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Pension and Postretirement Benefit Plans
 3 Months Ended
Mar. 31, 2024
Retirement Benefits [Abstract]  
Pension and Postretirement Benefit Plans Pension and Postretirement Benefit Plans
Transfer of Solventum Sponsored Pension and Postretirement Benefit Plans
Historically, certain employees of Solventum participated in U.S. and non-U.S. retirement plans sponsored by 3M. The primary U.S. defined-benefit pension plan was closed to new participants effective January 1, 2009. In December 2023, 3M committed to the future freeze of U.S. defined benefit pension benefits for non-union U.S. employees, effective December 31, 2028. During March 2024, in advance of the Spin-Off, all U.S. and most remaining 3M sponsored non-U.S. pension and postretirement plan obligations and assets were legally transferred to Solventum from 3M Company. These plans included the U.S. defined benefit pension plans as well as postretirement health care and life insurance benefits for U.S. employees who reach a retirement age while employed by the Company and were employed prior to January 1, 2016. Additionally, seven international plans covering employees in four countries were transferred to Solventum from 3M Company during March 2024.
As these plans are sponsored by Solventum, they are accounted for as single employer plans. Therefore, the funded status is reflected in the condensed combined balance sheets, and the net periodic benefit costs are included in the condensed combined statements of income.
The Company has made deposits for its defined benefit plans with independent trustees. Trust funds and deposits with insurance companies are maintained to provide pension benefits to plan participants and their beneficiaries. There are no plan assets in the non-qualified plan due to its nature. For the U.S. postretirement health care benefit plan, the Company has set aside amounts at least equal to annual benefit payments with an independent trustee.
The following tables include transfers during the first quarter of 2024 from 3M Company to Solventum of the benefit obligation and the fair value of plan assets as well as a summary of the related amounts recognized in the Company’s condensed combined balance sheets as of March 31, 2024.
Qualified and Non-qualified Pension BenefitsPostretirement Benefits
United StatesInternational
(Millions)202420242024
Change in benefit obligation
Transfers from 3M$1,850 $73 $241 
Benefit obligation at March 31$1,850 $73 $241 
Change in plan assets
Transfers from 3M$1,808 68 $129 
Fair value of plan assets at March 31$1,808 $68 $129 
Funded status at March 31$(42)$(5)$(112)
Amounts recognized in the Condensed Combined Balance Sheet as of March 31, (Millions)
Qualified and Non-qualified Pension BenefitsPostretirement Benefits
United StatesInternational
202420242024
Other assets$— $2 $— 
Accrued benefit cost
Current liabilities(2)— (1)
Non-current liabilities(40)(7)(111)
Ending balance$(42)$(5)$(112)
Amounts recognized in accumulated other comprehensive (income) loss as of March 31, (Millions)
Qualified and Non-qualified Pension BenefitsPostretirement Benefits
United StatesInternational
202420242024
Net actuarial loss (gain)$493 $15 $43 
Prior service cost (credit)(2)— (14)
Ending balance$491 $15 $29 
The balance of amounts recognized for non-U.S. plans in accumulated other comprehensive income (loss) as of March 31, 2024 in the preceding table is presented based on the foreign currency exchange rates on that date.
The pension accumulated benefit obligation represents the actuarial present value of benefits based on employee service and compensation as of the measurement date and does not include an assumption about future compensation levels. The following table summarizes the total accumulated benefit obligations, the accumulated benefit obligations and fair value of plan assets for defined benefit pension plans with accumulated benefit obligations in excess of plan assets, and the projected benefit obligation and fair value of plan assets for defined benefit pension plans with projected benefit obligation in excess of plan assets as of March 31, 2024:
Qualified and Non-qualified Pension Plans
United StatesInternational
(Millions)20242024
Accumulated benefit obligation$1,773 $63 
Plans with accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation$19 $5 
Fair value of plan assets— 3 
Plans with projected benefit obligation in excess of plan assets
Projected benefit obligation$1,850 $55 
Fair value of plan assets1,808 48 
Weighted-Average Assumptions Used to Determine Benefit Obligations as of March 31, 2024:
Qualified and Non-qualified Pension BenefitsPostretirement Benefits
20242024
Discount rate5.23 %5.20 %
Compensation rate increase3.77 %N/A
For the plans transferred to Solventum during the first quarter of 2024, the Company used the discount rate as of March 31, 2024 to measure plan liabilities. The discount rate reflects the current rate at which the associated liabilities could be effectively settled. The Company sets its rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits.
The Company measures service cost and interest cost separately using the spot yield curve approach applied to each corresponding obligation. Service costs are determined based on duration-specific spot rates applied to the service cost cash flows. The interest cost calculation is determined by applying duration-specific spot rates to the year-by-year projected benefit payments. The spot yield curve approach does not affect the measurement of the total benefit obligations as the change in service and interest costs offset in the actuarial gains and losses recorded in other comprehensive income.
During the three months ended March 31, 2024, the Company contributed $1 million to its defined benefit pension plans. In 2024, the Company expects to contribute approximately $10 million to $15 million of cash to its defined benefit pension plans.
Future Pension Benefit Payments
The following table provides the estimated pension and postretirement benefit payments for the plans transferred from 3M during the three months ended March 31, 2024 that are payable from the plans to participants.
Qualified and Non-qualified Pension BenefitsPostretirement Benefits
(Millions)United StatesInternational
2024 Remaining Benefit Payments$142 $2 $18 
2025 Benefit Payments147 3 19 
2026 Benefit Payments147 3 20 
2027 Benefit Payments147 4 20 
2028 Benefit Payments147 4 21 
Next five years$709 $23 $98 
Components of net periodic cost and other amounts recognized in other comprehensive (income) loss
The service cost component of defined benefit net periodic benefit cost is recorded in costs of product; costs of software and rentals; selling, general and administrative; and research and development. Components of net periodic benefit cost and other supplemental information for the three months ended March 31, 2024 and 2023 follow:
United StatesInternationalPostretirement Benefits
(Millions)202420232024202320242023
Net periodic benefit cost (benefit)
Operating expense
Service cost$— $— $4 $— $— $— 
Non-operating expense
Interest cost— — 5 — — — 
Expected return on plan assets— — (5)— — — 
Total non-operating expense (benefit)— — — — — — 
Total net periodic benefit cost (benefit)$— $— $4 $— $— $—