PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

PENSION AND OTHER POSTRETIREMENT BENEFIT PROGRAMS

We sponsor a number of qualified and nonqualified pension plans for eligible employees. We also sponsor certain unfunded contributory healthcare and life insurance benefits for substantially all domestic retired employees. Newly hired employees in the United States and Puerto Rico are not eligible to participate in the pension plans but receive a higher level of company contributions in our defined contribution plans.

Reconciliation of Pension and Other Postretirement Benefit Plan Obligations, Assets and Funded Status

The benefit plan information in the table below pertains to all of our pension and OPEB plans, both in the United States and in other countries.    

	Pension benefits				OPEB
as of and for the years ended December 31 (in millions)	2024		2023		2024		2023
Benefit obligations
Beginning of period	$	2,901	$	2,665	$	154	$	160
Service cost	11		19		—		—
Interest cost	136		148		8		8
Participant contributions	3		4		—		—
Actuarial (gain) loss	(129)		169		(3)		5
Benefit payments	(133)		(133)		(15)		(19)
Settlements	(8)		(14)		—		—
Acquisitions	—		2		—		—
Plan Amendments	—		3		(2)		—
Foreign exchange and other	(33)		38		(1)		—
End of period	2,748		2,901		141		154
Fair value of plan assets
Beginning of period	2,350		2,161		—		—
Actual return on plan assets	(4)		268		—		—
Employer contributions	46		27		15		19
Participant contributions	3		4		—		—
Benefit payments	(133)		(133)		(15)		(19)
Settlements	(8)		(14)		—		—
Foreign exchange and other	(26)		37		—		—
End of period	2,228		2,350		—		—
Funded status at December 31	$	(520)	$	(551)	$	(141)	$	(154)
Amounts recognized in the consolidated balance sheets
Noncurrent asset	$	56	$	46	$	—	$	—
Current liability	(23)		(20)		(16)		(17)
Noncurrent liability	(553)		(577)		(125)		(137)
Net liability recognized at December 31	$	(520)	$	(551)	$	(141)	$	(154)

Actuarial gains and losses result from changes in actuarial assumptions (such as changes in the discount rate and revised mortality rates). Actuarial gains in 2024 and losses in 2023 related to plan benefit obligations were primarily the result of changes in discount rates.

The pension obligation information in the table above represents the projected benefit obligation (PBO). The PBO incorporates assumptions relating to future compensation levels. The accumulated benefit obligation (ABO) is the same as the PBO except that it includes no assumptions relating to future compensation levels. The ABO for all of our pension plans was $2.71 billion and $3.06 billion at the 2024 and 2023 measurement dates, respectively.

The information in the funded status table above represents the totals for all of our pension plans. The following table is information relating to the individual plans in the funded status table above that have an ABO in excess of plan assets.

as of December 31 (in millions)	2024		2023
ABO	$	2,403	$	2,502
Fair value of plan assets	$	1,843	$	1,919

The following table presents information relating to the individual plans in the funded status table above that have a PBO in excess of plan assets (many of which also have an ABO in excess of assets and are therefore also included in the table directly above).

as of December 31 (in millions)	2024		2023
PBO	$	2,419	$	2,561
Fair value of plan assets	$	1,843	$	1,961

Expected Net Pension and OPEB Plan Payments for the Next 10 Years

(in millions)	Pension benefits		OPEB
2025	$	156	$	17
2026	160		15
2027	172		14
2028	179		14
2029	183		13
2030 through 2034	973		55
Total expected net benefit payments for next 10 years	$	1,823	$	128

The expected net benefit payments above reflect the total net benefits expected to be paid from the plans’ assets (for funded plans) or from our assets (for unfunded plans). The federal subsidies relating to the Medicare Prescription Drug, Improvement and Modernization Act are not expected to be significant.

