Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2018

Projected Benefit Obligations, Plan Assets and Funded Status of Pension Plans

The benefit obligations, plan assets and funded status of Altria’s pension and postretirement plans at December 31, 2018 and 2017 were as follows:



	Pension						Postretirement
(in millions)	2018			2017			2018			2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	8,510		$	8,312		$	2,335		$	2,364
Service cost	81			75			18			16
Interest cost	276			288			70			76
Benefits paid	(488		)	(703		)	(130		)	(139		)
Actuarial (gains) losses	(660		)	589			(298		)	56
Termination, settlement and curtailment	(18		)	(51		)	—			—
Other	25			—			45			(38		)
Benefit obligation at end of year	7,726			8,510			2,040			2,335
Change in plan assets:
Fair value of plan assets at beginning of year	8,015			7,475			270			—
Actual return on plan assets	(430		)	1,219			(14		)	—
Employer contributions	41			24			—			270
Benefits paid	(488		)	(703		)	(45		)	—
Fair value of plan assets at end of year	7,138			8,015			211			270
Funded status at December 31	$	(588	)	$	(495	)	$	(1,829	)	$	(2,065	)
Amounts recognized on Altria’s consolidated balance sheets were as follows:
Other accrued liabilities	$	(44	)	$	(51	)	$	(80	)	$	(78	)
Accrued pension costs	(544		)	(445		)	—			—
Other assets	—			1			—			—
Accrued postretirement health care costs	—			—			(1,749		)	(1,987		)
	$	(588	)	$	(495	)	$	(1,829	)	$	(2,065	)

Net Pension Liability Recognized in Consolidated Balance Sheets

The benefit obligations, plan assets and funded status of Altria’s pension and postretirement plans at December 31, 2018 and 2017 were as follows:



	Pension						Postretirement
(in millions)	2018			2017			2018			2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	8,510		$	8,312		$	2,335		$	2,364
Service cost	81			75			18			16
Interest cost	276			288			70			76
Benefits paid	(488		)	(703		)	(130		)	(139		)
Actuarial (gains) losses	(660		)	589			(298		)	56
Termination, settlement and curtailment	(18		)	(51		)	—			—
Other	25			—			45			(38		)
Benefit obligation at end of year	7,726			8,510			2,040			2,335
Change in plan assets:
Fair value of plan assets at beginning of year	8,015			7,475			270			—
Actual return on plan assets	(430		)	1,219			(14		)	—
Employer contributions	41			24			—			270
Benefits paid	(488		)	(703		)	(45		)	—
Fair value of plan assets at end of year	7,138			8,015			211			270
Funded status at December 31	$	(588	)	$	(495	)	$	(1,829	)	$	(2,065	)
Amounts recognized on Altria’s consolidated balance sheets were as follows:
Other accrued liabilities	$	(44	)	$	(51	)	$	(80	)	$	(78	)
Accrued pension costs	(544		)	(445		)	—			—
Other assets	—			1			—			—
Accrued postretirement health care costs	—			—			(1,749		)	(1,987		)
	$	(588	)	$	(495	)	$	(1,829	)	$	(2,065	)

Assumptions used to Determine Benefit Obligations

The following assumptions were used to determine Altria’s pension and postretirement benefit obligations at December 31:



	Pension				Postretirement
	2018		2017		2018		2017
Discount rate	4.4	%	3.7	%	4.4	%	3.7	%
Rate of compensation increase	4.0		4.0		—		—
Health care cost trend rate assumed for next year	—		—		6.5		7.0
Ultimate trend rate	—		—		5.0		5.0
Year that the rate reaches the ultimate trend rate	—		—		2025		2022

Schedule of Net Benefit Costs

Net periodic benefit cost consisted of the following for the years ended December 31, 2018, 2017 and 2016:



