Compensation and Benefit Plans | Compensation and Benefit Plans Employee Savings Plan The 401(k) defined contribution savings plan is designed to supplement employees' retirement income. The following employer contributions were made for continuing operations: Edison International SCE (in millions) Years ended December 31, 2017 $ 70 $ 69 2016 69 68 2015 73 72 Pension Plans and Postretirement Benefits Other Than Pensions Pension Plans Noncontributory defined benefit pension plans (some with cash balance features) cover most employees meeting minimum service requirements. SCE recognizes pension expense for its nonexecutive plan as calculated by the actuarial method used for ratemaking. The expected contributions (all by the employer) for Edison International and SCE are approximately $66 million and $50 million , respectively, for the year ending December 31, 2018 . Annual contributions made by SCE to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms. The funded position of Edison International's pension is sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's pension are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, a regulatory asset has been recorded equal to the unfunded status (See Note 10). Information on pension plan assets and benefit obligations for continuing and discontinued operations is shown below. Edison International SCE Years ended December 31, (in millions) 2017 2016 2017 2016 Change in projected benefit obligation Projected benefit obligation at beginning of year $ 4,284 $ 4,374 $ 3,791 $ 3,878 Service cost 137 139 129 132 Interest cost 164 171 144 150 Actuarial gain (46 ) (125 ) (74 ) (140 ) Benefits paid (360 ) (275 ) (288 ) (229 ) Projected benefit obligation at end of year $ 4,179 $ 4,284 $ 3,702 $ 3,791 Change in plan assets Fair value of plan assets at beginning of year $ 3,388 $ 3,298 $ 3,172 $ 3,080 Actual return on plan assets 483 262 442 239 Employer contributions 105 103 64 82 Benefits paid (360 ) (275 ) (288 ) (229 ) Fair value of plan assets at end of year $ 3,616 $ 3,388 $ 3,390 $ 3,172 Funded status at end of year $ (563 ) $ (896 ) $ (312 ) $ (619 ) Amounts recognized in the consolidated balance sheets consist of 1 : Long-term assets $ 7 $ 2 $ — $ — Current liabilities (17 ) (50 ) (4 ) (4 ) Long-term liabilities (553 ) (848 ) (308 ) (615 ) $ (563 ) $ (896 ) $ (312 ) $ (619 ) Amounts recognized in accumulated other comprehensive loss consist of: Prior service cost $ (1 ) $ (1 ) $ — $ — Net loss 1 77 93 21 24 $ 76 $ 92 $ 21 $ 24 Amounts recognized as a regulatory asset $ 271 $ 574 $ 271 $ 574 Total not yet recognized as expense $ 347 $ 666 $ 292 $ 598 Accumulated benefit obligation at end of year $ 4,022 $ 4,138 $ 3,585 $ 3,683 Pension plans with an accumulated benefit obligation in excess of plan assets: Projected benefit obligation $ 4,179 $ 4,284 $ 3,702 $ 3,791 Accumulated benefit obligation 4,022 4,138 3,585 3,683 Fair value of plan assets 3,616 3,388 3,390 3,172 Weighted-average assumptions used to determine obligations at end of year: Discount rate 3.46 % 3.94 % 3.46 % 3.94 % Rate of compensation increase 4.10 % 4.00 % 4.10 % 4.00 % 1 The SCE liability excludes a long-term payable due to Edison International Parent of $114 million and $124 million at December 31, 2017 and 2016 , respectively, related to certain SCE postretirement benefit obligations transferred to Edison International Parent. SCE's accumulated other comprehensive loss of $21 million and $24 million at December 31, 2017 and 2016 , respectively, excludes net loss of $19 million and $20 million related to these benefits. Net periodic pension expense components for continuing operations are: Edison International SCE Years ended December 31, (in millions) 2017 2016 2015 2017 2016 2015 Service cost $ 138 $ 139 $ 142 $ 133 $ 136 $ 139 Interest cost 164 172 170 149 156 155 Expected return on plan assets (212 ) (220 ) (233 ) (199 ) (205 ) (217 ) Settlement costs 1 6 — — — — — Amortization of prior service cost 3 4 5 3 4 5 Amortization of net loss 2 21 27 40 17 23 35 Expense under accounting standards 120 122 124 103 114 117 Regulatory adjustment (deferred) (28 ) (21 ) (6 ) (28 ) (21 ) (6 ) Total expense recognized $ 92 $ 101 $ 118 $ 75 $ 93 $ 111 1 Under GAAP, a settlement is recorded when lump-sum payments exceed estimated annual service and interest costs. Lump sum payments made in 2017 to Edison International executives retiring in 2016 from the Executive Retirement Plan exceeded the estimated service and interest costs, resulting in a partial settlement of that plan. A settlement loss of approximately $6.4 million ( $3.8 million after-tax) was recorded at Edison International for the year ended December 31, 2017. 