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RETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
RETIREMENT BENEFITS RETIREMENT BENEFITS

Pension and Postretirement Plans
The Company has several non-contributory defined benefit pension plans covering certain U.S. employees and has various defined benefit pension and termination indemnity plans covering employees outside the U.S.
The U.S. qualified defined benefit plan was frozen effective January 1, 2008 for most employees. Accordingly, no additional compensation-based contributions have been credited to the cash balance portion of the plan for existing plan participants after 2007. However, certain employees covered under the prior final pay plan formula continue to accrue benefits. The Company also offers postretirement health care and life insurance benefits to certain eligible U.S. retired employees, as well as to certain eligible employees outside the U.S.
The Company also sponsors a number of non-contributory, nonqualified pension plans. These plans, which are unfunded, provide supplemental defined pension benefits to certain U.S.
employees. With the exception of certain employees covered under the prior final pay plan formula, the benefits under these plans were frozen in prior years.
The plan obligations, plan assets and periodic plan expense for the Company’s most significant pension and postretirement benefit plans (Significant Plans) are measured and disclosed quarterly, instead of annually. The Significant Plans captured approximately 90% of the Company’s global pension and postretirement plan obligations as of December 31, 2019. All other plans (All Other Plans) are measured annually with a December 31 measurement date.

Net (Benefit) Expense
The following table summarizes the components of net (benefit) expense recognized in the Consolidated Statement of Income for the Company’s pension and postretirement plans for Significant Plans and All Other Plans:

 
Pension plans
Postretirement benefit plans
 
U.S. plans
Non-U.S. plans
U.S. plans
Non-U.S. plans
In millions of dollars
2019
2018
2017
2019
2018
2017
2019
2018
2017
2019
2018
2017
Benefits earned during the year
$
1

$
1

$
3

$
146

$
146

$
153

$
—

$
—

$
—

$
8

$
9

$
9

Interest cost on benefit obligation
469

514

533

287

292

295

24

26

26

104

102

101

Expected return on plan assets
(821
)
(844
)
(865
)
(281
)
(291
)
(299
)
(18
)
(14
)
(6
)
(84
)
(88
)
(89
)
Amortization of unrecognized:
 

 

 

 

 

 

 

 

 

 

 

 

Prior service cost (benefit)
2

2

2

(4
)
(4
)
(3
)
—

—

—

(10
)
(10
)
(10
)
Net actuarial loss
200

165

173

61

53

61

—

(1
)
—

23

29

35

Curtailment loss (gain)(1)
1

1

6

(6
)
(1
)
—

—

—

—

—

—

—

Settlement loss(1)
—

—

—

6

7

12

—

—

—

—

—

—

Total net (benefit) expense
$
(148
)
$
(161
)
$
(148
)
$
209

$
202

$
219

$
6

$
11

$
20

$
41

$
42

$
46


(1)
Curtailment and settlement relate to repositioning and divestiture actions.

Contributions
The Company’s funding practice for U.S. and non-U.S. pension and postretirement plans is generally to fund to minimum funding requirements in accordance with applicable local laws and regulations. The Company may increase its contributions above the minimum required contribution, if appropriate. In addition, management has the ability to change its funding practices. For the U.S. pension plans, there were no required minimum cash contributions for 2019 or 2018.

The following table summarizes the actual Company contributions for the years ended December 31, 2019 and 2018, as well as estimated expected Company contributions for 2020. Expected contributions are subject to change, since contribution decisions are affected by various factors, such as market performance, tax considerations and regulatory requirements.


 
Pension plans(1)
Postretirement benefit plans(1)
 
U.S. plans(2)
Non-U.S. plans
U.S. plans
Non-U.S. plans
In millions of dollars
2020
2019
2018
2020
2019
2018
2020
2019
2018
2020
2019
2018
Contributions made by the Company
$
—

$
425

$
—

$
111

$
111

$
140

$
—

$
—

$
145

$
4

$
221

$
3

Benefits paid directly by the Company
58

56

55

53

39

42

6

4

5

6

4

6


(1)
Amounts reported for 2020 are expected amounts.     
(2)
The U.S. pension plans include benefits paid directly by the Company for the nonqualified pension plans.