	Pension									Postretirement
(in millions)	2018			2017			2016			2018			2017			2016
Service cost	$	81		$	75		$	76		$	18		$	16		$	17
Interest cost	276			288			281			70			76			77
Expected return on plan assets	(585		)	(601		)	(553		)	(19		)	—			—
Amortization:
Net loss	225			197			171			21			25			25
Prior service cost (credit)	4			4			5			(42		)	(38		)	(39		)
Termination, settlement and curtailment	16			86			34			—			—			(2		)
Net periodic benefit cost	$	17		$	49		$	14		$	48		$	79		$	78

Schedule Of Termination Settlement And Curtailment Cost

The amounts included in termination, settlement and curtailment in the table above were comprised of the following changes:



	Pension						Post-retirement
(in millions)	2018		2017		2016		2016
Benefit obligation	$	—	$	—	$	23	$	11
Other comprehensive earnings/losses:
Net loss	13		86		9		—
Prior service cost (credit)	3		—		2		(13		)
	$	16	$	86	$	34	$	(2	)

Schedule of Estimated Net Loss and Prior Service Cost (Credit) Expected to be Amortized in 2017

The estimated net loss and prior service cost (credit) that are expected to be amortized from accumulated other comprehensive losses into net periodic benefit cost during 2019 is as follows:



(in millions)	Pension		Postretirement
Net loss	$	169	$	12
Prior service cost (credit)	6		(32		)

Schedule Of Assumptions To Determine Net Periodic Benefit Cost

The following assumptions were used to determine Altria’s net periodic benefit cost for the years ended December 31:



	Pension						Postretirement
	2018		2017		2016		2018		2017		2016
Discount rates:
Service cost	3.8	%	4.3	%	4.7	%	3.8	%	4.3	%	4.5	%
Interest cost	3.3		3.5		3.6		3.3		3.5		3.4
Expected rate of return on plan assets	7.8		8.0		8.0		7.8		—		—
Rate of compensation increase	4.0		4.0		4.0		—		—		—
Health care cost trend rate	—		—		—		7.0		7.0		6.5

Effects of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates

A one-percentage-point change in assumed health care cost trend rates would have had the following effects as of December 31, 2018:



	One-Percentage-Point Increase		One-Percentage-Point Decrease
Effect on total of postretirement service and interest cost	7.5	%	(6.3	)%
Effect on postretirement benefit obligation	5.6	%	(4.8	)%

Schedule of Fair Value of Plan Assets by Asset Category

The composition of Altria’s plan assets at December 31, 2018 was broadly characterized with the following allocation:



	Pension		Postretirement
Equity securities	48	%	48	%
Corporate bonds	32	%	42	%
U.S. Treasury and foreign government securities	20	%	10	%

The fair values of Altria’s pension plan assets by asset category at December 31, 2018 and 2017 were as follows:



	2018								2017
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
U.S. and foreign government securities or their agencies:
U.S. government and agencies	$	—	$	868	$	—	$	868	$	—	$	588	$	—	$	588
U.S. municipal bonds	—		73		—		73		—		81		—		81
Foreign government and agencies	—		115		—		115		—		150		—		150
Corporate debt instruments:
Above investment grade	—		1,726		—		1,726		—		1,789		—		1,789
Below investment grade and no rating	—		478		—		478		—		511		—		511
Common stock:
International equities	237		—		—		237		1,396		—		—		1,396
U.S. equities	1,082		—		—		1,082		831		—		—		831
Cash and cash equivalents	—		303		—		303		—		106		—		106
Other, net	36		36		—		72		47		42		—		89
	$	1,355	$	3,599	$	—	$	4,954	$	2,274	$	3,267	$	—	$	5,541
Investments measured at NAV as a practical expedient for fair value:
Collective investment funds
U.S. large cap							$	1,722							$	2,014
U.S. small cap							328								361
International developed markets							86								100
Total investments measured at NAV							$	2,136							$	2,475

Other							48								(1		)
Fair value of plan assets, net							$	7,138							$	8,015

Level 3 holdings and transactions were immaterial to total plan assets at December 31, 2018 and 2017.

