Employee Benefit Plans

12 Months Ended

Dec. 31, 2015

Employee Benefit Plans [Abstract]

Certain Employee Benefit and Stock Based Compensation Plans

Note 12 Employee Benefit Plans

Pension and Postretirement Plans

We have a noncontributory, qualified defined benefit pension plan covering eligible employees. Benefits are determined using a cash balance formula where earnings credits are a percentage of eligible compensation. Earnings credit percentages for those employees who were plan participants on December 31, 2009 are frozen at the level earned to that point. Earnings credits for all employees who become participants on or after January 1, 2010 are a flat 3% of eligible compensation. All plan participants earn interest on their cash balances based on 30-year Treasury securities rates with those who were participants at December 31, 2009 earning a minimum rate. New participants on or after January 1, 2010 are not subject to the minimum rate. Any pension contributions to the plan are based on an actuarially determined amount necessary to fund total benefits payable to plan participants. In February 2015, PNC made a voluntary contribution of $200 million to the qualified pension plan.

We also maintain nonqualified supplemental retirement plans for certain employees and provide certain health care and life insurance benefits for qualifying retired employees (postretirement benefits) through various plans. PNC reserves the right to terminate or make changes to these plans at any time. The nonqualified pension plan is unfunded. In November of 2015, PNC established a voluntary employee beneficiary association (VEBA) to partially fund postretirement medical and life insurance benefit obligations. PNC made a contribution of $200 million to the VEBA in December 2015.

We use a measurement date of December 31 for plan assets and benefit obligations. A reconciliation of the changes in the projected benefit obligation for qualified pension, nonqualified pension and postretirement benefit plans as well as the change in plan assets for the qualified pension plan follows.

Table 96: Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets
		Qualified				Nonqualified				Postretirement
		Pension				Pension				Benefits
December 31 (Measurement Date) – in millions			2015		2014		2015		2014		2015		2014
Accumulated benefit obligation at end of year		$	4,330	$	4,427	$	292	$	316
Projected benefit obligation at beginning of year		$	4,499	$	3,966	$	322	$	292	$	379	$	375
Service cost			107		103		3		3		5		5
Interest cost			177		187		11		12		15		16
Plan amendments					(7)
Actuarial (gains)/losses and changes in assumptions			(126)		504		(10)		40		(9)		4
Participant contributions											5		8
Federal Medicare subsidy on benefits paid											2		2
Benefits paid			(260)		(254)		(28)		(25)		(28)		(31)
Settlement payments											(1)
	Projected benefit obligation at end of year	$	4,397	$	4,499	$	298	$	322	$	368	$	379
Fair value of plan assets at beginning of year		$	4,357	$	4,252
Actual return on plan assets			19		359
Employer contribution			200			$	28	$	25	$	222	$	21
Participant contributions											5		8
Federal Medicare subsidy on benefits paid											2		2
Benefits paid			(260)		(254)		(28)		(25)		(28)		(31)
Settlement payments											(1)
	Fair value of plan assets at end of year	$	4,316	$	4,357					$	200
Funded status		$	(81)	$	(142)	$	(298)	$	(322)	$	(168)	$	(379)
Amounts recognized on the consolidated balance sheet
	Noncurrent asset
	Current liability					$	(27)	$	(31)	$	(2)	$	(25)
	Noncurrent liability	$	(81)	$	(142)		(271)		(291)		(166)		(354)
	Net amount recognized on the consolidated balance sheet	$	(81)	$	(142)	$	(298)	$	(322)	$	(168)	$	(379)
Amounts recognized in accumulated other comprehensive
	income consist of:
Prior service cost (credit)		$	(13)	$	(22)	$	1	$	1	$	(3)	$	(4)
Net actuarial loss			794		673		71		88		22		31
	Amount recognized in AOCI	$	781	$	651	$	72	$	89	$	19	$	27

At December 31,2015, the fair value of the qualified pension plan assets was less than both the accumulated benefit obligation and the projected benefit obligation.

