Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT BENEFITS

v3.8.0.1
PENSION AND OTHER POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2017
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Disclosure [Text Block] NOTE 10. PENSION AND OTHER POSTRETIREMENT BENEFITS
Pension Plans
We sponsor several contributory and noncontributory pension plans covering substantially all employees. Generally, hourly employee pension benefits are earned based on years of service and compensation during active employment while future benefits for salaried employees are determined using a cash balance formula. However, the level of benefits and terms of vesting may vary among plans. Pension plan assets are administered by trustees and are principally invested in fixed income securities and equity securities. It is our policy to make contributions to our various qualified plans in accordance with statutory and contractual funding requirements and any additional contributions we determine are appropriate.
Obligations, Assets and Funded Status
Benefit obligation balances presented below reflect the projected benefit obligation (PBO) for our pension plans. The changes in the benefit obligations, the various plan assets, the funded status of the plans and the amounts recognized in our Consolidated Balance Sheets for our significant pension plans at December 31 were as follows:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
In millions
 
2017
 
2016
 
2017
 
2016
Change in benefit obligation
 
 
 
 
 
 
 
 
Benefit obligation at the beginning of the year
 
$
2,661

 
$
2,533

 
$
1,451

 
$
1,390

Service cost
 
107

 
90

 
26

 
21

Interest cost
 
106

 
109

 
40

 
50

Actuarial loss
 
61

 
111

 
53

 
316

Benefits paid from fund
 
(155
)
 
(175
)
 
(54
)
 
(55
)
Benefits paid directly by employer
 
(15
)
 
(16
)
 
—

 
—

Plan amendments
 
—

 
9

 
—

 
—

Exchange rate changes
 
—

 
—

 
146

 
(271
)
Benefit obligation at end of year
 
$
2,765

 
$
2,661

 
$
1,662

 
$
1,451

Change in plan assets
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
 
$
2,751

 
$
2,636

 
$
1,753

 
$
1,712

Actual return on plan assets
 
351

 
200

 
78

 
402

Employer contributions
 
219

 
90

 
9

 
28

Benefits paid
 
(155
)
 
(175
)
 
(54
)
 
(55
)
Exchange rate changes
 
—

 
—

 
174

 
(334
)
Fair value of plan assets at end of year
 
$
3,166

 
$
2,751

 
$
1,960

 
$
1,753

Funded status (including underfunded and nonfunded plans) at end of year
 
$
401

 
$
90

 
$
298

 
$
302

Amounts recognized in consolidated balance sheets
 
 
 
 
 
 
 
 
Pension assets - long-term
 
$
745

 
$
429

 
$
298

 
$
302

Accrued compensation, benefits and retirement costs - current liabilities
 
(14
)
 
(13
)
 
—

 
—

Pensions - long-term liabilities
 
(330
)
 
(326
)
 
—

 
—

Net amount recognized
 
$
401

 
$
90

 
$
298

 
$
302

Amounts recognized in accumulated other comprehensive loss
 
 
 
 
 
 
 
 
Net actuarial loss
 
$
649

 
$
770

 
$
207

 
$
172

Prior service cost
 
8

 
9

 
—

 
—

Net amount recognized
 
$
657

 
$
779

 
$
207

 
$
172


In addition to the pension plans in the above table, we also maintain less significant defined benefit pension plans primarily in 14 other countries outside of the U.S. and the U.K. that comprise approximately 3 percent and 4 percent of our pension plan assets and obligations, respectively at December 31, 2017. These plans are reflected in "Other liabilities and deferred revenue" on our Consolidated Balance Sheets. In 2017, we made $11 million of contributions to these plans.
The following table presents information regarding total accumulated benefit obligation, PBO's and underfunded pension plans that are included in the preceding table:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
In millions
 
2017
 
2016
 
2017
 
2016
Total accumulated benefit obligation
 
$
2,745

 
$
2,625

 
$
1,569

 
$
1,366

Plans with accumulated benefit obligation in excess of plan assets
 
 
 
 
 
 
 
 
Accumulated benefit obligation
 
323

 
304

 
—

 
—

Plans with projected benefit obligation in excess of plan assets
 
 
 
 
 
 
 
