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PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (Notes)
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Defined Benefit Pension Plans
The Company has both funded and unfunded defined benefit pension plans in the United States and a number of other countries. The U.S. tax-qualified plan administered by the parent company is the largest plan. On March 4, 2021, the Company announced changes to its U.S. tax-qualified and non-qualified pension plans, which covered substantially all U.S. employees. As a result, effective December 31, 2023, the Company froze the pensionable compensation and credited service amounts used to calculate pension benefits for substantially all employees who participate in its U.S. tax-qualified and non-qualified retirement programs (collectively, the "U.S. Plans"), and, therefore, impacted employees will not accrue additional benefits for future service and compensation. In connection with these plan amendments, the Company remeasured its U.S. Plans in the first quarter of 2021, which resulted in a pretax actuarial gain of $1,268 million, included in other comprehensive income and a pretax curtailment gain of $19 million.

Separately, in the fourth quarter of 2023, certain Company pension plans in the United States and Canada purchased or converted to nonparticipating group annuity contracts from certain insurance companies, irrevocably transferring approximately $1,681 million of benefit obligations and $1,617 million of related plan assets to the insurers. These transactions did not require any cash funding from the Company and did not impact the pension benefits of participants. As a result of these transactions, the Company recognized pretax, non-cash settlement charges of $642 million in 2023, primarily related to the accelerated recognition of a portion of the accumulated actuarial losses of the plans, recorded in “Sundry income (expense) – net” in the consolidated statements of income and related to Corporate.

The Company's funding policy is to contribute to the plans when pension laws and/or economics either require or encourage funding. Total global pension contributions were $142 million in 2023, which includes contributions necessary to fund benefit payments for the Company's unfunded pension plans. Additionally, in the second quarter of 2023, the Company received a pension plan reversion of approximately $90 million for a portion of the excess funding of one of its plans in Europe, included in "Other assets and liabilities, net" in the consolidated statements of cash flows. The Company expects to contribute approximately $150 million to its pension plans in 2024.
The weighted-average assumptions used to determine pension plan obligations and net periodic benefit cost for all plans are summarized in the table below:

Weighted-Average Assumptions for All Pension Plans Benefit Obligations
 at Dec 31		Net Periodic Benefit Cost
for the Year Ended
 20232022202320222021
Discount rate4.73 %5.18 %5.26 %2.57 %2.40 %
Interest crediting rate for applicable benefits3.99 %4.19 %4.19 %3.57 %3.55 %
Rate of compensation increase3.80 %4.05 %4.05 %3.94 %3.91 %
Expected return on plan assets6.62 %6.68 %6.86 %
The weighted-average assumptions used to determine pension plan obligations and net periodic benefit cost for U.S. plans are summarized in the table below:

Weighted-Average Assumptions for U.S. Pension PlansBenefit Obligations
 at Dec 31		Net Periodic Benefit Cost
for the Year Ended
20232022202320222021
Discount rate5.30 %5.64 %5.76 %3.04 %3.03 %
Interest crediting rate for applicable benefits4.50 %4.50 %4.50 %4.50 %4.50 %
Rate of compensation increase4.25 %4.25 %4.25 %4.25 %4.25 %
Expected return on plan assets7.46 %7.95 %7.96 %

Other Postretirement Benefit Plans
The Company provides certain health care and life insurance benefits to retired employees and survivors. The Company’s plans outside of the United States are not significant; therefore, this discussion relates to the U.S. plans only. The plans provide health care benefits, including hospital, physicians’ services, drug and major medical expense coverage, and life insurance benefits. In general, for employees hired before January 1, 1993, the plans provide benefits supplemental to Medicare when retirees are eligible for these benefits. The Company and the retiree share the cost of these benefits, with the Company portion increasing as the retiree has increased years of credited service, although there is a cap on the Company portion. The Company has the ability to change these benefits at any time. Employees hired after January 1, 2008, are not covered under the plans.

