Retirement Plans and Postretirement Medical Benefits

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Retirement Plans and Postretirement Medical Benefits

Retirement Plans and Postretirement Medical Benefits

Retirement Plans

We provide retirement benefits to eligible employees in the U.S. and outside the U.S. under various defined benefit retirement plans. Benefit accruals under most of our significant defined benefit plans have been frozen. The benefit obligations and funded status of defined benefit pension plans are as follows:

	United States				Foreign
	2020		2019		2020		2019
Accumulated benefit obligation	$	1,729,515	$	1,612,551	$	829,413	$	745,658
Projected benefit obligation
Benefit obligation - beginning of year	$	1,613,054	$	1,501,140	$	746,942	$	662,644
Service cost	86		83		1,650		1,543
Interest cost	52,103		63,171		13,379		17,853
Actuarial loss (gain)	185,306		160,390		76,006		68,385
Foreign currency changes	—		—		29,128		25,452
Settlements and curtailments	(3,854)		(6,684)		(15,171)		(2,682)
Benefits paid	(116,736)		(105,046)		(21,260)		(26,253)
Benefit obligation - end of year	$	1,729,959	$	1,613,054	$	830,674	$	746,942

Fair value of plan assets
Fair value of plan assets - beginning of year	$	1,487,018	$	1,327,034	$	668,308	$	562,517
Actual return on plan assets	225,812		261,579		78,120		98,006
Company contributions	9,546		10,135		9,674		10,085
Settlements and curtailments	(3,854)		(6,684)		(15,171)		(1,773)
Foreign currency changes	—		—		22,968		25,726
Benefits paid	(116,736)		(105,046)		(21,260)		(26,253)
Fair value of plan assets - end of year	$	1,601,786	$	1,487,018	$	742,639	$	668,308

Amounts recognized in the Consolidated Balance Sheets
Noncurrent asset	$	465	$	383	$	26,053	$	20,020
Current liability	(5,843)		(9,019)		(1,444)		(1,313)
Noncurrent liability	(122,795)		(117,401)		(112,644)		(97,341)
Funded status	$	(128,173)	$	(126,037)	$	(88,035)	$	(78,634)

Information provided in the table below is only for pension plans with an accumulated benefit obligation in excess of plan assets:

	United States				Foreign
	2020		2019		2020		2019
Projected benefit obligation	$	1,729,638	$	1,612,745	$	691,909	$	615,288
Accumulated benefit obligation	$	1,729,194	$	1,612,241	$	690,887	$	614,293
Fair value of plan assets	$	1,601,000	$	1,486,325	$	577,821	$	516,634

Pretax amounts recognized in AOCI consist of:
	United States				Foreign
	2020		2019		2020		2019
Net actuarial loss	$	783,211	$	772,850	$	334,520	$	315,319
Prior service (credit) cost	(209)		(270)		8,072		8,317
Transition asset	—		—		(7)		(11)
Total	$	783,002	$	772,580	$	342,585	$	323,625

The components of net periodic benefit cost (income) for defined benefit pension plans were as follows:

	United States						Foreign
	2020		2019		2018		2020		2019		2018
Service cost	$	86	$	83	$	92	$	1,650	$	1,543	$	2,159
Interest cost	52,103		63,171		61,490		13,379		17,853		18,089
Expected return on plan assets	(84,719)		(92,726)		(101,087)		(34,391)		(34,363)		(35,687)
Amortization of net transition asset	—		—		—		(4)		(6)		(7)
Amortization of prior service (credit) cost	(60)		(60)		(60)		245		243		(71)
Amortization of net actuarial loss	32,490		26,146		31,298		7,842		6,337		7,264
Special termination benefits	—		—		—		—		—		208
Settlements and curtailments	1,364		2,381		44,665		5,060		397		(13)
Net periodic benefit cost (income)	$	1,264	$	(1,005)	$	36,398	$	(6,219)	$	(7,996)	$	(8,058)

In 2018, we incurred a non-cash pension settlement charge of $45 million in connection with the disposition of the Production Mail Business and certain other actions. We recognized $32 million of this charge in other components of net pension and postretirement cost and $13 million in income from discontinued operations, net of tax.

