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Employee Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2018
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 on the accompanying consolidated balance sheet for the Company’s defined benefit pension and other postretirement benefit plans:
 
Defined Benefit Pension Plans
 
United States
International
Total PPG
($ in millions)
2018

2017

2018

2017

2018

2017

Projected benefit obligation, January 1

$1,706


$1,692


$1,756


$1,560


$3,462


$3,252

Service cost
17

19

11

14

28

33

Interest cost
57

60

40

38

97

98

Actuarial losses (gains) - net
(129
)
124

(117
)
61

(246
)
185

Benefits paid
(70
)
(104
)
(55
)
(63
)
(125
)
(167
)
Plan transfers
—

—

(8
)
—

(8
)
—

Foreign currency translation adjustments
—

—

(88
)
165

(88
)
165

Settlements and curtailments
—

(84
)
(24
)
(1
)
(24
)
(85
)
Former glass business changes, net
—

—

—

(1
)
—

(1
)
Other
1

(1
)
3

(17
)
4

(18
)
Projected benefit obligation, December 31

$1,582


$1,706


$1,518


$1,756


$3,100


$3,462

Market value of plan assets, January 1

$1,196


$1,115


$1,687


$1,446


$2,883


$2,561

Actual return on plan assets
(82
)
156

(53
)
133

(135
)
289

Company contributions
75

54

24

33

99

87

Participant contributions
—

—

—

1

—

1

Benefits paid
(49
)
(47
)
(53
)
(62
)
(102
)
(109
)
Plan settlements
—

(82
)
(24
)
(13
)
(24
)
(95
)
Foreign currency translation adjustments
—

—

(95
)
149

(95
)
149

Other
—

—

(8
)
—

(8
)
—

Market value of plan assets, December 31

$1,140


$1,196


$1,478


$1,687


$2,618


$2,883

Funded Status

($442
)

($510
)

($40
)

($69
)

($482
)

($579
)
Amounts recognized in the Consolidated Balance Sheet:
 
 
 
 
 
 
Other assets (long-term)
—

—

189

173

189

173

Accounts payable and accrued liabilities
(18
)
(16
)
(8
)
(7
)
(26
)
(23
)
Accrued pensions
(424
)
(494
)
(221
)
(235
)
(645
)
(729
)
Net liability recognized

($442
)

($510
)

($40
)

($69
)

($482
)

($579
)

 
Other Postretirement Benefit Plans
 
United States
International
Total PPG
($ in millions)
2018

2017

2018

2017

2018

2017

Projected benefit obligation, January 1

$641


$692


$112


$100


$753


$792

Service cost
9

10

1

—

10

10

Interest cost
21

21

3

3

24

24

Actuarial losses (gains) - net
(38
)
(39
)
(9
)
12

(47
)
(27
)
Benefits paid
(45
)
(43
)
(4
)
(5
)
(49
)
(48
)
Foreign currency translation adjustments
—

—

(8
)
8

(8
)
8

Former glass business changes, net
—

—

—

(8
)
—

(8
)
Other
(1
)
—

(1
)
2

(2
)
2

Projected benefit obligation, December 31

$587


$641


$94


$112


$681


$753

Amounts recognized in the Consolidated Balance Sheet:
 
 
 
 
 
 
Accounts payable and accrued liabilities
(48
)
(48
)
(4
)
(6
)
(52
)
(54
)
Other postretirement benefits
(539
)
(593
)
(90
)
(106
)
(629
)
(699
)
Net liability recognized

($587
)

($641
)

($94
)

($112
)

($681
)

($753
)
The PBO is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits attributable to employee service rendered to date, but does not include the effects of estimated future pay increases. The ABO for all defined benefit pension plans as of December 31, 2018 and 2017 was $2,944 million and $3,382 million, respectively.
The following table details the pension plans where the benefit liability exceeds the fair value of the plan assets:
 
Pensions
($ in millions)
2018

 
2017

Plans with PBO in Excess of Plan Assets:
 
 
 
Projected benefit obligation

$1,935

 

$2,544

Fair value of plan assets

$1,269

 

$1,792

Plans with ABO in Excess of Plan Assets:
 
 
 
Accumulated benefit obligation

$1,883

 

$2,434

Fair value of plan assets

$1,269

 

$1,749
Accumulated Other Comprehensive Loss Pretax Amounts Not Yet Reflected in Net Periodic Benefit Cost
 
Pensions
 
Other Postretirement Benefits
($ in millions)
2018

2017

 
2018

2017

Accumulated net actuarial losses

$800


$835

 

$113


$180

Accumulated prior service cost (credit)
2

—

 
(178
)
(239
)
Total

$802


$835

 

($65
)

($59
)
Change in Accumulated Other Comprehensive Loss (Pretax) Relating to Defined Benefit Pension and Other Postretirement Benefits
The accumulated net actuarial losses for pensions and other postretirement benefits relate primarily to historical declines in the discount rate as well as updated mortality assumptions. The accumulated net actuarial losses exceed 10% of t
Net Periodic Benefit Cost
 