Funded Status and Accumulated Other Comprehensive Income (AOCI)
The following table summarizes the funded status and amounts recognized in the Consolidated Balance Sheet for the Company’s pension and postretirement plans:
 
Pension plans
Postretirement benefit plans
 
U.S. plans
Non-U.S. plans
U.S. plans
Non-U.S. plans
In millions of dollars
2019
2018
2019
2018
2019
2018
2019
2018
Change in projected benefit obligation
 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of year
$
12,655

$
14,040

$
7,149

$
7,433

$
662

$
699

$
1,159

$
1,261

Benefits earned during the year
1

1

146

146

—

—

8

9

Interest cost on benefit obligation
469

514

287

292

24

26

104

102

Plan amendments
—

—

7

7

—

—

—

—

Actuarial loss (gain)( 1)
1,263

(1,056
)
861

(99
)
46

(1
)
140

(123
)
Benefits paid, net of participants’ contributions and government subsidy(2)
(936
)
(845
)
(304
)
(293
)
(40
)
(62
)
(72
)
(68
)
Settlement gain(3)
—



(84
)
(121
)
—

—

—

—

Curtailment loss (gain)(3)
1

1

(4
)
(1
)
—

—

—

—

Foreign exchange impact and other
—

—

47

(215
)
—

—

45

(22
)
Projected benefit obligation at year end
$
13,453

$
12,655

$
8,105

$
7,149

$
692

$
662

$
1,384

$
1,159

Change in plan assets
 

 

 

 

 

 

 

 

Plan assets at fair value at beginning of year
$
11,490

$
12,725

$
6,699

$
7,128

$
345

$
262

$
1,036

$
1,119

Actual return on plan assets(1)
1,682

(445
)
781

(11
)
36

(5
)
138

(26
)
Company contributions
481

55

150

182

4

150

225

9

Benefits paid, net of participants’ contributions and government subsidy(2)
(936
)
(845
)
(304
)
(293
)
(40
)
(62
)
(72
)
(68
)
Settlement gain(3)
—

—

(84
)
(121
)
—

—

—

—

Foreign exchange impact and other
—

—

314

(186
)
—

—

(200
)
2

Plan assets at fair value at year end
$
12,717

$
11,490

$
7,556

$
6,699

$
345

$
345

$
1,127

$
1,036

Funded status of the plans
 
 
 
 
 
 
 
 
Qualified plans(4)
$
(23
)
$
(483
)
$
(549
)
$
(450
)
$
(347
)
$
(317
)
$
(257
)
$
(123
)
Nonqualified plans(5)
(713
)
(682
)
—

—

—

—

—

—

Funded status of the plans at year end
$
(736
)
$
(1,165
)
$
(549
)
$
(450
)
$
(347
)
$
(317
)
$
(257
)
$
(123
)
Net amount recognized
 

 

 

 

 

 

 

 

Qualified plans
 
 
 
 
 
 
 
 
Benefit asset
$
—

$
—

$
808

$
806

$
—

$
—

$
57

$
175

Benefit liability
(23
)
(483
)
(1,357
)
(1,256
)
(347
)
(317
)
(314
)
(298
)
Qualified plans
$
(23
)
$
(483
)
$
(549
)
$
(450
)
$
(347
)
$
(317
)
$
(257
)
$
(123
)
Nonqualified plans
(713
)
(682
)
—

—

—

—

—

—

Net amount recognized on the balance sheet
$
(736
)
$
(1,165
)
$
(549
)
$
(450
)
$
(347
)
$
(317
)
$
(257
)
$
(123
)
Amounts recognized in AOCI
 
 
 
 
 

 

 

 

Net transition obligation
$
—

$
—

$
—

$
(1
)
$
—

$
—

$
—

$
—

Prior service (cost) benefit
(12
)
(13
)
1

12

—

—

76

83

Net actuarial (loss) gain
(7,092
)
(6,892
)
(1,735
)
(1,420
)
24

53

(416
)
(340
)
Net amount recognized in equity (pretax)
$
(7,104
)
$
(6,905
)
$
(1,734
)
$
(1,409
)
$
24

$
53

$
(340
)
$
(257
)
Accumulated benefit obligation at year end

$
13,447

$
12,646

$
7,618

$
6,720

$
692

$
662

$
1,384

$
1,159



(1)
During 2019, the actuarial loss is primarily due to the decline in global discount rates and actual return on plan assets due to favorable asset returns.
(2)
U.S. postretirement benefit plans were net of Employer Group Waiver Plan subsidy of $22 million and $15 million in 2019 and 2018, respectively.
(3)
Curtailment and settlement (gains) losses relate to repositioning and divestiture activities.
(4)
The U.S. qualified pension plan is fully funded under specified Employee Retirement Income Security Act (ERISA) funding rules as of January 1, 2020 and no minimum required funding is expected for 2020.
(5)
The nonqualified plans of the Company are unfunded.

