PENSION AND OTHER POSTRETIREMENT BENEFITS

12 Months Ended

Nov. 02, 2025

PENSION AND OTHER POSTRETIREMENT BENEFITS

PENSION AND OTHER POSTRETIREMENT BENEFITS

7. PENSION AND OTHER POSTRETIREMENT BENEFITS

We have several funded and unfunded defined benefit pension plans and other postretirement benefit (OPEB) plans. These plans cover U.S. employees and certain foreign employees. The measurement date of our plans is October 31. The U.S. salaried qualified pension plan and U.S. salaried and hourly OPEB health care plans are closed to new participants.

The components of net periodic pension and OPEB (benefit) cost excluding the service cost component are included in the line item “Other operating expenses.”

The components of net periodic pension benefit and the related assumptions consisted of the following:

	2025		2024		2023
Pensions:
Service cost	$	252	$	230	$	246
Interest cost		517		545		533
Expected return on plan assets		(1,005)		(967)		(878)
Amortization of actuarial (gain) loss		5		3		(13)
Amortization of prior service cost		39		40		38
Settlements/curtailments		25		38		37
Net benefit	$	(167)	$	(111)	$	(37)
Weighted-average assumptions:
Discount rates – service cost		4.9%		5.8%		5.2%
Discount rates – interest cost		4.9%		5.7%		5.1%
Rate of compensation increase		4.3%		3.8%		3.8%
Expected long-term rates of return		7.2%		7.0%		6.3%
Interest crediting rate – U.S. cash balance plans		4.2%		4.8%		4.3%

During 2025 and 2024, curtailment expense of $18 and $35, respectively, was recognized related to U.S. hourly employee layoffs. During 2023, a settlement expense of $36 was recognized for the acceleration of actuarial losses related to the transfer of the Canadian pension plan’s defined benefit obligations and related plan assets to an insurance company.

The 2026 net periodic pension benefit is expected to increase by $60 due to changes in discount rates, decreases in amortization of actuarial losses, and the U.S. hourly pension curtailment recognized in 2025, described above.

The components of net periodic OPEB cost and the assumptions related to the cost consisted of the following:

	2025		2024		2023
OPEB:
Service cost	$	17	$	17	$	27
Interest cost		158		174		176
Expected return on plan assets		(113)		(108)		(117)
Amortization of actuarial gain		(44)		(54)		(59)
Amortization of prior service credit		(4)		(4)		(3)
Net cost	$	14	$	25	$	24
Weighted-average assumptions:
Discount rates – service cost		5.7%		6.7%		6.1%
Discount rates – interest cost		5.0%		5.9%		5.4%
Expected long-term rates of return		5.3%		5.6%		5.7%

The OPEB net periodic cost is expected to decrease by $50 due to an increase in the expected return related to the 2025 U.S. voluntary contribution.

The benefit plan obligations, funded status, and the assumptions related to the obligations at November 2, 2025, and October 27, 2024, follow:

	Pensions				OPEB
	2025		2024		2025		2024
Change in benefit obligations:
Beginning of year balance	$	(11,077)	$	(9,928)	$	(3,362)	$	(3,029)
Service cost		(252)		(230)		(17)		(17)
Interest cost		(517)		(545)		(158)		(174)
Actuarial gain (loss)		197		(1,097)		(25)		(385)
Benefits paid		752		746		280		263
Health care subsidies						(24)		(22)
Foreign exchange and other		(99)		(23)		(2)		2
End of year balance		(10,996)		(11,077)		(3,308)		(3,362)
Change in plan assets (fair value):
Beginning of year balance		13,080		12,004		2,171		2,028
Plan assets actual gain (loss)		849		1,703		203		259
Employer contribution		107		96		671		145
Benefits paid		(752)		(746)		(280)		(263)
Foreign exchange and other		74		23		2		2
End of year balance		13,358		13,080		2,767		2,171
Funded status	$	2,362	$	2,003	$	(541)	$	(1,191)
Weighted-average assumptions:
Discount rates		5.2%		5.1%		5.1%		5.2%
Rate of compensation increase		3.9%		4.3%
Interest crediting rate – U.S. cash balance plans		4.2%		4.1%

The actuarial gain for pension for 2025 was due to increases in discount rates. The actuarial losses for pension and OPEB for 2024 were due to decreases in discount rates. The actuarial loss for OPEB for 2024 was also impacted by changes to health care assumptions.