The fair value of Altria’s postretirement plan assets at December 31, 2018 were as follows:



			2018
(in millions)	Level 1		Level 2		Total
U.S. and foreign government securities or their agencies:
U.S. government and agencies	$	—	$	13	$	13
Foreign government and agencies	—		3		3
Corporate debt instruments:
Above investment grade	—		71		71
Below investment grade and no rating	—		8		8
Other, net	2		2		4
	$	2	$	97	$	99
Investments measured at NAV as a practical expedient for fair value:
Collective investment funds:
U.S. large cap					$	77
International developed markets					26
Total investments measured at NAV					$	103

Other					9
Fair value of plan assets, net					$	211

Estimated Future Benefit Payments

Estimated future benefit payments at December 31, 2018 were as follows:



(in millions)	Pension		Postretirement
2019	$	484	$	132
2020	464		130
2021	468		129
2022	470		129
2023	474		125
2024-2028	2,362		598

Schedule of Amounts Recognized in Other Comprehensive Income (Loss)

The amounts recorded in accumulated other comprehensive losses at December 31, 2018 consisted of the following:



(in millions)	Pension			Post- retirement			Post- employment			Total
Net loss	$	(2,591	)	$	(327	)	$	(78	)	$	(2,996	)
Prior service (cost) credit	(34		)	108			(6		)	68
Deferred income taxes	679			61			20			760
Amounts recorded in accumulated other comprehensive losses	$	(1,946	)	$	(158	)	$	(64	)	$	(2,168	)

The amounts recorded in accumulated other comprehensive losses at December 31, 2017 consisted of the following:



(in millions)	Pension			Post- retirement			Post- employment			Total
Net loss	$	(2,493	)	$	(612	)	$	(93	)	$	(3,198	)
Prior service (cost) credit	(15		)	195			—			180
Deferred income taxes	979			166			34			1,179
Amounts recorded in accumulated other comprehensive losses	$	(1,529	)	$	(251	)	$	(59	)	$	(1,839	)

Movements in Other Comprehensive Earnings/Losses

The movements in other comprehensive earnings/losses during the year ended December 31, 2018 were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts reclassified to net earnings as components of net periodic benefit cost:
Amortization:
Net loss	$	225		$	21		$	17		$	263
Prior service cost/credit	4			(42		)	—			(38		)
Other expense:
Net loss	13			—			—			13
Prior service cost/credit	3			—			—			3
Deferred income taxes	(61		)	4			(4		)	(61		)
	$	184		$	(17	)	$	13		$	180
Other movements during the year:
Adoption of ASU 2018-02 ⁽¹⁾	$	(330	)	$	(55	)	$	(12	)	$	(397	)
Net loss	(336		)	264			(2		)	(74		)
Prior service cost/credit	(26		)	(45		)	(6		)	(77		)
Deferred income taxes	91			(54		)	2			39
	$	(601	)	$	110		$	(18	)	$	(509	)
Total movements in other comprehensive earnings/losses	$	(417	)	$	93		$	(5	)	$	(329	)

⁽¹⁾ Reflects the reclassification of the stranded income tax effects of the Tax Reform Act. For further discussion, see Note 15. Income Taxes.

The movements in other comprehensive earnings/losses during the year ended December 31, 2017 were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts reclassified to net earnings as components of net periodic benefit cost:
Amortization:
Net loss	$	197		$	25		$	17		$	239
Prior service cost/credit	4			(38		)	—			(34		)
Other expense:
Net loss	86			—			—			86
Deferred income taxes	(113		)	6			(6		)	(113		)
	$	174		$	(7	)	$	11		$	178
Other movements during the year:
Net loss	$	81		$	(56	)	$	(11	)	$	14
Prior service cost/credit	—			38			—			38
Deferred income taxes	(32		)	7			4			(21		)
	$	49		$	(11	)	$	(7	)	$	31
Total movements in other comprehensive earnings/losses	$	223		$	(18	)	$	4		$	209