2 Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International was $10 million , $10 million and $14 million for the years ended December 31, 2017, 2016 and 2015, respectively. The amount reclassified for SCE was $6 million , $6 million and $8 million , respectively, for the years ended December 31, 2017, 2016 and 2015, respectively. Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss for continuing operations: Edison International SCE Years ended December 31, (in millions) 2017 2016 2015 2017 2016 2015 Net loss (gain) $ — $ 6 $ 7 $ 3 $ 4 $ (9 ) Settlement charges (6 ) — — — — — Amortization of net loss (10 ) (10 ) (15 ) (6 ) (6 ) (9 ) Total recognized in other comprehensive loss $ (16 ) $ (4 ) $ (8 ) $ (3 ) $ (2 ) $ (18 ) Total recognized in expense and other comprehensive loss $ 76 $ 97 $ 110 $ 72 $ 91 $ 93 In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans that are recoverable in utility rates. The estimated pension amounts that will be amortized to expense in 2018 for continuing operations are as follows: (in millions) Edison International SCE Unrecognized net loss to be amortized 1 $ 8 $ 6 Unrecognized prior service cost to be amortized 3 3 1 The amount of net loss expected to be reclassified from other comprehensive loss for Edison International's continuing operations and SCE is $8 million and $6 million , respectively. Edison International and SCE used the following weighted-average assumptions to determine pension expense for continuing operations: Years ended December 31, 2017 2016 2015 Discount rate 3.94 % 4.18 % 3.85 % Rate of compensation increase 4.00 % 4.00 % 4.00 % Expected long-term return on plan assets 6.50 % 7.00 % 7.00 % The following benefit payments, which reflect expected future service, are expected to be paid: Edison International SCE (in millions) Years ended December 31, 2018 $ 338 $ 304 2019 343 303 2020 327 293 2021 324 287 2022 309 281 2023 – 2027 1,453 1,299 Postretirement Benefits Other Than Pensions ("PBOP(s)") Employees hired prior to December 31, 2017 who are retiring at or after age 55 with at least 10 years of service may be eligible for postretirement medical, dental, and vision benefits. Eligibility for a company contribution toward the cost of these benefits in retirement depends on a number of factors, including the employee's years of service, age, hire date, and retirement date. Under the terms of the Edison International Health and Welfare Benefit Plan ("PBOP Plan"), each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of all PBOP Plan benefits with respect to its employees and former employees. A participating employer may terminate the PBOP Plan benefits with respect to its employees and former employees, as may SCE (as PBOP Plan sponsor), and, accordingly, the participants' PBOP Plan benefits are not vested benefits. The expected contributions (substantially all of which are expected to be made by SCE) for PBOP benefits are $12 million for the year ended December 31, 2018 . Annual contributions related to SCE employees made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans. SCE has established three voluntary employee beneficiary associations trusts ("VEBA Trusts") that can only be used to pay for retiree health care benefits of SCE. Once funded into the VEBA Trusts, neither SCE nor Edison International can subsequently terminate benefits and recover remaining amounts in the VEBA Trusts. Participants of the PBOP Plan do not have a beneficial interest in the VEBA Trusts. The VEBA Trust assets are sensitive to changes in market conditions. Changes in overall interest rate levels significantly affect the company's liabilities, while assets held in the various trusts established to fund Edison International's other postretirement benefits are affected by movements in the equity and bond markets. Due to SCE's regulatory recovery treatment, the unfunded status is offset by a regulatory asset. Information on PBOP Plan assets and benefit obligations is shown below: Edison International SCE Years ended December 31, (in millions) 2017 2016 2017 2016 Change in benefit obligation Benefit obligation at beginning of year $ 2,276 $ 2,350 $ 2,266 $ 2,341 Service cost 31 35 31 34 Interest cost 86 97 85 97 Special termination