The Company funds most of the cost of these health care and life insurance benefits as incurred. In 2023, the Company did not make any contributions to its other postretirement benefit plan trusts. The trusts did not hold assets at December 31, 2023. The Company does not expect to contribute assets to its other postretirement benefit plan trusts in 2024.

The weighted-average assumptions used to determine other postretirement benefit plan obligations and net periodic benefit cost for the U.S. plans are provided below:

Weighted-Average Assumptions for U.S. Other Postretirement Benefits PlansBenefit Obligations
 at Dec 31		Net Periodic Benefit Cost
for the Year Ended
20232022202320222021
Discount rate5.23 %5.57 %5.57 %2.85 %2.38 %
Health care cost trend rate assumed for next year6.61 %6.79 %6.79 %6.50 %6.75 %
Rate to which the cost trend rate is assumed to decline (the ultimate health care cost trend rate)5.00 %5.00 %5.00 %5.00 %5.00 %
Year that the rate reaches the ultimate health care cost trend rate20332033203320282028
Assumptions
The Company determines the expected long-term rate of return on plan assets by performing a detailed analysis of key economic and market factors driving historical returns for each asset class and formulating a projected return based on factors in the current environment. Factors considered include, but are not limited to, inflation, real economic growth, interest rate yield, interest rate spreads and other valuation measures and market metrics. The expected long-term rate of return for each asset class is then weighted based on the strategic asset allocation approved by the governing body for each plan. The Company’s historical experience with the pension fund asset performance is also considered.

The Company uses the spot rate approach to determine the discount rate utilized to measure the service cost and interest cost components of net periodic pension and other postretirement benefit costs for the United States and other selected countries. Under the spot rate approach, the Company calculates service cost and interest cost by applying individual spot rates from the Willis Towers Watson RATE:Link yield curve (based on high-quality corporate bond yields) for each selected country to the separate expected cash flow components of service cost and interest cost. Service cost and interest cost for all other plans are determined on the basis of the single equivalent discount rates derived in determining those plan obligations.

The discount rates utilized to measure the pension and other postretirement obligations of the U.S. plans are based on the yield on high-quality corporate fixed income investments at the measurement date. Future expected actuarially determined cash flows for the Company’s U.S. plans are individually discounted at the spot rates under the Willis Towers Watson U.S. RATE:Link 60-90 corporate yield curve (based on 60th to 90th percentile high-quality corporate bond yields) to arrive at the plan’s obligations as of the measurement date.

The Company’s mortality assumption used for the U.S. plans is a benefit-weighted version of the Society of Actuaries’ RP-2014 base table with future rates of mortality improvement based on a modified version of the assumptions used in the Social Security Administration’s 2021 trustees report. 
Summarized information on the Company's pension and other postretirement benefit plans is as follows:

