EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

For our employee benefit plans, we:

▪recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status in the balance sheet;

▪measure a plan’s assets and its obligations that determine its funded status as of the end of the fiscal year; and

▪recognize changes in the funded status of pension and PBOP plans in the year in which the changes occur. Generally, those changes are reported in OCI and as a separate component of shareholders’ equity.

The detailed information presented below covers the employee benefit plans of primarily Sempra and its consolidated subsidiaries.

Sempra has funded and unfunded noncontributory traditional defined benefit and cash balance plans, including separate plans for SDG&E and SoCalGas, which collectively cover all eligible employees, including a member of the Sempra board of directors who was a participant in a predecessor plan on or before June 1, 1998. Pension benefits under the traditional defined benefit plans are based on service and final average earnings, while the cash balance plans provide benefits using a career average earnings methodology.

IEnova has an unfunded noncontributory defined benefit plan covering all employees that provides defined benefits to retirees based on date of hire, years of service and final average earnings.

Sempra also has PBOP plans, including separate plans for SDG&E and SoCalGas, which collectively cover all domestic and certain foreign employees. The life insurance plans are both contributory and noncontributory, and the health care plans are contributory. Participants’ contributions are adjusted annually. Other postretirement benefits include medical benefits.

Pension and other postretirement benefits costs and obligations are dependent on assumptions used in calculating such amounts. We review these assumptions on an annual basis and update them as appropriate. We consider current market conditions, including interest rates, in making these assumptions. We use a December 31 measurement date for all of our plans.

RABBI TRUST

In support of its Supplemental Executive Retirement, Cash Balance Restoration and Deferred Compensation Plans, Sempra maintains dedicated assets, including a Rabbi Trust and investments in life insurance contracts, which totaled $567 million, $512 million and $488 million at December 31, 2021, 2020 and 2019, respectively.

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

Benefit Plan Amendments Affecting 2019

In 2019, certain executive participants in a company nonqualified pension plan became eligible in this same plan for Supplemental Executive Retirement Plan benefits. This was treated as a plan amendment and increased the recorded pension liability by $5 million at Sempra, $3 million at SDG&E and $2 million at SoCalGas in 2019.

Oncor

In 2021, 2020 and 2019, we had $7 million, $11 million and $27 million, respectively, in AOCI representing an actuarial loss related to Oncor’s pension plans.

Benefit Obligations and Assets

The following three tables provide a reconciliation of the changes in the plans’ projected benefit obligations and the fair value of assets during 2021, 2020 and 2019, and a statement of the funded status at December 31, 2021, 2020 and 2019:

PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
Sempra:
CHANGE IN PROJECTED BENEFIT OBLIGATION
Net obligation at January 1	$	4,077	$	3,768	$	3,339	$	989	$	913	$	868
Service cost	145		129		110		23		18		17
Interest cost	112		129		139		28		33		36
Contributions from plan participants	—		—		—		21		22		21
Actuarial (gain) loss	(76)		351		445		(53)		79		45
Plan amendments	—		—		5		—		—		—
Benefit payments	(98)		(93)		(93)		(68)		(74)		(72)
Settlements	(303)		(207)		(177)		—		(2)		(2)
Net obligation at December 31	3,857		4,077		3,768		940		989		913
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	3,002		2,662		2,160		1,399		1,281		1,108
Actual return on plan assets	340		350		496		51		164		218
Employer contributions	241		290		276		5		8		8
Contributions from plan participants	—		—		—		21		22		21
Benefit payments	(98)		(93)		(93)		(68)		(74)		(72)
Settlements	(303)		(207)		(177)		—		(2)		(2)
Fair value of plan assets at December 31	3,182		3,002		2,662		1,408		1,399		1,281
Funded status at December 31	$	(675)	$	(1,075)	(1,106)		$	468	$	410	$	368
Net recorded (liability) asset at December 31	$	(675)	$	(1,075)	(1,106)		$	468	$	410	$	368

PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
SDG&E:
CHANGE IN PROJECTED BENEFIT OBLIGATION
Net obligation at January 1	$	913	$	895	$	814	$	193	$	177	$	170
Service cost	35		31		30		5		4		4
Interest cost	25		30		34		5		6		7
Contributions from plan participants	—		—		—		7		8		7
Actuarial (gain) loss	(2)		37		61		(3)		17		7
Plan amendments	—		—		3		—		—		—
Benefit payments	(17)		(18)		(18)		(19)		(20)		(18)
Settlements	(69)		(52)		(39)		—		—		—
Transfer of liability from other plans	—		(10)		10		—		1		—
Net obligation at December 31	885		913		895		188		193		177
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	819		739		600		213		197		172
Actual return on plan assets	73		94		135		(5)		26		36
Employer contributions	53		52		52		1		1		—
Contributions from plan participants	—		—		—		7		8		7
Benefit payments	(17)		(18)		(18)		(19)		(20)		(18)
Settlements	(69)		(52)		(39)		—		—		—
Transfer of assets from other plans	—		4		9		—		1		—
Fair value of plan assets at December 31	859		819		739		197		213		197
Funded status at December 31	$	(26)	$	(94)	(156)		$	9	$	20	$	20
Net recorded (liability) asset at December 31	$	(26)	$	(94)	(156)		$	9	$	20	$	20