Other changes in plan assets and benefit obligations for defined benefit pension plans recognized in other comprehensive income were as follows:

	United States				Foreign
	2020		2019		2020		2019
Net actuarial (gain) loss	$	44,216	$	(8,459)	$	32,103	$	3,643
Amortization of net actuarial loss	(32,490)		(26,146)		(7,842)		(6,337)
Amortization of prior service credit (cost)	60		60		(245)		(243)
Net transition asset	—		—		4		6
Settlements and curtailments	(1,364)		(2,381)		(5,060)		(397)
Total recognized in other comprehensive income	$	10,422	$	(36,926)	$	18,960	$	(3,328)

Weighted-average actuarial assumptions used to determine end of year benefit obligations and net periodic benefit cost for defined benefit pension plans include:

	2020				2019				2018
United States
Used to determine benefit obligations
Discount rate	2.54%				3.34%				4.34%
Rate of compensation increase	N/A				N/A				N/A
Used to determine net periodic benefit cost
Discount rate	3.34%				4.34%				3.69%
Expected return on plan assets	6.25%				6.75%				7.00%
Rate of compensation increase	N/A				N/A				N/A
Foreign
Used to determine benefit obligations
Discount rate	0.70	%	-	2.40%	0.65	%	-	2.95%	0.75	%	-	3.55%
Rate of compensation increase	1.50	%	-	2.50%	1.50	%	-	2.50%	1.50	%	-	2.50%
Used to determine net periodic benefit cost
Discount rate	0.65	%	-	2.95%	0.75	%	-	3.55%	0.65	%	-	3.35%
Expected return on plan assets	4.25	%	-	6.00%	4.25	%	-	6.25%	3.75	%	-	6.25%
Rate of compensation increase	1.50	%	-	2.50%	1.50	%	-	2.50%	1.50	%	-	3.25%

A discount rate is used to determine the present value of our future benefit obligations. The discount rate for our U.S. pension and postretirement medical benefit plans is determined by matching the expected cash flows associated with our benefit obligations to a pool of corporate long-term, high-quality fixed income debt instruments available as of the measurement date. The discount rate for our largest foreign plan, the U.K. Qualified Pension Plan (the U.K. Plan), is determined using a model that discounts each year's estimated benefit payments by an applicable spot rate derived from a yield curve created from a large number of high quality corporate bonds. For our other smaller foreign pension plans, the discount rate is selected based on high-quality fixed income indices available in the country in which the plan is domiciled.

The expected return on plan assets is based on the target asset allocation for the applicable pension plan and expected rates of return for various asset classes in the plans' investment portfolio after analyzing historical experience and future expectations of the returns and volatility of the various asset classes.

Investment Strategy and Asset Allocation

The investment strategy for our pension plans is to maximize returns within reasonable and prudent risk levels, achieve and maintain full funding of the accumulated benefit obligation and the actuarial liabilities and earn the expected rate of return. Investment strategies of our foreign plans are also tailored to achieve the expected rate of return within an appropriate risk level, depending upon the liability profile of plan participants, local funding requirements, investment markets and restrictions.

Pension plan assets are invested in accordance with our strategic asset allocation policy. Pension plan assets are exposed to various risks, including interest rate risks, market risks and credit risks. Investments are diversified across asset classes and within each class to reduce the risk of large losses and are periodically rebalanced. Derivatives, such as swaps, options, forwards and futures contracts may be used for market exposure, to alter risk/return characteristics and to manage foreign currency exposure. We do not have any significant concentrations of credit risk within the plan assets.

U.S. Pension Plans

Investment objectives and investment managers are reviewed periodically. Target and actual asset allocations for the U.S. pension plans were as follows:

	Target allocation		Percent of Plan Assets at December 31,
	2021		2020		2019
Asset category
Equities	27	%	33	%	30	%
Multi-asset credit	4	%	—	%	—	%
Fixed income	60	%	62	%	63	%
Real estate	8	%	4	%	5	%
Private equity	1	%	1	%	2	%
Total	100	%	100	%	100	%

Foreign Pension Plans

Our foreign pension plan assets are managed by outside investment managers and monitored regularly by local trustees and our corporate personnel. Target and actual asset allocations for the U.K. Plan, which comprises 78% of the total foreign pension plan assets, were as follows:

	Target Allocation		Percent of Plan Assets at December 31,
	2021		2020		2019
Asset category
Equities	5	%	6	%	35	%
Non-U.K. equities	15	%	16	%	—	%
Fixed income	60	%	60	%	46	%
Real estate	10	%	8	%	9	%
Diversified growth	10	%	9	%	9	%
Cash	—	%	1	%	1	%
Total	100	%	100	%	100	%

Fair Value Measurements of Plan Assets

The following tables show the U.S. and foreign pension plans' assets, by level within the fair value hierarchy. The plan asset categories presented in the following tables are subsets of the broader asset allocation categories.

