Retirement Benefits (Tables)

12 Months Ended

Dec. 31, 2020

The cost to the company of its retirement benefit plans is shown in the following table:


	Year Ended December 31
	Pension Benefits						Medical and Life Benefits
$ in millions	2020		2019		2018		2020		2019		2018
Components of net periodic benefit cost (benefit)
Service cost	$	409	$	367	$	404	$	17	$	16	$	21
Interest cost	1,226		1,360		1,226		67		80		76
Expected return on plan assets	(2,376)		(2,101)		(2,217)		(102)		(92)		(101)
Amortization of prior service cost (credit)	(59)		(59)		(58)		4		(3)		(21)
Mark-to-market expense (benefit)	1,034		1,783		699		—		17		(44)
Other	10		—		—		2		—		—
Net periodic benefit cost (benefit)	$	244	$	1,350	$	54	$	(12)	$	18	$	(69)

Changes in unamortized benefit plan costs

The table below summarizes the components of changes in unamortized prior service credit (cost) for the years ended December 31, 2018, 2019 and 2020:


$ in millions	Pension Benefits		Medical and Life Benefits		Total
Changes in unamortized prior service credit
Amortization of prior service credit	$	58	$	21	$	79
Tax expense	(14)		(5)		(19)
Change in unamortized prior service credit – 2018	44		16		60
Amortization of prior service credit	59		3		62
Tax expense	(14)		(1)		(15)
Change in unamortized prior service credit – 2019	45		2		47
Amortization of prior service credit (cost)	59		(4)		55
Tax expense	(15)		1		(14)
Change in unamortized prior service credit (cost) – 2020	$	44	$	(3)	$	41

Change in plan assets and amounts recognized in the consolidated statements of financial position

The following table sets forth the funded status and amounts recognized in the consolidated statements of financial position for the company’s defined benefit retirement plans. Pension benefits data includes the qualified plans, foreign plans and U.S. unfunded non-qualified plans for benefits provided to directors, officers and certain employees. The company uses a December 31 measurement date for its plans.


	Pension Benefits				Medical and Life Benefits
$ in millions	2020		2019		2020		2019
Plan Assets
Fair value of plan assets at beginning of year	$	30,646	$	27,150	$	1,392	$	1,247
Net gain on plan assets	4,802		5,025		218		234
Employer contributions	851		221		36		42
Participant contributions	8		8		24		24
Benefits paid	(1,865)		(1,763)		(155)		(156)
Acquired plan assets	—		—		—		—
Other	10		5		—		1
Fair value of plan assets at end of year	34,452		30,646		1,515		1,392
Projected Benefit Obligation
Projected benefit obligation at beginning of year	36,914		32,231		2,048		1,930
Service cost	409		367		17		16
Interest cost	1,226		1,360		67		80
Participant contributions	8		8		24		24
Actuarial loss	3,455		4,708		115		159
Benefits paid	(1,865)		(1,763)		(155)		(156)
Acquired benefit obligation	—		—		—		—
Other	35		3		3		(5)
Projected benefit obligation at end of year	40,182		36,914		2,119		2,048
Funded status	$	(5,730)	$	(6,268)	$	(604)	$	(656)

Pension Benefits
The increase in our pension assets for the year ended December 31, 2020 was principally driven by net plan asset returns of 16.2 percent and a $750 million discretionary pension contribution. In 2019, pension assets increased primarily due to net plan asset returns of 19.1 percent.

The increase in our projected benefit obligation for the year ended December 31, 2020, was primarily driven by a 71 basis point decrease in the discount rate from year end 2019. In 2019, our projected benefit obligation increased primarily due to a 92 basis point decrease in the discount rate from year end 2018 as well as a change in our mortality assumptions.