The nonqualified pension plan is unfunded. Contributions from PNC and, in the case of the postretirement benefit plans, participant contributions cover all benefits paid under the nonqualified pension plan and postretirement benefit plans. The postretirement plan provides benefits to certain retirees that are at least actuarially equivalent to those provided by Medicare Part D and accordingly, we receive a federal subsidy as shown in Table 96.

In March 2010, the Patient Protection and Affordable Care Act (PPACA) was enacted. Key aspects of the PPACA which are reflected in our consolidated financial statements include the excise tax on high-cost health plans beginning in 2018 and fees for the Transitional Reinsurance Program and the Patient-Centered Outcomes Research Institute. These provisions did not have a significant effect on our postretirement medical liability or costs. The Early Retiree Reinsurance Program (ERRP) was established by the PPACA. Congress appropriated funding of $5.0 billion for this temporary ERRP to provide financial assistance to employers, unions, and state and local governments to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare, including their spouses, surviving spouses, and dependents. PNC did not receive reimbursement in 2014 related to the 2013 plan year. The ERRP terminated effective January 1, 2014.

PNC Pension Plan Assets

Assets related to our qualified pension plan (the Plan) are held in trust (the Trust). Effective July 1, 2011, the trustee is The Bank of New York Mellon. The Trust is exempt from tax pursuant to section 501(a) of the Internal Revenue Code (the Code). The Plan is qualified under section 401(a) of the Code. Plan assets consist primarily of listed domestic and international equity securities, U.S. government and agency securities, corporate debt securities, and real estate investments. The Plan held no PNC common stock as of December 31,2015 and December 31, 2014.

The PNC Financial Services Group, Inc. Administrative Committee (the Administrative Committee) adopted the Pension Plan Investment Policy Statement, including target allocations and allowable ranges, on August 13, 2008. On February 25, 2010, the Administrative Committee amended the investment policy to include a dynamic asset allocation approach and also updated target allocation ranges for certain asset categories. On February 24, 2014, the Administrative Committee amended the investment policy to update the target allocation ranges for certain asset categories.

The long-term investment strategy for pension plan assets is to:

• Meet present and future benefit obligations to all participants and beneficiaries,

• Cover reasonable expenses incurred to provide such benefits, including expenses incurred in the administration of the Trust and the Plan,

• Provide sufficient liquidity to meet benefit and expense payment requirements on a timely basis, and

• Provide a total return that, over the long term, maximizes the ratio of trust assets to liabilities by maximizing investment return, at an appropriate level of risk.

Under the dynamic asset allocation strategy, scenarios are outlined in which the Administrative Committee has the ability to make short to intermediate term asset allocation shifts based on factors such as the Plan’s funded status, the Administrative Committee’s view of return on equities relative to long term expectations, the Administrative Committee’s view on the direction of interest rates and credit spreads, and other relevant financial or economic factors which would be expected to impact the ability of the Trust to meet its obligation to participants and beneficiaries. Accordingly, the allowable asset allocation ranges have been updated to incorporate the flexibility required by the dynamic allocation policy.

The Plan’s specific investment objective is to meet or exceed the investment policy benchmark over the long term. The investment policy benchmark compares actual performance to a weighted market index, and measures the contribution of active investment management and policy implementation. This investment objective is expected to be achieved over the long term (one or more market cycles) and is measured over rolling five-year periods. Total return calculations are time-weighted and are net of investment-related fees and expenses.

The asset strategy allocations for the Trust at the end of 2015 and 2014, and the target allocation range at the end of 2015, by asset category, are as follows.