The movements in other comprehensive earnings/losses during the year ended December 31, 2016 were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts reclassified to net earnings as components of net periodic benefit cost:
Amortization:
Net loss	$	171		$	25		$	18		$	214
Prior service cost/credit	5			(39		)	—			(34		)
Other expense (income):
Net loss	9			—			—			9
Prior service cost/credit	2			(13		)	—			(11		)
Deferred income taxes	(69		)	11			(7		)	(65		)
	$	118		$	(16	)	$	11		$	113
Other movements during the year:
Net loss	$	(232	)	$	(18	)	$	(9	)	$	(259	)
Prior service cost/credit	(4		)	16			—			12
Deferred income taxes	92			1			3			96
	$	(144	)	$	(1	)	$	(6	)	$	(151	)
Total movements in other comprehensive earnings/losses	$	(26	)	$	(17	)	$	5		$	(38	)

The movements in other comprehensive earnings/losses during the year ended December 31, 2018 were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts reclassified to net earnings as components of net periodic benefit cost:
Amortization:
Net loss	$	225		$	21		$	17		$	263
Prior service cost/credit	4			(42		)	—			(38		)
Other expense:
Net loss	13			—			—			13
Prior service cost/credit	3			—			—			3
Deferred income taxes	(61		)	4			(4		)	(61		)
	$	184		$	(17	)	$	13		$	180
Other movements during the year:
Adoption of ASU 2018-02 ⁽¹⁾	$	(330	)	$	(55	)	$	(12	)	$	(397	)
Net loss	(336		)	264			(2		)	(74		)
Prior service cost/credit	(26		)	(45		)	(6		)	(77		)
Deferred income taxes	91			(54		)	2			39
	$	(601	)	$	110		$	(18	)	$	(509	)
Total movements in other comprehensive earnings/losses	$	(417	)	$	93		$	(5	)	$	(329	)

⁽¹⁾ Reflects the reclassification of the stranded income tax effects of the Tax Reform Act. For further discussion, see Note 15. Income Taxes.

The movements in other comprehensive earnings/losses during the year ended December 31, 2017 were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts reclassified to net earnings as components of net periodic benefit cost:
Amortization:
Net loss	$	197		$	25		$	17		$	239
Prior service cost/credit	4			(38		)	—			(34		)
Other expense:
Net loss	86			—			—			86
Deferred income taxes	(113		)	6			(6		)	(113		)
	$	174		$	(7	)	$	11		$	178
Other movements during the year:
Net loss	$	81		$	(56	)	$	(11	)	$	14
Prior service cost/credit	—			38			—			38
Deferred income taxes	(32		)	7			4			(21		)
	$	49		$	(11	)	$	(7	)	$	31
Total movements in other comprehensive earnings/losses	$	223		$	(18	)	$	4		$	209

The movements in other comprehensive earnings/losses during the year ended December 31, 2016 were as follows:



(in millions)	Pension			Post- retirement			Post- employment			Total
Amounts reclassified to net earnings as components of net periodic benefit cost:
Amortization:
Net loss	$	171		$	25		$	18		$	214
Prior service cost/credit	5			(39		)	—			(34		)
Other expense (income):
Net loss	9			—			—			9
Prior service cost/credit	2			(13		)	—			(11		)
Deferred income taxes	(69		)	11			(7		)	(65		)
	$	118		$	(16	)	$	11		$	113
Other movements during the year:
Net loss	$	(232	)	$	(18	)	$	(9	)	$	(259	)
Prior service cost/credit	(4		)	16			—			12
Deferred income taxes	92			1			3			96
	$	(144	)	$	(1	)	$	(6	)	$	(151	)
Total movements in other comprehensive earnings/losses	$	(26	)	$	(17	)	$	5		$	(38	)