Amounts Recognized in AOCI

The pension and OPEB plans’ gains or losses, prior service costs or credits, and transition assets or obligations not yet recognized in net periodic benefit cost are recognized on a net-of-tax basis in AOCI and will be amortized from AOCI to net periodic benefit cost in the future. For active employees, we utilize the average future working lifetime as the amortization period for prior service. For inactive employees, we utilize the average remaining life expectancy as the amortization period for prior service.

The following table is a summary of the pre-tax losses (gains) included in AOCI at December 31, 2024 and 2023.

(in millions)	Pension benefits		OPEB
Actuarial loss (gain)	$	642	$	(42)
Prior service credit and transition obligation	11		(10)
Total pre-tax loss (gain) recognized in AOCI at December 31, 2024	$	653	$	(52)
Actuarial loss (gain)	$	615	$	(50)
Prior service credit and transition obligation	11		(16)
Total pre-tax loss (gain) recognized in AOCI at December 31, 2023	$	626	$	(66)

Refer to Note 10 for the net-of-tax balances included in AOCI as of each of the year-end dates. The following table is a summary of the net-of-tax amounts recorded in OCI relating to pension and OPEB plans.

Year ended December 31 (in millions)	2024		2023		2022
Gain (loss) arising during the year, net of tax of $(6) in 2024, $31 in 2023 and $4 in 2022	$	(15)	$	(103)	$	(61)
Amortization of gain (loss) to earnings, net of tax of zero in 2024, $(5) in 2023 and $6 in 2022	(4)		13		21
Settlement charges, net of tax of zero in 2024, $(1) in 2023 and zero 2022	—		(2)		1
Pension and other employee benefits	$	(19)	$	(92)	$	(39)

In 2024, 2023 and 2022, OCI activity for pension and OPEB plans was primarily related to actuarial gains and losses.

Net Periodic Benefit Cost

Year ended December 31 (in millions)	2024		2023		2022
Pension benefits
Service cost	$	11	$	19	$	71
Interest cost	136		148		94
Expected return on plan assets	(179)		(187)		(156)
Amortization of net losses and other deferred amounts	15		6		41
Curtailment gain	—		—		(12)
Settlement charges	—		1		—
Other	—		1		1
Net periodic pension benefit cost	$	(17)	$	(12)	$	39
OPEB
Service cost	$	—	$	—	$	1
Interest cost	8		8		4
Amortization of net losses and prior service credit	(19)		(24)		(14)
Curtailment gain	—		(1)		—
Net periodic OPEB cost	$	(11)	$	(17)	$	(9)

Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date

	Pension benefits				OPEB
	2024		2023		2024		2023
Discount rate
U.S. and Puerto Rico plans	5.71	%	5.20	%	5.54	%	5.11	%
International plans	3.67	%	1.76	%	n/a		n/a
Rate of compensation increase
U.S. and Puerto Rico plans	3.00	%	2.60	%	n/a		n/a
International plans	3.07	%	2.59	%	n/a		n/a
Annual rate of increase in the per-capita cost	n/a		n/a		6.75	%	6.25	%
Rate decreased to	n/a		n/a		5.00	%	5.00	%
by the year ended	n/a		n/a		2032		2029

The assumptions above, which were used in calculating the December 31, 2024 measurement date benefit obligations, will be used in the calculation of net periodic benefit cost in 2025.

Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost

	Pension benefits						OPEB
	2024		2023		2022		2024		2023		2022
Discount rate
U.S. and Puerto Rico plans	5.20	%	5.55	%	3.01	%	5.11	%	5.46	%	2.76	%
International plans	3.41	%	4.11	%	1.55	%	n/a		n/a		n/a
Expected return on plan assets
U.S. and Puerto Rico plans	6.65	%	6.43	%	5.00	%	n/a		n/a		n/a
International plans	4.86	%	4.93	%	3.89	%	n/a		n/a		n/a
Rate of compensation increase
U.S. and Puerto Rico plans	2.60	%	2.93	%	3.68	%	n/a		n/a		n/a
International plans	3.32	%	3.43	%	3.17	%	n/a		n/a		n/a
Annual rate of increase in the per-capita cost	n/a		n/a		n/a		6.75	%	6.25	%	6.50	%
Rate decreased to	n/a		n/a		n/a		5.00	%	5.00	%	5.00	%
by the year ended	n/a		n/a		n/a		2032		2029		2029

We established the expected return on plan assets assumption primarily based on a review of historical compound average asset returns, both company-specific and relating to the broad market (based on our asset allocation), as well as an analysis of current market and economic information and future expectations. We plan to use a 6.65% assumption for our U.S. and Puerto Rico plans for 2025.

