13.    Employee Benefit Plans

Defined Contribution Savings Plan

The Company sponsors a US defined contribution savings plan that provides certain eligible employees of the Company an opportunity to accumulate funds for retirement. The Company matches the contributions of participating employees on the basis specified by the plan. The Company’s contributions to this plan were approximately $15 million, $10 million and $10 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Defined Benefit Pension and Other Post-Retirement Benefit Plans

The Company sponsors domestic non-contributory defined benefit pension plans, which cover certain eligible employees. The majority of the employees participating in these plans are no longer accruing benefits. Additionally, the Company sponsors contributory defined benefit pension plans in certain foreign subsidiaries with participation in the plans at the employee’s option. Under both the US domestic and foreign plans, benefits are based on an employee’s years of credited service and a percentage of final average compensation, or as otherwise described by the plan. As of December 31, 2013 and 2012, the aggregate accumulated benefit obligations of these plans were $581 million and $663 million, respectively.

The Company’s policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws, plus such additional amounts the Company determines to be appropriate. The Company also maintains other post-retirement health and welfare benefit plans for eligible employees of certain domestic subsidiaries.

The Company sponsors several defined benefit pension plans for certain employees located outside the United States. The aggregate benefit obligation for these plans was $81 million and $76 million as of December 31, 2013 and 2012, respectively, and the aggregate fair value of plan assets was $91 million and $79 million for December 31, 2013 and 2012, respectively.

 

The Company uses a December 31 measurement date for its defined benefit pension and other post-retirement benefit plans. For such plans, the following tables provide a statement of funded status as of December 31, 2013 and 2012, and summaries of the changes in the benefit obligation and fair value of assets for the years then ended:

 

		Defined Benefit Pension Plans
(in $ millions)		Year Ended December 31, 2013				Year Ended December 31, 2012
Benefit obligation, beginning of year			663				614
Interest cost			24				25
Actuarial (gain) loss			(83	)			44
Benefits paid			(24	)			(24	)
Currency translation adjustment			1				4
Benefit obligation, end of year			581				663
Fair value of plan assets, beginning of year			497				440
Return on plan assets			46				51
Employer contribution			3				26
Benefits paid			(24	)			(24	)
Currency translation adjustment			1				4
Fair value of plan assets, end of year			523				497
Funded status			(58	)			(166	)

The amount included in accumulated other comprehensive income (loss) that has not been recognized as a component of net periodic benefit expense relating to unrecognized actuarial losses was $78 million and $184 million as of December 31, 2013 and 2012, respectively.

 

		Post-Retirement Benefit Plans
(in $ millions)		Year Ended December 31, 2013				Year Ended December 31, 2012
Benefit obligation, beginning of year			8				9
Actuarial gains			(1	)			—
Benefits paid			—				(1	)
Benefits obligation, end of year			7				8
Fair value of plan assets, beginning of year			—				—
Employer contribution			—				1
Benefits paid			—				(1	)
Fair value of plan assets, end of year			—				—
Funded status			(7	)			(8	)

The amount included in accumulated other comprehensive income (loss) that has not been recognized as a component of net periodic post-retirement benefit expense relating to unrecognized actuarial gains was $3 million and $2 million as of December 31, 2013 and 2012, respectively.

 

The following table provides the components of net periodic benefit cost for the respective years:

 

		Defined Benefit Pension Plans
(in $ millions)		Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
Interest cost			24				25				27
Expected return on plan assets			(34	)			(31	)			(31	)
Recognized net actuarial loss			14				13				5
Net periodic benefit cost			4				7				1

 

		Post-Retirement Benefit Plans
(in $ millions)		Year Ended December 31, 2013				Year Ended December 31, 2012				Year Ended December 31, 2011
Interest cost			—				—				1
Amortization of prior service cost			—				—				(4	)
Recognized net actuarial gain			(1	)			(4	)			(1	)
Net periodic benefit gain			(1	)			(4	)			(4	)

The Company has utilized the following weighted average assumptions to measure the benefit obligation for the defined benefit pension plans and post-retirement benefit plans as of December 31, 2013 and 2012:

 

				December 31, 2013				December 31, 2012
Defined Benefit Pension Plans
Discount rate					4.8	%			3.6	%
Expected long-term return on plan assets					7.0	%			7.2	%
Post-Retirement Benefit Plans
Discount rate					5.3	%			3.8	%

The weighted average expected long-term return on plan assets is based on a number of factors including historic plan asset returns over varying long-term periods, long-term capital markets forecasts, expected asset allocations, risk premiums for respective asset classes, expected inflation and other factors. The Company’s post-retirement benefit plans use an assumed health care cost trend rate of approximately 9% for 2013 reduced over eight years until a rate of 5% is achieved. The effect of a one-percentage point change in the assumed health care cost trend would not have a material impact on the net periodic benefit costs or the accumulated benefit obligations of the Company’s health and welfare plans.

The Company seeks to produce a return on investment for the plans which is based on levels of liquidity and investment risk that are prudent and reasonable, given prevailing market conditions. The assets of the plans are managed in the long-term interests of the participants and beneficiaries of the plans. The Company manages this allocation strategy with the assistance of independent diversified professional investment management organizations. The assets and investment strategy of the Company’s UK based defined plans are managed by an independent custodian. The Company’s investment strategy for its US defined benefit plan is to achieve a return sufficient to meet the expected near-term retirement benefits payable under the plan when considered along with the minimum funding requirements. The target allocation of plan assets is 50% in equity securities, 42% in fixed income securities and 8% to all other types of investments.

 

The fair values of the Company’s pension plan assets by asset category as of December 31, 2013 are as follows:

 

		Pension Plan Assets
($ in millions)		Level 1				Level 2				Total
Common & commingled trust funds (1)			—				414				414
Mutual funds (2)			98				—				98
Cash equivalents (3)			11				—				11
Total			109				414				523

The fair values of the Company’s pension plan assets by asset category as of December 31, 2012 are as follows:

 

		Pension Plan Assets
($ in millions)		Level 1				Level 2				Total
Common & commingled trust funds (1)			—				438				438
Mutual funds (2)			47				—				47
Cash equivalents (3)			12				—				12
Total			59				438				497

 

(1)	The underlying investments held in common & commingled trust funds are actively managed equity securities and fixed income investment vehicles that are valued at the net asset value per share provided by the fund administrator multiplied by the number of units held as of the measurement date.

 

(2)	Values of units are based on the closing price reported on the major market on which the investments are traded and provided by the fund administrator.

 

(3)	Cash equivalents comprise of money market funds.

The Company’s contributions to its defined benefit pension and post-retirement benefit plans are estimated to aggregate $6 million in 2014 as compared to actual contribution of $3 million in 2013. The increase in estimated contributions is as a result of a change in US pension funding regulations.

The Company estimates its defined benefit pension and other post-retirement benefit plans will pay benefits to participants as follows:

 

(in $ millions)		Defined Benefit Pension Plans				Post-Retirement Benefit Plans
2014			29				—
2015			32				—
2016			34				—
2017			37				1
2018			42				1
Five years thereafter			299				1