Table 97: Asset Strategy Allocations
	Target Allocation Range				Target Percentage of Plan Assets by Strategy at December 31
PNC Pension Plan					2015		2014
Asset Category
Domestic Equity	20	-	40	%	32	%	34	%
International Equity	10	-	25	%	23	%	23	%
Private Equity	0	-	15	%	8	%	6	%
Total Equity	40	-	70	%	63	%	63	%
Domestic Fixed Income	10	-	40	%	17	%	17	%
High Yield Fixed Income	0	-	25	%	12	%	13	%
Total Fixed Income	10	-	65	%	29	%	30	%
Real estate	0	-	15	%	5	%	5	%
Other	0	-	5	%	3	%	2	%
Total	100%				100	%	100	%

The asset category represents the allocation of Plan assets in accordance with the investment objective of each of the Plan’s investment managers. Certain domestic equity investment managers utilize derivatives and fixed income securities as described in their Investment Management Agreements to achieve their investment objective under the Investment Policy Statement. Other investment managers may invest in eligible securities outside of their assigned asset category to meet their investment objectives. The actual percentage of the fair value of total Plan assets held as of December 31,2015 for equity securities, fixed income securities, real estate and all other assets are 70%, 21%, 5% and 4%, respectively.

We believe that, over the long term, asset allocation is the single greatest determinant of risk. Asset allocation will deviate from the target percentages due to market movement, cash flows, investment manager performance and implementation of shifts under the dynamic allocation policy. Material deviations from the asset allocation targets can alter the expected return and risk of the Trust. On the other hand, frequent rebalancing to the asset allocation targets may result in significant transaction costs, which can impair the Trust’s ability to meet its investment objective. Accordingly, the Trust portfolio is periodically rebalanced to maintain asset allocation within the target ranges described above.

In addition to being diversified across asset classes, the Trust is diversified within each asset class. Secondary diversification provides a reasonable basis for the expectation that no single security or class of securities will have a disproportionate impact on the total risk and return of the Trust.

The Administrative Committee selects investment managers for the Trust based on the contributions that their respective investment styles and processes are expected to make to the investment performance of the overall portfolio. The managers’ Investment Objectives and Guidelines, which are a part of each manager’s Investment Management Agreement, document performance expectations and each manager’s role in the portfolio. The Administrative Committee uses the Investment Objectives and Guidelines to establish, guide, control and measure the strategy and performance for each manager.

The purpose of investment manager guidelines is to:

• Establish the investment objective and performance standards for each manager,

• Provide the manager with the capability to evaluate the risks of all financial instruments or other assets in which the manager’s account is invested, and

• Prevent the manager from exposing its account to excessive levels of risk, undesired or inappropriate risk, or disproportionate concentration of risk.

The guidelines also indicate which investments and strategies the manager is permitted to use to achieve its performance objectives, and which investments and strategies it is prohibited from using.

Where investment strategies permit the use of derivatives and/or currency management, language is incorporated in the managers’ guidelines to define allowable and prohibited transactions and/or strategies. Derivatives are typically employed by investment managers to modify risk/return characteristics of their portfolio(s), implement asset allocation changes in a cost-effective manner, or reduce transaction costs. Under the managers’ investment guidelines, derivatives may not be used solely for speculation or leverage. Derivatives are to be used only in circumstances where they offer the most efficient economic means of improving the risk/reward profile of the portfolio.

BlackRock receives compensation for providing investment management services. The Asset Management Group business segment also receives compensation for payor-related services. Compensation for such services is paid by PNC and was not significant for 2015, 2014 or 2013. Non-affiliate service providers for the Trust are compensated from Plan assets.

Fair Value Measurements

As further described in Note 7 Fair Value, GAAP establishes the framework for measuring fair value, including a hierarchy used to classify the inputs used in measuring fair value.

A description of the valuation methodologies used for assets measured at fair value at both December 31,2015 and December 31, 2014 follows:

• Money market and mutual funds are valued at the net asset value of the shares held by the pension plan at year end.

