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Employee Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2019
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)
2019

2018

2019

2018

2019

2018

Projected benefit obligation, January 1

$1,582


$1,706


$1,518


$1,756


$3,100


$3,462

Service cost
13

17

10

11

23

28

Interest cost
64

57

41

40

105

97

Actuarial losses (gains) - net
263

(129
)
186

(117
)
449

(246
)
Benefits paid
(80
)
(70
)
(64
)
(55
)
(144
)
(125
)
Plan transfers
—

—

—

(8
)
—

(8
)
Foreign currency translation adjustments
—

—

34

(88
)
34

(88
)
Settlements and curtailments
—

—

(4
)
(24
)
(4
)
(24
)
Other
—

1

(2
)
3

(2
)
4

Projected benefit obligation, December 31

$1,842


$1,582


$1,719


$1,518


$3,561


$3,100

Market value of plan assets, January 1

$1,140


$1,196


$1,478


$1,687


$2,618


$2,883

Actual return on plan assets
219

(82
)
190

(53
)
409

(135
)
Company contributions
—

75

13

24

13

99

Benefits paid
(55
)
(49
)
(56
)
(53
)
(111
)
(102
)
Plan settlements
—

—

(4
)
(24
)
(4
)
(24
)
Foreign currency translation adjustments
—

—

42

(95
)
42

(95
)
Other
—

—

(2
)
(8
)
(2
)
(8
)
Market value of plan assets, December 31

$1,304


$1,140


$1,661


$1,478


$2,965


$2,618

Funded Status

($538
)

($442
)

($58
)

($40
)

($596
)

($482
)
Amounts recognized in the Consolidated Balance Sheet:
 
 
 
 
 
 
Other assets (long-term)
—

—

183

189

183

189

Accounts payable and accrued liabilities
(26
)
(18
)
(8
)
(8
)
(34
)
(26
)
Accrued pensions
(512
)
(424
)
(233
)
(221
)
(745
)
(645
)
Net liability recognized

($538
)

($442
)

($58
)

($40
)

($596
)

($482
)

 
Other Postretirement Benefit Plans
 
United States
International
Total PPG
($ in millions)
2019

2018

2019

2018

2019

2018

Projected benefit obligation, January 1

$587


$641


$94


$112


$681


$753

Service cost
8

9

—

1

8

10

Interest cost
23

21

3

3

26

24

Plan amendments
(17
)
—

—

—

(17
)
—

Actuarial losses (gains) - net
59

(38
)
1

(9
)
60

(47
)
Benefits paid
(44
)
(45
)
(5
)
(4
)
(49
)
(49
)
Foreign currency translation adjustments
—

—

4

(8
)
4

(8
)
Other
—

(1
)
(1
)
(1
)
(1
)
(2
)
Projected benefit obligation, December 31

$616


$587


$96


$94


$712


$681

Amounts recognized in the Consolidated Balance Sheet:
 
 
 
 
 
 
Accounts payable and accrued liabilities
(46
)
(48
)
(5
)
(4
)
(51
)
(52
)
Other postretirement benefits
(570
)
(539
)
(91
)
(90
)
(661
)
(629
)
Net liability recognized

($616
)

($587
)

($96
)

($94
)

($712
)

($681
)
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, 2019 and 2018 was $3.4 billion and $2.9 billion, respectively.
The following table details the pension plans where the benefit liability exceeds the fair value of the plan assets:
 
Pensions
($ in millions)
2019

 
2018

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

$2,223

 

$1,935

Fair value of plan assets

$1,449

 

$1,269

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

$2,176

 

$1,883

Fair value of plan assets

$1,449

 

$1,269
Accumulated Other Comprehensive Loss Pretax Amounts Not Yet Reflected in Net Periodic Benefit Cost
 
Pensions
 
Other Postretirement Benefits
($ in millions)
2019

2018

 
2019

2018

Accumulated net actuarial losses

$920


$800

 

$166


$113

Accumulated prior service cost (credit)
2

2

 
(138
)
(178
)
Total

$922


$802

 

$28


($65
)
Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]
The net increase in Accumulated other comprehensive loss (pretax) in 2019 relating to defined benefit pension and other postretirement benefits is primarily attributable to pension and other postretirement plan discount rate declines, as follows:
($ in millions)
Pensions

 
Other Postretirement Benefits

Net actuarial loss arising during the year

$179

 

$60

New prior service credit
—

 
(17
)
Amortization of actuarial loss
(62
)
 
