Pension and Postretirement Plans

12 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Pension and Postretirement Plans

RETIREMENT PLANS

Retirement plans expense includes the following components:

	U.S. Plans				Non-U.S. Plans
	2020		2021	2022	2020	2021	2022
Defined benefit plans:
Service cost (benefits earned during the period)	$	57	54	49	30	29	25
Interest cost	125		94	99	30	32	33
Expected return on plan assets	(268)		(264)	(253)	(72)	(74)	(56)
Net amortization and other	148		143	102	17	14	3
Net periodic pension expense	62		27	(3)	5	1	5
Defined contribution plans	112		114	124	56	52	52
Total retirement plans expense	$	174	141	121	61	53	57

Net periodic pension expense decreased in 2022 primarily due to lower amortization of deferred losses. For defined contribution plans, the Company makes cash contributions based on plan requirements, which are expensed as incurred.

The Company's principal U.S. defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing benefits effective October 1, 2016.

Details of the changes in the actuarial present value of the projected benefit obligation and the fair value of plan assets for defined benefit pension plans follow:

	U.S. Plans			Non-U.S. Plans
	2021		2022	2021	2022
Projected benefit obligation, beginning	$	4,525	4,338	1,633	1,562
Service cost	54		49	29	25
Interest cost	94		99	32	33
Actuarial gain	(13)		(1,170)	(101)	(404)
Benefits paid	(218)		(204)	(39)	(40)
Settlements	(105)		—	(35)	(29)
Foreign currency translation and other	1		—	43	(182)
Projected benefit obligation, ending	$	4,338	3,112	1,562	965
Fair value of plan assets, beginning	$	4,383	4,844	1,367	1,474
Actual return on plan assets	771		(1,030)	100	(337)
Employer contributions	12		15	29	28
Benefits paid	(218)		(204)	(39)	(40)
Settlements	(105)		—	(35)	(29)
Foreign currency translation and other	1		—	52	(188)
Fair value of plan assets, ending	$	4,844	3,625	1,474	908
Net amount recognized in the balance sheet	$	506	513	(88)	(57)
Location of net amount recognized in the balance sheet:
Noncurrent asset	$	732	676	283	205
Current liability	(13)		(14)	(16)	(17)
Noncurrent liability	(213)		(149)	(355)	(245)
Net amount recognized in the balance sheet	$	506	513	(88)	(57)
Pretax accumulated other comprehensive loss	$	(274)	(284)	(182)	(136)

Actuarial gains in 2022 were largely due to an increase in the discount rates used to estimate the benefit obligations for the U.S. and non-U.S. plans, which were 5.64% and 4.9% at September 30, 2022 compared to 2.92% and 2.2% at September 30, 2021, respectively. Actuarial gains in 2021 were largely due to an increase in the discount rates used to estimate the benefit obligations for the U.S. and non-U.S. plans, which was 2.92% and 2.2% at September 30, 2021 compared to 2.81% and 1.9% at September 30, 2020, respectively. As of September 30, 2022, U.S. pension plans were overfunded by $513 in total, including unfunded plans totaling $162. The non-U.S. plans were underfunded by $57, including unfunded plans totaling $236.

As of the September 30, 2022 and 2021 measurement dates, the plans' total accumulated benefit obligation was $3,910 and $5,634, respectively. The total projected benefit obligation, accumulated benefit obligation and fair value of plan assets for individual plans with projected benefit obligations in excess of plan assets were $527, $444 and $102, respectively, for 2022, and $1,142, $1,016 and $544, respectively, for 2021. The total projected benefit obligation, accumulated benefit obligation and fair value of plan assets for individual plans with accumulated benefit obligations in excess of plan assets were $477, $421 and $63, respectively, for 2022, and $711, $626 and $123, respectively, for 2021.

Future benefit payments by U.S. plans are estimated to be $215 in 2023, $220 in 2024, $225 in 2025, $229 in 2026, $232 in 2027 and $1,174 in total over the five years 2028 through 2032. Based on foreign currency exchange rates as of September 30, 2022, future benefit payments by non-U.S. plans are estimated to be $60 in 2023, $58 in 2024, $59 in 2025, $62 in 2026, $65 in 2027 and $366 in total over the five years 2028 through 2032. The Company expects to contribute approximately $40 to its retirement plans in 2023.

The weighted-average assumptions used in the valuation of pension benefits follow:

	U.S. Plans						Non-U.S. Plans
	2020		2021		2022		2020		2021		2022
Net pension expense
Discount rate used to determine service cost	3.40	%	3.16	%	3.16	%	1.9	%	1.9	%	2.2	%
Discount rate used to determine interest cost	2.87	%	2.10	%	2.31	%	1.9	%	1.9	%	2.2	%
Expected return on plan assets	6.75	%	6.50	%	6.00	%	5.8	%	5.6	%	4.4	%
Rate of compensation increase	3.25	%	3.25	%	4.00	%	3.7	%	3.6	%	3.7	%
Benefit obligations
Discount rate	2.81	%	2.92	%	5.64	%	1.9	%	2.2	%	4.9	%
Rate of compensation increase	3.25	%	3.25	%	4.00	%	3.6	%	3.7	%	4.0	%

The discount rate for the U.S. retirement plans was 5.64 percent as of September 30, 2022. An actuarially developed, company-specific yield curve is used to determine the discount rate. To determine the service and interest cost components of pension expense for its U.S. retirement plans, the Company applies the specific spot rates along the yield curve, rather than the single weighted-average rate, to the projected cash flows to provide more precise measurement of these costs. The expected return on plan assets assumption is determined by reviewing the investment returns of the plans for the past 10 years plus longer-term historical returns of an asset mix approximating the Company's asset allocation targets, and periodically comparing these returns to expectations of investment advisors and actuaries to determine whether long-term future returns are expected to differ significantly from the past.