Change in Projected Benefit Obligations, Plan Assets and Funded Status of All Significant PlansDefined Benefit Pension PlansOther Postretirement Benefit Plans
In millions2023202220232022
Change in projected benefit obligations:
Benefit obligations at beginning of year$22,861 $32,977 $893 $1,251 
Service cost272 392 4 6 
Interest cost1,110 680 45 26 
Plan participants' contributions9 12 — — 
Actuarial changes in assumptions and experience1,086 (8,433)65 (318)
Benefits paid(1,385)(1,539)(94)(67)
Plan amendments6 (25)— — 
Acquisitions/divestitures/other 1
6 (602)— — 
Effect of foreign exchange rates279 (600)1 (5)
Termination benefits/settlements 2
(1,777)(1)— — 
Benefit obligations at end of year$22,467 $22,861 $914 $893 
Change in plan assets:
Fair value of plan assets at beginning of year$21,231 $28,167 $— $— 
Actual return on plan assets 1,228 (4,556)— — 
Employer contributions142 235 — — 
Plan participants' contributions9 12 — — 
Benefits paid(1,385)(1,539)— — 
Settlements 3
(1,777)— — — 
Other 4
(73)(592)— — 
Effect of foreign exchange rates259 (496)— — 
Fair value of plan assets at end of year$19,634 $21,231 $— $— 
Funded status:
U.S. plans with plan assets$(1,192)$(545)$— $— 
Non-U.S. plans with plan assets(1,017)(473)— — 
All other plans(624)(612)(914)(893)
Funded status at end of year$(2,833)$(1,630)$(914)$(893)
Amounts recognized in the consolidated balance sheets at Dec 31:
Deferred charges and other assets$889 $1,035 $— $— 
Accrued and other current liabilities(67)(66)(86)(88)
Pension and other postretirement benefits - noncurrent(3,655)(2,599)(828)(805)
Net amount recognized$(2,833)$(1,630)$(914)$(893)
Pretax amounts recognized in accumulated other comprehensive loss at Dec 31:
Net loss (gain)$7,709 $7,045 $(402)$(523)
Prior service credit(84)(116)— — 
Pretax balance in accumulated other comprehensive loss at end of year$7,625 $6,929 $(402)$(523)
1.The 2022 impact relates to the transfer of certain benefit obligations in the United States through the purchase of annuity contracts from an insurance company.
2.The 2023 impact primarily relates to the transfer of certain pension benefit obligations in the United States and Canada through the purchase of or conversion to annuity contracts from insurance companies, triggering settlement accounting.
3.The 2023 impact primarily relates to the purchase of annuity contracts associated with the transfer of certain pension benefit obligations to insurance companies, triggering settlement accounting.
4.The 2023 impact primarily relates to a reversion of pension plan funds for a portion of the excess funding of one of its plans in Europe. The 2022 impact primarily relates to the purchase of annuity contracts associated with the transfer of certain pension benefit obligations to insurance companies.

A significant component of the overall decrease in the Company's benefit obligation for the year ended December 31, 2023, was due to the irrevocable transfer of certain benefit obligations to third-party insurance companies, partially offset by the change in weighted-average discount rates, which decreased from 5.18 percent at December 31, 2022, to 4.73 percent at December 31, 2023. A significant component of the overall decrease in the Company's benefit obligation for the year ended December 31, 2022, was due to the change in weighted-average discount rates, which increased from 2.57 percent at December 31, 2021, to 5.18 percent at December 31, 2022.
The accumulated benefit obligation for all significant pension plans was $22.3 billion and $22.6 billion at December 31, 2023 and 2022, respectively.

Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets at Dec 31 20232022
In millions
Accumulated benefit obligations$18,612 $18,300 
Fair value of plan assets$14,962 $15,723 

Pension Plans with Projected Benefit Obligations in Excess of Plan Assets at Dec 3120232022
In millions
Projected benefit obligations$18,783 $18,388 
Fair value of plan assets$15,060 $15,723 

Net Periodic Benefit Cost (Credit) for All Significant Plans for the Year Ended Dec 31Defined Benefit Pension PlansOther Postretirement Benefit Plans
In millions202320222021202320222021
Net Periodic Benefit Costs:
Service cost$272 $392 $387 $4 $6 $7 
Interest cost1,110 680 594 45 26 23 
Expected return on plan assets(1,539)(1,686)(1,724)— — — 
Amortization of prior service credit(26)(21)(22)— — — 
Amortization of unrecognized (gain) loss89 658 822 (57)(15)(6)
Curtailment/settlement/other 1
642 — (18)— — — 
Net periodic benefit cost (credit)$548 $23 $39 $(8)$17 $24 
Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss:
Net (gain) loss$1,395 $(2,231)$(1,980)$64 $(317)$(98)
Prior service cost (credit)6 (25)2 — — — 
Amortization of prior service credit26 21 22 — — — 
Amortization of unrecognized gain (loss)(89)(658)(822)57 15 6 
Curtailment and settlement gain (loss) 1
(642)— 18 — — — 
Total recognized in other comprehensive (income) loss$696 $(2,893)$(2,760)$121 $(302)$(92)
Total recognized in net periodic benefit cost and other comprehensive (income) loss$1,244 $(2,870)$(2,721)$113 $(285)$(68)
1.The 2023 impact relates to the settlement of certain pension benefit obligations in the United States and Canada through the purchase of or conversion to annuity contracts from insurance companies. The 2021 impact primarily relates to the freeze of pensionable compensation and credited service amounts for employees that participate in the U.S. Plans.