Pensions
 
Other Postretirement Benefits
($ in millions)
2018

2017

2016

 
2018

2017

2016

Service cost

$28


$33


$48

 

$10


$10


$15

Interest cost
97

98

142

 
24

24

31

Expected return on plan assets
(150
)
(141
)
(213
)
 
—

—

—

Amortization of prior service credit
—

—

(1
)
 
(60
)
(59
)
(31
)
Amortization of actuarial losses
63

75

110

 
19

12

19

Settlements, curtailments, and special termination benefits
5

60

1,015

 
—

—

—

Net periodic benefit cost/(income)

$43


$125


$1,101

 

($7
)

($13
)

$34
Effect of One Percentage Point Increase or Decrease in Health Care Cost Trend Rates
Schedule of Contributions to Defined benefit Plans
Contributions to defined benefit pension plans
($ in millions)
2018

2017

2016

U.S. defined benefit pension plans(a)

$75


$54


$134

Non-U.S. defined benefit pension plans(b)

$24


$33


$54

(a)
During 2016, U.S. contributions totaling $12 million associated with the former glass segment were recast as cash flows from operations - discontinued operations and are excluded from the
Schedule of Expected Benefit Payments
The estimated benefits expected to be paid under the Company’s defined benefit pension and other postretirement benefit plans are:
($ in millions)
Pensions

 
Other Postretirement Benefits

2019

$136

 

$53

2020

$139

 

$53

2021

$145

 

$53

2022

$147

 

$52

2023

$153

 

$51

2024 to 2028

$826

 

$228
Weighted Average Target Pension Plan Asset Allocations
The following summarizes the weighted average target pension plan asset allocation as of December 31, 2018 and 2017 for all PPG defined benefit plans:
Asset Category
2018
 
2017
Equity securities
15-45%
 
15-45%
Debt securities
30-65%
 
30-65%
Real estate
0-10%
 
0-10%
Other
20-40%
 
20-40%
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, 2018 and 2017, by asset category, are as follows:
 
December 31, 2018
 
December 31, 2017
($ in millions)
Level 1(1)

Level 2(1)

Level 3(1)

Total

 
Level 1(1)

Level 2(1)

Level 3(1)

Total

Asset Category
 
 
 
 
 
 
 
 
 
Equity securities:
 
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
 
Large cap

$43


$94


$—


$137

 

$—


$83


$—


$83

Small cap
23

—

—

23

 
29

—

—

29

Non-U.S.
 
 
 
 
 
 
 
 
 
Developed and emerging markets(2)
115

103

—

218

 
115

79

—

194

Debt securities:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
3

19

—

22

 
—

11

—

11

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

220

77

297

 
—

201

86

287

Developed and emerging markets(2)
—

4

—

4

 
—

43

—

43

Diversified(5)
—

142

—

142

 
—

124

—

124

Government
 
 
 
 
 
 
 
 
 
U.S.(4)
68

8

—

76

 
68

1

—

69

Developed markets
—

6

—

6

 
—

101

—

101

Other(6)
—

14

359

373

 
—

14

418

432

Real estate, hedge funds, and other
—

304

359

663

 
—

185

498

683

Total assets in the fair value hierarchy

$252


$914


$795


$1,961

 

$212


$842


$1,002


$2,056

Common-collective trusts(7)
—

—

—

657

 
—

—

—

827

Total Investments

$252


$914


$795


$2,618

 

$212


$842


$1,002


$2,883

(1)
These levels refer to the accounting guidance on fair value measurement described in Note 10, “Financial Instruments, Hedging Activities and Fair Value Measurements.”
(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, 2018 and 2017 was as follows:
($ in millions)
Real Estate

 
Other Debt Securities

 
Hedge Funds and Other Assets

 
Total

January 1, 2017

$129

 

$16

 

$370

 

$515

Realized gains
11

 
45

 
3

 
59

Unrealized losses
—

 
—

 
5

 
5

Transfers (out)/in, net
(5
)
 
355

 
36

 
386

Foreign currency losses
3

 
2

 
32

 
37

December 31, 2017

$138

 

$418

 

$446

 

$1,002

Realized gains (losses)
9

 
(29
)
 
10

 
(10
)
Unrealized losses
—

 
—

 
(28
)
 
(28
)
Transfers (out)/in, net
(6
)
 
(12
)
 
(119
)
 
(137
)
Foreign currency loss
(4
)
 
(18
)
 
(10
)
 
(32
)
December 31, 2018

$137

 

$359

 

$299

 

$795
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, 2018 and 2017:
 
United States
 
International
 
Total PPG
 
2018

2017

 
2018

2017

 
2018

2017

Discount rate
4.4
%
3.7
%
 
2.9
%
2.5
%
 
3.7
%
3.2
%
Rate of compensation increase
1.5
%
1.5
%
 
0.9
%
1.1
%
 
1.2
%
1.3
%
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, 2018:
 
2018

 
2017

 
2016

Discount rate
3.2
%
 
3.6
%
 
3.6
%
Expected return on assets
5.4
%
 
5.4
%
 
6.1
%
Rate of compensation increase
1.2
%
 
1.3
%
 
1.6
%