 
Projected benefit obligation
 
344

 
339

 
—

 
—


Components of Net Periodic Pension Cost
The following table presents the net periodic pension cost under our plans for the years ended December 31:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
In millions
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Service cost
 
$
107

 
$
90

 
$
80

 
$
26

 
$
21

 
$
27

Interest cost
 
106

 
109

 
102

 
40

 
50

 
56

Expected return on plan assets
 
(204
)
 
(201
)
 
(189
)
 
(70
)
 
(71
)
 
(91
)
Amortization of prior service cost
 
—

 
—

 
(1
)
 
—

 
—

 
—

Recognized net actuarial loss
 
37

 
29

 
45

 
40

 
15

 
34

Net periodic pension cost
 
$
46

 
$
27

 
$
37

 
$
36

 
$
15

 
$
26


Other changes in benefit obligations and plan assets recognized in other comprehensive income for the years ended December 31 were as follows:
In millions
 
2017
 
2016
 
2015
Amortization of prior service credit
 
$
—

 
$
—

 
$
1

Recognized net actuarial loss
 
(77
)
 
(44
)
 
(79
)
Incurred actuarial (gain) loss
 
(40
)
 
107

 
105

Foreign exchange translation adjustments
 
30

 
(28
)
 
(7
)
Total recognized in other comprehensive income
 
$
(87
)
 
$
35

 
$
20

 
 
 
 
 
 
 
Total recognized in net periodic pension cost and other comprehensive income
 
$
(5
)
 
$
77

 
$
83


The amount in accumulated other comprehensive loss expected to be recognized as a component of net periodic pension cost during the next fiscal year is a net actuarial loss of $62 million.
Assumptions
The table below presents various assumptions used in determining the PBO for each year and reflects weighted-average percentages for the various plans as follows:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
 
 
2017
 
2016
 
2017
 
2016
Discount rate
 
3.66
%
 
4.12
%
 
2.55
%
 
2.70
%
Compensation increase rate
 
2.99
%
 
4.87
%
 
3.75
%
 
3.75
%

The table below presents various assumptions used in determining the net periodic pension cost and reflects weighted-average percentages for the various plans as follows:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
 
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Discount rate
 
4.12
%
 
4.47
%
 
4.07
%
 
2.70
%
 
3.95
%
 
3.80
%
Expected return on plan assets
 
7.25
%
 
7.50
%
 
7.50
%
 
4.50
%
 
4.70
%
 
5.80
%
Compensation increase rate
 
4.87
%
 
4.87
%
 
4.88
%
 
3.75
%
 
3.75
%
 
4.25
%

Plan Assets
Our investment policies in the U.S. and U.K. provide for the rebalancing of assets to maintain our long-term strategic asset allocation. We are committed to this long-term strategy and do not attempt to time the market given empirical evidence that asset allocation is more critical than individual asset or investment manager selection. Rebalancing of the assets has and continues to occur. The rebalancing is critical to having the proper weighting of assets to achieve the expected total portfolio returns. We believe that our portfolio is highly diversified and does not have any significant exposure to concentration risk. The plan assets for our defined benefit pension plans do not include any of our common stock.
U.S. Plan Assets
For the U.S. qualified pension plans, our assumption for the expected return on assets was 7.25 percent in 2017. Projected returns are based primarily on broad, publicly traded equity and fixed income indices and forward-looking estimates of active portfolio and investment management. We expect additional positive returns from this active investment management. Based on the historical returns and forward-looking return expectations in a rising interest rate environment, we have elected to reduce our assumption to 6.50 percent in 2018.
The primary investment objective is to exceed, on a net-of-fee basis, the rate of return of a policy portfolio comprised of the following:
Asset Class
 
Target
 
Range
U.S. equities
 
10.0
%
 
+2.0/-8.0%
Non-U.S. equities
 
2.0
%
 
+3.0/-2.0%
Global equities
 
8.0
%
 
+1.0/-5.0%
Total equities
 
20.0
%
 
 
Real estate
 
6.0
%
 
+4.0/-6.0%
Private equity/venture capital
 
4.0
%
 
+6.0/-4.0%
Opportunistic credit
 
2.0
%
 
+8.0/-2.0%
Fixed income
 
68.0
%
 
+/-5.0%
Total
 
100.0
%
 
 

