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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS RETIREMENT AND POSTRETIREMENT BENEFIT PLANS
DEFINED BENEFIT PENSION PLANS

The Company sponsors and maintains pension plans for the benefit of certain of the Company’s employees. The service and non-service cost components of net periodic pension expense for these employees is recorded within cost of products sold and selling and administrative expenses. The assets and liabilities related to plans sponsored by the Company are reflected in deferred charges and other assets and other liabilities, respectively.
OBLIGATIONS AND FUNDED STATUS

The following table shows the changes in the benefit obligation and plan assets and the plans’ funded status.
In millions
20232022
Change in projected benefit obligation:
Benefit obligation, January 1
$307 $462 
Service cost
4 6 
Interest cost
17 13 
Actuarial loss (gain)
11 (151)
Benefits paid
(7)(7)
Expenses paid from assets— (1)
Effect of foreign currency exchange rate movements
6 (15)
Benefit obligation, December 31
$338 $307 
Change in plan assets:
Fair value of plan assets, January 1
$286 $431 
Actual return on plan assets
26 (126)
Company contributions
6 3 
Benefits paid
(8)(7)
Expenses paid from assets— (1)
Effect of foreign currency exchange rate movements
7 (14)
Fair value of plan assets, December 31
$317 $286 
Funded status, December 31
$(21)$(21)
Amounts recognized in the consolidated balance sheets:
Non-current asset
$12 $8 
Non-current liability
(33)(29)
$(21)$(21)
Amounts recognized in accumulated other comprehensive income under ASC 715 (pre-tax):
Net prior service cost$1 $2 
Net actuarial loss
93 91 
$94 $93 

The accumulated benefit obligation (“ABO”) for all plans was $328 million as of December 31, 2023 and $299 million as of December 31, 2022. The following table reflects the pension plans for which the accumulated benefit obligation or projected benefit obligation exceed the fair value of their respective plan assets at December 31:
In millions as of December 31
20232022
Pension plans with ABO in excess of plan assets
Accumulated benefit obligation
$220 $201 
Fair value of plan assets
196 180 
Pension plans with PBO in excess of plan assets
Projected benefit obligation
$229 $209 
Fair value of plan assets
196 180 
NET PERIODIC PENSION EXPENSE

Service cost is the actuarial present value of benefits attributed by the plans’ benefit formula to services rendered by employees during the year. Interest cost represents the increase in the projected benefit obligation, which is a discounted amount, due to the passage of time. The expected return on plan assets reflects the computed amount of current-year earnings from the investment of plan assets using an estimated long-term rate of return.

Net periodic pension expense comprised the following:
In millions
202320222021
Service cost
$4 $6 $2 
Interest cost17 13 6 
Expected return on plan assets
(17)(21)(11)
Actuarial loss (gain)
3 4 2 
Net periodic pension expense (benefit)
$7 $2 $(1)

ASSUMPTIONS

The Company evaluates its actuarial assumptions annually as of December 31 (the measurement date) and considers changes in these long-term factors based upon market conditions and the requirements for employers’ accounting for pensions. These assumptions are used to calculate benefit obligations as of December 31 of the current year and pension expense to be recorded in the following year (i.e., the discount rate used to determine the benefit obligation as of December 31, 2023 is also the discount rate used to determine net pension expense for the 2024 year).
Major actuarial assumptions used in determining the benefit obligations and net periodic pension cost for our defined benefit plans are presented in the following table:
202320222021
Actuarial assumptions used to determine benefit obligations as of December 31:
Discount rate
5.27 %5.52 %2.79 %
Rate of compensation increase
3.30 %3.36 %3.36 %
Actuarial assumptions used to determine net periodic pension cost for years ended December 31:
Discount rate
5.52 %2.79 %2.79 %
Expected long-term rate of return on plan assets
5.84 %5.18 %5.38 %
Rate of compensation increase
3.36 %3.36 %2.85 %
PLAN ASSETS
The plans maintain a strategic asset allocation policy that designates target allocations by asset class. Investments are diversified across classes and within each class to minimize the risk of large losses. Derivatives, including swaps, forward and futures contracts, may be used as asset class substitutes or for hedging or other risk management purposes. Periodic reviews are made of investment policy objectives and investment manager performance. The fair value of pension plan assets at December 31, 2023 and 2022 by asset class are shown below for the material plans. Each category of investments for the U.S. plans is diversified and comprised of the following:

•Equity investments - developed market and emerging market equity securities primarily held in mutual funds
•Debt securities - corporate bonds and government securities
•Other investments - represents primarily cash and cash equivalents
Each category of investments for the U.K. plan is diversified and comprised of the following:

•Growth assets – equities, diversified growth funds, absolute return fixed income funds, multi-asset credit funds, and other private equity type investments
•Stabilizing assets – liability-driven investments consisting primarily of interest and inflation linked assets, cash flow driven investments invested primarily in credit markets, and cash and cash equivalents
The target allocations for each asset class in the U.S. plan were 35% in equity securities, 65% in debt securities and 0% in other investment types for the year ended December 31, 2023, and were 23% in equity securities, 75% in debt securities and 2% in other investment types for the year ended December 31, 2022. The target allocations for each asset class in the U.K. plan were 33% in growth assets and 67% in stabilizing assets for the year ended December 31, 2023, and were 48% in growth assets and 52% in stabilizing assets for the year ended December 31, 2022. Pension assets for the immaterial plans totaled $30 million for the years ended December 31, 2023 and $26 million for the year ended December 31, 2022. These assets primarily relate to government securities within Level 1 of the fair value hierarchy.
Fair Value Measurement U.S. Plans
20232022
Asset Class 
TotalQuoted Prices in Active Markets For Identical Assets (Level 1)Significant Observable Inputs (Level 2)TotalQuoted Prices in Active Markets For Identical Assets (Level 1)Significant Observable Inputs (Level 2)
In millions
Cash and cash equivalents
$5 $5 $— $10 $10 $— 
Equities - developed markets
58 58 — 41 — 41 
Equities - emerging markets markets
7 7 — — — — 
Government securities50 — 50 7 7 — 
Corporate bonds72 — 72 108 — 108 
Other fixed income securities— — — 9 — 9 
Derivatives— — — 1 — 1 
Total Investments
$192 $70 $122 $176 $17 $159 
Fair Value Measurement U.K. Plans
20232022
Asset Class 
TotalQuoted Prices in Active Markets For Identical Assets (Level 1)Significant Observable Inputs (Level 2)TotalQuoted Prices in Active Markets For Identical Assets (Level 1)Significant Observable Inputs (Level 2)
In millions
Cash and cash equivalents
$1 $1 $— $2 $2 $— 
Equities - emerging markets
— — — — — — 
Diversified growth funds8 — 8 6 — 6 
Multi-asset credit10 — 10 8 — 8 
Absolute return fixed income1 — 1 4 — 4 
Liability driven investments32 — 32 30 — 30 
Cash flow driven investments
29 — 29 25 — 25 
Other Investments:
Private equity14 — — 9 — — 
Total Investments
$95 $1 $80 $84 $2 $73 

In accordance with accounting standards, certain investments that are measured at net asset value are not classified in the fair value hierarchy. As part of the U.K. plan assets, the Company holds investments in private equity fund partnerships. These investments are contractually locked up for the life of the private equity funds by the partnership agreements, which mature in
2031 and 2032. The remaining unfunded commitment of these partnership interests is $9 million as of December 31, 2023 and $11 million as of December 31, 2022.

FUNDING AND CASH FLOWS

The Company’s funding policy for the pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that the Company may determine to be appropriate considering the funded status of the plans, tax deductibility, cash flow generated by the Company, and other factors. The Company continually reassesses the amount and timing of any discretionary contributions. Generally, the non-U.S. pension plans are funded using the projected benefit as a target, except in certain countries where funding of benefit plans is not required.

At December 31, 2023, projected future pension benefit payments, excluding any termination benefits, were as follows:

In millions
2024$8 
202511 
202613 
202716 
202817 
2029-2033113 

OTHER POSTRETIREMENT BENEFITS

Certain of the Company’s Brazilian employees are eligible for retiree health care and life insurance benefits. The accumulated benefit obligation for this plan as of December 31, 2023 and 2022 was $9 million and $7 million, respectively, which is recorded within other liabilities in the consolidated balance sheets.

DEFERRED COMPENSATION AND NON-QUALIFIED PENSION PLAN
We are responsible for certain deferred compensation and non-qualified pension plan balances related to our employees. These balances relate to employees who previously participated in plans sponsored by International Paper. As part of the spin-off, we assumed responsibility for these balances. As our employees become eligible for these benefits and these benefits are paid, we will be reimbursed by International Paper for the balances transferred upon the spin-off. As of December 31, 2023, there is a receivable of $24 million reflected within deferred charges and other assets of our consolidated balance sheets related to the plans. The deferred compensation savings plan liability of $21 million as of December 31, 2023 is recorded within accounts payable in the consolidated balance sheets. The non-qualified pension plan is included within the pension obligation and funded status presented above, and the liability is recorded in other liabilities in the consolidated balance sheets.