Net periodic benefit cost, other than the service cost component, is included in "Sundry income (expense) - net" in the consolidated statements of income. See Note 5 for additional information.
Estimated Future Benefit Payments
The estimated future benefit payments, reflecting expected future service, as appropriate, are presented in the following table:

Estimated Future Benefit Payments at Dec 31, 2023
Defined Benefit Pension PlansOther Postretirement Benefit Plans
In millions
2024$1,493 $88 
20251,359 86 
20261,374 83 
20271,393 82 
20281,416 80 
2029-20337,160 348 
Total$14,195 $767 

Plan Assets
Plan assets consist primarily of equity and fixed income securities of United States and foreign issuers, and include alternative investments, such as real estate, private equity and absolute return strategies. Plan assets totaled $19.6 billion at December 31, 2023 and $21.2 billion at December 31, 2022 and included no directly held common stock of Dow Inc.

The Company's investment strategy for plan assets is to manage the assets in relation to the liability in order to pay retirement benefits to plan participants over the life of the plans. This is accomplished by identifying and managing the exposure to various market risks, diversifying investments across various asset classes and earning an acceptable long-term rate of return consistent with an acceptable amount of risk, while considering the liquidity needs of the plans.

The plans are permitted to use derivative instruments for investment purposes, as well as for hedging the underlying asset and liability exposure and rebalancing the asset allocation. The plans use value-at-risk, stress testing, scenario analysis and Monte Carlo simulations to monitor and manage both the risk within the portfolios and the surplus risk of the plans.

Equity securities primarily include investments in large- and small-cap companies located in both developed and emerging markets around the world. Fixed income securities include investment and non-investment grade corporate bonds of companies diversified across industries, U.S. treasuries, non-U.S. developed market securities, U.S. agency mortgage-backed securities, emerging market securities and fixed income related funds. Alternative investments primarily include investments in real estate, private equity and absolute return strategies. Other significant investment types include various insurance contracts and interest rate, equity, commodity and foreign exchange derivative investments and hedges.

The Company mitigates the credit risk of investments by establishing guidelines with investment managers that limit investment in any single issue or issuer to an amount that is not material to the portfolio being managed. These guidelines are monitored for compliance both by the Company and external managers. Credit risk related to derivative activity is mitigated by utilizing multiple counterparties, collateral support agreements and centralized clearing, where appropriate. A short-term investment money market fund is utilized as the sweep vehicle for the U.S. plans, which from time to time can represent a significant investment.
The weighted-average target allocation for plan assets of the Company's pension plans is summarized as follows:

Target Allocation for Plan Assets at Dec 31, 2023
Target Allocation
Asset Category
Equity securities20 %
Fixed income securities53 
Alternative investments26 
Other investments1 
Total 100 %

Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

For pension plan assets classified as Level 1 measurements (measured using quoted prices in active markets), total fair value is either the price of the most recent trade at the time of the market close or the official close price, as defined by the exchange on which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without consideration of transaction costs.

For pension plan assets classified as Level 2 measurements, where the security is frequently traded in less active markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability. Market inputs are obtained from well-established and recognized vendors of market data and subjected to tolerance and quality checks. For derivative assets and liabilities, standard industry models are used to calculate the fair value of the various financial instruments based on significant observable market inputs, such as foreign exchange rates, commodity prices, swap rates, interest rates and implied volatilities obtained from various market sources. For other pension plan assets for which observable inputs are used, fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models.

For pension plan assets classified as Level 3 measurements, total fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity for the investment.