The fixed income component is structured to represent a custom bond benchmark that will closely hedge the change in the value of our liabilities. This component is structured in such a way that its benchmark covers approximately 100 percent of the plan's exposure to changes in its discount rate (AA corporate bond yields). In order to achieve a hedge on more than the targeted 68 percent of plan assets invested in fixed income securities, our Benefits Policy Committee (BPC) permits the fixed income managers, other managers or the custodian/trustee to utilize derivative securities, as part of a liability driven investment strategy to further reduce the plan's risk of declining interest rates. However, all managers hired to manage assets for the trust are prohibited from using leverage unless specifically discussed with the BPC and approved in their guidelines.
U.K. Plan Assets
For the U.K. qualified pension plans, our assumption for the expected return on assets was 4.5 percent in 2017. The methodology used to determine the rate of return on pension plan assets in the U.K. was based on establishing an equity-risk premium over current long-term bond yields adjusted based on target asset allocations. Our strategy with respect to our investments in these assets is to be invested in a suitable mixture of return-seeking assets such as equities, real estate and liability matching assets such as group annuity insurance contracts and duration matched bonds. Therefore, the risk and return balance of our U.K. asset portfolio should reflect a long-term horizon. To achieve these objectives we have established the following targets:
Asset Class
 
Target
Global equities
 
23.0
%
Real estate/private markets
 
5.0
%
Re-insurance
 
8.0
%
Corporate credit instruments
 
7.5
%
Fixed income
 
56.5
%
Total
 
100.0
%

As part of our strategy in the U.K. we have not prohibited the use of any financial instrument, including derivatives. As in the U.S. plan, derivatives may be used to better match liability duration and are not used in a speculative way. The 56.5 percent fixed income component is structured in a way that covers approximately 79 percent of the plan's exposure to changes in its discount rate. Based on the above discussion, we have elected an assumption of 4.00 percent in 2018.
Fair Value of U.S. Plan Assets
The fair values of U.S. pension plan assets by asset category were as follows:
 
 
Fair Value Measurements at December 31, 2017
In millions
 
Quoted prices in active
markets for identical assets
(Level 1)
 
Significant other
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
Total
Equities
 
 
 
 
 
 
 
 
U.S.
 
$
102

 
$
—

 
$
—

 
$
102

Non-U.S.
 
56

 
—

 
—

 
56

Fixed income
 
 
 
 
 
 
 

Government debt
 
—

 
691

 
—

 
691

Corporate debt
 
 
 
 
 
 
 

U.S.
 
—

 
590

 
—

 
590

Non-U.S.
 
—

 
73

 
—

 
73

Asset/mortgaged backed securities
 
—

 
78

 
—

 
78

Net cash equivalents(1)
 
50

 
25

 
—

 
75

Derivative instruments(2)
 
—

 
3

 
—

 
3

Private equity and real estate(3)
 
—

 
—

 
246

 
246

Net plan assets subject to leveling
 
$
208

 
$
1,460

 
$
246

 
$
1,914

Pending trade/purchases/sales
 
 

 
 

 
 

 
(96
)
Accruals(4)
 
 

 
 

 
 

 
12

Investments measured at net asset value
 
 
 
 
 
 
 
1,336

Net plan assets
 
 

 
 

 
 

 
$
3,166


 
 
Fair Value Measurements at December 31, 2016
In millions
 
Quoted prices in active
markets for identical assets
(Level 1)
 
Significant other
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
Total
Equities
 
 

 
 

 
 
 
 

U.S.
 
$
145

 
$
—

 
$
—

 
$
145

Non-U.S.
 
125

 
—

 
—

 
125

Fixed income
 
 
 
 
 
 
 


Government debt
 
—

 
570

 
—

 
570

Corporate debt
 
 
 
 
 
 
 


U.S.
 
—

 
497

 
—

 
497

Non-U.S.
 