Pension Plan Assets

An investment committee of members of senior management is responsible for supervising, monitoring and evaluating the invested assets of our funded pension plans. The investment committee, which meets at least quarterly, abides by documented policies and procedures relating to investment goals, targeted asset allocations, risk management practices, allowable and prohibited investment holdings, diversification, use of derivatives, the relationship between plan assets and benefit obligations, and other relevant factors and considerations.

The investment committee’s policies and procedures include the following:

•Ability to pay all benefits when due;

•Targeted long-term performance expectations relative to applicable market indices, such as Russell, MSCI EAFE, and other indices;

•Targeted asset allocation percentage ranges (summarized below), and periodic reviews of these allocations;

•Diversification of assets among third-party investment managers, and by geography, industry, stage of business cycle and other measures;

•Specified investment holding and transaction prohibitions (for example, private placements or other restricted securities, securities that are not traded in a sufficiently active market, short sales, certain derivatives, commodities and margin transactions);

•Specified portfolio percentage limits on holdings in a single corporate or other entity (generally 5% at time of purchase, except for holdings in U.S. government or agency securities);

•Specified average credit quality for the fixed-income securities portfolio (at least A- by Standard & Poor’s or A3 by Moody’s);

•Specified portfolio percentage limits on foreign holdings; and

•Periodic monitoring of investment manager performance and adherence to the investment committee’s policies.

Plan assets are invested using a total return investment approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and exceed the planned benchmark

investment return. Investment strategies and asset allocations are based on consideration of plan liabilities, the plans’ funded status and other factors, such as the plans’ demographics and liability durations. Investment performance is reviewed by the investment committee on a quarterly basis and asset allocations are reviewed at least annually.

Plan assets are managed in a balanced portfolio comprised of two major components: return-seeking investments and liability hedging investments. The target allocations for plan assets are 50% in return-seeking investments and 50% in liability hedging investments and other holdings. The documented policy includes an allocation range based on each individual investment type within the major components that allows for a variance from the target allocations depending on the investment type. Return-seeking investments primarily include common stock of U.S. and international companies, common/collective trust funds, mutual funds, hedge funds, and partnership investments. Liability hedging investments and other holdings primarily include cash, money market funds with an original maturity of three months or less, U.S. and foreign government and governmental agency issues, corporate bonds, municipal securities, derivative contracts and asset-backed securities.

While the investment committee provides oversight over plan assets for U.S. and international plans, the summary above is specific to the plans in the United States. The plan assets for international plans are managed and allocated by the entities in each country, with input and oversight provided by the investment committee. The plan assets for the U.S. and international plans are included in the table below.

The following tables summarize our pension plan financial instruments that are measured at fair value on a recurring basis.

			Basis of fair value measurement
(in millions)	Balance at December 31, 2024		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Measured at NAV (a)
Assets
Cash	$	52
Fixed income securities
Cash equivalents	$	179	$	—	$	179	$	—	$	—
U.S. government and government agency issues	135		—		135		—		—
Corporate bonds	357		—		357		—		—
Equity securities
Common stock	353		353		—		—		—
Mutual funds	199		199		—		—		—
Common/collective trust funds	540		—		—		—		540
Partnership investments	198		—		—		—		198
Other holdings	215		9		79		127		—
Fair value of pension plan assets	$	2,228	$	561	$	750	$	127	$	738

(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

			Basis of fair value measurement
(in millions)	Balance at December 31, 2023		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Measured at NAV (a)
Assets
Cash	$	60
Fixed income securities
Cash equivalents	$	399	$	—	$	399	$	—	$	—
U.S. government and government agency issues	95		—		95		—		—
Corporate bonds	265		—		265		—		—
Equity securities
Common stock	344		344		—		—		—
Mutual funds	192		192		—		—		—
Common/collective trust funds	540		—		—		—		540
Partnership investments	216		—		—		—		216
Other holdings	239		12		72		155		—
Fair value of pension plan assets	$	2,350	$	548	$	831	$	155	$	756

(a) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The following table is a reconciliation of changes in fair value measurements that used significant unobservable inputs (Level 3).