The following table shows the change in AOCI related to the Company’s pension, postretirement and post employment plans:
In millions of dollars
2019
2018
2017
Beginning of year balance, net of tax(1)(2)
$
(6,257
)
$
(6,183
)
$
(5,164
)
Actuarial assumptions changes and plan experience
(2,300
)
1,288

(760
)
Net asset gain (loss) due to difference between actual and expected returns
1,427

(1,732
)
625

Net amortization
274

214

229

Prior service (cost) credit
(7
)
(7
)
(4
)
Curtailment/settlement gain(3)
1

7

17

Foreign exchange impact and other
(66
)
136

(93
)
Impact of Tax Reform(4)
—

—

(1,020
)
Change in deferred taxes, net
119

20

(13
)
Change, net of tax
$
(552
)
$
(74
)
$
(1,019
)
End of year balance, net of tax(1)(2)
$
(6,809
)
$
(6,257
)
$
(6,183
)
(1)
See Note 19 to the Consolidated Financial Statements for further discussion of net AOCI balance.
(2)
Includes net-of-tax amounts for certain profit-sharing plans outside the U.S.
(3)
Curtailment and settlement relate to repositioning and divestiture activities.
(4)
In the fourth quarter of 2017, Citi adopted ASU 2018-02, which transferred these amounts from AOCI to Retained earnings. See Note 1 to the Consolidated Financial Statements.

At December 31, 2019 and 2018, the aggregate projected benefit obligation (PBO), the aggregate accumulated benefit obligation (ABO) and the aggregate fair value of plan assets are presented for all defined benefit pension plans with a PBO in excess of plan assets and for all defined benefit pension plans with an ABO in excess of plan assets as follows:
 
PBO exceeds fair value of plan assets
ABO exceeds fair value of plan assets
 
U.S. plans(1)
Non-U.S. plans
U.S. plans(1)
Non-U.S. plans
In millions of dollars
2019
2018
2019
2018
2019
2018
2019
2018
Projected benefit obligation
$
13,453

$
12,655

$
4,445

$
3,904

$
13,453

$
12,655

$
2,748

$
3,718

Accumulated benefit obligation
13,447

12,646

4,041

3,528

13,447

12,646

2,435

3,387

Fair value of plan assets
12,717

11,490

3,089

2,648

12,717

11,490

1,429

2,478

(1)
At December 31, 2019 and 2018, for both the U.S. qualified plan and nonqualified plans, the aggregate PBO and the aggregate ABO exceeded plan assets.

Plan Assumptions
The Company utilizes a number of assumptions to determine plan obligations and expenses. Changes in one or a combination of these assumptions will have an impact on the Company’s pension and postretirement PBO, funded status and (benefit) expense. Changes in the plans’ funded status resulting from changes in the PBO and fair value of plan assets will have a corresponding impact on Accumulated other comprehensive income (loss).
The actuarial assumptions at the respective years ended December 31 in the table below are used to measure the year-end PBO and the net periodic (benefit) expense for the subsequent year (period). Since Citi’s Significant Plans are measured on a quarterly basis, the year-end rates for those plans are used to calculate the net periodic (benefit) expense for the subsequent year’s first quarter. 
As a result of the quarterly measurement process, the net periodic (benefit) expense for the Significant Plans is calculated at each respective quarter end based on the preceding quarter-end rates (as shown below for the U.S. and non-U.S. pension and postretirement plans). The actuarial assumptions for All Other Plans are measured annually.
Certain assumptions used in determining pension and postretirement benefit obligations and net benefit expense for the Company’s plans are shown in the following table:
At year end
2019
2018
Discount rate
 
 
U.S. plans
 
 
Qualified pension
3.25%
4.25%
Nonqualified pension
3.25
4.25
Postretirement
3.15
4.20
Non-U.S. pension plans
 
 
Range(1)
-0.10 to 11.30
0.25 to 12.00
Weighted average
3.65
4.47
Non-U.S. postretirement plans
 
 
 
Range
0.90 to 9.10
1.75 to 10.75
Weighted average
7.76
9.05
Future compensation increase rate(2)
 
Non-U.S. pension plans
 
 
Range
1.50 to 11.50
1.30 to 13.67
Weighted average
3.17
3.16
Expected return on assets
 
 
U.S. plans


Qualified pension
6.70
6.70
Postretirement(3)
6.70/3.00
6.70/3.00
Non-U.S. pension plans
 
 
Range
0.00 to 11.50
1.00 to 11.50
Weighted average
3.95
4.30
Non-U.S. postretirement plans
 
 
Range
6.20 to 8.00
8.00 to 9.20
Weighted average
7.99
8.01

(1)
Due to substantial downward movement in yields, there were negative discount rates for plans with relatively short duration in major markets, such as the Eurozone and Switzerland.
(2)
Not material for U.S. plans.
(3)
In 2019 and 2018, the expected rate of return for the VEBA Trust was 3.00%.