The discount rate assumptions used to determine the pension and OPEB obligations for all periods presented were based on hypothetical AA yield curves represented by a series of annualized individual discount rates. These discount rates represent the rates at which our benefit obligations could effectively be settled at the October 31 measurement dates.

The mortality assumptions for the 2025 and 2024 U.S. benefit plan obligations used the tables based on the plan’s mortality experience and the most recent scales issued by the Society of Actuaries. The 2025 and 2024 mortality assumptions included an adjustment to the scale related to COVID for some plans.

The weighted-average annual rates of increase in the per capita cost of covered health care benefits (the health care cost trend rates) for medical and prescription drug claims for pre- and post-65 age groups used to determine the November 2, 2025, and

October 27, 2024, accumulated postretirement benefit obligations were as follows:

	2025	2024
Initial year	18.1% (2025 to 2026)	16.9% (2024 to 2025)
Second year	9.9% (2026 to 2027)	11.5% (2025 to 2026)
Ultimate	4.7% (2034 to 2035)	4.7% (2033 to 2034)

An increase in Medicare Advantage premiums impacted the weighted-average annual rates of increase for the initial year in 2025 and 2024.

Information related to pension plans benefit obligations at November 2, 2025, and October 27, 2024, follows:

	2025		2024
Total accumulated benefit obligations for all plans	$	10,424	$	10,441
Plans with accumulated benefit obligation exceeding fair value of plan assets:
Accumulated benefit obligations		1,405		1,405
Fair value of plan assets		983		920
Plans with projected benefit obligation exceeding fair value of plan assets:
Projected benefit obligations		1,542		1,541
Fair value of plan assets		1,021		951

The pension and OPEB amounts recognized in the balance sheet at November 2, 2025, and October 27, 2024, consisted of the following:

	Pensions				OPEB
	2025		2024		2025		2024
Noncurrent asset	$	2,883	$	2,593	$	390	$	328
Less: Current liability		56		66		41		39
Less: Noncurrent liability		465		524		890		1,480
Total	$	2,362	$	2,003	$	(541)	$	(1,191)

The retirement benefits and other liabilities recognized in the balance sheet at November 2, 2025, and October 27, 2024, consisted of the following:

	2025		2024
Deferred compensation – current	$	23	$	28
Deferred compensation and other – noncurrent		235		217
Pensions and OPEB – current		97		105
Pensions and OPEB – noncurrent		1,355		2,004
Total	$	1,710	$	2,354

The amounts recognized in accumulated other comprehensive income ‒ pretax at November 2, 2025, and October 27, 2024, consisted of the following:

	Pensions				OPEB
	2025		2024		2025		2024
Net actuarial (gain) loss	$	1,953	$	2,011	$	(653)	$	(632)
Prior service cost		272		329		8		2
Total	$	2,225	$	2,340	$	(645)	$	(630)

Actuarial gains and losses are recorded in accumulated other comprehensive income (loss). To the extent unamortized gains and losses exceed 10% of the higher of the market-related value of assets or the benefit obligation, the excess is amortized as a component of net periodic (benefit) cost over the remaining service period of the active participants. For plans in which all or almost all of the plan’s participants are inactive, the amortization period is the remaining life expectancy of the inactive participants.

Contributions

We make any required contributions to the plan assets under applicable regulations and voluntary contributions after evaluating our liquidity position and ability to make tax-deductible contributions. Total contributions to the plans were $778 in 2025 and $241 in 2024, which included both required and voluntary contributions and direct benefit payments. The 2025 contributions include a $520 voluntary contribution to a U.S. OPEB plan. This contribution increased plan assets.

