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Pensions and Other Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2013
Changes in Projected Benefit Obligations, Plan Assets and Funded Status
The following table sets forth the changes in projected benefit obligations (“PBO”) (as calculated as of December 31), plan assets, the funded status and the amounts recognized in the accompanying consolidated balance sheet for the Company’s defined benefit pension and other postretirement benefit plans:
 
Pensions
 
Other
Postretirement
Benefits
(Millions)
2013
 
2012
 
2013
 
2012
Projected benefit
obligation, January 1
$
5,784

 
$
5,333

 
$
1,362

 
$
1,394

Service cost
57

 
54

 
20

 
19

Interest cost
218

 
217

 
49

 
50

Plan amendments
(25
)
 
(2
)
 
(8
)
 
(19
)
Actuarial losses / (gains) - net
(267
)
 
443

 
(160
)
 
(33
)
Benefits paid
(304
)
 
(347
)
 
(60
)
 
(62
)
Plan transfers
327

 
—

 
40

 
—

Foreign currency translation adjustments
12

 
59

 
(8
)
 
3

Curtailment and special termination benefits
(18
)
 
(6
)
 
—

 
—

Impact of commodity chemicals transaction (a)
(548
)
 
29

 
(165
)
 
10

Other
4

 
4

 
—

 
—

Projected benefit
obligation, December 31
$
5,240

 
$
5,784

 
$
1,070

 
$
1,362

Market value of plan
assets, January 1
$
4,750

 
$
4,382

 
 
 
 
Actual return on plan assets
267

 
571

 
 
 
 
Company contributions
174

 
80

 
 
 
 
Participant contributions
2

 
2

 
 
 
 
Benefits paid
(283
)
 
(335
)
 
 
 
 
Plan transfers
352

 
—

 
 
 
 
Plan settlements
(51
)
 
—

 
 
 
 
Plan expenses and other-net
(2
)
 
(1
)
 
 
 
 
Foreign currency translation adjustments
(11
)
 
50

 
 
 
 
Impact of commodity chemicals transaction
(496
)
 
1

 
 
 
 
Other
(1
)
 
—

 
 
 
 
Market value of plan
assets, December 31
$
4,701

 
$
4,750

 
 
 
 
Funded Status
$
(539
)
 
$
(1,034
)
 
$
(1,070
)
 
$
(1,362
)
Amounts recognized in the Consolidated Balance Sheet:
 
 
 
 
Other assets (long-term)
224

 
27

 
—

 
—

Accounts payable and accrued liabilities
(19
)
 
(20
)
 
(63
)
 
(75
)
Accrued pensions
(744
)
 
(1,041
)
 
—

 
—

Other postretirement benefits
—

 
—

 
(1,007
)
 
(1,287
)
Net liability recognized
$
(539
)
 
$
(1,034
)
 
$
(1,070
)
 
$
(1,362
)

(a) Amount reported in Income from discontinued operations.
Accumulated Other Comprehensive Loss Pretax Amounts Not Yet Reflected in Net Periodic Benefit Cost
Amounts (pretax) not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss include the following:
(Millions)
Pensions
 
Other
Postretirement
Benefits
 
2013
 
2012
 
2013
 
2012
Accumulated net actuarial losses
$
1,542

 
$
2,097

 
$
254

 
$
505

Accumulated prior service credit
(26
)
 
(3
)
 
(45
)
 
(45
)
Total
$
1,516

 
$
2,094

 
$
209

 
$
460
Change in Accumulated Other Comprehensive Loss (Pretax) Relating to Defined Benefit Pension and Other Postretirement Benefits
The decrease in accumulated other comprehensive loss (pretax) in 2013 relating to defined benefit pension and other postretirement benefits consists of:
(Millions)
Pensions
 
Other
Postretirement
Benefits
Net actuarial gain arising during the year
$
(250
)
 
$
(160
)
New prior service credit
(25
)
 
(9
)
Impact of curtailments
(36
)
 