During the year
2019
2018
2017
Discount rate
 
 
 
U.S. plans
 
 
 
Qualified pension
4.25%/3.85%/ 3.45%/3.10%
3.60%/3.95%/ 4.25%/4.30%
4.10%/4.05%/ 3.80%/3.75%
Nonqualified pension
4.25/3.90/ 3.50/3.10
3.60/3.95/ 4.25/4.30
4.00/3.95/ 3.75/3.65
Postretirement
4.20/3.80/ 3.35/3.00
3.50/3.90/ 4.20/4.20
3.90/3.85/ 3.60/3.55
Non-U.S. pension plans(1)
 
 
Range(2)
-0.05 to 12.00
0.00 to 10.75
0.25 to 72.50
Weighted average
4.47
4.17
4.40
Non-U.S. postretirement plans(1)
 
 
Range
1.75 to 10.75
1.75 to 10.10
1.75 to 11.05
Weighted average
9.05
8.10
8.27
Future compensation increase rate(3)
 
Non-U.S. pension plans(1)
 
 
Range
1.30 to 13.67
1.17 to 13.67
1.25 to 70.00
Weighted average
3.16
3.08
3.21
Expected return on assets
 
 
U.S. plans



Qualified pension(4)
6.70
6.80/6.70
6.80
Postretirement(4)(5)
6.70/3.00
6.80/6.70/3.00
6.80
Non-U.S. pension plans(1)
 
 
Range
1.00 to 11.50
0.00 to 11.60
1.00 to 11.50
Weighted average
4.30
4.52
4.55
Non-U.S. postretirement plans(1)
 
 
Range
8.00 to 9.20
8.00 to 9.80
8.00 to 10.30
Weighted average
8.01
8.01
8.02


(1)
Reflects rates utilized to determine the quarterly expense for Significant non-U.S. pension and postretirement plans.
(2)
Due to substantial downward movement in yields, there were negative discount rates for plans with relatively short duration in major markets, such as the Eurozone and Switzerland.
(3)
Not material for U.S. plans.
(4)
The expected rate of return for the U.S. pension and postretirement plans was lowered from 6.80% to 6.70% effective in the second quarter of 2018 to reflect a change in target asset allocation.
(5)
In 2017, the VEBA Trust was funded with an expected rate of return on assets of 3.00%.

Discount Rate
The discount rates for the U.S. pension and postretirement plans were selected by reference to a Citigroup-specific analysis using each plan’s specific cash flows and compared with high-quality corporate bond indices for reasonableness. The discount rates for the non-U.S. pension and postretirement plans are selected by reference to high-quality corporate bond rates in countries that have developed corporate bond markets. However, where developed corporate bond markets do not exist, the discount rates are selected by reference to local government bond rates with a premium added to reflect the additional risk for corporate bonds in certain countries.
Effective December 31, 2019, the established rounding convention is to the nearest 5 bps for all countries.

Expected Rate of Return
The Company determines its assumptions for the expected rate of return on plan assets for its U.S. pension and postretirement plans using a “building block” approach, which focuses on ranges of anticipated rates of return for each asset class. A weighted average range of nominal rates is then determined based on target allocations to each asset class. Market performance over a number of earlier years is evaluated covering a wide range of economic conditions to determine whether there are sound reasons for projecting any past trends.
The Company considers the expected rate of return to be a long-term assessment of return expectations and does not anticipate changing this assumption unless there are significant changes in investment strategy or economic conditions. This contrasts with the selection of the discount rate and certain other assumptions, which are reconsidered annually (or quarterly for the Significant Plans) in accordance with GAAP.
The expected rate of return for the U.S. pension and postretirement plans was 6.70% at December 31, 2019 and 2018 and 6.80% at December 31, 2017. The expected return on assets reflects the expected annual appreciation of the plan assets and reduces the Company’s annual pension expense. The expected return on assets is deducted from the sum of service cost, interest cost and other components of pension expense to arrive at the net pension (benefit) expense.
The following table shows the expected rates of return used in determining the Company’s pension expense compared to the actual rate of return on plan assets during 2019, 2018 and 2017 for the U.S. pension and postretirement plans:
 U.S. plans
2019
2018
2017
Expected rate of return



U.S. pension and postretirement trust
6.70%
6.80%/6.70%
6.80%
VEBA trust(1)
3.00
3.00
3.00
Actual rate of return(2)



U.S. pension and postretirement trust
15.20
-3.40
10.90
VEBA trust(1)
1.91 to 2.76
0.43 to 1.41
—
(1)
In December 2017, the VEBA Trust was funded for postretirement benefits with an expected rate of return on assets of 3.00%.
(2)
Actual rates of return are presented net of fees.

For the non-U.S. pension plans, pension expense for 2019 was reduced by the expected return of $281 million, compared with the actual return of $781 million. Pension expense for 2018 and 2017 was reduced by expected returns of $291 million and $299 million, respectively.