PROJECTED BENEFIT OBLIGATION, FAIR VALUE OF ASSETS AND FUNDED STATUS
(Dollars in millions)
	Pension benefits						Other postretirement benefits
(Dollars in millions)	2021		2020		2019		2021		2020		2019
SoCalGas:
CHANGE IN PROJECTED BENEFIT OBLIGATION
Net obligation at January 1	$	2,829	$	2,526	$	2,148	$	749	$	688	$	646
Service cost	97		86		68		17		14		12
Interest cost	78		88		91		22		25		27
Contributions from plan participants	—		—		—		13		14		13
Actuarial (gain) loss	(83)		282		345		(49)		57		39
Plan amendments	—		—		2		—		—		—
Benefit payments	(63)		(60)		(59)		(46)		(49)		(49)
Settlements	(211)		(105)		(65)		—		—		—
Transfer of liability to other plans	—		12		(4)		—		—		—
Net obligation at December 31	2,647		2,829		2,526		706		749		688
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	1,969		1,737		1,385		1,159		1,059		916
Actual return on plan assets	243		243		320		51		134		178
Employer contributions	157		152		152		1		1		1
Contributions from plan participants	—		—		—		13		14		13
Benefit payments	(63)		(60)		(59)		(46)		(49)		(49)
Settlements	(211)		(105)		(65)		—		—		—
Transfer of assets from other plans	—		2		4		—		—		—
Fair value of plan assets at December 31	2,095		1,969		1,737		1,178		1,159		1,059
Funded status at December 31	$	(552)	$	(860)	$	(789)	$	472	$	410	$	371
Net recorded (liability) asset at December 31	$	(552)	$	(860)	$	(789)	$	472	$	410	$	371

Actuarial losses (gains) fluctuate based on changes in assumptions that we describe below in “Assumptions for Pension and Other Postretirement Benefit Plans” and updates to census data. In 2021, 2020 and 2019, the Society of Actuaries released updated mortality improvement projection scales, reflecting changes to projected observed longevity improvements in its mortality tables. We have incorporated these assumptions, adjusted for the Sempra companies’ actual mortality experience, in our calculations for each of those years.

▪Actuarial gains in pension plans at Sempra in 2021 were driven primarily by an increase in discount rates at SoCalGas, SDG&E and Sempra and updated census data at SoCalGas. These actuarial gains were partially offset by actuarial losses at SDG&E, SoCalGas and Sempra due to an increase in the interest crediting rate for the cash balance plans, at SDG&E and Sempra due to updated census data and at SoCalGas due to a decrease in the conversion rate used to determine lump-sum distributions.

▪Actuarial gains in PBOP plans at Sempra in 2021 were driven primarily by an increase in discount rates at SoCalGas, SDG&E and Sempra, updated census data at SoCalGas and a reduction in the 2022 expected health care costs at SoCalGas.

Net Assets and Liabilities

The assets and liabilities of the pension and PBOP plans are affected by changing market conditions as well as when actual plan experience is different than assumed. Such events result in investment gains and losses, which we defer and recognize in pension and other postretirement benefit costs over a period of years. Our funded pension and PBOP plans use the asset smoothing method, except for those at SDG&E. This method develops an asset value that recognizes realized and unrealized investment gains and losses over a three-year period. This adjusted asset value, known as the market-related value of assets, is used in conjunction with an expected long-term rate of return to determine the expected return-on-assets component of net periodic benefit cost. SDG&E does not use the asset smoothing method, but rather recognizes realized and unrealized investment gains and losses during the current year.

The 10% corridor accounting method is used at Sempra, SDG&E and SoCalGas. Under the corridor accounting method, if as of the beginning of a year unrecognized net gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related value of plan assets, the excess is amortized over the average remaining service period of active participants. The asset smoothing and 10% corridor accounting methods help mitigate volatility of net periodic benefit costs from year to year.

Defined benefit pension and other postretirement plans with an aggregated overfunded status are recognized as an asset and with an aggregated underfunded status are recognized as a liability; unrecognized changes in these assets and/or liabilities are normally recorded in AOCI on the balance sheet. SDG&E and SoCalGas record regulatory assets and liabilities that offset the funded pension and other postretirement plans’ assets or liabilities, as these costs are expected to be recovered in future utility rates based on decisions by regulatory agencies.