—

 
84

 
—

 
84

Asset/mortgaged backed securities
 
—

 
58

 
—

 
58

Net cash equivalents (1)
 
18

 
20

 
—

 
38

Derivative instruments (2)
 
—

 
9

 
—

 
9

Private equity and real estate (3)
 
—

 
—

 
212

 
212

Net plan assets subject to leveling
 
$
288

 
$
1,238

 
$
212

 
$
1,738

Pending trade/purchases/sales
 
 

 
 

 
 

 
(83
)
Accruals (4)
 
 

 
 

 
 

 
12

Investments measured at net asset value
 
 
 
 
 
 
 
1,084

Net plan assets
 
 

 
 

 
 

 
$
2,751

____________________________________________________
(1)
Cash equivalents include commercial paper, short-term government/agency, mortgage and credit instruments.
(2)
Derivative instruments include interest rate swaps and credit default swaps.
(3)
The instruments in private equity, real estate and insurance funds, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by audited financial statements of the funds.
(4)
Accruals include interest or dividends that were not settled at December 31.
Certain of our assets are valued based on their respective net asset value (NAV) (or its equivalent), as an alternative to estimated fair value due to the absence of readily available market prices. The fair value of each such investment category was as follows:
•
U.S. and Non-U.S. Equities ($428 million and $511 million at December 31, 2017 and 2016, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•
Government Debt ($347 million and $178 million at December 31, 2017 and 2016, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•
U.S. and Non-U.S. Corporate Debt ($321 million and $265 million at December 31, 2017 and 2016, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•
Real Estate ($137 million and $129 million at December 31, 2017 and 2016, respectively) - This asset type represents different types of real estate including development property, industrial property, individual mortgages, office property, property investment companies, and retail property. These funds are valued using NAVs and allow quarterly or more frequent redemptions.
•
Asset/Mortgage Backed Securities ($103 million and $1 million at December 31, 2017 and 2016, respectively) - This asset type represents investments in fixed- and floating-rate loans. These funds are valued using NAVs and allow quarterly or more frequent redemptions.
The reconciliation of Level 3 assets was as follows:
 
 
Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)
In millions
 
Private Equity
 
Real Estate
 
Total
Balance at December 31, 2015
 
$
143

 
$
60

 
$
203

Actual return on plan assets
 
 
 
 
 
 
Unrealized gains on assets still held at the reporting date
 
6

 
6

 
12

Purchases, sales and settlements, net
 
(1
)
 
(2
)
 
(3
)
Balance at December 31, 2016
 
148

 
64

 
212

Actual return on plan assets
 
 
 
 
 
 
Unrealized gains on assets still held at the reporting date
 
24

 
5

 
29

Purchases, sales and settlements, net
 
8

 
(3
)
 
5

Balance at December 31, 2017
 
$
180

 
$
66

 
$
246


Fair Value of U.K. Plan Assets
In July 2012, the U.K. pension plan purchased an insurance contract that will guarantee payment of specified pension liabilities. The contract defers payment for 10 years and is included in the table below in Level 3 for years ended December 31, 2017 and 2016 at a value of $477 million and $439 million, respectively.
The fair values of U.K. pension plan assets by asset category were as follows:
 
 
Fair Value Measurements at December 31, 2017
In millions
 
Quoted prices in active
markets for identical assets
(Level 1)
 
Significant other
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
Total
Equities
 
 
 
 
 
 
 
 
U.S.
 
$
—

 
$
63

 
$
—

 
$
63

Non-U.S.
 
—

 
91

 
—

 
91

Fixed income
 
 
 
 
 
 
 
 
Net cash equivalents (1)
 
29

 
—

 
—

 
29

Private equity, real estate and insurance (2)
 
—

 
—

 
671

 
671

Net plan assets subject to leveling
 
$
29

 
$
154

 
$
671

 
$
854

Investments measured at net asset value
 
 
 
 
 
 
 
1,106

Net plan assets
 
 

 
 

 
 

 
$
1,960


 
 
Fair Value Measurements at December 31, 2016
In millions
 
Quoted prices in active
markets for identical assets
(Level 1)
 
Significant other
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
Total
Equities
 
 
 
 
 
 
 
 
U.S.
 
$
—

 
$
174

 
$
—

 
$
174

Non-U.S.
 