Mortality Tables
At December 31, 2019, the Company adopted the Private Retirement Plans (PRI-2012) mortality table and the Mortality Projection 2019 (MP-2019) projection table for the U.S. plans.
 U.S. plans
2019(1)
2018(2)
Mortality
 
 
Pension
PRI-2012/MP-2019
RP-2014/MP-2018
Postretirement
PRI-2012/MP-2019
RP-2014/MP-2018

(1)
The PRI-2012 table is the white-collar PRI-2012 table. The MP-2019 projection scale is projected from 2012, with convergence to 0.75% ultimate rate of annual improvement by 2035.
(2)
The RP-2014 table is the white-collar RP-2014 table. The MP-2018 projection scale is projected from 2006, with convergence to 0.75% ultimate rate of annual improvement by 2034.

Sensitivities of Certain Key Assumptions
The following tables summarize the effect on pension expense:
 
Discount rate
 
One-percentage-point increase
In millions of dollars
2019
2018
2017
U.S. plans
$
28

$
25

$
29

Non-U.S. plans
(19
)
(22
)
(27
)
 
One-percentage-point decrease
In millions of dollars
2019
2018
2017
U.S. plans
$
(44
)
$
(37
)
$
(44
)
Non-U.S. plans
32

32

41



The U.S. Qualified Pension Plan was frozen in 2008, and as a result, most service cost has been eliminated. The pension expense for the U.S. Qualified Pension Plan is driven primarily by interest cost rather than by service cost. An increase in the discount rate generally increases pension expense.
For Non-U.S. Pension Plans that are not frozen (in countries such as Mexico, the U.K. and South Korea), there is more service cost. The pension expense for the Non-U.S. Plans is driven by both service cost and interest cost. An increase in the discount rate generally decreases pension expense due to the greater impact on service cost compared to interest cost.
Since the U.S. Qualified Pension Plan was frozen, most of the prospective service cost has been eliminated and the gain/loss amortization period was changed to the life expectancy for inactive participants. As a result, pension expense for the U.S. Qualified Pension Plan is driven more by interest costs than service costs, and an increase in the discount rate would increase pension expense, while a decrease in the discount rate would decrease pension expense.
The following tables summarize the effect on pension expense:
 
Expected rate of return
 
One-percentage-point increase
In millions of dollars
2019
2018
2017
U.S. plans
$
(123
)
$
(126
)
$
(127
)
Non-U.S. plans
(64
)
(64
)
(64
)
 
One-percentage-point decrease
In millions of dollars
2019
2018
2017
U.S. plans
$
123

$
126

$
127

Non-U.S. plans
64

64

64


 Health Care Cost Trend Rate
Assumed health care cost trend rates were as follows:
 
2019
2018
Health care cost increase rate for 
  U.S. plans
 
 
Following year
6.75%
7.00%
Ultimate rate to which cost increase is
  assumed to decline
5.00
5.00
Year in which the ultimate rate is
reached
2027
2027
 
 
 
Health care cost increase rate for 
  Non-U.S. plans (weighted average)
 
 
Following year
6.85%
6.90%
Ultimate rate to which cost increase is
  assumed to decline
6.85
6.90
Year in which the ultimate rate
  is reached
2020
2019


Interest Crediting Rate
The Company has cash balance plans and other plans with promised interest crediting rates. For these plans, the interest crediting rates are set in line with plan rules or country legislation and do not change with market conditions.

 
Weighted average interest crediting rate
At year end
2019
2018
2017
U.S. plans
2.25%
3.25%
2.60%
Non-U.S. plans
1.61
1.68
1.74



Plan Assets
Citigroup’s pension and postretirement plans’ asset allocations for the U.S. plans and the target allocations by asset category based on asset fair values, are as follows:
 
Target asset
allocation
U.S. pension assets
at December 31,
U.S. postretirement assets
at December 31,
Asset category(1)
2020
2019
2018
2019
2018
Equity securities(2)
0–26%
17
%
15
%
17
%
15
%
Debt securities(3)
35–82
58

57

58

57

Real estate
0–7
4

5

4

5

Private equity
0–10
3

3

3

3

Other investments
0–30
18

20

18

20

Total
 
100
%
100
%
100
%
100
%
(1)
Asset allocations for the U.S. plans are set by investment strategy, not by investment product. For example, private equities with an underlying investment in real estate are classified in the real estate asset category, not private equity.
(2)
Equity securities in the U.S. pension and postretirement plans do not include any Citigroup common stock at the end of 2019 and 2018.
(3)
The VEBA Trust for postretirement benefits are primarily invested in cash equivalents and debt securities in 2019 and 2018, respectively, and are not reflected in the table above.

