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PENSION AND OTHER RETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
PENSION AND OTHER RETIREMENT BENEFITS PENSION AND OTHER RETIREMENT BENEFITS
U.S. Plans
Moody’s maintains funded and unfunded noncontributory DBPPs. The DBPPs provide defined benefits using a cash balance formula based on years of service and career average salary or final average pay for selected executives. The Company also provides certain healthcare and life insurance benefits for retired U.S. employees. The retirement healthcare plans are contributory; the life insurance plans are noncontributory. Moody’s funded and unfunded U.S. pension plans, the U.S. retirement healthcare plans and the U.S. retirement life insurance plans are collectively referred to herein as the “Retirement Plans.” The U.S. retirement healthcare plans and the U.S. retirement life insurance plans are collectively referred to herein as the “Other Retirement Plans.”
Through 2007, substantially all U.S. employees were eligible to participate in the Company’s DBPPs. Effective January 1, 2008, the Company no longer offers DBPPs to U.S. employees hired or rehired on or after January 1, 2008, and new hires in the U.S. instead will receive a retirement contribution in similar benefit value under the Company’s Profit Participation Plan. Current participants of the Company’s Retirement Plans and Other Retirement Plans continue to accrue benefits based on existing plan benefit formulas.
The following is a summary of changes in benefit obligations and fair value of plan assets for the Retirement Plans for the years ended December 31:
Pension PlansOther Retirement Plans
2025202420252024
Change in benefit obligation:
Benefit obligation, beginning of the period$(464)$(484)$(42)$(42)
Service cost(10)(10)(3)(3)
Interest cost(25)(22)(2)(2)
Plan participants’ contributions— — (2)(2)
Benefits paid21 24 4 3 
Actuarial (loss) gain (3)— 2 — 
Assumption changes(11)28 (1)4 
Benefit obligation, end of the period$(492)$(464)$(44)$(42)
Change in plan assets:
Fair value of plan assets, beginning of the period$460 $449 $— $— 
Actual return on plan assets55 24 — — 
Benefits paid(21)(24)(3)(3)
Employer contributions6 11 1 1 
Plan participants’ contributions— — 2 2 
Fair value of plan assets, end of the period$500 $460 $— $— 
Funded status of the plans$8 $(4)$(44)$(42)
Amounts recorded on the consolidated balance sheets:
Pension and retirement benefits asset – non current$75 $60 $— $— 
Pension and retirement benefits liability – current(7)(8)(2)(2)
Pension and retirement benefits liability – non current(60)(56)(42)(40)
Net amount recognized$8 $(4)$(44)$(42)
Accumulated benefit obligation, end of the period$(464)$(436)
The net increase in the pension benefit obligation from assumption changes in 2025 primarily resulted from a decrease to the discount rates used to measure the obligation. The net decrease in the pension benefit obligation from assumption changes and actuarial losses in 2024 primarily resulted from increase to the discount rates used to measure the obligation.
The following information is for those pension plans with an accumulated benefit obligation in excess of plan assets:
December 31,
20252024
Aggregate projected benefit obligation$68 $65 
Aggregate accumulated benefit obligation$60 $57 
The following table summarizes the pre-tax net actuarial losses and prior service costs recognized in AOCL for the Company’s Retirement Plans as of December 31:
Pension PlansOther Retirement Plans
2025202420252024
Net actuarial gains (losses)
$(53)$(61)$13 $13 
Net prior service credits— 1 — — 
Total recognized in AOCL – pre-tax
$(53)$(60)$13 $13 
Net periodic pension expenses (income) recognized for the Retirement Plans are as follows for the years ended December 31:
Pension PlansOther Retirement Plans
202520242023202520242023
Components of net periodic expense (income)
Service cost$10 $10 $11 $3 $3 $3 
Interest cost25 22 22 2 2 2 
Expected return on plan assets(33)(30)(32)— — — 
Amortization of net actuarial (gains) losses and prior service credits from earlier periods
(1)— (1)(1)(1)(1)
(Gain) loss on settlement of pension obligations
— (1)(2)— — — 
Net periodic expense (income)
$1 $1 $(2)$4 $4 $4 
The following table summarizes the pre-tax amounts recorded in OCI related to the Company’s Retirement Plans for the years ended December 31:
Pension PlansOther Retirement Plans
202520242023202520242023
Amortization of net actuarial (gains) losses and prior service credit
$(1)$(1)$(1)$(1)$(1)$(1)
(Gain) loss on settlement of pension obligations
— (1)(2)— — — 
