
Accumulated benefit obligation	$	2,251		$	2,190
Plans with accumulated benefit obligation in excess of the fair value of plan assets:
Projected benefit obligation	$	674		$	1,810
Accumulated benefit obligation	$	665		$	1,801
Fair value of plan assets	$	441		$	1,598
Amounts recognized in accumulated other comprehensive loss, net of tax:
Net actuarial loss (gain)	$	483		$	433		$	(35	)	$	(24	)
Prior service credit	1			1			(13		)	(5		)
Total recognized	$	484		$	434		$	(48	)	$	(29	)

The actuarial loss included in accumulated other comprehensive loss for our retirement plans and expected to be recognized in net periodic pension cost during the year ending December 31, 2017 is $18 million. There is no prior service credit included in accumulated other comprehensive loss for our retirement plans expected to be recognized in net periodic benefit cost during the year ending December 31, 2017.

There is an immaterial amount of actuarial loss and prior service credit included in accumulated other comprehensive loss for our postretirement plans expected to be recognized in net periodic benefit cost during the year ending December 31, 2017.

Net Periodic Benefit Cost

For purposes of determining annual pension cost, prior service costs are being amortized straight-line over the average expected remaining lifetime of plan participants expected to receive benefits.

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
	2016			2015			2014			2016			2015			2014
Service cost	$	3		$	6		$	5		$	—		$	—		$	1
Interest cost	78			96			99			2			3			4
Expected return on assets	(122		)	(127		)	(138		)							—
Amortization of:
Actuarial loss (gain)	16			20			11			(1		)	—			(1		)
Prior service (credit) cost	—			—			—			—			(1		)	—
Curtailment ¹	—			—			—			—			—			(1		)
Net periodic benefit cost	$	(25	)	$	(5	)	$	(23	)	$	1		$	2		$	3


¹	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.

Our U.K. retirement plan accounted for a benefit of $10 million in 2016, $10 million in 2015, and $8 million in 2014 of the net periodic benefit cost attributable to the funded plans.

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
	2016			2015			2014			2016			2015			2014
Net actuarial loss (gain)	$	60		$	(6	)	$	232		$	(12	)	$	(17	)	$	3
Recognized actuarial (gain) loss	(10		)	(13		)	(7		)	1			—			1
Prior service cost (credit)	—			—			—			(8		)	1			(5		)
Total recognized	$	50		$	(19	)	$	225		$	(19	)	$	(16	)	$	(1	)

The total cost for our retirement plans was $69 million for 2016, $91 million for 2015 and $81 million for 2014. Included in the total retirement plans cost are defined contribution plans cost of $65 million for 2016, $67 million for 2015 and $74 million for 2014.

Assumptions



	Retirement Plans						Postretirement Plans
	2016		2015		2014		2016		2015		2014
Benefit obligation:
Discount rate ²	4.14	%	4.47	%	4.15	%	3.69	%	3.90	%	3.60	%
Net periodic cost:
Weighted-average healthcare cost rate ¹							7.0	%	7.0	%	7.0	%
Discount rate - U.S. plan ²	4.47	%	4.15	%	5.0	%	3.94	%	3.60	%	4.125	%
Discount rate - U.K. plan ²	3.84	%	3.8	%	4.5	%
Return on assets ³	6.25	%	6.25	%	7.125	%


¹	The assumed weighted-average healthcare cost trend rate will decrease ratably from 7% in 2016 to 5% in 2024 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	$	1	$	(1	)

Effective January 1, 2016, we changed our discount rate assumption on our U.S. retirement plans to 4.47% from 4.15% in 2015 and changed our discount rate assumption on our U.K. plan to 3.84% from 3.8% in 2015. At the end of 2015, we changed our approach used to measure service and interest costs on all of our retirement plans. For 2015 and prior periods presented, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation. For 2016, we elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans' liability cash flows. We believe this new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans' liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of our benefit obligation. We have accounted for this change as a change in accounting estimate that is inseparable from a change in accounting principle and, accordingly, have accounted for it on a prospective basis. Pension and postretirement medical costs decreased by approximately $14 million in 2016 as a result of this change.


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, 2017, our return on assets assumption for the U.S. plan and U.K. plan remained unchanged at 6.25%.

Cash Flows

In December of 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was enacted. The Act established a prescription drug benefit under Medicare, known as “Medicare Part D”, and a federal subsidy to sponsors of retiree healthcare benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. Our benefits provided to certain participants are at least actuarially equivalent to Medicare Part D, and, accordingly, we are entitled to a subsidy.

Expected employer contributions in 2017 are $8 million for each of our retirement and postretirement plans. In 2017, we may elect to make additional non-required contributions depending on investment performance and the pension plan status. 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 ³		Net payments
2017	$	88	$	12	$	(4	)	$	—	$	8
2018	90		11		(4		)	—		7
2019	93		10		(3		)	—		7
2020	96		9		(3		)	—		6
2021	98		8		(3		)	—		5
2022-2026	527		30		(12		)	—		18


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.