—

 
193

 
—

 
193

Fixed income
 
 
 
 
 
 
 

Net cash equivalents (1)
 
24

 
—

 
—

 
24

Private equity, real estate and insurance (2)
 
—

 
—

 
613

 
613

Net plan assets subject to leveling
 
$
24

 
$
367

 
$
613

 
$
1,004

Investments measured at net asset value
 
 
 
 
 
 
 
749

Net plan assets
 
 

 
 

 
 

 
$
1,753

_____________________________________________________
(1) 
Cash equivalents include commercial paper, short-term government/agency, mortgage and credit instruments.
(2) 
The instruments in private equity, real estate and insurance funds, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by audited financial statement of the funds.
Certain of our assets are valued based on their respective NAV (or its equivalent), as an alternative to estimated fair value due to the absence of readily available market prices. The fair value of each such investment category was as follows:
•
U.S. and Non-U.S. Corporate Debt ($822 million and $655 million at December 31, 2017 and 2016, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•
U.S. and Non-U.S. Equities ($144 million and zero dollars at December 31, 2017 and 2016, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•
Re-insurance ($86 million and $56 million at December 31, 2017 and 2016, respectively) - This commingled fund has a NAV that is determined on a monthly basis and the investment may be sold at that value.
•
Managed Futures Funds ($54 million and $38 million at December 31, 2017 and 2016, respectively) - These commingled funds invest in commodities, fixed income and equity securities. They have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
The reconciliation of Level 3 assets was as follows:
 
 
Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)
In millions
 
Insurance
 
Real Estate
 
Private Equity
 
Total
Balance at December 31, 2015
 
$
445

 
$
57

 
$
99

 
$
601

Actual return on plan assets
 
 
 
 
 
 
 
 
Unrealized (losses) gains on assets still held at the reporting date
 
(6
)
 
(7
)
 
15

 
2

Purchases, sales and settlements, net
 
—

 
7

 
3

 
10

Balance at December 31, 2016
 
439

 
57

 
117

 
613

Actual return on plan assets
 
 
 
 
 
 
 
 
Unrealized gains on assets still held at the reporting date
 
38

 
10

 
28

 
76

Purchases, sales and settlements, net
 
—

 
(8
)
 
(10
)
 
(18
)
Balance at December 31, 2017
 
$
477

 
$
59

 
$
135

 
$
671


Level 3 Assets
The investments in an insurance contract, venture capital, private equity, opportunistic credit and real estate funds, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by quarterly financial statements of the funds. These financial statements are audited at least annually. In conjunction with our investment consultant, we monitor the fair value of the insurance contract as periodically reported by our insurer and their counterparty risk. The fair value of all real estate properties, held in the partnerships, are valued at least once per year by an independent professional real estate valuation firm. Fair value generally represents the fund's proportionate share of the net assets of the investment partnerships as reported by the general partners of the underlying partnerships. Some securities with no readily available market are initially valued at cost, utilizing independent professional valuation firms as well as market comparisons with subsequent adjustments to values which reflect either the basis of meaningful third-party transactions in the private market or the fair value deemed appropriate by the general partners of the underlying investment partnerships. In such instances, consideration is also given to the financial condition and operating results of the issuer, the amount that the investment partnerships can reasonably expect to realize upon the sale of the securities and any other factors deemed relevant. The estimated fair values are subject to uncertainty and therefore may differ from the values that would have been used had a ready market for such investments existed and such differences could be material.
Estimated Future Contributions and Benefit Payments
We plan to contribute approximately $38 million to our defined benefit pension plans in 2018. The table below presents expected future benefit payments under our pension plans:
 
 
Qualified and Non-Qualified Pension Plans
In millions
 
2018
 
2019
 
2020
 
2021
 
2022
 
2023 - 2027
Expected benefit payments
 
$
239

 
$
237

 
$
242

 
$
248

 
$
253

 
$
1,320


Other Pension Plans
We also sponsor defined contribution plans for certain hourly and salaried employees. Our contributions to these plans were $84 million, $68 million and $74 million for the years ended December 31, 2017, 2016 and 2015.
Other Postretirement Benefits
Our other postretirement benefit plans provide various health care and life insurance benefits to eligible employees, who retire and satisfy certain age and service requirements, and their dependents. The plans are contributory and contain cost-sharing features such as caps, deductibles, coinsurance and spousal contributions. Employer contributions are limited by formulas in each plan. Retiree contributions for health care benefits are adjusted annually, and we reserve the right to change benefits covered under these plans. There were no plan assets for the postretirement benefit plans as our policy is to fund benefits and expenses for these plans as claims and premiums are incurred.
Obligations and Funded Status
Benefit obligation balances presented below reflect the accumulated postretirement benefit obligations (APBO) for our other postretirement benefit plans. The changes in the benefit obligations, the funded status of the plans and the amounts recognized in our Consolidated Balance Sheets for our significant other postretirement benefit plans were as follows:
In millions
 