SDG&E and SoCalGas record annual pension and other postretirement net periodic benefit costs equal to the contributions to their qualified plans as authorized by the CPUC. The annual contributions to the pension plans are the greater of:

▪a minimum required funding amount as required by the IRS;

▪the amount required to maintain an 85% Adjusted Funding Target Attainment Percentage as defined by the Pension Protection Act of 2006, as amended; or

▪beginning January 1, 2019 and for the duration of the 2019 GRC cycle, a fixed amount equal to the estimated annual service cost as defined by U.S. GAAP plus one year of a 14-year amortization of the unfunded projected benefit obligation of the pension plan as of January 1, 2019, and limited to an annual amount that keeps the fair value of the pension plan assets from exceeding 110% of the pension benefit obligation of the plan.

The annual contributions to PBOP plans are equal to the lesser of the maximum tax deductible amount or the net periodic cost calculated in accordance with U.S. GAAP for pension and PBOP plans. Any differences between booked net periodic benefit cost and amounts contributed to the pension and other postretirement plans for SDG&E and SoCalGas are disclosed as regulatory adjustments in accordance with U.S. GAAP for rate-regulated entities.

The net (liability) asset is included in the following categories on the Consolidated Balance Sheets at December 31:

PENSION AND OTHER POSTRETIREMENT BENEFIT OBLIGATIONS, NET OF PLAN ASSETS
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
Sempra:
Noncurrent assets	$	19	$	—	$	—	$	481	$	430	$	391
Current liabilities	(19)		(35)		(59)		(1)		(1)		(3)
Noncurrent liabilities	(675)		(1,040)		(1,047)		(12)		(19)		(20)
Net recorded (liability) asset	$	(675)	$	(1,075)	$	(1,106)	$	468	$	410	$	368
SDG&E:
Noncurrent assets	$	—	$	—	$	—	$	9	$	20	$	20
Current liabilities	(1)		(2)		(3)		—		—		—
Noncurrent liabilities	(25)		(92)		(153)		—		—		—
Net recorded (liability) asset	$	(26)	$	(94)	$	(156)	$	9	$	20	$	20
SoCalGas:
Noncurrent assets	$	—	$	—	$	—	$	472	$	410	$	371
Current liabilities	(1)		(7)		(4)		—		—		—
Noncurrent liabilities	(551)		(853)		(785)		—		—		—
Net recorded (liability) asset	$	(552)	$	(860)	$	(789)	$	472	$	410	$	371

Amounts recorded in AOCI at December 31, net of income tax effects and amounts recorded as regulatory assets, are as follows:

AMOUNTS IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
Sempra(1):
Net actuarial (loss) gain	$	(86)	$	(102)	$	(113)	$	11	$	8	$	10
Prior service cost	(8)		(11)		(14)		—		—		—
Total	$	(94)	$	(113)	$	(127)	$	11	$	8	$	10
SDG&E:
Net actuarial loss	$	(9)	$	(8)	$	(9)
Prior service cost	(1)		(2)		(7)
Total	$	(10)	$	(10)	$	(16)
SoCalGas:
Net actuarial loss	$	(15)	$	(14)	$	(7)
Prior service cost	(3)		(4)		(3)
Total	$	(18)	$	(18)	$	(10)

(1)    Includes discontinued operations in 2020 and 2019.

Sempra, SDG&E and SoCalGas each have a funded pension plan. The following table shows the obligations of funded pension plans with benefit obligations in excess of plan assets at December 31:

OBLIGATIONS OF FUNDED PENSION PLANS
(Dollars in millions)
	2021		2020		2019
Sempra:
Projected benefit obligation	$	2,612	$	3,679	$	3,578
Accumulated benefit obligation	2,277		3,265		3,229
Fair value of plan assets	2,095		2,788		2,662
SDG&E:
Projected benefit obligation			$	887	$	861
Accumulated benefit obligation			834		818
Fair value of plan assets			819		739
SoCalGas:
Projected benefit obligation	$	2,612	$	2,792	$	2,505
Accumulated benefit obligation	2,277		2,431		2,208
Fair value of plan assets	2,095		1,969		1,737

We also have unfunded pension plans at Sempra, SDG&E, SoCalGas and IEnova. The following table shows the obligations of unfunded pension plans at December 31:

OBLIGATIONS OF UNFUNDED PENSION PLANS
(Dollars in millions)
	2021		2020		2019
Sempra:
Projected benefit obligation	$	178	$	184	$	190
Accumulated benefit obligation	139		146		158
SDG&E:
Projected benefit obligation	$	26	$	26	$	34
Accumulated benefit obligation	22		22		27
SoCalGas:
Projected benefit obligation	$	35	$	37	$	21
Accumulated benefit obligation	29		31		17

Sempra, SDG&E and SoCalGas each have a funded other postretirement benefit plan. At December 31, 2021, the assets for SDG&E’s and SoCalGas’ other postretirement benefit plans exceeded the plans’ obligations. The following table shows the obligations of funded other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets at December 31:

OBLIGATIONS OF FUNDED OTHER POSTRETIREMENT BENEFIT PLANS
(Dollars in millions)
	2021		2020		2019
Sempra:
Accumulated postretirement benefit obligation	$	34	$	33	$	32
Fair value of plan assets	33		27		25

We also have unfunded other postretirement benefit plans at Sempra. The following table shows the obligations of unfunded other postretirement benefit plans at December 31:

OBLIGATIONS OF UNFUNDED OTHER POSTRETIREMENT BENEFIT PLANS
(Dollars in millions)
	2021		2020		2019
Sempra:
Accumulated postretirement benefit obligation	$	12	$	14	$	16

Net Periodic Benefit Cost

The following tables provide the components of net periodic benefit cost and pretax amounts recognized in OCI for the years ended December 31:

NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OCI
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
Sempra:
NET PERIODIC BENEFIT COST
Service cost	$	145	$	129	$	110	$	23	$	18	$	17
Interest cost	112		129		139		28		33		36
Expected return on assets	(173)		(169)		(144)		(61)		(55)		(71)
Amortization of:
Prior service cost (credit)	11		12		12		(2)		(2)		—
Actuarial loss (gain)	45		35		36		(9)		(10)		(10)
Settlement charges	38		22		28		—		—		—
Net periodic benefit cost (credit)	178		158		181		(21)		(16)		(28)
Regulatory adjustment	57		91		77		21		16		29
Total expense recognized	235		249		258		—		—		1
CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OCI (1)
Net (gain) loss	(5)		28		17		(4)		1		(3)
Prior service cost	—		—		5		—		—		—
Amortization of actuarial loss	(8)		(14)		(13)		—		—		—
Amortization of prior service cost	(4)		(4)		(3)		—		—		—
Settlements	(7)		(22)		(28)		—		—		—
Total recognized in OCI	(24)		(12)		(22)		(4)		1		(3)
Total recognized in net periodic benefit cost and OCI	$	211	$	237	$	236	$	(4)	$	1	$	(2)

(1)    Includes discontinued operations in 2020 and 2019.

NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OCI
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
SDG&E:
NET PERIODIC BENEFIT COST
Service cost	$	35	$	31	$	30	$	5	$	4	$	4
Interest cost	25		30		34		5		6		7
Expected return on assets	(50)		(49)		(38)		(10)		(10)		(11)
Amortization of:
Prior service cost	1		2		3		—		—		2
Actuarial loss (gain)	2		3		11		(2)		(3)		(2)
Settlement charges	6		—		—		—		—		—
Net periodic benefit cost (credit)	19		17		40		(2)		(3)		—
Regulatory adjustment	34		38		14		2		3		—
Total expense recognized	53		55		54		—		—		—
CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OCI
Net loss	1		6		5		—		—		—
Prior service cost	—		—		2		—		—		—
Transfer of actuarial gain	—		(7)		—		—		—		—
Transfer of prior service credit	—		(5)		—		—		—		—
Amortization of actuarial loss	—		(1)		—		—		—		—
Amortization of prior service cost	(1)		(1)		(1)		—		—		—
Total recognized in OCI	—		(8)		6		—		—		—
Total recognized in net periodic benefit cost and OCI	$	53	$	47	$	60	$	—	$	—	$	—

NET PERIODIC BENEFIT COST AND AMOUNTS RECOGNIZED IN OCI
SOUTHERN CALIFORNIA GAS COMPANY
(Dollars in millions)
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
SoCalGas:
NET PERIODIC BENEFIT COST
Service cost	$	97	$	86	$	68	$	17	$	14	$	12
Interest cost	78		88		91		22		25		27
Expected return on assets	(113)		(107)		(94)		(48)		(43)		(58)
Amortization of:
Prior service cost (credit)	8		8		8		(3)		(2)		(2)
Actuarial loss (gain)	36		26		16		(7)		(7)		(8)
Settlement charges	25		—		—		—		—		—
Net periodic benefit cost (credit)	131		101		89		(19)		(13)		(29)
Regulatory adjustment	23		53		63		19		13		29
Total expense recognized	154		154		152		—		—		—
CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OCI
Net loss	2		6		2		—		—		—
Prior service cost	—		—		3		—		—		—
Transfer of actuarial loss (gain)	—		5		(4)		—		—		—
Transfer of prior service cost (credit)	—		3		(1)		—		—		—
Amortization of actuarial loss	(1)		(1)		(1)		—		—		—
Amortization of prior service cost	(1)		(1)		—		—		—		—
Total recognized in OCI	—		12		(1)		—		—		—
Total recognized in net periodic benefit cost and OCI	$	154	$	166	$	151	$	—	$	—	$	—

Assumptions for Pension and Other Postretirement Benefit Plans

Benefit Obligation and Net Periodic Benefit Cost

Except for the IEnova plans, we develop the discount rate assumptions using a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high quality corporate bonds that generate sufficient cash flows to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of corporate bonds with a Bloomberg Composite of AA or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plans’ projected benefit payments discounted at this rate with the market value of the bonds selected.