United States Pension Plans

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	14,442	$	—	$	14,442
Equity securities	—		323,311		—		323,311
Commingled fixed income securities	—		264,896		—		264,896
Government and related securities	322,851		22,549		—		345,400
Corporate debt securities	—		586,998		—		586,998
Mortgage-backed /asset-backed securities	—		45,861		—		45,861
Real estate	—		—		69,347		69,347
Securities lending collateral	—		151,049		—		151,049
Total plan assets at fair value	$	322,851	$	1,409,106	$	69,347	$	1,801,304
Securities lending payable							(151,049)
Investments valued at NAV							17,132
Cash							15,449
Other							(81,050)
Fair value of plan assets							$	1,601,786

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	4,917	$	—	$	4,917
Equity securities	—		265,832		—		265,832
Commingled fixed income securities	—		275,335		—		275,335
Government and related securities	292,506		15,764		—		308,270
Corporate debt securities	—		528,425		—		528,425
Mortgage-backed /asset-backed securities	—		51,770		—		51,770
Real estate	—		—		71,337		71,337
Securities lending collateral	—		106,886		—		106,886
Total plan assets at fair value	$	292,506	$	1,248,929	$	71,337	$	1,612,772
Securities lending payable							(106,886)
Investments valued at NAV							23,608
Cash							9,409
Other							(51,885)
Fair value of plan assets							$	1,487,018

Foreign Plans

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	10,072	$	—	$	10,072
Equity securities	—		166,683		—		166,683
Commingled fixed income securities	—		379,656		—		379,656
Government and related securities	—		46,268		—		46,268
Corporate debt securities	—		37,002		—		37,002
Real estate	—		—		45,275		45,275
Diversified growth funds	—		—		50,750		50,750
Total plan assets at fair value	$	—	$	639,681	$	96,025	$	735,706
Cash							6,448
Other							485
Fair value of plan assets							$	742,639

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	8,734	$	—	$	8,734
Equity securities	—		222,554		—		222,554
Commingled fixed income securities	—		264,131		—		264,131
Government and related securities	—		43,405		—		43,405
Corporate debt securities	—		34,528		—		34,528
Real estate	—		—		45,335		45,335
Diversified growth funds	—		—		47,621		47,621
Total plan assets at fair value	$	—	$	573,352	$	92,956	$	666,308
Cash							1,516
Other							484
Fair value of plan assets							$	668,308

The following information relates to our classification of investments into the fair value hierarchy:

•Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.

•Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Government and Related Securities: Debt securities are classified as Level 1 where active, high volume trades for identical securities exist. Valuation adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.

•Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.

•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or on external price/spread data. These securities are classified as Level 2.

•Real Estate: include units in open-ended commingled real estate funds. Investments are valued on an annual basis by certified appraisers. Valuation techniques used to value these investments include the cost approach, sales-comparison method and the income approach. These securities are classified as Level 3.

•Diversified Growth Funds: comprised of units in commingled diversified growth funds that comprise a mix of different asset classes. The underlying investments may not be listed on an exchange in an active market or traded on a daily basis and may fall into all three fair value categories. Accordingly, these securities are classified as Level 3.

•Securities Lending Fund: represents a commingled fund through our custodian's securities lending program. The U.S. pension plan lends securities that are held within the plan to other banks and/or brokers, and receives collateral, typically cash. This collateral is invested in a commingled fund that invests in short-term fixed income securities. This investment is classified as Level 2. This amount invested in the fund is offset by a corresponding liability reflected in the U.S. pension plan's net assets available for benefits.

Net Asset Value (NAV)

Represents investments in private equity limited partnerships that are measured at fair value using the Net Asset Value (NAV) per share as a practical expedient and are not categorized in the fair value hierarchy. These investments were previously classified as Level 3 within the fair value hierarchy, but have been reclassified as NAV and excluded from fair value hierarchy. There is no active market for these investments and the pension plan receives a proportionate share of the gains, losses and expenses in accordance with the partnership agreements. There is a remaining unfunded commitment of $9 million at December 31, 2020. These investments comprise 1.1% and 1.6% of total U.S. Pension Fund assets at December 31, 2020 and 2019, respectively.