2017
 
2016
Change in benefit obligation
 
 
 
 
Benefit obligation at the beginning of the year
 
$
364

 
$
385

Interest cost
 
14

 
16

Plan participants' contributions
 
24

 
14

Actuarial (gain) loss
 
(35
)
 
9

Benefits paid directly by employer
 
(49
)
 
(60
)
Benefit obligation at end of year
 
$
318

 
$
364

 
 
 
 
 
Funded status at end of year
 
$
(318
)
 
$
(364
)
 
 
 
 
 
Amounts recognized in consolidated balance sheets
 
 
 
 
Accrued compensation, benefits and retirement costs - current liabilities
 
$
(29
)
 
$
(35
)
Postretirement benefits other than pensions-long-term liabilities
 
(289
)
 
(329
)
Net amount recognized
 
$
(318
)
 
$
(364
)
 
 
 
 
 
Amounts recognized in accumulated other comprehensive loss:
 
 
 
 
Net actuarial loss
 
$
27

 
$
69

Prior service credit
 
(4
)
 
(5
)
Net amount recognized
 
$
23

 
$
64


In addition to the other postretirement plans in the above table, we also maintain less significant postretirement plans in four other countries outside the U.S. that comprise approximately 6 percent and 5 percent of our postretirement obligations at December 31, 2017 and 2016, respectively. These plans are reflected in "Other liabilities and deferred revenue" in our Consolidated Balance Sheets.
Components of Net Periodic Other Postretirement Benefits Cost
The following table presents the net periodic other postretirement benefits cost under our plans:
 
 
Years ended December 31,
In millions
 
2017
 
2016
 
2015
Interest cost
 
$
14

 
$
16

 
$
15

Recognized net actuarial loss
 
6

 
5

 
5

Net periodic other postretirement benefit cost
 
$
20

 
$
21

 
$
20


Other changes in benefit obligations recognized in other comprehensive income for the years ended December 31 were as follows:
 
 
Years ended December 31,
In millions
 
2017
 
2016
 
2015
Recognized net actuarial loss
 
$
(6
)
 
$
(6
)
 
$
(5
)
Incurred actuarial (gain) loss
 
(35
)
 
9

 
6

Total recognized in other comprehensive income
 
$
(41
)
 
$
3

 
$
1

 
 
 
 
 
 
 
Total recognized in net periodic other postretirement benefit cost and other comprehensive income
 
$
(21
)
 
$
24

 
$
21


The amount in accumulated other comprehensive loss expected to be recognized as a component of net periodic other postretirement benefit cost during the next fiscal year is approximately zero.
Assumptions
The table below presents assumptions used in determining the other postretirement benefit obligation for each year and reflects weighted-average percentages for our other postretirement plans as follows:
 
 
2017
 
2016
Discount rate
 
3.55
%
 
4.00
%

The table below presents assumptions used in determining the net periodic other postretirement benefits cost and reflects weighted-average percentages for the various plans as follows:
 
 
2017
 
2016
 
2015
Discount rate
 
4.00
%
 
4.35
%
 
3.90
%

Our consolidated other postretirement benefit obligation is determined by application of the terms of health care and life insurance plans, together with relevant actuarial assumptions and health care cost trend rates. For measurement purposes, an 8.00 percent annual rate of increase in the per capita cost of covered health care benefits was assumed in 2017. The rate is assumed to decrease on a linear basis to 5.00 percent through 2026 and remain at that level thereafter. An increase in the health care cost trends of 1 percent would increase our APBO by $16 million at December 31, 2017 and the net periodic other postretirement benefit cost for 2018 by $1 million. A decrease in the health care cost trends of 1 percent would decrease our APBO by $14 million at December 31, 2017 and the net periodic other postretirement benefit cost for 2018 by $1 million.
Estimated Benefit Payments
The table below presents expected benefit payments under our other postretirement benefit plans:
In millions
 
2018
 
2019
 
2020
 
2021
 
2022
 
2023 - 2027
Expected benefit payments
 
$
29

 
$
28

 
$
27

 
$
26

 
$
25

 
$
108