benefits 1 2 1 2 Plan Amendments — (6 ) — (6 ) Actuarial loss (gain) 24 (110 ) 23 (110 ) Plan participants' contributions 24 19 24 19 Benefits paid (105 ) (111 ) (105 ) (111 ) Benefit obligation at end of year $ 2,337 $ 2,276 $ 2,325 $ 2,266 Change in plan assets Fair value of plan assets at beginning of year $ 2,102 $ 2,036 $ 2,102 $ 2,036 Actual return on assets 297 137 297 137 Employer contributions 12 21 12 21 Plan participants' contributions 24 19 24 19 Benefits paid (105 ) (111 ) (105 ) (111 ) Fair value of plan assets at end of year $ 2,330 $ 2,102 $ 2,330 $ 2,102 Funded status at end of year $ (7 ) $ (174 ) $ 5 $ (164 ) Amounts recognized in the consolidated balance sheets consist of: Long-term assets $ 6 $ — $ 17 $ — Current liabilities (13 ) (14 ) (12 ) (13 ) Long-term liabilities — (160 ) — (151 ) $ (7 ) $ (174 ) $ 5 $ (164 ) Amounts recognized in accumulated other comprehensive loss consist of: Net loss $ 4 $ 4 $ — $ — Amounts recognized as a regulatory (liability) asset (26 ) 136 (26 ) 136 Total not yet recognized as (income) expense $ (22 ) $ 140 $ (26 ) $ 136 Weighted-average assumptions used to determine obligations at end of year: Discount rate 3.70 % 4.29 % 3.70 % 4.29 % Assumed health care cost trend rates: Rate assumed for following year 6.75 % 7.00 % 6.75 % 7.00 % Ultimate rate 5.00 % 5.00 % 5.00 % 5.00 % Year ultimate rate reached 2029 2022 2029 2022 Net periodic PBOP expense components for continuing operations are: Edison International SCE Years ended December 31, (in millions) 2017 2016 2015 2017 2016 2015 Service cost $ 31 $ 35 $ 46 $ 31 $ 34 $ 46 Interest cost 86 97 102 85 97 102 Expected return on plan assets (110 ) (112 ) (116 ) (110 ) (112 ) (116 ) Special termination benefits 1 1 2 1 1 2 1 Amortization of prior service credit (3 ) (2 ) (12 ) (2 ) (2 ) (12 ) Amortization of net loss — — 3 — — 2 Total expense $ 5 $ 20 $ 24 $ 5 $ 19 $ 23 1 Due to the reduction in workforce, SCE has incurred costs for extended retiree health care coverage. In accordance with authoritative guidance on rate-regulated enterprises, SCE records regulatory assets and liabilities instead of charges and credits to other comprehensive income (loss) for the portion of SCE's postretirement benefit plans that are recoverable in utility rates. The estimated PBOP amounts that will be amortized to expense in 2018 for continuing operations are as follows: (in millions) Edison International SCE Unrecognized prior service credit to be amortized $ (1 ) $ (1 ) Edison International and SCE used the following weighted-average assumptions to determine PBOP expense for continuing operations: Years ended December 31, 2017 2016 2015 Discount rate 4.29 % 4.55 % 4.16 % Expected long-term return on plan assets 5.30 % 5.60 % 5.50 % Assumed health care cost trend rates: Current year 7.00 % 7.50 % 7.75 % Ultimate rate 5.00 % 5.00 % 5.00 % Year ultimate rate reached 2022 2022 2021 A one-percentage-point change in assumed health care cost trend rate would have the following effects on continuing operations: Edison International SCE (in millions) One-Percentage-Point Increase One-Percentage-Point Decrease One-Percentage-Point Increase One-Percentage-Point Decrease Effect on accumulated benefit obligation as of December 31, 2017 $ 247 $ (203 ) $ 246 $ (202 ) Effect on annual aggregate service and interest costs 9 (8 ) 9 (8 ) The following benefit payments are expected to be paid: Edison International SCE (in millions) Years ended December 31, 2018 $ 93 $ 93 2019 96 96 2020 100 100 2021 103 103 2022 107 106 2023 – 2027 582 580 Plan Assets Description of Pension and Postretirement Benefits Other than Pensions Investment Strategies The investment of plan assets is overseen by a fiduciary investment committee. Plan assets are invested using a combination of asset classes, and may have active and passive investment strategies within asset classes. Target allocations for 2017 pension plan assets were 29% for U.S. equities, 17% for non-U.S. equities, 35% for fixed income, 15% for opportunistic and/or alternative investments and 4% for other investments. Target allocations for 2017 PBOP plan assets (except for Represented VEBA which is 85% for fixed income, 5% for opportunistic/private equities, and 10% global equities) are 58% for global equities, 29% for fixed income, and 13% for opportunistic and/or alternative investments. Edison International employs multiple investment management firms. Investment managers within each asset