• U.S. government and agency securities, corporate debt, common stock and preferred stock are valued at the closing price reported on the active market on which the individual securities are traded. If quoted market prices are not available for the specific security, then fair values are estimated by using pricing models or quoted prices of securities with similar characteristics. Such securities are generally classified within Level 2 of the valuation hierarchy but may be a Level 3 depending on the level of liquidity and activity in the market for the security.

• The collective trust fund investments are valued based upon the units of such collective trust fund held by the Plan at year end multiplied by the respective unit value. The unit value of the collective trust fund is based upon significant observable inputs, although it is not based upon quoted marked prices in an active market. The underlying investments of the collective trust funds consist primarily of equity securities, debt obligations, short-term investments, and other marketable securities. Due to the nature of these securities, there are no unfunded commitments or redemption restrictions. Certain collective trust fund investments based on net asset value are not classified as part of fair value hierarchy, in accordance with ASU 2015-07.

• Limited partnerships are valued by investment managers based on recent financial information used to estimate fair value. Other investments held by the pension plan include derivative financial instruments and real estate, which are recorded at estimated fair value as determined by third-party appraisals and pricing models, and group annuity contracts, which are measured at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer. In accordance with ASC 820-10, these investments are not classified in the fair value hierarchy.

These methods may result in fair value calculations that may not be indicative of net realizable values or future fair values. Furthermore, while the pension plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31,2015 and 2014.

Table 98: Pension Plan Assets - Fair Value Hierarchy
	Fair Value Measurements Using:
In millions	December 31, 2015 Fair Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	154	$	154
U.S. government and agency securities		324		186	$	138
Corporate debt (a)		575				568	$	7
Common stock		660		630		30
Preferred stock		7				7
Mutual funds		213		5		208
Interest in Collective Funds (b)		1,888				1,888
Other		13		1		12
Investments measured at net asset value (d)		482
Total	$	4,316	$	976	$	2,851	$	7

		Fair Value Measurements Using:
In millions		December 31, 2014 Fair Value		Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds		$	121	$	121
U.S. government and agency securities			294		147	$	147
Corporate debt (a)			648				638	$	10
Common stock			1,041		1,040		1
Preferred Stock			6				6
Mutual funds			220		2		218
Interest in Collective Funds (c)			1,589				1,589
Limited partnerships			2				2
Other			55		(4)		59
Investments measured at net asset value (d)			381
Total		$	4,357	$	1,306	$	2,660	$	10
(a)	Corporate debt includes $29 million and $34 million of non-agency mortgage-backed securities as of December 31, 2015 and 2014, respectively.
(b)	The benefit plans own commingled funds that invest in equity securities. The funds seek to mirror the benchmark of the S&P 500 Index, Morgan Stanley Capital International ACWI X US Index, Morgan Stanley Capital EAFE Index, Morgan Stanley Capital Emerging Markets Index and the NCREIF ODCE NOF Index with the exception of the BlackRock Index Fund.
(c)	The benefit plans own commingled funds that invest in equity and fixed income securities. The funds seek to mirror the performance of the S&P 500 Index, Russell 3000 Index, Morgan Stanley Capital International ACWI X US Index and the Dow Jones U.S. Select Real Estate Securities Index. The commingled fund that holds fixed income securities invests in domestic investment grade securities and seeks to mimic the performance of the Barclays Aggregate Bond Index.
(d)	In accordance with ASC 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the Consolidated Balance Sheet.

The following summarizes changes in the fair value of the pension plan’s Level 3 assets during 2015 and 2014.

Table 99: Rollforward of Pension Plan Level 3 Assets
.
		CorporateDebt
In millions
January 1, 2015	$	10
Net realized gain/(loss) on sale of investments		1
Net unrealized gain/(loss) on assets held at end of year
Purchases		4
Sales		(8)
December 31, 2015	$	7

		CorporateDebt
In millions
January 1, 2014	$	13
Net realized gain/(loss) on sale of investments		3
Net unrealized gain/(loss) on assets held at end of year
Purchases
Sales		(6)
December 31, 2014	$	10

The following table provides information regarding our estimated future cash flows related to our various plans.