Third-party investment managers and advisors provide their services to Citigroup’s U.S. pension and postretirement plans. Assets are rebalanced as the Company’s Pension Plan Investment Committee deems appropriate. Citigroup’s investment strategy, with respect to its assets, is to maintain a globally diversified investment portfolio across several asset classes that, when combined with Citigroup’s contributions to

the plans, will maintain the plans’ ability to meet all required benefit obligations.
Citigroup’s pension and postretirement plans’ weighted-average asset allocations for the non-U.S. plans and the actual ranges, and the weighted-average target allocations by asset category based on asset fair values, are as follows:
 
Non-U.S. pension plans
 
Target asset
allocation
Actual range
at December 31,
Weighted-average
at December 31,
Asset category(1)
2020
2019
2018
2019
2018
Equity securities
0–100%
0–100%
0–66%
13
%
13
%
Debt securities
0–100
0–100
0–100
80

80

Real estate
0–15
0–15
0–12
1

1

Other investments
0–100
0–100
0–100
6

6

Total



100
%
100
%

(1)
Similar to the U.S. plans, asset allocations for certain non-U.S. plans are set by investment strategy, not by investment product.

 
Non-U.S. postretirement plans
 
Target asset
allocation
Actual range
at December 31,
Weighted-average
at December 31,
Asset category(1)
2020
2019
2018
2019
2018
Equity securities
0–38%
0–31%
0–35%
27
%
35
%
Debt securities
56–100
66–100
62–100
71

62

Other investments
0–6
0–3
0–3
2

3

Total



100
%
100
%
(1)
Similar to the U.S. plans, asset allocations for certain non-U.S. plans are set by investment strategy, not by investment product.



Fair Value Disclosure
For information on fair value measurements, including descriptions of Levels 1, 2 and 3 of the fair value hierarchy and the valuation methodology utilized by the Company, see Notes 1 and 24 to the Consolidated Financial Statements. ASU 2015-07 removed the requirement to categorize within the fair value hierarchy investments for which fair value is measured using the NAV per share practical expedient.
Certain investments may transfer between the fair value hierarchy classifications during the year due to changes in valuation methodology and pricing sources.
Plan assets by detailed asset categories and the fair value hierarchy are as follows:
 
U.S. pension and postretirement benefit plans(1)
In millions of dollars
Fair value measurement at December 31, 2019
Asset categories
Level 1
Level 2
Level 3
Total
U.S. equities

$
739

$
—

$
—

$
739

Non-U.S. equities

553

—

—

553

Mutual funds and other registered investment companies

280

—

—

280

Commingled funds

—

1,410

—

1,410

Debt securities

1,534

4,046

—

5,580

Annuity contracts
—

—

1

1

Derivatives
10

245

—

255

Other investments
—

—

75

75

Total investments
$
3,116

$
5,701

$
76

$
8,893

Cash and short-term investments
$
93

$
1,080

$
—

$
1,173

Other investment liabilities
(87
)
(249
)
—

(336
)
Net investments at fair value
$
3,122

$
6,532

$
76

$
9,730

Other investment receivables redeemed at NAV
 
 
 
$
22

Securities valued at NAV
 
 
 
3,310

Total net assets
 
 
 
$
13,062

(1)
The investments of the U.S. pension and postretirement plans are commingled in one trust. At December 31, 2019, the allocable interests of the U.S. pension and postretirement plans were 98.0% and 2.0%, respectively. The investments of the VEBA Trust for postretirement benefits are reflected in the above table.
 
U.S. pension and postretirement benefit plans(1)
In millions of dollars
Fair value measurement at December 31, 2018
Asset categories
Level 1
Level 2
Level 3
Total
U.S. equities

$
625

$
—

$
—

$
625

Non-U.S. equities

481

—

—

481

Mutual funds and other registered investment companies


215

—

—

215

Commingled funds
—

1,344

—

1,344

Debt securities
1,346

3,443

—

4,789

Annuity contracts
—

—

1

1

Derivatives
16

252

—

268

Other investments
—

—

127

127

Total investments
$
2,683

$
5,039

$
128

$
7,850

Cash and short-term investments
$
93

$
897

$
—

$
990

Other investment liabilities
(100
)
(254
)
—

(354
)
Net investments at fair value
$
2,676

$
5,682

$
128

$
8,486

Other investment receivables redeemed at NAV
 
 
 
$
80

Securities valued at NAV 
 
 
 
3,269

Total net assets
 
 
 
$
11,835

(1)
The investments of the U.S. pension and postretirement plans are commingled in one trust. At December 31, 2018, the allocable interests of the U.S. pension and postretirement plans were 98.0% and 2.0%, respectively. The investments of the VEBA Trust for postretirement benefits are reflected in the above table.
 