	Pension Benefits				Medical and Life Benefits
$ in millions	2020		2019		2020		2019
Classification of amounts recognized in the consolidated statements of financial position
Non-current assets	$	211	$	124	$	179	$	151
Current liability	(180)		(173)		(46)		(47)
Non-current liability	(5,761)		(6,219)		(737)		(760)

Pension plans with accumulated benefit obligations in excess of fair value of plan assets

Amounts for pension plans with accumulated benefit obligations in excess of fair value of plan assets are as follows:


	December 31
$ in millions	2020		2019
Projected benefit obligation	$	37,681	$	34,715
Accumulated benefit obligation	37,135		34,305
Fair value of plan assets	31,741		28,324

Weighted-average plan assumptions

On a weighted-average basis, the following assumptions were used to determine benefit obligations and net periodic benefit cost:


	Pension Benefits				Medical and Life Benefits
	2020		2019		2020		2019
Assumptions used to determine benefit obligation at December 31
Discount rate	2.68	%	3.39	%	2.58	%	3.35	%
Initial cash balance crediting rate assumed for the next year	2.25	%	2.39	%
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate)	2.25	%	2.64	%
Year that the cash balance crediting rate reaches the ultimate rate	2026		2025
Rate of compensation increase	3.00	%	3.00	%
Initial health care cost trend rate assumed for the next year					5.60	%	5.90	%
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate)					5.00	%	5.00	%
Year that the health care cost trend rate reaches the ultimate trend rate					2023		2023
Assumptions used to determine benefit cost for the year ended December 31
Discount rate	3.39	%	4.31	%	3.35	%	4.30	%
Initial cash balance crediting rate assumed for the next year	2.39	%	3.00	%
Rate to which the cash balance crediting rate is assumed to increase (the ultimate rate)	2.64	%	3.25	%
Year that the cash balance crediting rate reaches the ultimate rate	2025		2024
Expected long-term return on plan assets	8.00	%	8.00	%	7.66	%	7.67	%
Rate of compensation increase	3.00	%	3.00	%
Initial health care cost trend rate assumed for the next year					5.90	%	6.20	%
Rate to which the health care cost trend rate is assumed to decline (the ultimate trend rate)					5.00	%	5.00	%
Year that the health care cost trend rate reaches the ultimate trend rate					2023		2023

Plan asset allocation

For the majority of the plans’ assets, the investment policies require that the asset allocation be maintained within the following ranges as of December 31, 2020:


						Asset Allocation Ranges
Cash and cash equivalents						—% - 12%
Global public equities						30% - 50%
Fixed-income securities						20% - 40%
Alternative investments						18% - 38%

The table below provides the fair values of the company’s pension and Voluntary Employee Beneficiary Association (VEBA) trust plan assets at December 31, 2020 and 2019, by asset category. The table also identifies the level of inputs used to determine the fair value of assets in each category. See Note 1 for the definitions of these levels. Certain investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient are not required to be categorized in the fair value hierarchy table. The total fair value of these investments is included in the table below to permit reconciliation of the fair value hierarchy to amounts presented in the funded status table. As of December 31, 2020 and 2019, there were no investments expected to be sold at a value materially different than NAV.


	Level 1				Level 2				Level 3				Total
$ in millions	2020		2019		2020		2019		2020		2019		2020		2019
Asset category
Cash and cash equivalents	$	120	$	233	$	1,238	$	2,572					$	1,358	$	2,805
U.S. equities	2,981		3,341										2,981		3,341
International equities	3,354		3,271						$	2	$	2	3,356		3,273
Fixed-income securities
U.S. Treasuries	22		20		2,273		2,716						2,295		2,736
U.S. Government Agency					258		297						258		297
Non-U.S. Government					332		194						332		194
Corporate debt	31		28		6,228		4,513						6,259		4,541
Asset backed					1,080		892						1,080		892
High yield debt	24		30		48		104						72		134
Bank loans					59		33						59		33
Other assets	(2)		(9)		59		59		2		2		59		52
Investments valued using NAV as a practical expedient
U.S. equities													1,567		1,131
International equities													7,193		5,636
Fixed-income funds													1,959		438
Hedge funds													65		246
Opportunistic investments													2,499		1,459
Private equity funds													2,627		2,454
Real estate funds													2,180		2,376
Payables, net													(232)		—
Fair value of plan assets at the end of the year	$	6,530	$	6,914	$	11,575	$	11,380	$	4	$	4	$	35,967	$	32,038

Estimated benefit payments

The following table reflects estimated future benefit payments for the next ten years, based upon the same assumptions used to measure the benefit obligation, and includes expected future employee service, as of December 31, 2020:


$ in millions	Pension Plans		Medical and Life Plans		Total
Year Ending December 31
2021	$	1,884	$	152	$	2,036
2022	1,930		153		2,083
2023	1,973		135		2,108
2024	2,017		133		2,150
2025	2,057		130		2,187
2026 through 2030	10,599		556		11,155