We expect to contribute approximately $100 to our pension plans and approximately $150 to our OPEB plans in 2026. The contributions include voluntary contributions and direct benefit payments from company funds. We have no required contributions to U.S. pension plan assets in 2026 under applicable funding regulations.

Expected Future Benefit Payments

The expected future benefit payments at November 2, 2025, were as follows:

	​ ​Pensions		​ ​ ​ ​ ​OPEB*
2026	$	750	$	256
2027		727		262
2028		725		267
2029		724		269
2030		718		275
2031 to 2035		3,585		1,321

*    Net of prescription drug group benefit subsidy under Medicare Part D.

Plan Asset Information

The fair values of the pension plan assets at November 2, 2025, follow:

	Total		Level 1		Level 2
Cash and short-term investments	$	275	$	272	$	3
Equity:
U.S. equity securities		479		468		11
International equity securities and funds		249		241		8
Fixed Income:
Government and agency securities		1,279		860		419
Corporate debt securities		5,543				5,543
Mortgage-backed securities		254				254
Other investments		55		31		24
Derivative contracts – assets		95		57		38
Derivative interest rate contracts – liabilities		(75)		(3)		(72)
Receivables and payables		(264)		(264)
Securities lending collateral		507				507
Securities lending liability		(507)				(507)
Securities sold short		(107)		(105)		(2)
Total of Level 1 and Level 2 assets		7,783	$	1,557	$	6,226
Investments at net asset value:
Short-term investments		503
U.S. equity funds		211
International equity funds		259
Fixed income funds		1,593
Real estate funds		316
Hedge funds		481
Private equity		1,037
Venture capital		1,121
Other investments		54
Total net assets	$	13,358

The fair values of the OPEB health care assets at November 2, 2025, follow:

	Total		Level 1		Level 2
Cash and short-term investments	$	104	$	104
Equity securities		73		67	$	6
Fixed Income:
Government and agency securities		673		621		52
Corporate debt securities		658				658
Mortgage-backed securities		110				110
Other		(28)		(30)		2
Securities lending collateral		105				105
Securities lending liability		(105)				(105)
Total of Level 1 and Level 2 assets		1,590	$	762	$	828
Investments at net asset value:
U.S. equity funds		115
International equity funds		75
Fixed income funds		436
Real estate funds		106
Hedge funds		104
Private equity		153
Venture capital		165
Other investments		23
Total net assets	$	2,767

The fair values of the pension plan assets at October 27, 2024, follow:

	Total		Level 1		Level 2
Cash and short-term investments	$	411	$	399	$	12
Equity:
U.S. equity securities		451		440		11
International equity securities and funds		238		232		6
Fixed Income:
Government and agency securities		1,250		932		318
Corporate debt securities		4,956				4,956
Mortgage-backed securities		177				177
Other investments		57		36		21
Derivative contracts – assets		130		7		123
Derivative interest rate contracts – liabilities		(161)		(119)		(42)
Receivables, prepaids, and payables		(171)		(171)
Securities lending collateral		662				662
Securities lending liability		(662)				(662)
Securities sold short		(94)		(92)		(2)
Total of Level 1 and Level 2 assets		7,244	$	1,664	$	5,580
Investments at net asset value:
Short-term investments		492
U.S. equity funds		174
International equity funds		194
Fixed income funds		1,649
Real estate funds		385
Hedge funds		457
Private equity		1,219
Venture capital		1,219
Other investments		47
Total net assets	$	13,080

The fair values of the OPEB health care assets at October 27, 2024, follow:

	Total		Level 1		Level 2
Cash and short-term investments	$	77	$	77
Fixed Income:
Government and agency securities		606		561	$	45
Corporate debt securities		551				551
Mortgage-backed securities		92				92
Other		11		7		4
Securities lending collateral		167				167
Securities lending liability		(167)				(167)
Total of Level 1 and Level 2 assets		1,337	$	645	$	692
Investments at net asset value:
U.S. equity funds		163
International equity funds		84
Fixed income funds		348
Real estate funds		77
Hedge funds		71
Private equity		41
Venture capital		41
Other investments		9
Total net assets	$	2,171

Investments at net asset value in the preceding tables are measured at fair value using the net asset value per share practical expedient and are not classified in the fair value hierarchy. Fair value measurement levels in the preceding tables are defined in Note 25.