class cover a range of investment styles and approaches. Risk is managed through diversification among multiple asset classes, managers, styles and securities. Plan asset classes and individual manager performances are measured against targets. Edison International also monitors the stability of its investment managers' organizations. Allowable investment types include: • United States Equities: Common and preferred stocks of large, medium, and small companies which are predominantly United States-based. • Non-United States Equities: Equity securities issued by companies domiciled outside the United States and in depository receipts which represent ownership of securities of non-United States companies. • Fixed Income: Fixed income securities issued or guaranteed by the United States government, non-United States governments, government agencies and instrumentalities including municipal bonds, mortgage backed securities and corporate debt obligations. A portion of the fixed income positions may be held in debt securities that are below investment grade. Opportunistic, Alternative and Other Investments: • Opportunistic: Investments in short to intermediate term market opportunities. Investments may have fixed income and/or equity characteristics and may be either liquid or illiquid. • Alternative: Limited partnerships that invest in non-publicly traded entities. • Other: Investments diversified among multiple asset classes such as global equity, fixed income currency and commodities markets. Investments are made in liquid instruments within and across markets. The investment returns are expected to approximate the plans' expected investment returns. Asset class portfolio weights are permitted to range within plus or minus 3% . Where approved by the fiduciary investment committee, futures contracts are used for portfolio rebalancing and to reallocate portfolio cash positions. Where authorized, a few of the plans' investment managers employ limited use of derivatives, including futures contracts, options, options on futures and interest rate swaps in place of direct investment in securities to gain efficient exposure to markets. Derivatives are not used to leverage the plans or any portfolios. Determination of the Expected Long-Term Rate of Return on Assets The overall expected long-term rate of return on assets assumption is based on the long-term target asset allocation for plan assets and capital markets return forecasts for asset classes employed. A portion of the PBOP trust asset returns are subject to taxation, so the expected long-term rate of return for these assets is determined on an after-tax basis. Capital Markets Return Forecasts SCE's capital markets return forecast methodologies primarily use a combination of historical market data, current market conditions, proprietary forecasting expertise, complex models to develop asset class return forecasts and a building block approach. The forecasts are developed using variables such as real risk-free interest, inflation, and asset class specific risk premiums. For equities, the risk premium is based on an assumed average equity risk premium of 5% over cash. The forecasted return on private equity and opportunistic investments are estimated at a 2% premium above public equity, reflecting a premium for higher volatility and lower liquidity. For fixed income, the risk premium is based off of a comprehensive modeling of credit spreads. Fair Value of Plan Assets The PBOP Plan and the Southern California Edison Company Retirement Plan Trust (Master Trust) assets include investments in equity securities, U.S. treasury securities, other fixed-income securities, common/collective funds, mutual funds, other investment entities, foreign exchange and interest rate contracts, and partnership/joint ventures. Equity securities, U.S. treasury securities, mutual and money market funds are classified as Level 1 as fair value is determined by observable, unadjusted quoted market prices in active or highly liquid and transparent markets. The fair value of the underlying investments in equity mutual funds are based on stock-exchange prices. The fair value of the underlying investments in fixed-income mutual funds and other fixed income securities including municipal bonds are based on evaluated prices that reflect significant observable market information such as reported trades, actual trade information of similar securities, benchmark yields, broker/dealer quotes, issuer