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Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
Retirement Plan Summary Information
The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary and benefits generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. With respect to U.S. qualified pension plans, we intend to contribute annually not less than the required minimum funding thresholds. For all periods presented, the Company made no discretionary pension contributions. Plan assets are invested primarily in equities, bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, cash and cash equivalents and real estate.
The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions.
The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service.
The following tables provide certain information regarding the Company's pension, postretirement and supplemental retirement plans as of December 31, 2023 and 2022:
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
(Dollars in millions)202320222023202220232022
Change in benefit obligation:
Benefit obligation at beginning of year$162$215$1$2$17$22
Interest cost86——11
Actuarial loss (gain)6(45)———(5)
Benefits paid(12)(9)—(1)(1)(1)
(Gain) loss due to settlement1(5)————
Benefit obligation at end of year$165$162$1$1$17$17
Change in plan assets:
Fair value of plan assets at beginning of year$124$166$1$1$11$12
Actual return on plan assets12(33)——1(1)
Employer contributions103——11
Benefits paid(12)(9)——(1)(1)
(Loss) gain due to settlement—(3)————
Fair value of plan assets at end of year134124111211
Funded status of the plans at year end$(31)$(38)$—$—$(5)$(6)
The amounts recognized in the Consolidated Balance Sheets as of December 31, 2023 and 2022 consist of:
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
(Dollars in millions)202320222023202220232022
Noncurrent assets$—$—$—$1$—$—
Noncurrent liabilities(31)(38)—(1)(5)(6)
Net liability recognized
$(31)$(38)$—$—$(5)$(6)
Amounts recognized in accumulated other comprehensive income (before taxes) at December 31, 2023 and 2022 consist of:
Defined Benefit Pension PlansPostretirement Benefit Plans Supplemental Retirement Plans
(Dollars in millions)202320222023202220232022
Net actuarial loss (gain)$31$31$(1)$(1)$2$2
Total amount recognized in accumulated other comprehensive losses (earnings) $31$31$(1)$(1)$2$2
The aggregate accumulated benefit obligation (“ABO”) for the Company's defined benefit pension plans combined was $182 million and $179 million at December 31, 2023 and 2022, respectively. The ABO represents benefits accrued without assuming future compensation increases to plan participants and is approximately equal to our projected benefit obligation (“PBO”). The table below presents information for the pension plans with an ABO and PBO in excess of the fair value of plan assets at December 31, 2023 and 2022:
(Dollars in millions)20232022
Projected benefit obligation$182 $179 
Accumulated benefit obligation182 179 
Fair value of plan assets146 135 
The following table summarizes the weighted average actuarial assumptions used to determine our benefit obligations at December 31, 2023 and 2022:
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
202320222023202220232022
Rate assumptions
Discount rate4.8 %5.0 %4.7 %4.9 %4.8 %5.1 %
Increase in future compensation levelsN/AN/AN/AN/AN/AN/A
Expected long-term return on plan assets6.5 %7.2 %6.5 %7.2 %N/AN/A
Health care trend rate assumed for next yearN/AN/A5.9 %5.3 %N/AN/A
Ultimate health care trend rateN/AN/A4.2 %4.2 %N/AN/A
Year rate reaches ultimate trend rateN/AN/A20372037N/AN/A
The following table summarizes the components of net periodic benefit cost for the Company's pension, postretirement and supplemental retirement plans for the years ended December 31, 2023, 2022 and 2021. Net actuarial gains and losses are amortized to expense when they exceed the 10% accounting corridor, based on the greater of the plan assets or benefit obligations, over the average future lifetime for all plans that are frozen, and over the average remaining service period for active plans.