Table 100: Estimated Cash Flows
		Pension Plans				Postretirement Benefits
In millions		Qualified Pension		Nonqualified Pension		Gross PNC Benefit Payments		Reduction in PNC Benefit Payments Due to Medicare Part D Subsidy
Estimated 2016 employer contributions				$	27	$	2
Estimated future benefit payments
	2016	$	273	$	27	$	25	$	1
	2017		289		26		26		1
	2018		305		28		27		1
	2019		303		25		27		1
	2020		304		24		28		1
	2021-2025		1,560		105		133		5

The qualified pension plan contributions are deposited into the Trust, and the qualified pension plan benefit payments are paid from the Trust. In February 2015, PNC made a $200 million voluntary contribution to the Trust. Notwithstanding the contribution, we do not expect to be required to make a contribution to the qualified plan for 2016 based on the funding calculations under the Pension Protection Act of 2006. For the other plans, total contributions and the benefit payments are the same and represent expected benefit amounts, which are paid from general assets. Postretirement benefits are net of participant contributions. Estimated cash flows reflect the partial funding of postretirement medical and life insurance obligations in the VEBA.

The components of net periodic benefit cost/(income) and other amounts recognized in Other comprehensive income (OCI) were as follows.

Table 101: Components of Net Periodic Benefit Cost
			Qualified Pension Plan						Nonqualified Pension Plan						Postretirement Benefits
Year ended December 31 – in millions				2015		2014		2013		2015		2014		2013		2015		2014		2013
Net periodic cost consists of:
Service cost			$	107	$	103	$	113	$	3	$	3	$	3	$	5	$	5	$	6
Interest cost				177		187		170		11		12		12		15		16		14
Expected return on plan assets				(297)		(289)		(288)
Amortization of prior service cost/(credit)				(9)		(8)		(8)								(1)		(2)		(3)
Amortization of actuarial (gain)/loss				31				87		7		4		8
Settlement (gain)/loss														7						1
Net periodic cost (benefit)				9		(7)		74		21		19		30		19		19		18
Other changes in plan assets and benefit
	obligations recognized in Other
	comprehensive income:
Current year prior service cost/(credit)						(7)
Amortization of prior service (cost)/credit				9		8		8								1		2		3
Current year actuarial loss/(gain)				152		434		(784)		(10)		40		(26)		(9)		4		(9)
Amortization of actuarial gain/(loss)				(31)				(87)		(7)		(4)		(15)						(1)
	Total recognized in OCI			130		435		(863)		(17)		36		(41)		(8)		6		(7)
	Total amounts recognized in net
		periodic cost and OCI	$	139	$	428	$	(789)	$	4	$	55	$	(11)	$	11	$	25	$	11

The weighted-average assumptions used (as of the beginning of each year) to determine the net periodic costs shown above were as follows.

Table 102: Net Periodic Costs - Assumptions
		Net Periodic Cost Determination
Year ended December 31		2015		2014		2013
Discount rate
	Qualified pension	3.95	%	4.75	%	3.80	%
	Nonqualified pension	3.65	%	4.35	%	3.45	%
	Postretirement benefits	3.80	%	4.50	%	3.60	%
Rate of compensation increase (average)		4.00	%	4.00	%	4.00	%
Assumed health care cost trend rate
	Initial trend	7.50	%	7.75	%	8.00	%
	Ultimate trend	5.00	%	5.00	%	5.00	%
	Year ultimate reached	2025		2025		2019
Expected long-term return on plan assets		6.75	%	7.00	%	7.50	%

The weighted-average assumptions used (as of the end of each year) to determine year end obligations for pension and postretirement benefits were as follows.

