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Benefit Plans
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Benefit Plans
14. Benefit Plans
Pension expense associated with the U.S. and certain significant international locations totaled $7 million in 2024, $6 million in 2023 and $12 million in 2022.
A.    International Pension Plans
Information about the dedicated pension plans is provided in the tables below.
Obligations and Funded Status––Dedicated Plans
The following table provides an analysis of the changes in the benefit obligations, plan assets and funded status of our dedicated pension plans (including those transferred to us):
As of and for the
Year Ended December 31,
(MILLIONS OF DOLLARS)20242023
Change in benefit obligation:
Projected benefit obligation, beginning$129 $122 
Service cost5 5 
Interest cost5 5 
Changes in actuarial assumptions and other9 (4)
Settlements and curtailments(2)— 
Benefits paid(4)(3)
Adjustments for foreign currency translation(5)5 
Other––net(1)(1)
Benefit obligation, ending136 129 
Change in plan assets:
Fair value of plan assets, beginning86 78 
Actual return on plan assets12 3 
Company contributions6 6 
Settlements and curtailments(3)— 
Benefits paid(4)(3)
Adjustments for foreign currency translation(3)2 
Other––net— — 
Fair value of plan assets, ending94 86 
Funded status—Projected benefit obligation in excess of plan assets at end of year(a)
$(42)$(43)
(a) Included in Other noncurrent liabilities.
Changes in the benefit obligation resulted in a net loss of $9 million in 2024 and a net gain of $4 million in 2023.
Actuarial gains were $3 million ($2 million, net of tax) at December 31, 2024 and $4 million ($4 million, net of tax) at December 31, 2023. The actuarial gains and losses primarily represent the cumulative difference between the actuarial assumptions and actual return on plan assets, changes in discount rates and changes in other assumptions used in measuring the benefit obligations. These actuarial gains and losses are recognized in Accumulated other comprehensive loss. The actuarial losses will be amortized into net periodic benefit costs over an average period of 9.8 years.
Information related to the funded status of selected plans follows:
As of December 31,
(MILLIONS OF DOLLARS)20242023
Pension plans with an accumulated benefit obligation in excess of plan assets:
Fair value of plan assets$9 $8 
Accumulated benefit obligation50 45 
Pension plans with a projected benefit obligation in excess of plan assets:
Fair value of plan assets9 64 
Projected benefit obligation55 109 
Net Periodic Benefit Costs––Dedicated Plans
The following table provides the net periodic benefit cost associated with dedicated pension plans (including those transferred to us):
Year Ended December 31,
(MILLIONS OF DOLLARS)202420232022
Service cost$5 $5 $6 
Interest cost5 5 2 
Expected return on plan assets(4)(4)(3)
Amortization of net losses— — 1 
Settlement and curtailments (gains) / losses1 — — 
Net periodic benefit cost$7 $6 $6 
Actuarial Assumptions––Dedicated Plans
The following table provides the weighted average actuarial assumptions for the dedicated pension plans (including those transferred to us):
As of December 31,
(PERCENTAGES)202420232022
Weighted average assumptions used to determine benefit obligations:
Discount rate3.5 %4.2 %3.7 %
Rate of compensation increase3.5 %3.6 %3.5 %
Cash balance credit interest rate1.7 %1.6 %1.7 %
Weighted average assumptions used to determine net benefit cost for the year ended December 31:
Discount rate4.2 %3.7 %1.4 %
Expected return on plan assets4.6 %4.7 %3.3 %
Rate of compensation increase3.6 %3.5 %3.4 %
Cash balance credit interest rate1.6 %1.7 %1.5 %
The assumptions above are used to develop the benefit obligations at the end of the year and to develop the net periodic benefit cost for the following year. Therefore, the assumptions used to determine the net periodic benefit cost for each year are established at the end of each previous year, while the assumptions used to determine the benefit obligations are established at each year-end. The net periodic benefit cost and the benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. The assumptions are revised based on an annual evaluation of long-term trends, as well as market conditions that may have an impact on the cost of providing retirement benefits.
Actuarial and other assumptions for pension plans can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For a description of the risks associated with estimates and assumptions, see Note 3. Significant Accounting Policies—Estimates and Assumptions.