Certain pension plan assets are held in funds where fair value is based on an estimated net asset value per share (or its equivalent) as of the most recently available fund financial statements which are received on a monthly or quarterly basis. These valuations are reviewed for reasonableness based on applicable sector, benchmark and company performance. Adjustments to valuations are made where appropriate to arrive at an estimated net asset value per share at the measurement date. These funds are not classified within the fair value hierarchy.
The following table summarizes the bases used to measure the Company’s pension plan assets at fair value for the years ended December 31, 2023 and 2022:

Basis of Fair Value MeasurementsDec 31, 2023Dec 31, 2022
In millionsTotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Cash and cash equivalents$1,050 $987 $63 $— $1,240 $989 $251 $— 
Equity securities:
U.S. equity securities$1,443 $1,431 $11 $1 $1,855 $1,845 $7 $3 
Non - U.S. equity securities1,720 1,584 132 4 2,120 1,924 193 3 
Total equity securities$3,163 $3,015 $143 $5 $3,975 $3,769 $200 $6 
Fixed income securities:
Debt - government-issued$4,665 $47 $4,618 $— $3,885 $57 $3,827 $1 
Debt - corporate-issued4,277 584 3,692 1 4,231 441 3,790 — 
Debt - asset-backed43 — 43 — 128 44 84 — 
Total fixed income securities$8,985 $631 $8,353 $1 $8,244 $542 $7,701 $1 
Alternative investments:
Private markets$1 $— $— $1 $5 $— $— $5 
Real estate21 21 — — 48 48 — — 
Derivatives - asset position190 1 189 — 348 5 343 — 
Derivatives - liability position(223)— (223)— (479)(6)(473)— 
Total alternative investments$(11)$22 $(34)$1 $(78)$47 $(130)$5 
Other investments$609 $3 $606 $— $1,103 $16 $1,087 $— 
Subtotal$13,796 $4,658 $9,131 $7 $14,484 $5,363 $9,109 $12 
Investments measured at net asset value:
Hedge funds$820 $964 
Private markets3,350 3,873 
Real estate1,741 1,956 
Total investments measured at net asset value$5,911 $6,793 
Items to reconcile to fair value of plan assets:
Pension trust receivables 1
$42    $31    
Pension trust payables 2
(115)   (77)   
Total$19,634    $21,231    
1.Primarily receivables for investment securities sold.
2.Primarily payables for investment securities purchased.
The following table summarizes the changes in the fair value of Level 3 pension plan assets for the years ended December 31, 2023 and 2022:

Fair Value Measurement of Level 3 Pension Plan AssetsEquity SecuritiesFixed Income SecuritiesAlternative InvestmentsOther InvestmentsTotal
In millions
Balance at Jan 1, 2022$6 $1 $5 $— $12 
Actual return on assets:
Relating to assets held at Dec 31, 2022(6)— (6)— (12)
Purchases, sales and settlements, net— — 6 — 6 
Transfers into Level 3, net6 — — — 6 
Balance at Dec 31, 2022$6 $1 $5 $— $12 
Actual return on assets:
Relating to assets held at Dec 31, 20231 — (4)— (3)
Purchases, sales and settlements, net(2)— — — (2)
Balance at Dec 31, 2023$5 $1 $1 $— $7 

Defined Contribution Plans
U.S. employees may participate in defined contribution plans by contributing a portion of their compensation, which is partially matched by the Company. Defined contribution plans also cover employees in some subsidiaries in other countries, including Brazil, The Netherlands, Canada, Korea, Spain and the United Kingdom. Expense recognized for all defined contribution plans was $214 million in 2023, $150 million in 2022 and $165 million in 2021.
On March 4, 2021, the Company announced changes to its U.S. tax-qualified and non-qualified defined contribution plans. Effective January 1, 2022, contributions to U.S. tax-qualified and non-qualified defined contribution plans were harmonized across the Company's U.S. eligible employee population. The matching contribution allows all eligible U.S. employees to receive matching contributions of up to 5 percent of their eligible compensation. In addition, beginning on January 1, 2024, all eligible U.S. employees will receive an automatic non-elective contribution of 4 percent of eligible compensation to their respective defined contribution plans.