We develop the discount rate assumptions for the plans at IEnova by constructing a synthetic government zero coupon bond yield curve from the available market data, based on duration matching, and we add a risk spread to allow for the yields of high-quality corporate bonds. Such method is required when there is no deep market for high quality corporate bonds.

Long-term return on assets is based on the weighted-average of the plans’ investment allocation as of the measurement date and the expected returns for those asset types.

Interest crediting rate is based on an average 30-year Treasury bond from the month of November of the preceding year.

We amortize prior service cost using straight line amortization over average future service (or average expected lifetime for plans where participants are substantially inactive employees), which is an alternative method allowed under U.S. GAAP.

The significant assumptions affecting benefit obligation and net periodic benefit cost are as follows:

WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATION
AT DECEMBER 31
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
Sempra:
Discount rate	3.04	%	2.78	%	3.49	%	3.04	%	2.88	%	3.54	%
Interest crediting rate(1)(2)	1.94		1.62		2.28		1.94		1.62		2.28
Rate of compensation increase	2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00
SDG&E:
Discount rate	2.99	%	2.73	%	3.44	%	3.05	%	2.85	%	3.55	%
Interest crediting rate(1)(2)	1.94		1.62		2.28		1.94		1.62		2.28
Rate of compensation increase	3.50-10.00		2.70-10.00		2.70-10.00		3.50-10.00		2.70-10.00		2.70-10.00
SoCalGas:
Discount rate	3.04	%	2.79	%	3.50	%	3.05	%	2.90	%	3.55	%
Interest crediting rate(1)(2)	1.94		1.62		2.28		1.94	%	1.62		2.28
Rate of compensation increase	2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00		2.70-10.00

(1)    Interest crediting rate for pension benefits applies only to funded cash balance plans.

(2)    Interest crediting rate for other postretirement benefits applies only to interest bearing health retirement accounts at SDG&E and SoCalGas.

WEIGHTED-AVERAGE ASSUMPTIONS USED TO DETERMINE NET PERIODIC BENEFIT COST
YEARS ENDED DECEMBER 31
	Pension benefits						Other postretirement benefits
	2021		2020		2019		2021		2020		2019
Sempra:
Discount rate	2.78	%	3.49	%	4.29	%	2.88	%	3.54	%	4.29	%
Expected return on plan assets	6.47		7.00		7.00		4.76		4.64		6.48
Interest crediting rate(1)(2)	1.62		2.28		3.36		1.62		2.28		3.36
Rate of compensation increase	2.70-10.00		2.70-10.00		2.00-10.00		2.70-10.00		2.70-10.00		2.00-10.00
SDG&E:
Discount rate	2.73	%	3.44	%	4.29	%	2.85	%	3.55	%	4.30	%
Expected return on plan assets	6.25		7.00		7.00		4.81		5.51		6.92
Interest crediting rate(1)(2)	1.62		2.28		3.36		1.62		2.28		3.36
Rate of compensation increase	2.70-10.00		2.70-10.00		2.00-10.00		2.70-10.00		2.70-10.00		2.00-10.00
SoCalGas:
Discount rate	2.79	%	3.50	%	4.30	%	2.90	%	3.55	%	4.30	%
Expected return on plan assets	6.75		7.00		7.00		4.70		4.41		6.38
Interest crediting rate(1)(2)	1.62		2.28		3.36		1.62		2.28		3.36
Rate of compensation increase	2.70-10.00		2.70-10.00		2.00-10.00		2.70-10.00		2.70-10.00		2.00-10.00

(1)    Interest crediting rate for pension benefits applies only to funded cash balance plans.

(2)    Interest crediting rate for other postretirement benefits applies only to interest bearing health retirement accounts at SDG&E and SoCalGas.

Health Care Cost Trend Rates

Assumed health care cost trend rates have a significant effect on the amounts that Sempra, SDG&E and SoCalGas report for the health care plan costs. Following are the health care cost trend rates applicable to our postretirement benefit plans:

ASSUMED HEALTH CARE COST TREND RATES
AT DECEMBER 31
	Other postretirement benefit plans
	Pre-65 retirees						Retirees aged 65 years and older
	2021		2020		2019		2021		2020		2019
Health care cost trend rate assumed for next year	6.00	%	6.00	%	6.25	%	4.75	%	4.75	%	4.75	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend)	4.75	%	4.75	%	4.75	%	4.50	%	4.50	%	4.50	%
Year the rate reaches the ultimate trend	2025		2025		2025		2022		2022		2022

Plan Assets

Investment Allocation Strategy for Sempra’s Pension Master Trust

Sempra’s pension master trust holds the investments for our pension plans and a portion of the investments for our PBOP plans. We maintain additional trusts, as we discuss below, for certain of SDGE’s and SoCalGas’ PBOP plans. Other than through indexing strategies, the trusts do not invest in securities of Sempra.