(61
)
Plan spinoff
(159
)
 
—

Amortization of actuarial loss
(103
)
 
(28
)
Amortization of prior service cost
2

 
10

Foreign currency translation adjustments and other
(7
)
 
(3
)
Net change
$
(578
)
 
$
(251
)
Net Periodic Benefit Cost
Net periodic benefit cost for the three years ended December 31, 2013, included the following:
 
Pensions
 
Other
Postretirement
Benefits
(Millions)
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Service cost
$
57

 
$
54

 
$
57

 
$
20

 
$
19

 
$
16

Interest cost
218

 
217

 
231

 
49

 
50

 
55

Expected return on plan assets
(286
)
 
(261
)
 
(280
)
 
—

 
—

 
—

Amortization of prior service cost (credit)
(2
)
 
—

 
1

 
(9
)
 
(10
)
 
(10
)
Amortization of actuarial losses
102

 
133

 
106

 
28

 
31

 
26

Curtailments and special termination benefits
18

 
—

 
5

 
—

 
—

 
—

Net periodic benefit cost
$
107

 
$
143

 
$
120

 
$
88

 
$
90

 
$
87
Effect of One Percentage Point Increase or Decrease in Health Care Cost Trend Rates
If these 2014 health care cost trend rates were increased or decreased by one percentage point per year, such increase or decrease would have the following effects:
 
One-Percentage Point
(Millions)
Increase
 
Decrease
Increase (decrease) in the aggregate of service and interest cost components of annual expense
$
10

 
$
(7
)
Increase (decrease) in the benefit obligation
$
111

 
$
(86
)
Weighted Average Target Pension Plan Asset Allocations
The following summarizes the weighted average target pension plan asset allocation as of December 31, 2013 and 2012 for all PPG defined benefit plans:
Asset Category
Dec. 31, 2013
 
Dec. 31, 2012
Equity securities
30-65%
 
35-70%
Debt securities
30-65%
 
30-65%
Real estate
0-10%
 
0-10%
Other
0-10%
 
0-10%
Fair Values of the Company's Pension Plan Assets by Asset Category
The fair values of the Company’s pension plan assets at December 31, 2013, by asset category, are as follows:
(Millions)
Level 1(1)
 
Level 2(1)
 
Level 3(1)
 
Total
Asset Category
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
 
Large cap
$
6

 
$
378

 
$
—

 
$
384

 
 
Small cap
—

 
172

 
—

 
172

 
 
PPG common stock
85

 
—

 
—

 
85

 
Non-U.S.
 
 
 
 
 
 
 
 
 
Developed and emerging markets(2)
17

 
795

 
—

 
812

Debt securities:
 
 
 
 
 
 
 
 
Cash and cash equivalents
—

 
115

 
—

 
115

 
Corporate(3)
 
 
 
 
 
 
 
 
 
U.S.(4)
—

 
750

 
131

 
881

 
 
Developed and emerging markets(2)
—

 
200

 
—

 
200

 
Diversified(5)
—

 
698

 
—

 
698

 
Government
 
 
 
 
 
 
 
 
 
U.S.(4)
201

 
36

 
—

 
237

 
 
Developed markets
—

 
331

 
—

 
331

 
Other(6)
—

 
161

 
27

 
188

Real estate, hedge funds, and other
—

 
124

 
474

 
598

 
Total
$
309

 
$
3,760

 
$
632

 
$
4,701

(1)
These levels refer to the accounting guidance on fair value measurement described in Note 9, “Fair Value Measurement.”
(2)
These amounts represent holdings in investment grade debt or equity securities of issuers in both developed markets and emerging economies.
(3)
This category represents investment grade debt securities from a diverse set of industry issuers.
(4)
These investments are primarily long duration fixed income securities.
(5)
This category represents commingled funds invested in diverse portfolios of debt securities.
(6)
This category includes mortgage-backed and asset backed debt securities, municipal bonds and other debt securities including derivatives.
 