Level 3 Gains and Losses

The following table summarizes the changes in the fair value of Level 3 assets:

	U.S. Plans		Foreign Plans
	Real estate		Real estate		Diversified Growth Funds
Balance at December 31, 2018	$	96,877	$	42,143	$	40,766
Realized gains	14,876		—		—
Unrealized losses	(12,517)		(799)		4,954
Net purchases, sales and settlements	(27,899)		1,618		107
Foreign currency and other	—		2,373		1,794
Balance at December 31, 2019	71,337		45,335		47,621
Realized gains	1,554		—		—
Unrealized (losses) gains	(3,360)		(2,134)		1,493
Net purchases, sales and settlements	(184)		1,221		56
Foreign currency and other	—		853		1,580
Balance at December 31, 2020	$	69,347	$	45,275	$	50,750

Postretirement Medical Benefits

We provide certain employer subsidized health care and employer provided life insurance benefits in the U.S. and Canada to eligible retirees and their dependents. The cost of these benefits is recognized over the period the employee provides credited service to the company. The benefit obligation and funded status for postretirement medical benefit plans are as follows:

	2020		2019
Benefit obligation
Benefit obligation - beginning of year	$	164,104	$	166,476
Service cost	885		967
Interest cost	4,993		6,584
Actuarial loss	11,496		6,930
Foreign currency changes	340		674
Benefits paid, net	(12,608)		(17,527)
Benefit obligation - end of year (1)	$	169,210	$	164,104

Fair value of plan assets
Fair value of plan assets - beginning of year	$	—	$	—
Company contribution	12,608		17,527
Benefits paid, net	(12,608)		(17,527)
Fair value of plan assets - end of year	$	—	$	—

Amounts recognized in the Consolidated Balance Sheets
Current liability	$	(15,372)	$	(16,132)
Non-current liability	(153,838)		(147,972)
Funded status	$	(169,210)	$	(164,104)

(1)    The benefit obligation for U.S. postretirement medical benefits plan was $153 million and $150 million at December 31, 2020 and 2019, respectively.

Pretax amounts recognized in AOCI consist of:

	2020		2019
Net actuarial loss	$	41,570	$	33,272
Prior service cost	129		502
Total	$	41,699	$	33,774

The components of net periodic benefit cost for postretirement medical benefit plans were as follows:

	2020		2019		2018
Service cost	$	885	$	967	$	1,405
Interest cost	4,993		6,584		6,640
Amortization of prior service cost	373		321		304
Amortization of net actuarial loss	3,198		2,026		3,048
Curtailment	—		—		246
Net periodic benefit cost	$	9,449	$	9,898	$	11,643

Other changes in benefit obligation for postretirement medical benefit plans recognized in other comprehensive income were as follows:

	2020		2019
Net actuarial loss (gain)	$	11,496	$	6,931
Amortization of net actuarial loss	(3,198)		(2,026)
Amortization of prior service cost	(373)		(321)
Total recognized in other comprehensive income	$	7,925	$	4,584

The weighted-average discount rates used to determine end of year benefit obligation and net periodic pension cost include:

	2020		2019		2018
Discount rate used to determine benefit obligation
U.S.	2.35	%	3.20	%	4.20	%
Canada	2.50	%	3.00	%	3.60	%
Discount rate used to determine net period benefit cost
U.S.	3.20	%	4.20	%	3.55	%
Canada	3.00	%	3.60	%	3.35	%

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the U.S. plan was 7.0% and 6.5% for 2020 and 2019, respectively. The assumed health care trend rate is 6.75% for 2021 and will gradually decline to 5.0% by the year 2028 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, are expected to be paid.

	Pension Benefits		Postretirement Medical Benefits
2021	$	133,588	$	15,332
2022	131,658		14,730
2023	130,138		14,077
2024	125,913		12,995
2025	126,921		11,948
Thereafter	611,769		50,774
	$	1,259,987	$	119,856

During 2021, we estimate making contributions of $6 million to our U.S. pension plans and $9 million to our foreign pension plans.

Savings Plans

We offer voluntary defined contribution plans to our U.S. employees designed to help them accumulate additional savings for retirement. We provide a core contribution to all employees, regardless if they participate in the plan, and match a portion of each participating employees' contribution, based on eligible pay. Total contributions to our defined contribution plans were $28 million in both 2020 and 2019.