STI 2018 Annual Report

Notes to Consolidated Financial Statements, continued 137 Target allocations for pension and other postretirement benefits at December 31, by asset category, are presented below: Pension Benefits Other Postretirement Benefits 2018 Target Allocation % of plan assets 2018 Target Allocation % of plan assets 2018 2017 2018 2017 Cash equivalents 0-10 % 4% 4% 5-15 % 7% 7% Equity securities 0-25 13 29 20-40 30 34 Debt securities 75-100 83 67 50-70 63 59 Total 100% 100% 100% 100% The Company sets pension asset values equal to their market value, reflecting gains and losses immediately rather than deferring over a period of years, which provides a more realistic economic measure of the plan’s funded status and cost. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the other postretirement benefit plans. At December 31, 2018, the Company assumed that pre-65 retiree healthcare costs will increase at an initial rate of 7.25% per year. The Company expects this annual cost increase to decrease over a 7 year period to 4.50% per year. Assumed discount rates and expected returns on plan assets affect the amounts of net periodic benefit. A25 basis point increase/decrease in the expected long- term return on plan assets would increase/decrease the net periodic benefit by $8 million for pension and other postretirement benefits plans. A25 basis point increase/decrease in the discount rate would change the net periodic benefit by $1 million for pension and other postretirement benefits plans. Expected Cash Flows Expected cash flows for the pension and other postretirement benefit plans are presented in the following table: (Dollars in millions) Pension Benefits 1 Other Postretirement Benefits (excluding Medicare Subsidy) 2 Employer Contributions: 2019 (expected) to plan trusts $— $— 2019 (expected) to plan participants 3 7 — Expected Benefit Payments: 2019 175 6 2020 161 6 2021 161 6 2022 159 5 2023 159 4 2024 - 2028 773 16 1 Based on the funding status and ERISA limitations, the Company anticipates contributions to the Retirement Plan will not be required during 2019. 2 Expected payments under other postretirement benefit plans are shown net of participant contributions. 3 The expected benefit payments for the SERP will be paid directly from the Company's corporate assets. Defined Contribution Plans SunTrust's employee benefit program includes a qualified defined contribution plan. For years ended December 31, 2018, 2017, and 2016, the 401(k) plan provided a dollar-for-dollar match on the first 6% of eligible pay that a participant, including executive participants, elected to defer. SunTrust also maintains the SunTrust Banks, Inc. Deferred Compensation Plan in which key executives of the Company are eligible. Matching contributions for the deferred compensation plan are the same percentage as provided in the 401(k) plan, subject to limitations imposed by the plans' provisions and applicable laws and regulations. Matching contributions for both the Company's 401(k) plan and the deferred compensation plan fully vest upon two years of completed service. Furthermore, both plans permit an additional discretionary Company contribution equal to a fixed percentage of eligible pay. TheCompany's 401(k) expense, including any discretionary contributions, was $112 million, $130 million, and $105 million for the years ended December 31, 2018, 2017, and 2016, respectively.