Defined Benefit Postretirement Plans and Defined Contribution Plan

12 Months Ended

Dec. 31, 2022

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Defined Benefit Postretirement Plans and Defined Contribution Plan

Defined Benefit Postretirement Plans and Defined Contribution Plan

We have noncontributory defined benefit pension plans covering substantially all domestic employees. Benefits under these plans are based on plan provisions specific to each plan.

We also have plans for other postretirement benefits covering our U.S. employees. Health care benefits are provided up to age 65 through comprehensive hospital, surgical and major medical benefit provisions subject to various cost-sharing features. Life insurance benefits are provided to certain retiree beneficiaries. These other postretirement benefits are not funded in advance. Employees hired after 2016 are not eligible for any postretirement health care or life insurance benefits.

Obligations and funded status – The following summarizes the obligations and funded status for our defined benefit pension and other postretirement plans.    

	Pension Benefits				Other Benefits
	2022		2021		2022		2021
(In millions)	U.S.		U.S.		U.S.		U.S.
Accumulated benefit obligation	$	214	$	260	$	53	$	73
Change in pension benefit obligations:
Beginning balance	$	269	$	308	$	73	$	80
Service cost	14		16		—		—
Interest cost	7		7		2		2
Actuarial (gain) loss	(46)		(15)		(11)		1
Settlements paid	(21)		(43)		—		—
Benefits paid	(5)		(4)		(11)		(10)
Ending balance	$	218	$	269	$	53	$	73
Change in fair value of plan assets:
Beginning balance	$	192	$	194	$	—	$	—
Actual return on plan assets	(27)		13		—		—
Employer contributions	22		32		11		10
Settlements paid	(21)		(43)		—		—
Benefits paid	(5)		(4)		(11)		(10)
Ending balance	$	161	$	192	$	—	$	—
Funded status of plans at December 31	$	(57)	$	(77)	$	(53)	$	(73)
Amounts recognized in the consolidated balance sheets:
Current liabilities	$	(3)	$	(3)	$	(8)	$	(10)
Noncurrent liabilities	(54)		(74)		(45)		(63)
Accrued benefit cost	$	(57)	$	(77)	$	(53)	$	(73)
Pretax amounts in accumulated other comprehensive loss:
Net loss	$	24	$	37	$	11	$	23
Prior service credit	(8)		(13)		(65)		(81)

In 2022, the pension plans and the postretirement plans experienced a net actuarial gain. Both pension and postretirement plans experienced an increase in discount rate used to measure the plans, which decreased their respective benefit obligations and was the primary source of the actuarial gain.

Components of net periodic benefit costs and other comprehensive (income) loss – The following summarizes the net periodic benefit costs and the amounts recognized as other comprehensive (income) loss for our defined benefit pension and other postretirement plans.

	Pension Benefits						Other Benefits
	Year Ended December 31,						Year Ended December 31,
	2022		2021		2020		2022		2021		2020
(In millions)	U.S.		U.S.		U.S.		U.S.		U.S.		U.S.
Components of net periodic benefit costs:
Service cost	$	14	$	16	$	19	$	—	$	—	$	1
Interest cost	7		7		9		2		2		2
Expected return on plan assets	(8)		(8)		(11)		—		—		—
Amortization:
- prior service credit	(6)		(6)		(6)		(16)		(16)		(18)
- actuarial loss	2		5		9		2		2		2
Net settlement loss(a)	2		9		30		—		—		—
Net curtailment gain(b)	—		—		(3)		—		—		(14)
Net periodic benefit cost (credit) (c)	$	11	$	23	$	47	$	(12)	$	(12)	$	(27)
Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss (pretax):
Actuarial loss (gain)	$	(10)	$	(21)	$	27	$	(10)	$	1	$	4
Settlement loss and amortization of actuarial gain (loss)	(4)		(14)		(40)		(2)		(2)		(2)
Curtailment gain and amortization of prior service credit (cost)	6		6		10		16		16		32
Total recognized in other comprehensive (income) loss	$	(8)	$	(29)	$	(3)	$	4	$	15	$	34
Total recognized in net periodic benefit cost and other comprehensive (income) loss	$	3	$	(6)	$	44	$	(8)	$	3	$	7

(a)Settlements are recognized as they occur, once it is probable that lump sum payments from a plan for a given year will exceed the plan’s total service and interest costs for that year.

(b)Related to workforce reductions, which reduced the future expected years of service for employees participating in the plans.

(c)Net periodic benefit costs (credits) reflects a calculated market-related value of plan assets, which recognizes changes in fair value over three years.

Plan assumptions – The following summarizes the assumptions used to determine the benefit obligations at December 31, and net periodic benefit cost for the defined benefit pension and other postretirement plans for 2022, 2021 and 2020.

	Pension Benefits						Other Benefits
	2022		2021		2020		2022		2021		2020
	U.S.		U.S.		U.S.		U.S.		U.S.		U.S.
Weighted average assumptions used to determine benefit obligation:
Discount rate	5.20	%	2.83	%	2.52	%	5.07	%	2.48	%	2.02	%
Rate of compensation increase(a)	5.00	%	0.50	%	0.50	%	5.00	%	0.50	%	0.50	%
Cash balance interest crediting	4.20	%	3.00	%	3.00	%	—	%	—	%	—	%
Weighted average assumptions used to determine net periodic benefit cost:
Discount rate	4.02	%	2.77	%	2.90	%	2.48	%	2.02	%	2.63	%
Expected long-term return on plan assets	5.75	%	5.75	%	6.00	%	—	%	—	%	—	%
Rate of compensation increase(b)	5.00	%	0.50	%	4.50	%	5.00	%	0.50	%	4.50	%
Cash balance interest crediting	3.60	%	3.00	%	3.00	%	—	%	—	%	—	%

(a)The assumed rate of compensation increase is 5.50% for the year 2023 and 4.50% for future years.

