United states securities and exchange commission

Investment Policy and Strategy

The U.S. investment policy, as established by the Aon Retirement Plan Governance and Investment Committee (“RPGIC”), seeks reasonable asset growth at prudent risk levels within target allocations, which are 41% equity investments, 30% fixed income investments, and 29% other investments. Aon believes that plan assets are well-diversified and are of appropriate quality. The investment portfolio asset allocation is reviewed quarterly and re-balanced to be within policy target allocations. The investment policy is reviewed at least annually and revised, as deemed appropriate by the RPGIC. The investment policies for international plans are generally established by the local pension plan trustees and seek to maintain the plans’ ability to meet liabilities and to comply with local minimum funding requirements. Plan assets are invested in diversified portfolios that provide adequate levels of return at an acceptable level of risk. The investment policies are reviewed at least annually and revised, as deemed appropriate to ensure that the objectives are being met. At December 31, 2016 , the weighted average targeted allocation for the U.K. and non-U.S. plans was 14% for equity investments, 77% for fixed income investments, and 9% for other investments.

Cash Flows

Contributions

Based on current assumptions, in 2017 , the Company expects to contribute approximately $80 million , $87 million , and $18 million to its U.K., U.S. and other significant international pension plans, respectively.

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Estimated Future Benefit Payments

Estimated future benefit payments for plans are as follows at December 31, 2016 (in millions):

		U.K.				U.S.				Other
2017		$	124			$	168			$	39
2018		130				180				40
2019		140				187				40
2020		148				191				41
2021		156				185				42
2022 – 2026		892				893				228

U.S. and Canadian Other Post-Retirement Benefits

The following table provides an overview of the accumulated projected benefit obligation, fair value of plan assets, funded status and net amount recognized as of December 31, 2016 and 2015 for the Company’s other significant post-retirement benefit plans located in the U.S. and Canada (in millions):

	2016				2015
Accumulated projected benefit obligation	$	110			$	105
Fair value of plan assets	18				18
Funded status	(92		)		(87		)
Unrecognized prior-service credit	(3		)		(3		)
Unrecognized loss	10				7
Net amount recognized	$	(85	)		$	(83	)

Other information related to the Company’s other post-retirement benefit plans are as follows:

	2016		2015		2014
Net periodic benefit cost recognized (millions)	$5		$6		$3
Weighted-average discount rate used to determine future benefit obligations	3.71-4.15%		3.99-4.33%		3.83 - 4.08
Weighted-average discount rate used to determine net periodic benefit costs	3.99-4.33%		3.83-4.08%		4.44 - 4.95

Amounts recognized in Accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at December 31, 2016 are $10 million and $3 million of net loss and prior service credit, respectively. The amount in Accumulated other comprehensive income expected to be recognized as a component of net periodic benefit cost during 2017 is $0.2 million and $0.3 million of net gain and prior service credit, respectively.

Based on current assumptions, the Company expects:

•	To contribute $4 million to fund significant other post-retirement benefit plans during 2017 .

•	Estimated future benefit payments will be approximately $6 million each year for 2017 through 2021, and $30 million in aggregate for 2022-2026.

The accumulated post-retirement benefit obligation is increased by $7 million and decreased by $6 million by a respective 1% increase or decrease to the assumed healthcare trend rate. The service cost and interest cost components of net periodic benefits cost is increased by $0.6 million and decreased by $0.5 million by a respective 1% increase or decrease to the assumed healthcare trend rate.

For most of the participants in the U.S. plan, Aon’s liability for future plan cost increases for pre-65 and Medical Supplement plan coverage is limited to 5% per annum. Although the net employer trend rates range from 4% to 8.5% per year, because of this cap, these plans are effectively limited to 5% per year in the future.

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11.     Share-Based Compensation Plans

The following table summarizes share-based compensation expense recognized in the Consolidated Statements of Income in Compensation and benefits (in millions):

Years ended December 31	2016				2015				2014
Restricted share units (“RSUs”)	$	194			$	201			$	187
Performance share awards ("PSAs")	125				127				132
Employee share purchase plans	12				11				9
Total share-based compensation expense	331				339				328
Tax benefit	94				95				94
Share-based compensation expense, net of tax	$	237			$	244			$	234