Post-Employment Benefits

12 Months Ended

Dec. 31, 2021

AbbVie sponsors various pension and other post-employment benefit plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. In addition, AbbVie provides medical benefits, primarily to eligible retirees in the United States and Puerto Rico, through other post-retirement benefit plans. Net obligations for these plans have been reflected on the consolidated balance sheets as of December 31, 2021 and 2020.

The following table summarizes benefit plan information for the global AbbVie-sponsored defined benefit and other post-employment plans:


	Defined benefit plans				Other post-employment plans
as of and for the years ended December 31 (in millions)	2021		2020		2021		2020
Projected benefit obligations
Beginning of period	$	11,792	$	8,646	$	795	$	1,050
Service cost	440		370		48		42
Interest cost	237		264		19		34
Employee contributions	2		2		—		—
Amendments	—		—		—		(397)
Actuarial (gain) loss	(8)		1,105		10		40
Benefits paid	(281)		(249)		(22)		(17)

Acquisition	—		1,409		—		43
Other, primarily foreign currency translation adjustments	(176)		245		—		—
End of period	12,006		11,792		850		795
Fair value of plan assets
Beginning of period	9,702		7,116		—		—
Actual return on plan assets	1,000		979		—		—
Company contributions	376		367		22		17
Employee contributions	2		2		—		—
Benefits paid	(281)		(249)		(22)		(17)

Acquisition	—		1,296		—		—
Other, primarily foreign currency translation adjustments	(144)		191		—		—
End of period	10,655		9,702		—		—
Funded status, end of period	$	(1,351)	$	(2,090)	$	(850)	$	(795)

Amounts recognized on the consolidated balance sheets
Other assets	$	991	$	563	$	—	$	—
Accounts payable and accrued liabilities	(13)		(12)		(26)		(23)
Other long-term liabilities	(2,329)		(2,641)		(824)		(772)
Net obligation	$	(1,351)	$	(2,090)	$	(850)	$	(795)
Actuarial loss, net	$	3,504	$	4,163	$	461	$	482
Prior service cost (credit)	5		8		(370)		(408)
Accumulated other comprehensive loss	$	3,509	$	4,171	$	91	$	74

The projected benefit obligations in the table above included $3.2 billion at December 31, 2021 and $3.5 billion at December 31, 2020, related to international defined benefit plans.

For plans reflected in the table above, the accumulated benefit obligations were $10.5 billion at December 31, 2021 and December 31, 2020.

Information For Pension Plans With An Accumulated Benefit Obligation In Excess Of Plan Assets


as of December 31 (in millions)	2021		2020
Accumulated benefit obligation	$	6,395	$	7,527
Fair value of plan assets	5,412		6,066

Information For Pension Plans With A Projected Benefit Obligation In Excess Of Plan Assets


as of December 31 (in millions)	2021		2020
Projected benefit obligation	$	7,788	$	8,719
Fair value of plan assets	5,447		6,066

The 2021 actuarial gain of $8 million for qualified pension plans and actuarial loss of $10 million for other post-employment plans were primarily driven by an increase in the assumed discount rate offset by change in demographic assumptions from 2020. The 2020 actuarial losses of $1.1 billion for qualified pension plans and $40 million for other post-employment plans were primarily driven by a decrease in the assumed discount rate from 2019.

AbbVie's U.S. pension plan was modified to close the plan to new entrants effective January 1, 2022. In addition, a change to AbbVie's U.S. retiree health benefit plan was approved in 2020 and communicated to employees and retirees in October 2020. Beginning in 2022, Medicare-eligible retirees and Medicare-eligible dependents will choose health care coverage from insurance providers through a private Medicare exchange. AbbVie will continue to provide financial support to Medicare-eligible retirees. This change to the U.S. retiree health benefit plan decreased AbbVie's post-employment benefit obligation and increased AbbVie's unrecognized prior service credit as of December 31, 2020 by $397 million.

In connection with the Allergan acquisition, AbbVie assumed certain post-employment benefit obligations which were recorded at fair value. Upon acquisition in the second quarter of 2020, the excess of projected benefit obligations over the plan assets was recognized as a liability totaling $156 million.

Amounts Recognized in Other Comprehensive Income (Loss)

The following table summarizes the pre-tax losses (gains) included in other comprehensive income (loss):


years ended December 31 (in millions)	2021		2020		2019
Defined benefit plans
Actuarial loss (gain)	$	(345)	$	701	$	1,231

Amortization of prior service cost	(2)		(2)		—
Amortization of actuarial loss	(288)		(227)		(109)
Foreign exchange loss (gain) and other	(27)		56		(6)
Total loss (gain)	$	(662)	$	528	$	1,116
Other post-employment plans
Actuarial loss	$	10	$	40	$	451
Prior service credit	—		(397)		—
Amortization of prior service credit	39		4		—
Amortization of actuarial loss	(32)		(26)		(1)
Total loss (gain)	$	17	$	(379)	$	450

Net Periodic Benefit Cost


years ended December 31 (in millions)	2021		2020		2019
Defined benefit plans
Service cost	$	440	$	370	$	269
Interest cost	237		264		259
Expected return on plan assets	(663)		(575)		(474)
Amortization of prior service cost	2		2		—
Amortization of actuarial loss	288		227		109
Net periodic benefit cost	$	304	$	288	$	163
Other post-employment plans
Service cost	$	48	$	42	$	25
Interest cost	19		34		29
Amortization of prior service credit	(39)		(4)		—
Amortization of actuarial loss	32		26		1
Net periodic benefit cost	$	60	$	98	$	55

The components of net periodic benefit cost other than service cost are included in other expense, net in the consolidated statements of earnings.