The current asset allocation objective for the pension master trust is to protect the funded status of the plans while generating sufficient returns to cover future benefit payments and accruals. We assess the portfolio performance by comparing actual returns with relevant benchmarks. Currently, the pension plans’ target asset allocations are:

▪31% domestic equity

▪21% international equity

▪21% long credit

▪10% diversified real assets

▪10% return-seeking credit

▪5% ultra-long duration government securities

▪2% other diversifying assets

The asset allocation of the plans is reviewed by our Plan Funding Committee and our Pension and Benefits Investment Committee (the Committees) on a regular basis. When evaluating strategic asset allocations, the Committees consider many variables, including:

▪long-term cost

▪variability and level of contributions

▪funded status

▪a range of expected outcomes over varying confidence levels

This allocation results in a 74% target allocation to return-seeking assets and a 26% target allocation to risk-mitigating assets. We maintain asset allocations at strategic levels with reasonable bands of variance.

In accordance with the Sempra pension investment guidelines, derivative financial instruments may be used by the pension master trust’s equity and fixed income portfolio investment managers to equitize cash, hedge certain exposures, and as substitutes for certain types of fixed income securities.

Rate of Return Assumption

The expected return on assets in our pension and PBOP plans is based on the weighted-average of the plans’ investment allocations to specific asset classes as of the measurement date. We arrive at a 6.75% expected return on assets by considering both the historical and forecasted long-term rates of return on those asset classes. We expect a return of between 4% and 12% on return-seeking assets and between 1% and 4% for risk-mitigating assets. Certain trusts that hold assets for the SDG&E other postretirement benefit plan are subject to taxation, which impacts the expected after-tax return on assets in the plan.

Concentration of Risk

Plan assets are diversified across global equity and bond markets, and concentration of risk in any one economic, industry, maturity or geographic sector is limited.

Investment Strategy for SDG&E’s and SoCalGas’ Other Postretirement Benefit Plans

SDG&E’s and SoCalGas’ PBOP plans are funded by cash contributions from SDG&E and SoCalGas and their current retirees. The assets of these plans are placed into the pension master trust and other Voluntary Employee Beneficiary Association trusts. Certain assets of SDG&E’s and SoCalGas’ PBOP plans are held in the pension master trust, which invests a portion of the assets in completion portfolios that aim to reduce interest rate risk, thereby resulting in an overall target allocation of 38% to return-seeking assets and 62% to risk-mitigating assets for these well-funded plans. Certain of SoCalGas’ PBOP plans are held in a Voluntary Employee Benefit Association trust that also utilizes a completion portfolio, resulting in a target allocation of 30% to return-seeking assets and 70% to risk-mitigating assets. SDG&E’s and SoCalGas’ assets held in other Voluntary Employee Beneficiary Association trusts are invested in accordance with a de-risking glidepath that reduces the assets’ exposure to risk as the trusts become better funded. These specific allocations are periodically reviewed to help ensure that plan assets are best positioned to meet plan obligations.

Fair Value of Pension and Other Postretirement Benefit Plan Assets

We classify the investments in Sempra’s pension master trust and the trusts for SDG&E’s and SoCalGas’ PBOP plans based on the fair value hierarchy, except for certain investments measured at NAV.

The following are descriptions of the valuation methods and assumptions we use to estimate the fair values of investments held by pension and other postretirement benefit plan trusts.

Equity Securities – Equity securities are valued using quoted prices listed on nationally recognized securities exchanges.

Registered Investment Companies – Investments in mutual funds sponsored by a registered investment company are valued based on exchange listed prices. Where the value is a quoted price in an active market, the investment is classified within Level 1 of the fair value hierarchy. Other investments are valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

Fixed Income Securities – Certain fixed income securities are valued at the closing price reported in the active market in which the security is traded. Other fixed income securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar securities, the security is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks. Certain high yield fixed-income securities are valued by applying a price adjustment to the bid side to calculate a mean and ask value. Adjustments can vary based on maturity, credit standing, and reported trade frequencies. The bid to ask spread is determined by the investment manager based on the review of the available market information.

Common/Collective Trusts – Investments in common/collective trust funds are valued based on the NAV of units owned, which is based on the current fair value of the funds’ underlying assets.

Venture Capital Funds and Real Estate Funds – These funds consist of investments in venture capital funds and real estate funds that are held by limited partnerships or similar private entities following various investment strategies. The value is determined based on the NAV of our proportionate ownership interest in the entity.

Derivative Financial Instruments – Futures contracts that are publicly traded in active markets are valued at closing prices as of the last business day of the year. Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies, and unrealized gain (loss) is recorded daily. Fixed income futures and options are marked to market daily. Equity index futures contracts are valued at the last sales price quoted on the exchange on which they primarily trade.