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
(Dollars in millions)202320222021202320222021202320222021
Interest cost$8 $6 $5 $— $— $— $1 $1 $1 
Expected return on plan assets(7)(7)(7)— — — — — — 
Amortization of net actuarial loss (gain)1 1 2 — — (1)— — — 
Settlement expense (income)— 1 — — — — — — — 
Net periodic benefit cost
$2 $1 $— $— $— $(1)$1 $1 $1 
The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive earnings for the Company's pension, postretirement and supplemental retirement benefit plans for the years ended December 31, 2023, 2022 and 2021:
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
(Dollars in millions)202320222021202320222021202320222021
Net actuarial loss (gain)$1 $(8)$(11)$— $— $— $— $(4)$(1)
Amortization of net actuarial (loss) gain from prior years(1)(2)(2)— — 1 — — — 
Total recognized in other comprehensive income
$— $(10)$(13)$— $— $1 $— $(4)$(1)
The following table summarizes the weighted average actuarial assumptions used to determine our net periodic cost of the plans for the years ended December 31, 2023, 2022 and 2021:
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
202320222021202320222021202320222021
Rate assumptions
Discount rate5.0 %2.8 %2.8 %4.9 %2.6 %2.1 %5.0 %2.8 %2.4 %
Expected long-term return on plan assets7.2 %5.9 %6.4 %7.2 %5.9 %6.4 %N/AN/AN/A
Increase in future compensation levelsN/AN/AN/AN/AN/AN/AN/AN/AN/A
Health care trend rate assumed for next yearN/AN/AN/A5.3 %5.5 %5.8 %N/AN/AN/A
Ultimate health care trend rateN/AN/AN/A4.2 %4.2 %4.5 %N/AN/AN/A
Year rate reaches ultimate trend rateN/AN/AN/A203720312030N/AN/AN/A
The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class.
Pension related expenses are reflected in cost of revenues and general and administrative expenses on the Consolidated Statements of Earnings.
A one percentage increase or decrease in healthcare trend rates in the table above would have an insignificant impact to our service and interest cost and the postretirement medical obligations.
Plan Assets
The Retirement Committee has been authorized by the Company’s management to manage the strategic oversight of our defined benefit plan assets held in trust. The Retirement Committee has adopted an investment policy and provides oversight of a third-party investment manager who reports to the Retirement Committee on a regular basis. The outsourced third-party manager develops investment strategies and makes all of the day to day investment decisions related to the defined benefit plan assets
in accordance with the investment policy and target asset allocation targets, therein. Presently all of the plans are governed by a single investment policy and are uniformly invested. As part of the policy statement the Company has implemented a glide path which adjusts the percentage of assets invested in return seeking assets based upon the attainment of specific funding percentages. The non-return seeking assets are invested primarily in bonds with maturities closely matching the anticipated payment of benefits. As the funding percentage increases the glide path reduces the amount of the assets invested in return seeking assets.
The table below represents all of the Company's funded pension plans' and postretirement benefit plans' weighted average asset allocation at December 31, 2023 and 2022 by asset category:
Asset Allocation
20232022
Asset Category
Equity securities33 %37 %
Debt securities55 %49 %
Real estate4 %6 %
Other, primarily cash and cash equivalents, and hedge funds8 %8 %
The table below presents the target allocation ranges for each major asset category for the Company's benefit plans for the years ended December 31, 2023 and 2022:
Target Asset Allocation Range
20232022
Asset Category
Equity securities
28% - 36%
30% - 50%
Debt securities
54% - 70%
45% - 65%
Real estate
0% - 8%
0% - 10%
Other, primarily cash and cash equivalents and hedge funds
0% - 10%
0% - 10%
The following tables provides the fair value of plan assets held by our defined benefit plan by asset category and by fair value hierarchy level. Certain investments are measured at their NAV per share and do not have readily determined fair values. As such, these investments are not subject to leveling in the fair value hierarchy.
December 31, 2023
(Dollars in millions)Level 1Level 2Level 3Total
Asset category
Investments measured at fair value:
Cash and cash equivalents$11 $— $— $11 
Equity securities5 — — 5 
Total$16 $— $— $16 
Investments measured at NAV:
Collective trust funds131 
Equity and fixed income funds— 
Total
$16 $— $— $147 
December 31, 2022
(Dollars in millions)Level 1Level 2Level 3Total
Asset category
Investments measured at fair value:
Cash and cash equivalents$10 $— $— $10 
Equity securities5 — — 5 
Total$15 $— $— $15 
Investments measured at NAV:
Collective trust funds121 
Equity and fixed income funds— 
Total
$15 $— $— $136 
For the year ended December 31, 2024, the Company expects to contribute $10 million to its pension plans and an inconsequential amount to its postretirement plans.
The following table presents expected pension and postretirement benefit payments over the next 10 years:
(Dollars in millions)
Year Ending December 31,
Defined Benefit Pension PlansPostretirement Benefit PlansSupplemental Retirement Plans
2024$13 $— $1 
202512 — 1 
202612 — 1 
202713 — 1 
202813 — 1 
2029-203361 1 6 
Defined Contribution Plans
The Company maintains defined contribution plans covering substantially all domestic full-time eligible employees. The Company's contributions to these plans for the years ended December 31, 2023, 2022 and 2021, amounted to $28 million, $22 million, and $22 million, respectively.