PENSION AND OTHER POSTRETIREMENT BENEFITS

9 Months Ended

Jul. 31, 2022

PENSION AND OTHER POSTRETIREMENT BENEFITS

PENSION AND OTHER POSTRETIREMENT BENEFITS

(6)  Pension and Other Postretirement Benefits

The Company has several defined benefit pension plans and postretirement benefit (OPEB) plans, primarily health care and life insurance plans, covering its U.S. employees and employees in certain foreign countries.

The components of net periodic pension cost consisted of the following in millions of dollars:

	Three Months Ended				Nine Months Ended
	July 31		August 1		July 31		August 1
	2022		2021		2022		2021
Service cost	$	86	$	83	$	265	$	251
Interest cost		85		69		242		207
Expected return on plan assets		(182)		(199)		(544)		(599)
Amortization of actuarial loss		31		64		107		192
Amortization of prior service cost		9		2		25		8
Settlements/curtailment		36		4		44		22
Net cost	$	65	$	23	$	139	$	81

The components of net periodic OPEB cost consisted of the following in millions of dollars:

	Three Months Ended				Nine Months Ended
	July 31		August 1		July 31		August 1
	2022		2021		2022		2021
Service cost	$	11	$	12	$	34	$	36
Interest cost		25		25		74		76
Expected return on plan assets		(28)		(19)		(83)		(58)
Amortization of actuarial (gain) loss		(4)		7		(13)		21
Amortization of prior service credit		(1)		(1)		(3)		(3)
Net cost	$	3	$	24	$	9	$	72

The components of net periodic pension and OPEB costs excluding the service cost component are included in the line item Other operating expenses in the statements of consolidated income.

On November 17, 2021, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. In the first quarter of 2022, the Company remeasured the U.S. hourly pension plan due to the new collective bargaining agreement, which decreased the plan’s funded status by approximately $495 million and will increase pension expense in 2022 by nearly $80 million with $35 million negatively impacting operating profit in 2022.

During the third quarter of 2022, the Company remeasured the U.S. hourly pension plan when 10 percent of active, eligible employees elected to freeze their defined benefit pension plan benefit for an enhanced defined contribution benefit. The remeasurement resulted in a $34 million curtailment loss, while the impact to the plan’s funded status was not material.

During the first nine months of 2022, the Company contributed $67 million to its pension plans and $1,109 million to its OPEB plans. The OPEB contributions include a voluntary contribution of $1,000 million to a U.S. plan on November 30, 2021. The Company presently anticipates contributing an additional $16 million to its pension plans and $28 million to its OPEB plans during the remainder of 2022. The remaining pension and OPEB contributions are primarily direct benefit payments from Company funds.