Net actuarial gain (loss) arising during the period
8 22 (3)1 4 1 
Total recognized in OCI – pre-tax$7 $20 $(6)$— $3 $— 
ADDITIONAL INFORMATION:
Assumptions—Retirement Plans
Weighted-average assumptions used to determine benefit obligations at December 31:
Pension PlansOther Retirement Plans
2025202420252024
Discount rate5.24 %5.43 %5.30 %5.40 %
Rate of compensation increase3.10 %3.60 %— — 
Cash balance plan interest crediting rate
4.71 %4.78 %— — 
Weighted-average assumptions used to determine net periodic benefit expense for years ended December 31:
Pension PlansOther Retirement Plans
202520242023202520242023
Discount rate5.43 %4.73 %4.93 %5.40 %4.75 %4.90 %
Expected return on plan assets6.60 %6.10 %6.55 %— — — 
Rate of compensation increase3.60 %3.60 %3.63 %— — — 
Cash balance plan interest crediting rate4.78 %4.50 %4.50 %— — — 
The expected rate of return on plan assets represents the Company’s best estimate of the long-term return on plan assets and is determined by using a building block approach, which generally weighs the underlying long-term expected rate of return for each major asset class based on their respective allocation target within the plan portfolio, net of plan paid expenses. As the assumption reflects a long-term time horizon, the plan performance in any one particular year does not, by itself, significantly influence the Company’s evaluation. For 2025, the expected rate of return used in calculating the net periodic benefit costs was 6.60%. For 2026, the Company’s expected rate of return assumption is 6.95% to reflect the Company’s current view of long-term capital market outlook.
Plan Assets
Moody’s investment objective for the assets in the funded pension plan is to earn total returns that will minimize future contribution requirements over the long-term within a prudent level of risk. The Company works with its independent investment consultants to determine asset allocation targets for its pension plan investment portfolio based on its assessment of business and financial conditions, demographic and actuarial data, funding characteristics, and related risk factors. Other relevant factors, including historical and forward looking views of inflation and capital market returns, are also considered. Risk management practices include monitoring plan asset performance, diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. The Company’s Asset Management Committee is responsible for overseeing the investment activities of the plan, which includes selecting acceptable asset classes, defining allowable ranges of holdings by asset class and by individual investment managers, defining acceptable securities within each asset class, and establishing investment performance expectations. Ongoing monitoring of the plan includes reviews of investment performance and managers on a regular basis, annual liability measurements, and periodic asset/liability studies.
The Company’s investment policy uses risk-controlled investment strategies by increasing the plan’s asset allocation to fixed income securities and specifying ranges of acceptable target allocation by asset class based on different levels of the plan’s accounting funded status. In addition, the investment policy also requires the investment-grade fixed income assets to be rebalanced between shorter and longer duration bonds as the interest rate environment changes. This investment policy is designed to help protect the plan’s funded status and to limit volatility of the Company’s contributions. Based on the policy, the Company’s current target asset allocation is approximately 35% (range of 23% to 46%) in equity securities, 61% (range of 44% to 77%) in fixed income securities and 5% (range of 2% to 8%) in other investments and the plan will use a combination of active and passive investment strategies and different investment styles for its investment portfolios within each asset class. The plan’s equity investments are diversified across U.S. and non-U.S. stocks of small, medium and large capitalization. The plan’s fixed income investments are diversified principally across U.S. and non-U.S. government and corporate bonds, which are expected to help reduce plan exposure to interest rate variation and to better align assets with obligations. The plan also invests in other fixed income investments such as debts rated below investment grade, emerging market debt, and convertible securities. The plan’s other investment, which is made through a private real estate debt fund, is expected to provide additional diversification benefits and absolute return enhancement to the plan assets.