The fair values of the Company’s pension plan assets at December 31, 2012, by asset category, are as follows:
(Millions)
Level 1(1)
 
Level 2(1)
 
Level 3(1)
 
Total
Asset Category
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
 
Large cap
$
1

 
$
172

 
$
—

 
$
173

 
 
Small cap
—

 
146

 
—

 
146

 
 
PPG common stock
244

 
—

 
—

 
244

 
Non-U.S.
 
 
 
 
 
 
 
 
 
Developed and emerging markets(2)
—

 
578

 
—

 
578

Debt securities:
 
 
 
 
 
 
 
 
Cash and cash equivalents
—

 
499

 
—

 
499

 
Corporate(3)
 
 
 
 
 
 
 
 
 
U.S.(4)
—

 
922

 
76

 
998

 
 
Developed and emerging markets(2)
—

 
185

 
—

 
185

 
Diversified(5)
—

 
635

 
4

 
639

 
Government
 
 
 
 
 
 
 
 
 
U.S.(4)
196

 
69

 
—

 
265

 
 
Developed markets
—

 
301

 
—

 
301

 
Other(6)
—

 
155

 
27

 
182

Real estate, hedge funds, and other
—

 
128

 
412

 
540

 
Total
$
441

 
$
3,790

 
$
519

 
$
4,750

(1)
These levels refer to the accounting guidance on fair value measurement described in Note 9, “Fair Value Measurement.”
(2)
These amounts represent holdings in investment grade debt or equity securities of issuers in both developed markets and emerging economies.
(3)
This category represents investment grade debt securities from a diverse set of industry issuers.
(4)
These investments are primarily long duration fixed income securities.
(5)
This category represents commingled funds invested in diverse portfolios of debt securities.
(6)
This category includes mortgage-backed and asset backed debt securities, municipal bonds and other debt securities including derivatives.
Change in the Fair Value of the Company's Level 3 Pension Assets
The change in the fair value of the Company’s Level 3 pension assets for the years ended December 31, 2013 and 2012 was as follows:
(Millions)
Real
Estate
 
Other Debt
Securities
 
Hedge Funds
&
Other assets
 
Total
Balance, January 1, 2012
$
156

 
$
28

 
$
157

 
$
341

Realized gain
8

 
—

 
13

 
21

Unrealized gain/(loss) for positions still held
8

 
—

 
(1
)
 
7

Transfers in/(out)
4

 
(1
)
 
148

 
151

Foreign currency loss
—

 
—

 
(1
)
 
(1
)
Balance, December 31, 2012
$
176

 
$
27

 
$
316

 
$
519

Realized gain/(loss)
7

 
1

 
55

 
63

Unrealized gain/(loss) for positions still held
18

 
—

 
14

 
32

Transfers in/(out)
21

 
(1
)
 
(5
)
 
15

Foreign currency gain/(loss)
—

 
—

 
3

 
3

Balance, December 31, 2013
$
222

 
$
27

 
$
383

 
$
632
Benefit Obligations
  
Weighted Average Assumptions Used for the Defined Benefit Pension and Other Postretirement Plans
The following weighted average assumptions were used to determine the benefit obligation for the Company’s defined benefit pension and other postretirement plans as of December 31, 2013 and 2012:
 
2013
 
2012
Discount rate
4.6
%
 
4.1
%
Rate of compensation increase
3.5
%
 
4.0
%
Benefit Costs
  
Weighted Average Assumptions Used for the Defined Benefit Pension and Other Postretirement Plans
The following weighted average assumptions were used to determine the net periodic benefit cost for the Company’s defined benefit pension and other postretirement benefit plans for the three years in the period ended December 31, 2013:
 
2013
 
2012
 
2011
Discount rate
4.1
%
 
4.6
%
 
5.3
%
Expected return on assets
6.5
%
 
7.0
%
 
7.6
%
Rate of compensation increase
4.0
%
 
3.9
%
 
3.8
%