Non-U.S. pension and postretirement benefit plans
In millions of dollars
Fair value measurement at December 31, 2019
Asset categories
Level 1
Level 2
Level 3
Total
U.S. equities
$
4

$
12

$
—

$
16

Non-U.S. equities
127

262

—

389

Mutual funds and other registered investment companies
3,223

63

—

3,286

Commingled funds
23

—

—

23

Debt securities
4,307

1,615

10

5,932

Real estate
—

3

1

4

Annuity contracts
—

—

5

5

Derivatives
—

1,590

—

1,590

Other investments
1

—

274

275

Total investments
$
7,685

$
3,545

$
290

$
11,520

Cash and short-term investments
$
86

$
3

$
—

$
89

Other investment liabilities
(3
)
(2,938
)
—

(2,941
)
Net investments at fair value
$
7,768

$
610

$
290

$
8,668

Securities valued at NAV 
 
 
 
$
15

Total net assets
 
 
 
$
8,683

 
 
Non-U.S. pension and postretirement benefit plans
In millions of dollars
Fair value measurement at December 31, 2018
Asset categories
Level 1
Level 2
Level 3
Total
U.S. equities
$
4

$
9

$
—

$
13

Non-U.S. equities
100

100

—

200

Mutual funds and other registered investment companies

2,887

63

—

2,950

Commingled funds
21

—

—

21

Debt securities
5,145

1,500

9

6,654

Real estate
—

3

1

4

Annuity contracts
—

1

10

11

Derivatives
—

156

—

156

Other investments
1

—

210

211

Total investments
$
8,158

$
1,832

$
230

$
10,220

Cash and short-term investments
$
91

$
3

$
—

$
94

Other investment liabilities
(1
)
(2,589
)
—

(2,590
)
Net investments at fair value
$
8,248

$
(754
)
$
230

$
7,724

Securities valued at NAV 
 
 
 
$
11

Total net assets
 
 
 
$
7,735




Level 3 Rollforward
The reconciliations of the beginning and ending balances during the year for Level 3 assets are as follows:
In millions of dollars
U.S. pension and postretirement benefit plans
Asset categories
Beginning Level 3 fair value at
Dec. 31, 2018
Realized (losses)
Unrealized gains
Purchases, sales and issuances
Transfers in and/or out of Level 3
Ending Level 3 fair value at Dec. 31, 2019
Annuity contracts
$
1

$
—

$
—

$
—

$
—

$
1

Other investments
127

(7
)
12

(57
)
—

75

Total investments
$
128

$
(7
)
$
12

$
(57
)
$
—

$
76

 

In millions of dollars
U.S. pension and postretirement benefit plans
Asset categories
Beginning Level 3 fair value at
Dec. 31, 2017
Realized (losses)
Unrealized (losses)
Purchases, sales and issuances
Transfers in and/or out of Level 3
Ending Level 3 fair value at Dec. 31, 2018
Annuity contracts
$
1

$
—

$
—

$
—

$
—

$
1

Other investments
148

(2
)
(18
)
(1
)
—

127

Total investments
$
149

$
(2
)
$
(18
)
$
(1
)
$
—

$
128


 
 In millions of dollars
Non-U.S. pension and postretirement benefit plans
Asset categories
Beginning Level 3 fair value at
Dec. 31, 2018
Unrealized gains
Purchases, sales and issuances
Transfers in and/or out of Level 3
Ending Level 3 fair value at Dec. 31, 2019
Debt securities
$
9

$
1

$
—

$
—

$
10

Real estate
1

—

—

—

1

Annuity contracts
10

—

(5
)
—

5

Other investments
210

7

57

—

274

Total investments
$
230

$
8

$
52

$
—

$
290



 In millions of dollars
Non-U.S. pension and postretirement benefit plans
Asset categories
Beginning Level 3 fair value at
Dec. 31, 2017
Unrealized (losses)
Purchases, sales and issuances
Transfers in and/or out of Level 3
Ending Level 3 fair value at
Dec. 31, 2018
Non-U.S. equities
$
1

$
—

$
—

$
(1
)
$
—

Debt securities
7

(1
)
3

—

9

Real estate
1

—

—

—

1

Annuity contracts
9

(1
)
1

1

10

Other investments
214

(3
)
(1
)
—

210

Total investments
$
232

$
(5
)
$
3

$
—

$
230



 


Investment Strategy
The Company’s global pension and postretirement funds’ investment strategy is to invest in a prudent manner for the exclusive purpose of providing benefits to participants. The investment strategies are targeted to produce a total return that, when combined with the Company’s contributions to the funds, will maintain the funds’ ability to meet all required benefit obligations. Risk is controlled through diversification of asset types and investments in domestic and international equities, fixed income securities and cash and short-term investments. The target asset allocation in most locations outside the U.S. is primarily in equity and debt securities. These allocations may vary by geographic region and country depending on the nature of applicable obligations and various other regional considerations. The wide variation in the actual range of plan asset allocations for the funded non-U.S. plans is a result of differing local statutory requirements and economic conditions. For example, in certain countries local law requires that all pension plan assets must be invested in fixed income investments, government funds or local-country securities.
 