(in millions)	Other holdings
Balance at December 31, 2022	$	7
Purchases1	148
Balance at December 31, 2023	155
Unrealized gains (losses)	(24)
Sales	(7)
Purchases	3
Balance at December 31, 2024	$	127

1 Purchases in 2023 included $148 million for an insurance contract buy-in related to our pension plan in the United Kingdom.

The assets and liabilities of our pension plans are valued using the following valuation methods:

Investment category	Valuation methodology
Cash equivalents	These largely consist of a short-term investment fund, U.S. Dollars and foreign currency. The fair value of the short-term investment fund is based on the net asset value.
U.S. government and government agency issues	Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs.
Corporate bonds	Values are based on reputable pricing vendors, who typically use pricing matrices or models that use observable inputs.
Common stock	Values are based on the closing prices on the valuation date in an active market on national and international stock exchanges.
Mutual funds	Values are based on the net asset value of the units held in the respective fund which are obtained from national and international exchanges or based on the net asset value of the underlying assets of the fund provided by the fund manager.
Common/collective trust funds	Values are based on the net asset value of the units held at year end.
Partnership investments	Values are based on the net asset value of the participation by us in the investment as determined by the general partner or investment manager of the respective partnership.
Other holdings	Other holdings includes assets valued by pricing vendors using pricing matrices or models that use observable inputs and an insurance contract held by our pension plan in the United Kingdom, which is measured using a discounted cash flow model. In addition to observable market inputs such as interest rates, the fair value measurement of the insurance contract also reflects unobservable inputs, such as qualitative judgments about pricing of similar contracts in the insurance market.

Expected Pension and OPEB Plan Funding

Our funding policy for our pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that we may determine to be appropriate considering the funded status of the plans, tax deductibility, the cash flows generated by us, and other factors. Volatility in the global financial markets could have an unfavorable impact on future funding requirements. In 2025, we have no obligation to fund our principal plans in the United States, but we regularly reassess the amount and timing of any discretionary contributions. Conversely, we do expect to make contributions of at least $26 million to our Puerto Rico plan and $7 million to our foreign pension plans in 2025. Additionally, we expect to have net cash outflows relating to our OPEB plans of approximately $16 million in 2025.

The following table details the funded status percentage of our pension plans as of December 31, 2024, including certain plans that are unfunded in accordance with the guidelines of our funding policy outlined above.

	United States and Puerto Rico				International
as of December 31, 2024 (in millions)	Qualified plans			Nonqualified plan	Funded plans			Unfunded plans	Total
Fair value of plan assets	$	1,763		$ n/a	$	465		$ n/a	$	2,228
PBO	2,015			183	518			33	2,749
Funded status percentage	87		%	n/a	90		%	n/a	81		%

Pension Plan Amendments

In May 2022, we announced that the pay and service amounts used to calculate pension benefits for active non-bargaining participants in our U.S. Hillrom pension plan would freeze as of December 31, 2022. Years of additional service earned and eligible compensation received after December 31, 2022 will not be included in the determination of the benefits payable to those participants. This change resulted in an $11 million decline in the

projected benefit obligation (PBO) with an offsetting curtailment gain included within other (income) expense, net on the consolidated statements of income (loss) for the year ended December 31, 2022.

U.S. Defined Contribution Plan

Most U.S. employees are eligible to participate in a qualified defined contribution plan. We recognized expense of $119 million in 2024, $116 million in 2023 and $96 million in 2022 related to contributions to this plan.