Plan Assets—Dedicated Plans
The components of plan assets follow:
As of December 31,
(MILLIONS OF DOLLARS)20242023
Cash and cash equivalents$1 $1 
Equity securities: Equity commingled funds37 34 
Debt securities: Government bonds46 40 
Other investments10 11 
Total(a)
$94 $86 
(a)    Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 3. Significant Accounting Policies—Fair Value). Investment plan assets are valued using Level 1 or Level 2 inputs.
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely on estimates and assumptions. For information about the risks associated with estimates and assumptions, see Note 3. Significant Accounting Policies—Estimates and Assumptions.
Specifically, the following methods and assumptions were used to estimate the fair value of our pension assets:
•    Equity commingled funds––observable market prices (Level 1).
•    Government bonds and other investments––principally observable market prices (Level 2).
The long-term target asset allocations and the percentage of the fair value of plans assets for dedicated benefit plans follow:
As of December 31,
Target allocation
percentagePercentage of Plan Assets
(PERCENTAGES)202420242023
Cash and cash equivalents
0-10%
1.4 %1.7 %
Equity securities
0-60%
39.2 %39.4 %
Debt securities
15-100%
48.4 %46.9 %
Other investments
0-100%
11.0 %12.0 %
Total
100%
100 %100 %
Zoetis utilizes long-term asset allocation ranges in the management of our plans’ invested assets. Long-term return expectations are developed with input from outside investment consultants based on the company’s investment strategy, which takes into account historical experience, as well as the impact of portfolio diversification, active portfolio management, and the investment consultant’s view of current and future economic and financial market conditions. As market conditions and other factors change, the targets may be adjusted accordingly and actual asset allocations may vary from the target allocations.
The long-term asset allocation ranges reflect the asset class return expectations and tolerance for investment risk within the context of the respective plans’ long-term benefit obligations. These ranges are supported by an analysis that incorporates historical and expected returns by asset class, as well as volatilities and correlations across asset classes and our liability profile. This analysis, referred to as an asset-liability analysis, also provides an estimate of expected returns on plan assets, as well as a forecast of potential future asset and liability balances.
The investment consultants review investment performance with Zoetis on a quarterly basis in total, as well as by asset class, relative to one or more benchmarks.
Cash Flows—Dedicated Plans
Our plans are generally funded in amounts that are at least sufficient to meet the minimum requirements set forth in applicable employee benefit laws and local tax and other laws.
We expect to contribute approximately $6 million to our dedicated pension plans in 2025. Benefit payments are expected to be approximately $6 million for 2025, $10 million for 2026, $7 million for 2027, $6 million for 2028 and $13 million for 2029. Benefit payments are expected to be approximately $51 million in the aggregate for the five years thereafter. These expected benefit payments reflect the future plan benefits subsequent to 2025 projected to be paid from the plans or from the general assets of Zoetis entities under the current actuarial assumptions used for the calculation of the projected benefit obligation and, therefore, actual benefit payments may differ from projected benefit payments.
B.    Postretirement Plans
Postretirement benefit expense associated with these U.S. retiree medical plans totaled $0 million per year in 2024 and 2023, and $4 million in 2022.
C.    Defined Contribution Plans
Zoetis has a voluntary defined contribution plan, the Zoetis Savings Plan (ZSP) that allows participation by substantially all U.S. employees. Zoetis matches 100% of employee contributions, up to a maximum of 5% of each employee’s eligible compensation. The ZSP also includes a profit-sharing feature that provides for an additional contribution ranging between 0 and 8 percent of each employee’s eligible compensation. All eligible employees receive the profit-sharing contribution regardless of the amount they choose to contribute to the ZSP. The profit-sharing contribution is a discretionary amount provided by Zoetis and is determined on an annual basis. Employees can direct their contributions and the company's matching and profit-sharing contributions into any of the funds offered. These funds provide participants with a cross section of investing options, including the Zoetis stock fund. The matching and profit-sharing contributions are cash funded.
Employees are permitted to diversify all or any portion of their company matching or profit-sharing contribution. Once the contributions have been paid, Zoetis has no further payment obligations. Contribution expense, associated with the ZSP, totaled $79 million in 2024, $69 million in 2023 and $57 million in 2022.
Employees in the U.S. who meet certain eligibility requirements participate in a supplemental (non-qualified) savings plan sponsored by Zoetis. The cost/(benefit) of the supplemental savings plan was $3 million in 2024, $11 million in 2023 and $(9) million in 2022. Benefit payments for this plan are expected to be approximately $5 million in 2025 and $43 million thereafter.