Significant Concentrations of Risk in Plan Assets
The assets of the Company’s pension plans are diversified to limit the impact of any individual investment. The U.S. qualified pension plan is diversified across multiple asset classes, with publicly traded fixed income, hedge funds, publicly traded equity and real estate representing the most significant asset allocations. Investments in these four asset classes are further diversified across funds, managers, strategies, vintages, sectors and geographies, depending on the specific characteristics of each asset class. The pension assets for the Company’s non-U.S. Significant Plans are primarily invested in publicly traded fixed income and publicly traded equity securities.

Oversight and Risk Management Practices
The framework for the Company’s pension oversight process includes monitoring of retirement plans by plan fiduciaries and/or management at the global, regional or country level, as appropriate. Independent Risk Management contributes to the risk oversight and monitoring for the Company’s U.S. qualified pension plan and non-U.S. Significant Pension Plans. Although the specific components of the oversight process are tailored to the requirements of each region, country and plan, the following elements are common to the Company’s monitoring and risk management process:
 
•
periodic asset/liability management studies and strategic asset allocation reviews;
•
periodic monitoring of funding levels and funding ratios;
•
periodic monitoring of compliance with asset allocation guidelines;
•
periodic monitoring of asset class and/or investment manager performance against benchmarks; and
•
periodic risk capital analysis and stress testing.

Estimated Future Benefit Payments 
The Company expects to pay the following estimated benefit payments in future years:
 
Pension plans
Postretirement benefit plans
In millions of dollars
U.S. plans
Non-U.S. plans
U.S. plans
Non-U.S. plans
2020
$
821

$
476

$
64

$
75

2021
840

434

63

80

2022
851

464

61

85

2023
866

480

59

91

2024
873

495

57

97

2025–2029
4,282

2,651

244

567



Post Employment Plans
The Company sponsors U.S. post employment plans that provide income continuation and health and welfare benefits to certain eligible U.S. employees on long-term disability.
As of December 31, 2019 and 2018, the plans’ funded status recognized in the Company’s Consolidated Balance Sheet was $(38) million and $(32) million, respectively. The pretax amounts recognized in AOCI as of December 31, 2019 and 2018 were $(15) million and $(15) million, respectively.
The following table summarizes the components of net expense recognized in the Consolidated Statement of Income for the Company’s U.S. post employment plans:
 
Net expense
In millions of dollars
2019
2018
2017
Service-related expense
 

 

 

Interest cost on benefit obligation
$
2

$
2

$
2

Expected return on plan assets
(1
)
(1
)
—

Amortization of unrecognized:
 
 
 
   Prior service cost
—

(23
)
(31
)
   Net actuarial loss
2

2

2

Total service-related (benefit) expense
$
3

$
(20
)
$
(27
)
Non-service-related expense (benefit)
$
6

$
2

$
30

Total net expense (benefit)
$
9

$
(18
)
$
3



The following table summarizes certain assumptions used in determining the post employment benefit obligations and net benefit expense for the Company’s U.S. post employment plans: 
 
2019
2018
Discount rate
2.90%
3.95%
Expected return on assets
3.00
3.00
Health care cost increase rate
 
 
Following year
6.75
7.00
Ultimate rate to which cost increase is assumed to decline
5.00
5.00
Year in which the ultimate rate is reached
2027
2027


Defined Contribution Plans
The Company sponsors defined contribution plans in the U.S. and in certain non-U.S. locations, all of which are administered in accordance with local laws. The most significant defined contribution plan is the Citi Retirement Savings Plan (formerly known as the Citigroup 401(k) Plan) sponsored by the Company in the U.S.
Under the Citi Retirement Savings Plan, eligible U.S. employees received matching contributions of up to 6% of their eligible compensation for 2019 and 2018, subject to statutory limits. In addition, for eligible employees whose eligible compensation is $100,000 or less, a fixed contribution of up to 2% of eligible compensation is provided. All Company contributions are invested according to participants’ individual elections. The following tables summarize the Company contributions for the defined contribution plans:
 
U.S. plans
In millions of dollars
2019
2018
2017
Company contributions
$
404

$
396

$
383

 
 
 
 
 
Non-U.S. plans
In millions of dollars
2019
2018
2017
Company contributions
$
281

$
283

$
270