While management believes the valuation methods described above are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

We provide more discussion of fair value measurements in Notes 1 and 12. The following tables set forth by level within the fair value hierarchy a summary of the investments in our pension and other postretirement benefit plan trusts measured at fair value on a recurring basis.

SDG&E and SoCalGas each hold a proportionate share of investment assets in the pension master trust at Sempra. The fair values of our pension plan assets by asset category are as follows:

FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS
(Dollars in millions)
	Fair value at December 31, 2021
	Level 1		Level 2		Total
Sempra:
Cash and cash equivalents	$	18	$	—	$	18
Equity securities:
Domestic	844		5		849
International	384		1		385
Registered investment companies:
Domestic	204		21		225
International	33		—		33
Fixed income securities:
Domestic government and government agencies	463		24		487
International government bonds	—		11		11
Domestic corporate bonds	—		413		413
International corporate bonds	—		65		65
Other	1		—		1
Total investment assets in the fair value hierarchy	$	1,947	$	540	2,487
Accounts receivable/payable, net					(20)
Investments measured at NAV:
Common/collective trusts					657
Venture capital funds and real estate funds					58
Total investment assets					$	3,182
SDG&E’s proportionate share of investment assets					$	859
SoCalGas’ proportionate share of investment assets					$	2,095
	Fair value at December 31, 2020
	Level 1		Level 2		Total
Sempra:
Cash and cash equivalents	$	7	$	—	$	7
Equity securities:
Domestic	931		—		931
International	563		—		563
Registered investment companies:
Domestic	151		37		188
International	32		—		32
Fixed income securities:
Domestic government and government agencies	238		34		272
International government bonds	—		13		13
Domestic corporate bonds	—		418		418
International corporate bonds	—		61		61
Other	2		(1)		1
Total investment assets in the fair value hierarchy	$	1,924	$	562	2,486
Accounts receivable/payable, net					13
Investments measured at NAV:
Common/collective trusts					493
Venture capital funds and real estate funds					10
Total investment assets					$	3,002
SDG&E’s proportionate share of investment assets					$	819
SoCalGas’ proportionate share of investment assets					$	1,969

FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF PENSION PLANS
(Dollars in millions)
	Fair value at December 31, 2019
	Level 1		Level 2		Total
Sempra:
Cash and cash equivalents	$	17	$	—	$	17
Equity securities:
Domestic	923		—		923
International	555		1		556
Registered investment companies:
Domestic	93		2		95
International	3		—		3
Fixed income securities:
Domestic government and government agencies	228		39		267
International government bonds	—		9		9
Domestic corporate bonds	—		346		346
International corporate bonds	—		62		62
Total investment assets in the fair value hierarchy	$	1,819	$	459	2,278
Accounts receivable/payable, net					(38)
Investments measured at NAV:
Common/collective trusts					417
Venture capital funds and real estate funds					5
Total investment assets					$	2,662
SDG&E’s proportionate share of investment assets					$	739
SoCalGas’ proportionate share of investment assets					$	1,737

The fair values by asset category of the PBOP plan assets held in the pension master trust and in the additional trusts for SoCalGas’ PBOP plans and SDG&E’s PBOP plan trusts are as follows:

FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF OTHER POSTRETIREMENT BENEFIT PLANS
(Dollars in millions)
	Fair value at December 31, 2021
	Level 1		Level 2		Total
SDG&E:
Equity securities:
Domestic	$	16	$	—	$	16
International	7		—		7
Registered investment companies:
Domestic	82		1		83
International	9		—		9
Fixed income securities:
Domestic government and government agencies	24		1		25
Domestic corporate bonds	—		8		8
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	138		11		149
Accounts receivable/payable, net					(1)
Investments measured at NAV – Common/collective trusts					49
Total investment assets					197
SoCalGas:
Cash and cash equivalents	2		—		2
Equity securities:
Domestic	83		1		84
International	37		—		37
Registered investment companies:
Domestic	74		73		147
International	3		—		3
Fixed income securities:
Domestic government and government agencies	241		17		258
International government bonds	1		11		12
Domestic corporate bonds	—		337		337
International corporate bonds	—		49		49
Total investment assets in the fair value hierarchy	441		488		929
Accounts receivable/payable, net					(1)
Investments measured at NAV:
Common/collective trusts					244
Venture capital funds and real estate funds					6
Total investment assets					1,178
Other Sempra:
Equity securities:
Domestic	9		—		9
International	6		—		6
Registered investment companies – Domestic	2		—		2
Fixed income securities:
Domestic government and government agencies	2		1		3
Domestic corporate bonds	—		4		4
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	19		6		25
Investments measured at NAV:
Common/collective trusts					7
Venture capital funds and real estate funds					1
Total other Sempra investment assets					33
Total Sempra investment assets in the fair value hierarchy	$	598	$	505
Total Sempra investment assets					$	1,408

FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF OTHER POSTRETIREMENT BENEFIT PLANS
(Dollars in millions)
	Fair value at December 31, 2020
	Level 1		Level 2		Total
SDG&E:
Equity securities:
Domestic	$	17	$	—	$	17
International	11		—		11
Registered investment companies:
Domestic	69		7		76
International	11		—		11
Fixed income securities:
Domestic government and government agencies	38		2		40
Domestic corporate bonds	—		8		8
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	146		18		164
Accounts receivable/payable, net					(2)
Investments measured at NAV – Common/collective trusts					51
Total investment assets					213
SoCalGas:
Cash and cash equivalents	1		—		1
Equity securities:
Domestic	76		—		76
International	46		—		46
Registered investment companies:
Domestic	58		81		139
International	3		—		3
Fixed income securities:
Domestic government and government agencies	273		25		298
International government bonds	1		14		15
Domestic corporate bonds	—		349		349
International corporate bonds	—		42		42
Derivative financial instruments	1		—		1
Total investment assets in the fair value hierarchy	459		511		970
Investments measured at NAV:
Common/collective trusts					188
Venture capital funds and real estate funds					1
Total investment assets					1,159
Other Sempra:
Equity securities:
Domestic	10		—		10
International	6		—		6
Registered investment companies – Domestic	1		(1)		—
Fixed income securities:
Domestic government and government agencies	2		—		2
Domestic corporate bonds	—		4		4
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	19		4		23
Investments measured at NAV – Common/collective trusts					4
Total other Sempra investment assets					27
Total Sempra investment assets in the fair value hierarchy	$	624	$	533
Total Sempra investment assets					$	1,399

FAIR VALUE MEASUREMENTS – INVESTMENT ASSETS OF OTHER POSTRETIREMENT BENEFIT PLANS
(Dollars in millions)
	Fair value at December 31, 2019
	Level 1		Level 2		Total
SDG&E:
Equity securities:
Domestic	$	21	$	—	$	21
International	13		—		13
Registered investment companies:
Domestic	57		8		65
International	11		—		11
Fixed income securities:
Domestic government and government agencies	32		1		33
Domestic corporate bonds	—		8		8
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	134		18		152
Accounts receivable/payable, net					(2)
Investments measured at NAV – Common/collective trusts					47
Total investment assets					197
SoCalGas:
Cash and cash equivalents	3		—		3
Equity securities:
Domestic	78		—		78
International	48		—		48
Registered investment companies – Domestic	52		75		127
Fixed income securities:
Domestic government and government agencies	267		21		288
International government bonds	1		10		11
Domestic corporate bonds	—		309		309
International corporate bonds	—		40		40
Derivative financial instruments	3		—		3
Total investment assets in the fair value hierarchy	452		455		907
Accounts receivable/payable, net					(5)
Investments measured at NAV – Common/collective trusts					157
Total investment assets					1,059
Other Sempra:
Equity securities:
Domestic	9		—		9
International	4		—		4
Fixed income securities:
Domestic government and government agencies	3		1		4
Domestic corporate bonds	—		3		3
International corporate bonds	—		1		1
Total investment assets in the fair value hierarchy	16		5		21
Investments measured at NAV – Common/collective trusts					4
Total other Sempra investment assets					25
Total Sempra investment assets in the fair value hierarchy	$	602	$	478
Total Sempra investment assets					$	1,281

Future Payments

We expect to contribute the following amounts to our pension and PBOP plans in 2022:

EXPECTED CONTRIBUTIONS
(Dollars in millions)
	Sempra		SDG&E		SoCalGas
Pension plans	$	231	$	52	$	152
Other postretirement benefit plans	5		1		1

The following table shows the total benefits we expect to pay for the next 10 years to current employees and retirees from the plans or from company assets.

EXPECTED BENEFIT PAYMENTS
(Dollars in millions)
	Sempra				SDG&E				SoCalGas
	Pension benefits		Other postretirement benefits		Pension benefits		Other postretirement benefits		Pension benefits		Other postretirement benefits
2022	$	276	$	46	$	71	$	9	$	171	$	33
2023	261		46		69		10		163		33
2024	253		46		66		10		158		33
2025	244		46		65		10		156		33
2026	240		48		59		10		153		33
2027-2031	1,122		226		275		48		725		166

SAVINGS PLANS

Sempra, SDG&E and SoCalGas offer trusteed savings plans to all employees. Employee participation, employee contributions and employer matching contributions are subject to the provisions of the respective plans, and for employee contributions, limits imposed by the respective governmental authorities.

Employer contributions to the savings plans were as follows:

EMPLOYER CONTRIBUTIONS TO SAVINGS PLANS
(Dollars in millions)
	2021		2020		2019
Sempra	$	52	$	47	$	44
SDG&E	18		16		15
SoCalGas	28		25		24

The market value of Sempra common stock held by the savings plans was $1.0 billion, $1.1 billion and $1.3 billion at December 31, 2021, 2020 and 2019, respectively.