(b)The assumed rate of compensation increase is 4.50% for future years.

Expected long-term return on plan assets – The expected long-term return on plan assets assumption for our pension plan is determined based on an internally developed asset rate-of-return modeling tool, which utilizes underlying assumptions based on actual and forward-looking expected market returns by asset category and inflation and takes into account our pension plan’s asset allocation. The expected return for each asset category is then weighted based on the actual and targeted asset allocation to develop the overall expected long-term return on plan assets assumption.

Assumed weighted average health care cost trend rates – The pre-65 retiree medical coverage subsidy was frozen as of January 1, 2019, and the ability for retirees to opt in and out of this coverage, as well as pre-65 retiree dental and vision coverage, was also eliminated. Retirees must enroll in connection with retirement for such coverage, or they lose eligibility. Annual costs associated with the pre-65 retiree medical coverage were immaterial for all periods presented.

Plan investment policies and strategies – The investment policies for our pension plan assets reflect the funded status of the plan and expectations regarding our future ability to make further contributions. Long-term investment goals are to: (1) manage the assets in accordance with applicable legal requirements; (2) produce investment returns which meet or exceed the rates of return achievable in the capital markets while maintaining the risk parameters set by the plan’s investment committees and protecting the assets from any erosion of purchasing power; and (3) position the portfolios with a long-term risk/return orientation. Investment performance and risk is measured and monitored on an ongoing basis through quarterly investment meetings and periodic asset and liability studies.

Pension plan – The plan’s current targeted asset allocation is comprised of 47% equity securities and 53% other fixed income securities. Over time, as the plan’s funded ratio (as defined by the investment policy) improves, in order to reduce volatility in returns and to better match the plan’s liabilities, the allocation to equity securities will decrease while the amount allocated to fixed income securities will increase. The plan’s assets are managed by a third-party investment manager.

Fair value measurements – Plan assets are measured at fair value. The following provides a description of the valuation techniques employed for each major plan asset class at December 31, 2022 and 2021.

Cash and cash equivalents – Cash and cash equivalents are valued using a market approach and are considered Level 1.

Equity securities – Investments in common stock are valued using a market approach at the closing price reported in an active market and are therefore considered Level 1. Private equity investments include interests in limited partnerships which are valued based on the sum of the estimated fair values of the investments held by each partnership, determined using a combination of market, income and cost approaches, plus working capital, adjusted for liabilities, currency translation and estimated performance incentives. These private equity investments are considered Level 3.

Other – Other investments are comprised of an unallocated annuity contract, two limited liability companies and real estate. All are considered Level 3, as significant inputs to determine fair value are unobservable.

Commingled funds – The investment in the commingled funds are valued using the net asset value of units held as a practical expedient. The commingled funds consist of equity and fixed income portfolios with underlying investments held in U.S. and non-U.S. securities.

The following tables present the fair values of our defined benefit pension plan’s assets, by level within the fair value hierarchy, as of December 31, 2022 and 2021.

	December 31, 2022
(In millions)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	8	$	—	$	—	$	8
Equity securities:
Common stock	22		—		—		22
Private equity	—		—		5		5
Other	—		—		10		10
Total investments, at fair value	30		—		15		45
Commingled funds(b)	—		—		—		116
Total investments	$	30	$	—	$	15	$	161

	December 31, 2021
(In millions)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents(a)	$	(1)	$	—	$	—	$	(1)
Equity securities:
Common stock	28		—		—		28
Private equity	—		—		7		7
Other	—		—		16		16
Total investments, at fair value	27		—		23		50
Commingled funds(b)	—		—		—		142
Total investments	$	27	$	—	$	23	$	192

(a)The negative cash balance was due to the timing of when investment trades occur and when they settle.

(b)After the adoption of the FASB update for the fair value hierarchy, we separately report the investments for which fair value was measured using the net asset value per share as a practical expedient. Amounts presented in this table are intended to reconcile the fair value hierarchy to the pension plan assets.

The activity during the year ended December 31, 2022 and 2021, for the assets using Level 3 fair value measurements was immaterial.

Cash flows

Estimated future benefit payments – The following gross benefit payments, which were estimated based on actuarial assumptions applied at December 31, 2022 and reflect expected future services, as appropriate, are to be paid in the years indicated.

(In millions)	Pension Benefits		Other Benefits
2023	$	25	$	8
2024	24		7
2025	23		6
2026	21		6
2027	21		5
2028 through 2032	$	100	$	19

Contributions to defined benefit plans – We expect to make contributions to the funded pension plan of up to $12 million in 2023. Cash contributions to be paid from our general assets for the unfunded portion of our pension and postretirement plans are expected to be approximately $3 million and $8 million in 2023.

Contributions to defined contribution plans – We contribute to several defined contribution plans for eligible employees. Contributions to these plans totaled $12 million in 2022 and $13 million in each of 2021 and 2020.