The Company's asset allocations at September 30, 2022 and 2021, and weighted-average target allocations follow:

	U.S. Plans					Non-U.S. Plans
	2021		2022		Target	2021		2022		Target
Equity securities	39	%	39	%	35-45%	35	%	11	%	10-20%
Debt securities	55		54		50-60	55		73		70-80
Other	6		7		0-10	10		16		10-20
Total	100	%	100	%	100%	100	%	100	%	100%

The primary objective for the investment of pension assets is to secure participant retirement benefits by earning a reasonable rate of return. Plan assets are invested consistent with the provisions of the prudence and diversification rules of ERISA and with a long-term investment horizon. The Company continuously monitors the value of assets by class and routinely rebalances to remain within target allocations. The equity strategy is to minimize concentrations of risk by investing primarily in a mix of companies that are diversified across geographies, market capitalization, style, sectors and industries worldwide. The approach for bonds emphasizes investment-grade corporate and government debt with maturities matching a portion of the longer duration pension liabilities. The bonds strategy also includes a high-yield element which is generally shorter in duration. For diversification, a small portion of U.S. plan assets is allocated to private equity partnerships and real asset fund investments, providing opportunities for above market returns. Leveraging techniques are not used and the use of derivatives in any fund is limited and inconsequential.

The fair values of defined benefit pension assets as of September 30, organized by asset class and by the fair value hierarchy of ASC 820, Fair Value Measurement, follow. Investments valued based on the net asset value (NAV) of fund units held, as derived from the fair value of the underlying assets, are excluded from the fair value hierarchy.

	Level 1		Level 2	Level 3	Measured at NAV	Total	%
2022
U.S. equities	$	405	6	—	633	1,044	23	%
International equities	225		10	—	123	358	8	%
Emerging market equities	—		1	—	124	125	3	%
Corporate bonds	—		1,143	—	859	2,002	44	%
Government bonds	—		468	—	152	620	14	%
Other	(9)		7	130	256	384	8	%
Total	$	621	1,635	130	2,147	4,533	100	%
2021
U.S. equities	$	591	9	—	670	1,270	20	%
International equities	356		17	—	563	936	15	%
Emerging market equities	—		1	—	212	213	3	%
Corporate bonds	—		1,516	—	565	2,081	33	%
Government bonds	—		642	—	730	1,372	22	%
Other	46		8	135	257	446	7	%
Total	$	993	2,193	135	2,997	6,318	100	%

Asset Classes

U.S. equities reflect companies domiciled in the U.S., including multinational companies. International equities are comprised of companies domiciled in developed nations outside the U.S. Emerging market equities are comprised of companies domiciled in portions of Asia, Eastern Europe and Latin America. Corporate bonds represent investment-grade debt of issuers primarily from the U.S. Government bonds include investment-grade instruments issued by federal, state and local governments, primarily in the U.S. Other includes cash, interests in mixed asset funds investing in commodities, natural resources, agriculture, real estate and infrastructure funds, life insurance contracts (U.S.), and shares in certain general investment funds of financial institutions or insurance arrangements (non-U.S.) that typically ensure no market losses or provide for a small minimum return guarantee.

Fair Value Hierarchy Categories

Valuations of Level 1 assets for all classes are based on quoted closing market prices from the principal exchanges where the individual securities are traded. Cash is valued at cost, which approximates fair value. Debt securities categorized as Level 2 assets are generally valued based on independent broker/dealer bids or by comparison to other debt securities having similar durations, yields and credit ratings. Valuation techniques and inputs for these assets include discounted cash flow analysis, earnings multiple approaches, recent transactions, transfer restrictions, prevailing discount rates, volatilities, credit ratings and other factors. In the Other class, interests in mixed asset funds are Level 2, and U.S. life insurance contracts and non-U.S. general fund investments and insurance arrangements are Level 3. Investments measured at NAV are primarily nonexchange-traded commingled or collective funds where the underlying securities have observable prices available from active markets and typically provide liquidity daily or within a few days. The NAV category also includes fund investments in private equities, real estate and infrastructure where the fair value of the underlying assets is determined by the investment manager. Total unfunded commitments for the private equity funds were approximately $190 at September 30, 2022. These investments cannot be redeemed, but instead the funds will make distributions through liquidation of the underlying assets, which is expected to occur over approximately the next 10 years. The real estate and infrastructure funds typically offer quarterly redemption.

Postretirement Plans

The Company also sponsors unfunded postretirement benefit plans (primarily health care) for certain U.S. retirees and their dependents. The Company’s principal U.S. postretirement plan has been frozen to new employees since 1993. The postretirement benefit liability for all plans was $83 and $119 as of September 30, 2022 and 2021, respectively, and included deferred actuarial gains in accumulated other comprehensive income of $112 and $98, respectively. Service and interest costs are negligible and more than offset by the amortization of deferred actuarial gains, which resulted in net postretirement income of $12 for 2022 and $15 for 2021 and $12 for 2020. Benefits paid

were $10 and $9 for 2022 and 2021, respectively, and the Company estimates that future health care benefit payments will be approximately $10 per year for 2023 through 2027, and $33 in total over the five years 2028 through 2032.