(8
)
Amortization of prior service credit
—

 
57

Foreign currency translation adjustments
5

 
1

Impact of settlements and curtailments
(2
)
 
—

Net change

$120

 

$93

 
Net Periodic Benefit Cost
 
Pensions
 
Other Postretirement Benefits
($ in millions)
2019

2018

2017

 
2019

2018

2017

Service cost

$23


$28


$33

 

$8


$10


$10

Interest cost
105

97

98

 
26

24

24

Expected return on plan assets
(139
)
(150
)
(141
)
 
—

—

—

Amortization of prior service credit
—

—

—

 
(57
)
(60
)
(59
)
Amortization of actuarial losses
62

63

75

 
8

19

12

Settlements, curtailments, and special termination benefits
3

5

60

 
—

—

—

Net periodic benefit cost/(income)

$54


$43


$125

 

($15
)

($7
)

($13
)
Schedule of Contributions to Defined benefit Plans
Contributions to defined benefit pension plans
($ in millions)
2019

2018

2017

U.S. defined benefit pension plans

$—


$75


$54

Non-U.S. defined benefit pension plans

$13


$24


$33
Schedule of Expected Benefit Payments
The estimated benefits expected to be paid under the Company’s defined benefit pension and other postretirement benefit plans are:
($ in millions)
Pensions

 
Other Postretirement Benefits

2020

$145

 

$51

2021

$143

 

$51

2022

$146

 

$50

2023

$153

 

$49

2024

$160

 

$48

2025 to 2029

$845

 

$209
Weighted Average Target Pension Plan Asset Allocations The following summarizes the weighted average target pension plan asset allocation as of December 31, 2019 and 2018 for all PPG defined benefit plans:
Asset Category
2019
 
2018
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, 2019 and 2018, by asset category, are as follows:
 
December 31, 2019
 
December 31, 2018
($ 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

$58


$80


$—


$138

 

$43


$94


$—


$137

Small cap
41

—

—

41

 
23

—

—

23

Non-U.S.
 
 
 
 
 
 
 
 
 
Developed and emerging markets(2)
143

84

—

227

 
115

103

—

218

Debt securities:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
10

16

—

26

 
3

19

—

22

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

337

77

414

 
—

220

77

297

Developed and emerging markets(2)
—

2

—

2

 
—

4

—

4

Diversified(5)
—

237

—

237

 
—

142

—

142

Government
 
 
 
 
 
 
 
 
 
U.S.(4)
72

9

—

81

 
68

8

—

76

Developed markets
—

7

—

7

 
—

6

—

6

Other(6)
—

18

377

395

 
—

14

359

373

Real estate, hedge funds, and other
—

303

381

684

 
—

304

359

663

Total assets in the fair value hierarchy

$324


$1,093


$835


$2,252

 

$252


$914


$795


$1,961

Common-collective trusts(7)
—

—

—

713

 
—

—

—

657

Total Investments

$324


$1,093


$835


$2,965

 

$252


$914


$795


$2,618

(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.
(7)
Certain investments that are measured at net asset value per share (or its equivalent) are not required to be classified in the fair value hierarchy.
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, 2019 and 2018 was as follows:
($ in millions)
Real Estate

 
Other Debt Securities

 
Hedge Funds and Other Assets

 
Total

January 1, 2018

$138

 

$418

 

$446

 

$1,002

Realized gains/(losses)
9

 
(29
)
 
10

 
(10
)
Unrealized losses
—

 
—

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

$137

 

$359

 

$299

 

$795

Realized gains/(losses)
18

 
38

 
(3
)
 
53

Unrealized (losses)/gains
(7
)
 
—

 
15

 
8

Transfers (out)/in, net
(27
)
 
(12
)
 
17

 
(22
)
Foreign currency gains/(losses)
2

 
(8
)
 
7

 
1

December 31, 2019

$123

 

$377

 

$335

 

$835
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, 2019 and 2018:
 
United States
 
International
 
Total PPG
 
2019

2018

 
2019

2018

 
2019

2018

Discount rate
3.3
%
4.4
%
 
2.2
%
2.9
%
 
2.8
%
3.7
%
Rate of compensation increase
2.5
%
1.5
%
 
2.8
%
0.9
%
 
2.6
%
1.2
%
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, 2019:
 
2019

 
2018

 
2017

Discount rate
3.7
%
 
3.2
%
 
3.6
%
Expected return on assets
5.4
%
 
5.4
%
 
5.4
%
Rate of compensation increase
1.8
%
 
1.2
%
 
1.3
%