Table 103: Other Pension Assumptions
Year ended December 31		2015		2014
Discount rate
	Qualified pension	4.25	%	3.95	%
	Nonqualified pension	3.95	%	3.65	%
	Postretirement benefits	4.15	%	3.80	%
Rate of compensation increase (average)		3.50	%	4.00	%
Assumed health care cost trend rate
	Initial trend	7.25	%	7.50	%
	Ultimate trend	5.00	%	5.00	%
	Year ultimate reached	2025		2025

The discount rates are determined independently for each plan by comparing the expected future benefits that will be paid under each plan with yields available on high quality corporate bonds of similar duration. For this analysis, 10% of bonds with the highest yields and 40% with the lowest yields were removed from the bond universe.

The expected return on plan assets is a long-term assumption established by considering historical and anticipated returns of the asset classes invested in by the pension plan and the allocation strategy currently in place among those classes. We review this assumption at each measurement date and adjust it if warranted.

The health care cost trend rate assumptions shown in the preceding tables relate only to the postretirement benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects.

Table 104: Effect of One Percent Change in Assumed Health Care Cost
Year ended December 31, 2015
In millions		Increase	Decrease
Effect on year end benefit obligation	$	10	(9)

Unamortized actuarial gains and losses and prior service costs and credits are recognized in AOCI each December 31, with amortization of these amounts through net periodic benefit cost. The estimated amounts that will be amortized in 2016 are as follows.

Table 105: Estimated Amortization of Unamortized Actuarial Gains and Losses - 2016
	2016 Estimate
Year ended December 31In millions	Qualified Pension		Nonqualified Pension		Postretirement Benefits
Prior service (credit)	$	(7)			$	(1)
Net actuarial loss		45	$	4
Total	$	38	$	4	$	(1)

Defined Contribution Plans

The PNC Incentive Savings Plan (ISP) is a qualified defined contribution plan that covers all eligible PNC employees. Effective January 1, 2015, newly-hired full time employees and part-time employees who became eligible to participate in the ISP after that date are automatically enrolled in the ISP with a deferral rate equal to 4% of eligible compensation in the absence of an affirmative election otherwise. Employee benefits expense related to the ISP was $126 million in 2015, $108 million in 2014 and $120 million in 2013, representing cash contributed to the ISP by PNC.

Under the ISP, employee contributions up to 4% of eligible compensation as defined by the ISP are matched 100% once an employee has reached match-eligibility, subject to IRS Code limitations. PNC will contribute a minimum matching contribution up to $2,000 annually for eligible employees who contribute at least 4% of eligible compensation every pay period he or she is eligible during the year. This amount is prorated for certain employees, including part-time employees and those who are eligible for the company match for less than a full year. Additionally, PNC makes an annual true-up matching contribution to ensure that eligible participants receive the full company match available. Effective January 1, 2012, in the case of both the minimum and true-up matching contributions, eligible employees must remain employed on the last day of the applicable plan year in order to receive the contribution. Employees hired prior to January 1, 2010, became 100% vested in employer matching contributions immediately, while employees hired on or after January 1, 2010, generally become 100% vested in employer matching contributions after three years of service. Minimum matching contributions made with respect to the 2014 and 2013 plan years are immediately 100% vested.

The ISP is a 401(k) Plan and includes an employee stock ownership (ESOP) feature. Employee contributions are invested in a number of investment options, including pre mixed portfolios and individual core funds, available under the ISP at the direction of the employee. Although employees were also historically permitted to direct the investment of their contributions into the PNC common stock fund, this fund was frozen to future investments of such contributions effective January 1, 2010. All shares of PNC common stock held by the ISP are part of the ESOP. Effective January 1, 2011, employer matching contributions were made in cash.

We also maintain a nonqualified supplemental savings plan for certain employees, known as The PNC Financial Services Group, Inc. Supplemental Incentive Savings Plan. Effective January 1, 2012, the Supplemental Incentive Savings Plan was frozen to new participants and for any deferrals of amounts earned on or after such date. It was replaced by a new plan called The PNC Financial Services Group, Inc. Deferred Compensation and Incentive Plan.