XML 52 R21.htm IDEA: XBRL DOCUMENT v3.24.0.1
Postretirement Benefit Plans
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Postretirement Benefit Plans Postretirement Benefit Plans
Pensions
Our employees participate in employee pension plans in accordance with legal requirements, customs and the related matters in the respective countries. These are defined benefit pension plans, defined contribution plans and multi-employer plans.

The Company’s employees in The Netherlands participate in a multi-employer plan, implemented for the employees of the Metal and Electrical Engineering Industry ("Bedrijfstakpensioenfonds Metalektro" or "PME") in accordance with the mandatory affiliation to PME effective for the industry in which NXP operates. As this affiliation is a legal requirement for the Metal and Electrical Engineering Industry, it has no expiration date. This PME multi-employer plan (a career average plan) covers 1,527 companies and 612,500 participants. The plan monitors its risk on an aggregate basis, not by company or participant and can therefore not be accounted for as a defined benefit plan. The pension fund rules state that the only obligation for affiliated companies will be to pay the annual plan contributions. There is no obligation for affiliated companies to fund plan deficits. Affiliated companies are also not entitled to any possible surpluses in the pension fund.

Every participating company contributes the same fixed percentage of its total pension base, being pensionable salary minus an individual offset. The Company’s pension cost for any period is the amount of contributions due for that period.

The contribution rate for the mandatory scheme will remain 27.98% in 2024, same as 2023.
PME multi-employer plan202320222021
NXP’s contributions to the plan38 33 37 
(including employees’ contributions)8 6 5 
Average number of NXP’s active employees participating in the plan2,338 2,197 2,075 
NXP’s contribution to the plan exceeded more than 5 percent of the total contribution (as of December 31 of the plan’s year end)NoNoNo

The amount for pension costs included in the statement of operations for the year 2023 was $123 million (2022: $116 million; 2021: $112 million) of which $69 million (2022: $62 million; 2021: $52 million) represents defined contribution plans and $30 million (2022: $27 million; 2021: $32 million) represents the PME multi-employer plans.

Defined benefit plans
The benefits provided by defined benefit plans are based on employees’ years of service and compensation levels. Contributions are made by the Company, as necessary, to provide assets sufficient to meet the benefits payable to defined benefit pension plan participants.

These contributions are determined based upon various factors, including funded status, legal and tax considerations as well as local customs. The Company funds certain defined benefit pension plans as claims are incurred.

The total ongoing cost of defined benefit plans amounted to $24 million in 2023 (2022: a cost of $27 million; 2021: a cost of $28 million).
The table below provides a summary of the changes in the pension benefit obligations and defined benefit pension plan assets for 2023 and 2022, associated with the Company’s dedicated plans, and a reconciliation of the funded status of these plans to the amounts recognized in the Consolidated Balance Sheets.
20232022
Projected benefit obligation
Projected benefit obligation at beginning of year537 730 
Service cost12 15 
Interest cost18 8 
Actuarial (gains) and losses47 (146)
Curtailments and settlements— — 
Benefits paid(21)(19)
Exchange rate differences12 (51)
Projected benefit obligation at end of year605 537 
Plan assets
Fair value of plan assets at beginning of year202 222 
Actual return on plan assets9 (5)
Employer contributions20 22 
Curtailments and settlements— — 
Benefits paid(20)(19)
Exchange rate differences2 (18)
Fair value of plan assets at end of year213 202 
Funded status(392)(335)
Classification of the funded status is as follows
–   Prepaid pension cost within non-current assets8 14 
–   Accrued pension cost within other non-current liabilities(388)(339)
–   Accrued pension cost within accrued liabilities(12)(10)
Total(392)(335)
Accumulated benefit obligation
Accumulated benefit obligation for all Company-dedicated benefit pension plans576 509 
Plans with assets less than accumulated benefit obligation (including unfunded plans)
–   Fair value of plan assets87 84 
–   Accumulated benefit obligations459 407 
Amounts recognized in accumulated other comprehensive income (before tax)
Total AOCI at beginning of year17 175 
–   Net actuarial loss (gain)43 (145)
–   Exchange rate differences— (13)
Total AOCI at end of year60 17 

The net amount of projected benefit obligation and plan assets for all underfunded (including unfunded) pension plans was $392 million and $335 million at December 31, 2023 and 2022, respectively, and was classified as liabilities and non-current assets in the Consolidated Balance Sheets.