Fair value of the assets in the Company’s funded pension plan by asset category at December 31, 2025 and 2024 are as follows:
Fair Value Measurement as of December 31, 2025
Asset CategoryBalanceLevel 1Level 2
Measured using NAV practical expedient (1)
% of total
assets
Cash and cash equivalents
$4 $— $4 $— 1 %
Common/collective trust funds—equity securities
U.S. large-cap119 — 119 — 24 %
U.S. small and mid-cap28 — 28 — 6 %
Total equity investments147 — 147 — 30 %
Emerging markets bond fund35 — — 35 7 %
Common/collective trust funds and corporate bonds—fixed income securities
Intermediate-term investment grade U.S. government/ corporate bonds64 — 64 — 13 %
Mutual funds
Long duration corporate bonds157 — 157 — 31 %
U.S. Treasury Inflation-Protected Securities (TIPs)27 27 — — 5 %
Emerging markets equity
26 — 26 — 5 %
Private investment fund—high yield securities16 — — 16 3 %
Total fixed-income investments325 27 247 51 64 %
Other investment—private real estate fund24 — — 24 5 %
Total Assets$500 $27 $398 $75 100 %
Fair Value Measurement as of December 31, 2024
Asset CategoryBalanceLevel 1Level 2
Measured using NAV practical expedient (1)
% of total
assets
Cash and cash equivalents
$2 $— $2 $— — %
Common/collective trust funds—equity securities
U.S. large-cap114 — 114 — 25 %
U.S. small and mid-cap25 — 25 — 5 %
Total equity investments139 — 139 — 30 %
Emerging markets bond fund30 — — 30 7 %
Common/collective trust funds and corporate bonds—fixed income securities
Intermediate-term investment grade U.S. government/ corporate bonds57 — 57 — 12 %
Mutual funds
Long duration corporate bonds146 — 146 — 32 %
U.S. Treasury Inflation-Protected Securities (TIPs)26 26 — — 6 %
Emerging markets equity
21 — 21 — 5 %
Private investment fund—high yield securities15 — — 15 3 %
Total fixed-income investments295 26 224 45 65 %
Other investment—private real estate debt fund24 — — 24 5 %
Total Assets$460 $26 $365 $69 100 %
(1)Investments are measured using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit a reconciliation of the fair value hierarchy to the value of the total plan assets.
Cash and cash equivalents are primarily comprised of investments in money market mutual funds. In determining fair value, Level 1 investments are valued based on quoted market prices in active markets. Investments in common/collective trust and private mutual funds are valued using the NAV per unit in each fund. The NAV is based on the value of the underlying investments owned by each fund, minus its liabilities, and then divided by the number of shares outstanding. Common/collective trust funds and the private mutual fund are categorized in Level 2 to the extent that they are considered to have a readily determinable fair value. Government/corporate bonds are categorized as Level 2 as their fair values are derived from observable market data. Investments for which fair value is estimated by using the NAV per share (or its equivalent) as a practical expedient are not categorized in the fair value hierarchy.
Except for the Company’s U.S. funded pension plan, all of Moody’s Retirement Plans are unfunded and therefore have no plan assets.
Cash Flows
The Company did not contribute to its U.S. funded pension plan during the years ended December 31, 2025 and 2024, and does not anticipate making a contribution to the funded plan in 2026. For its unfunded plans, actual contributions in 2025 were not material and expected payments in 2026 are not expected to be material.
Estimated Future Benefits Payable
Estimated future benefits payments for the Retirement Plans are as follows as of the year ended December 31, 2025:
Year Ending December 31,Pension PlansOther Retirement Plans
2026$33 $2 
202735 2 
202838 3 
202939 3 
203039 3 
2031 - 2035182 20 
Defined Contribution Plans
Moody’s has a Profit Participation Plan covering substantially all U.S. employees. The Profit Participation Plan provides for an employee salary deferral and the Company matches employee contributions, equal to 50% of employee contribution up to a maximum of 3% of the employee’s pay. Effective January 1, 2008, all new hires are automatically enrolled in the Profit Participation Plan when they meet eligibility requirements unless they decline participation. As the Company’s U.S. DBPPs are closed to new entrants effective January 1, 2008, all eligible new hires will instead receive a retirement contribution into the Profit Participation Plan in value similar to the pension benefits. Additionally, effective January 1, 2008, the Company implemented a deferred compensation plan in the U.S., which is unfunded and provides for employee deferral of compensation and Company matching contributions related to compensation in excess of the IRS limitations on benefits and contributions under qualified retirement plans. Total expenses associated with U.S. defined contribution plans were $67 million, $73 million and $71 million in the years ended December 31, 2025, 2024 and 2023, respectively.
Effective January 1, 2008, Moody’s has designated the Moody’s Stock Fund, an investment option under the Profit Participation Plan, as an Employee Stock Ownership Plan and, as a result, participants in the Moody’s Stock Fund may receive dividends in cash or may reinvest such dividends into the Moody’s Stock Fund. Dividend payments relating to the Moody’s Stock Fund were immaterial in each of the years ended December 31, 2025, 2024, and 2023. The Company records the dividends as a reduction of retained earnings in the Consolidated Statements of Shareholders’ Equity. The Moody’s Stock Fund held approximately 282,442 and 304,076 shares of Moody’s common stock at December 31, 2025 and 2024, respectively.
Non-U.S. Plans
Certain of the Company’s non-U.S. operations provide pension benefits to their employees. The non-U.S. defined benefit pension plans are immaterial. For defined contribution plans, company contributions are primarily determined as a percentage of employees’ eligible compensation. Expenses related to these defined contribution plans for the years ended December 31, 2025, 2024, and 2023 were $61 million, $50 million, and $42 million, respectively.