Fair values are determined as follows:

Cash and Short-Term Investments – The investments include (1) cash accounts that are valued based on the account value, which approximates fair value; (2) investments that are valued at quoted prices in the active markets in which the investment trades or using a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data; and (3) investment funds that are valued based on a constant fund net asset value, which is based on quoted prices in the active market in which the investment fund trades, or the fund’s net asset value using the net asset value per share practical expedient (NAV), which is based on the fair value of the underlying securities.

Equity Securities and Funds – The Level 1 investments are determined using quoted prices in the active market in which the equity investment trades. Equity funds are valued using the fund’s NAV, which is based on the fair value of the underlying securities.

Fixed Income Securities and Funds and Other Funds – The securities are valued using either a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds, or they are valued using the quoted prices in the active market in which the fixed income investment trades. Fixed income and other funds are valued using the fund’s NAV, which is based on the fair value of the underlying securities.

Real Estate, Venture Capital, Private Equity, and Hedge Funds – The investments that are structured as limited partnerships are valued at estimated fair value based on their proportionate share of the limited partnership’s fair value that is determined by the respective general partner. These investments are valued using the fund’s NAV, which is based on the fair value of the underlying investments. Valuations may be lagged up to six months. The NAV is adjusted for cash flows (additional investments or contributions, and distributions) and any known substantive valuation changes through year end.

Derivative Instruments – The derivatives are valued using either an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates, or a market approach (quoted prices in the active market in which the derivative instrument trades).

The investment objective for the pension and health care plan assets is to fulfill the projected obligations to the beneficiaries over a long period of time, while meeting our fiduciary responsibilities. The asset allocation policy is the most important decision in managing the assets, and it is reviewed regularly. The asset allocation policy considers our long-term asset class risk/return expectations for each plan since the obligations are long-term in

nature. The target asset allocations as of November 2, 2025, are as follows:

	Pension	Health Care
	Assets	Assets
Equity	8%	10%
Debt	66%	70%
Real estate	3%	3%
Other investments	23%	17%

The assets are diversified and are managed by professional investment firms as well as by investment professionals who are company employees. As a result of our diversified investment policy, there were no significant concentrations of risk.

A market related value of plan assets is used to calculate the expected return on assets. The market related value recognizes changes in the fair value of pension plan assets systematically over a five-year period. The market related value of the health care plan assets equals fair value.

The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligations. The expected return is based on the outlook for inflation and for returns in multiple asset classes, while also considering historical returns, asset allocation, and investment strategy. Our approach has emphasized the long-term nature of the return estimate such that the return assumption is not changed significantly unless there are fundamental changes in capital markets that affect our expectations for returns over an extended period of time (i.e., 10 to 20 years). The average annual return of our U.S. pension fund was approximately 7.4% during the past 10 years and approximately 7.7% during the past 20 years.

We have Voluntary Employees’ Beneficiary Association trusts (VEBAs) for the funding of hourly and salary postretirement health care benefits. The future expected asset returns for the VEBAs are lower than the expected return on the other pension and health care plan assets due to investment in a higher proportion of liquid securities. These assets are in addition to the other postretirement health care plan assets that have been funded under Section 401(h) of the U.S. Internal Revenue Code and maintained in a separate account in the John Deere Pension Trust.

Defined Contribution Plans

We maintain separate defined contribution plans, primarily in the U.S. Under the plans, we contribute a percentage of each eligible employee’s compensation. Our contributions and costs under these plans were $333 in 2025, $326 in 2024, and $288 in 2023.