spreads, bids, offers and relevant credit information. Foreign exchange and interest rate contracts are classified as Level 2 because the values are based on observable prices but are not traded on an exchange. Futures contracts trade on an exchange and therefore are classified as Level 1. Common/collective funds and partnerships are measured at fair value using the net asset value per share ("NAV") and have not been classified in the fair value hierarchy. Other investment entities are valued similarly to common/collective funds and are therefore classified as NAV. The Level 1 registered investment companies are either mutual or money market funds. The remaining funds in this category are readily redeemable and classified as NAV and are discussed further at Note 8 to the pension plan master trust investments table below. Edison International reviews the process/procedures of both the pricing services and the trustee to gain an understanding of the inputs/assumptions and valuation techniques used to price each asset type/class. The trustee and Edison International's validation procedures for pension and PBOP equity and fixed income securities are the same as the nuclear decommissioning trusts. For further discussion, see Note 4. The values of Level 1 mutual and money market funds are publicly quoted. The trustees obtain the values of common/collective and other investment funds from the fund managers. The values of partnerships are based on partnership valuation statements updated for cash flows. SCE's investment managers corroborate the trustee fair values. Pension Plan The following table sets forth the Master Trust investments for Edison International and SCE that were accounted for at fair value as of December 31, 2017 by asset class and level within the fair value hierarchy: (in millions) Level 1 Level 2 Level 3 NAV 1 Total U.S. government and agency securities 2 $ 184 $ 507 $ — $ — $ 691 Corporate stocks 3 718 11 — — 729 Corporate bonds 4 — 676 — — 676 Common/collective funds 5 — — — 705 705 Partnerships/joint ventures 6 — — — 396 396 Other investment entities 7 — — — 262 262 Registered investment companies 8 140 — — — 140 Interest-bearing cash 9 — — — 9 Other — 106 — — 106 Total $ 1,051 $ 1,300 $ — $ 1,363 $ 3,714 Receivables and payables, net (98 ) Net plan assets available for benefits $ 3,616 SCE's share of net plan assets $ 3,390 The following table sets forth the Master Trust investments that were accounted for at fair value as of December 31, 2016 by asset class and level within the fair value hierarchy: (in millions) Level 1 Level 2 Level 3 NAV 1 Total U.S. government and agency securities 2 $ 217 $ 309 $ — $ — $ 526 Corporate stocks 3 720 15 — — 735 Corporate bonds 4 — 725 — — 725 Common/collective funds 5 — — — 692 692 Partnerships/joint ventures 6 — — — 333 333 Other investment entities 7 — — — 253 253 Registered investment companies 8 124 — — 6 130 Interest-bearing cash 42 — — — 42 Other — 112 — — 112 Total $ 1,103 $ 1,161 $ — $ 1,284 $ 3,548 Receivables and payables, net (160 ) Net plan assets available for benefits $ 3,388 SCE's share of net plan assets $ 3,172 1 These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits. 2 Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. 3 Corporate stocks are diversified. At December 31, 2017 and 2016 , respectively, performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes ( 54% ) and ( 62% ) and Morgan Stanley Capital International (MSCI) index ( 46% ) and ( 38% ). 4 Corporate bonds are diversified. At December 31, 2017 and 2016 , respectively, this category includes $65 million and $76 million for collateralized mortgage obligations and other asset backed securities of which $18 million and $27 million are below investment grade. 5 At December 31, 2017 and 2016 , respectively, the common/collective assets were invested in equity index funds that seek to track performance of the Standard and Poor's 500 Index ( 41% and 45% ) and Russell 1000 indexes ( 15% ). At both December 31, 2017 and 2016, 15% of the assets in this category are in index funds which seek to track performance in the MSCI All Country World Index exUS. At December 31, 2017 and 2016, a non-index U.S. equity fund representing 25% and 23% of this category for 2017 and 2016 , respectively, is actively managed. 