For the year ended December 31, 2023, actuarial losses were primarily related to decreases in discount rates of approximately 10 basis points on a weighted basis and experience losses related to salary and pension indexation adjustments being higher than our long-term assumptions. For the year ended December 31, 2022, actuarial gains were primarily related to increases in discount rates of approximately 200 basis points on a weighted basis and updates to mortality table benchmarks in various countries.
The weighted average assumptions used to calculate the projected benefit obligations were as follows:
20232022
Discount rate3.2 %3.3 %
Rate of compensation increase2.2 %2.2 %
The weighted average assumptions used to calculate the net periodic pension cost were as follows:
202320222021
Discount rate3.3 %1.2 %0.8 %
Expected returns on plan assets2.9 %2.6 %2.6 %
Rate of compensation increase2.2 %1.9 %1.6 %

For the Company’s major plans, the discount rate used is based on high quality corporate bonds (iBoxx Corporate Euro AA 10+).

Plans in certain Asian countries without a deep corporate bond market use a discount rate based on the local sovereign rate and the plans' maturities (Bloomberg Government Bond Yields).

Expected returns per asset class are based on the assumption that asset valuations tend to return to their respective long-term equilibria. The Expected Return on Assets for any funded plan equals the average of the expected returns per asset class weighted by their portfolio weights in accordance with the fund’s strategic asset allocation.

The components of net periodic pension costs were as follows:
202320222021
Service cost12 15 18 
Interest cost on the projected benefit obligation18 8 6 
Expected return on plan assets(6)(5)(6)
Amortization of net (gain) loss— 9 10 
Curtailments & settlements— — — 
Net periodic cost24 27 28 

The components of net periodic pension cost other than the service cost component are included in Other financial income (expense) in the Consolidated Statements of Operations.

Plan assets
The actual pension plan asset allocation at December 31, 2023 and 2022 is as follows:
20232022
Asset category:
Equity securities26 %32 %
Debt securities38 %34 %
Insurance contracts7 %7 %
Other29 %27 %
100 %100 %

We met our target plan asset allocation. The investment objectives for the pension plan assets are designed to generate returns that, along with the future contributions, will enable the pension plans to meet their future obligations. The investments in our major defined benefit plans largely consist of government bonds, “Level 2” Corporate Bonds and cash to mitigate the risk of interest fluctuations. The asset mix of equity, bonds, cash and other categories is evaluated by an asset-liability modeling study for our largest plan. The assets of funded plans in other countries mostly have a large proportion of fixed income securities with return characteristics that are
aligned with changes in the liabilities caused by discount rate volatility. Total pension plan assets of $213 million include $175 million related to the German and Japanese pension funds.

The following table summarizes the classification of these assets.
20232022
Level ILevel IILevel IIILevel ILevel IILevel III
Equity securities— 49 — — 59 — 
Debt securities18 38 — 3 42 — 
Insurance contracts— 14 — — 14 — 
Other4 27 25 — 27 22 
22 128 25 3 142 22 

The Company currently expects to make $15 million of employer contributions to defined benefit pension plans and $11 million of expected cash payments in relation to unfunded pension plans in 2024.

Estimated future pension benefit payments
The following benefit payments are expected to be made (including those for funded plans):
202424 
202525 
202628 
202729 
202831 
Years 2029-2033184 

Postretirement health care benefits
In addition to providing pension benefits, NXP provides retiree healthcare benefits in the U.S. which are accounted for as defined benefit plans.

The accumulated postretirement benefit obligation at the end of 2023 equals $2 million (2022: $3 million).