³	Expected medicare subsidy amounts, for the years presented, are less than $1 million.

Fair Value of Plan Assets

In accordance with authoritative guidance for fair value measurements certain assets and liabilities are required to be recorded at fair value. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value hierarchy has been established which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:


•	Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.


•	Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of our defined benefit plans assets as of December 31, 2016 and 2015, by asset class is as follows:



(in millions)	December 31, 2016
	Total		Level 1		Level 2		Level 3
Cash and short-term investments	$	38	$	38	$	—	$	—
Equities:
U.S. indexes ¹	69		69		—		—
U.S. growth and value	103		103		—		—
U.K.	3		3		—		—
International, excluding U.K.	38		38		—		—
Fixed income:
Long duration strategy ²	970		—		970		—
Intermediate duration securities	32		—		32		—
Agency mortgage backed securities	5		—		5		—
Asset backed securities	19		—		19		—
Non-agency mortgage backed securities ³	20		—		20		—
International	16		—		16		—
Real Estate
U.K. ⁴	11		—		—		11
Other	—		—		—		—
Total	$	1,324	$	251	$	1,062	$	11
Collective investment funds	749
Total	$	2,073



(in millions)	December 31, 2015
	Total		Level 1		Level 2		Level 3
Cash, short-term investments, and other	$	1	$	1	$	—	$	—
Equities:
U.S. indexes ¹	63		63		—		—
U.S. growth and value	92		92		—		—
U.K.	6		6		—		—
International, excluding U.K.	35		35		—		—
Fixed income:
Long duration strategy ²	969		—		969		—
Intermediate duration securities	31		—		31		—
Agency mortgage backed securities	6		—		6		—
Asset backed securities	17		—		17		—
Non-agency mortgage backed securities ³	23		—		23		—
International	17		—		17		—
Other	—		—		—		—
Total	$	1,260	$	197	$	1,063	$	—
Collective investment funds	763
Total	$	2,023


¹	Includes securities that are tracked in the S&P Smallcap 600 index.


²	Includes securities that are mainly 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 a fund which holds real estate properties in the U.K.

For securities that are quoted in active markets, the trustee/custodian determines fair value by applying securities’ prices obtained from its pricing vendors. For commingled funds that are not actively traded, the trustee applies pricing information provided by investment management firms to the unit quantities of such funds. Investment management firms employ their own pricing vendors to value the securities underlying each commingled fund. Underlying securities that are not actively traded derive their prices from investment managers, which in turn, employ vendors that use pricing models (e.g., discounted cash flow, comparables). The domestic defined benefit plans have no investment in our stock, except through the S&P 500 commingled trust index fund.

The trustee obtains estimated prices from vendors for securities that are not easily quotable and they are categorized accordingly as Level 3. The following table details further information on our plan assets where we have used significant unobservable inputs (Level 3):



(in millions)	Level 3
Balance as of December 31, 2015	$	—
Purchases	11
Balance as of December 31, 2016	$	11

Pension Trusts’ Asset Allocations

There are two pension trusts, one in the U.S. and one in the U.K.


•	The U.S. pension trust had assets of $1.6 billion as of December 31, 2016 and 2015, and the target allocations in 2016 include 68% debt securities and short-term investments, 27% domestic equities and 5% international equities.


•	The U.K. pension trust had assets of $441 million and $425 million as of December 31, 2016 and 2015, respectively, and the target allocations in 2016 include 40% fixed income, 30% diversified growth funds, 20% equities and 10% real estate .

The pension assets are invested with the goal of producing a combination of capital growth, income and a liability hedge. The mix of assets is established after consideration of the long-term performance and risk characteristics of asset classes. Investments are selected based on their potential to enhance returns, preserve capital and reduce overall volatility. Holdings are diversified within each asset class. The portfolios employ a mix of index and actively managed equity strategies by market capitalization, style, geographic regions and economic sectors. The fixed income strategies include U.S. long duration securities, opportunistic fixed income securities and U.K. debt instruments. The short-term portfolio, whose primary goal is capital preservation for liquidity purposes, is composed of government and government-agency securities, uninvested cash, receivables and payables. The portfolios do not employ any financial leverage.

U.S. Defined Contribution Plans

Assets of the defined contribution plans in the U.S. consist primarily of investment options which include actively managed equity, indexed equity, actively managed equity/bond funds, target date funds, S&P Global Inc. common stock, stable value and money market strategies. There is also a self-directed mutual fund investment option. The plans purchased 216,035 shares and sold 437,283 shares of S&P Global Inc. common stock in 2016 and purchased 223,656 shares and sold 247,984 shares of S&P Global Inc. common stock in 2015. The plans held approximately 1.6 million shares of S&P Global Inc. common stock as of December 31, 2016 and 1.8 million shares as of December 31, 2015, with market values of $171 million and $179 million, respectively. The plans received dividends on S&P Global Inc. common stock of $2 million during both the years ended December 31, 2016 and December 31, 2015.