6 At both December 31, 2017 and 2016 , 55% are invested in private equity funds with investment strategies that include branded consumer products, clean technology and California geographic focus companies. At December 31, 2017 and 2016 , respectively, 23% and 22% are invested in publicly traded fixed income securities, 20% and 18% are invested in a broad range of financial assets in all global markets and 2% and 4% of the remaining partnerships are invested in asset backed securities, including distressed mortgages and commercial and residential loans and debt and equity of banks. 7 Other investment entities were primarily invested in (1) emerging market equity securities, (2) a hedge fund that invests through liquid instruments in a global diversified portfolio of equity, fixed income, interest rate, foreign currency and commodities markets, and (3) domestic mortgage backed securities. 8 Level 1 registered investment companies primarily consisted of a global equity mutual fund which seeks to outperform the MSCI World Total Return Index. At December 31, 2017 and 2016 , respectively, approximately 67% and 69% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States. Postretirement Benefits Other than Pensions The following table sets forth the VEBA Trust assets for Edison International and SCE that were accounted for at fair value as of December 31, 2017 by asset class and level within the fair value hierarchy: (in millions) Level 1 Level 2 Level 3 NAV 1 Total U.S. government and agency securities 2 $ 398 $ 33 $ — $ — $ 431 Corporate stocks 3 254 — — — 254 Corporate notes and bonds 4 — 845 — — 845 Common/collective funds 5 — — — 569 569 Partnerships 6 — — — 82 82 Registered investment companies 7 37 — — — 37 Interest bearing cash 42 — — — 42 Other 8 5 84 — — 89 Total $ 736 $ 962 $ — $ 651 $ 2,349 Receivables and payables, net (19 ) Combined net plan assets available for benefits $ 2,330 The following table sets forth the VEBA Trust assets for SCE that were accounted for at fair value as of December 31, 2016 by asset class and level within the fair value hierarchy: (in millions) Level 1 Level 2 Level 3 NAV 1 Total U.S. government and agency securities 2 $ 222 $ 59 $ — $ — $ 281 Corporate stocks 3 230 — — — 230 Corporate notes and bonds 4 — 877 — — 877 Common/collective funds 5 — — — 462 462 Partnerships 6 — — — 79 79 Registered investment companies 7 48 — — 1 49 Interest bearing cash 48 — — — 48 Other 8 4 103 — — 107 Total $ 552 $ 1,039 $ — $ 542 $ 2,133 Receivables and payables, net (31 ) Combined net plan assets available for benefits $ 2,102 1 These investments are measured at fair value using the net asset value per share practical expedient and have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the net plan assets available for benefits. 2 Level 1 U.S. government and agency securities are U.S. treasury bonds and notes. Level 2 primarily relates to the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association. 3 Corporate stock performance for actively managed separate accounts is primarily benchmarked against the Russell Indexes ( 64% and 47% ) and the MSCI All Country World Index ( 36% and 53% ) for 2017 and 2016 , respectively. 4 Corporate notes and bonds are diversified and include approximately $36 million and $47 million for commercial collateralized mortgage obligations and other asset backed securities at December 31, 2017 and 2016 , respectively. 5 At December 31, 2017 and 2016 , respectively, 75% and 39% of the common/collective assets are invested in index funds which seek to track performance in the MSCI All Country World Index Investable Market Index and MSCI Europe, Australasia and Far East (EAFE) Index. 17% and 18% are invested in a non-index U.S. equity fund which is actively managed. The remaining assets in this category are primarily invested in emerging market fund at December 31, 2017 and a large cap index fund which seeks to track performance of the Russell 1000 index at December 31, 2016 . 6 At December 31, 2017 and 2016 , respectively, 56% and 59% of the partnerships are invested in private equity and venture capital funds. Investment strategies for these funds include branded consumer products, clean and information technology and healthcare. 33% and 31% are invested in a broad range of financial assets in all global markets. 9% of the remaining partnerships category for both years is invested in asset backed securities including distressed mortgages, distressed companies and commercial and residential loans and debt and equity of banks. 