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


as of December 31	2021		2020
Defined benefit plans
Discount rate	2.8	%	2.4	%
Rate of compensation increases	5.2	%	4.6	%
Cash balance interest crediting rate	2.7	%	2.8	%
Other post-employment plans
Discount rate	3.1	%	2.8	%

The assumptions used in calculating the December 31, 2021 measurement date benefit obligations will be used in the calculation of net periodic benefit cost in 2022.

Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost


years ended December 31	2021		2020		2019
Defined benefit plans
Discount rate for determining service cost	2.6	%	3.1	%	4.0	%
Discount rate for determining interest cost	2.2	%	3.0	%	4.0	%
Expected long-term rate of return on plan assets	7.1	%	7.1	%	7.6	%
Expected rate of change in compensation	4.6	%	4.6	%	4.6	%
Cash balance interest crediting rate	2.8	%	2.8	%	2.8	%
Other post-employment plans
Discount rate for determining service cost	3.0	%	3.7	%	4.7	%
Discount rate for determining interest cost	2.2	%	3.2	%	4.3	%

For the December 31, 2021 post-retirement health care obligations remeasurement, the company assumed a 5.9% pre-65 (2.1% post-65) annual rate of increase in the per capita cost of covered health care benefits. The pre-65 rate was assumed to decrease gradually to 4.5% (1.8% post-65) in 2029 and remain at that level thereafter. For purposes of measuring the 2021 post-retirement health care costs, the company assumed a 6.0% pre-65 (2.3% post-65) annual rate of increase in the per capita cost of covered health care benefits. The pre-65 rate was assumed to decrease gradually to 4.5% (2.0% post-65) for 2029 and remain at that level thereafter.

Defined Benefit Pension Plan Assets


			Basis of fair value measurement
as of December 31 (in millions)	2021		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Equities
U.S. large cap(a)	$	1,428	$	1,428	$	—	$	—
U.S. mid cap(b)	198		198		—		—
International(c)	458		458		—		—
Fixed income securities
U.S. government securities(d)	228		95		133		—
Corporate debt instruments(d)	945		179		766		—
Non-U.S. government securities(d)	602		445		157		—
Other(d)	273		268		5		—
Absolute return funds(e)	100		5		95		—
Real assets	10		10		—		—
Other(f)	261		216		45		—
Total	$	4,503	$	3,302	$	1,201	$	—
Total assets measured at NAV	6,152
Fair value of plan assets	$	10,655


			Basis of fair value measurement
as of December 31 (in millions)	2020		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Equities
U.S. large cap(a)	$	1,143	$	1,143	$	—	$	—
U.S. mid cap(b)	164		164		—		—
International(c)	524		524		—		—
Fixed income securities
U.S. government securities(d)	132		18		114		—
Corporate debt instruments(d)	854		178		676		—
Non-U.S. government securities(d)	544		397		147		—
Other(d)	297		294		3		—
Absolute return funds(e)	310		4		306		—
Real assets	10		10		—		—
Other(f)	252		250		2		—
Total	$	4,230	$	2,982	$	1,248	$	—
Total assets measured at NAV	5,472
Fair value of plan assets	$	9,702

(a)A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.

(b)A mix of index funds and actively managed equity accounts that are benchmarked to various mid cap indices.

(c)A mix of index funds and actively managed equity accounts that are benchmarked to various non-U.S. equity indices in both developed and emerging markets.

(d)Securities held by actively managed accounts, index funds and mutual funds.

(e)Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide range of asset classes and strategies, including but not limited to equities, fixed income, commodities, financial futures, currencies and other securities, with objectives to outperform agreed upon benchmarks of specific return and volatility targets.

(f)Investments in cash and cash equivalents.

Equities and registered investment companies having quoted prices are valued at the published market prices. Fixed income securities that are valued using significant other observable inputs are quoted at prices obtained from independent financial service industry-recognized vendors. Investments held in pooled investment funds, common collective trusts or limited partnerships are valued at the net asset value (NAV) practical expedient to estimate fair value. The NAV is provided by the fund administrator and is based on the value of the underlying assets owned by the fund minus its liabilities.

The investment mix of equity securities, fixed income and other asset allocation strategies is based upon achieving a desired return, balancing higher return, more volatile equity securities and lower return, less volatile fixed income securities. Investment allocations are established for each plan and are generally made across a range of markets, industry sectors, capitalization sizes and in the case of fixed income securities, maturities and credit quality. The 2021 target investment allocation for the AbbVie Pension Plan was 62.5% in equity securities, 22.5% in fixed income securities and 15% in asset allocation strategies and other holdings. There are no known significant concentrations of risk in the plan assets of the AbbVie Pension Plan or of any other plans.

The expected return on plan assets assumption for each plan is based on management's expectations of long-term average rates of return to be achieved by the underlying investment portfolio. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, as well as current economic and capital market conditions.

Expected Benefit Payments

The following table summarizes total benefit payments expected to be paid to plan participants including payments funded from both plan and company assets:


years ending December 31 (in millions)	Defined benefit plans		Other post-employment plans
2022	$	293	$	27
2023	312		30
2024	334		31
2025	356		34
2026	379		36
2027 to 2031	2,291		224

Defined Contribution Plan

AbbVie maintains defined contribution savings plans for the benefit of its eligible employees. The expense recognized for these plans was $267 million in 2021, $191 million in 2020 and $102 million in 2019. AbbVie provides certain other post-employment benefits, primarily salary continuation arrangements, to qualifying employees and accrues for the related cost over the service lives of the employees.