7 At December 31, 2017 , registered investment companies were primarily invested in (1) a money market fund, (2) exchange rate trade funds which seek to track performance of MSCI Emerging Market Index, Russell 2000 Index, and international small cap equities. At December 31, 2016 , Level 1 registered investment companies consist of a money market fund. 8 Other includes $60 million and $76 million of municipal securities at December 31, 2017 and 2016 , respectively. At December 31, 2017 and 2016 , respectively, approximately 61% and 63% of the publicly traded equity investments, including equities in the common/collective funds, were located in the United States. Stock-Based Compensation Edison International maintains a shareholder-approved incentive plan (the 2007 Performance Incentive Plan) that includes stock-based compensation. The maximum number of shares of Edison International's common stock authorized to be issued or transferred pursuant to awards under the 2007 Performance Incentive Plan, as amended, is 66 million shares, plus the number of any shares subject to awards issued under Edison International's prior plans and outstanding as of April 26, 2007, which expire, cancel or terminate without being exercised or shares being issued. As of December 31, 2017 , Edison International had approximately 30 million shares remaining available for new award grants under its stock-based compensation plans. The following table summarizes total expense and tax benefits (expense) associated with stock based compensation: Edison International SCE Years ended December 31, (in millions) 2017 2016 2015 2017 2016 2015 Stock-based compensation expense 1 : Stock options $ 14 $ 14 $ 14 $ 8 $ 7 $ 8 Performance shares 2 13 7 2 6 4 Restricted stock units 6 6 7 3 3 4 Other 1 1 1 — — — Total stock-based compensation expense $ 23 $ 34 $ 29 $ 13 $ 16 $ 16 Income tax benefits related to stock compensation expense 2 $ 72 $ 41 $ 12 $ 15 $ 20 $ 7 Excess tax benefits 2 — — 15 — — 23 1 Reflected in "Operation and maintenance" on Edison International's and SCE's consolidated statements of income. 2 Under new accounting guidance adopted in 2016, share-based payments may create a permanent difference between the amount of compensation expense recognized for book and tax purposes. Beginning January 1, 2016, the excess tax impact of this permanent difference is recognized in earnings in the period it is created. Stock Options Under the 2007 Performance Incentive Plan, Edison International has granted stock options at exercise prices equal to the closing price at the grant date. Edison International may grant stock options and other awards related to, or with a value derived from, its common stock to directors and certain employees. Options generally expire 10 years after the grant date and vest over a period of four years of continuous service, with expense recognized evenly over the requisite service period, except for awards granted to retirement-eligible participants, as discussed in "Stock-Based Compensation" in Note 1. Additionally, Edison International will substitute cash awards to the extent necessary to pay tax withholding or any government levies. The fair value for each option granted was determined as of the grant date using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires various assumptions noted in the following table: Years ended December 31, 2017 2016 2015 Expected terms (in years) 5.7 5.9 5.9 Risk-free interest rate 2.1% - 2.3% 1.2% – 2.2% 1.6% – 2.1% Expected dividend yield 2.7% - 3.8% 2.5% – 3.0% 2.6% – 3.2% Weighted-average expected dividend yield 2.7% 2.9% 2.6% Expected volatility 17.8% - 20.9% 17.2% – 17.5% 16.4% – 17.0% Weighted-average volatility 17.9% 17.4% 16.5% The expected term represents the period of time for which the options are expected to be outstanding and is primarily based on historical exercise and post-vesting cancellation experience and stock price history. The risk-free interest rate for periods within the contractual life of the option is based on a zero coupon U.S. Treasury STRIPS (separate trading of registered interest and principal of securities) whose maturity equals the option's expected term on the measurement date. Expected volatility is based on the historical volatility of Edison International's common stock for the length of the option's expected term for 2017 . The volatility period used was 68 months , 71 months and 71 months at December 31, 2017 , 2016 and 2015 , respectively. The following is a summary of the status of Edison International's stock |