XML 56 R25.htm IDEA: XBRL DOCUMENT

Retirement Plans

12 Months Ended

Dec. 31, 2019

Our company and subsidiaries have various plans that cover a significant number of our employees. These plans include defined contribution plans, defined benefit plans and other postretirement plans:

our defined contribution plans provide retirement benefits in return for services rendered. These plans provide an individual account for each participant and have terms that specify how contributions to the participant’s account are to be determined rather than the amount of pension benefits the participant is to receive. Contributions to these plans are based on a percentage of pre-tax income, after-tax income, or discretionary amounts determined on an annual basis. Our expense for the defined contribution plans for continuing operations totaled $206 million in 2019, $193 million in 2018 and $173 million in 2017.


-	our defined benefit plans, which include both funded and unfunded pension plans, define an amount of pension benefit to be provided, usually as a function of age, years of service and/or compensation. The unfunded obligations and net periodic benefit cost of our United States defined benefit plans were not material for the periods presented; and


-	our postretirement plans other than pensions are offered to specific eligible employees. The accumulated benefit obligations and net periodic benefit cost for these plans were not material for the periods presented.

Funded status

For our international pension plans, at December 31, 2019, the projected benefit obligation was $1.1 billion and the fair value of plan assets was $1.0 billion, which resulted in an unfunded obligation of $111 million. At December 31, 2018, the projected benefit obligation was $951 million and the fair value of plan assets was $832 million, which resulted in an unfunded obligation of $119 million. The accumulated benefit obligation for our international plans was $1.0 billion at December 31, 2019 and $878 million at December 31, 2018.

The following table presents additional information about our international pension plans.



	December 31
Millions of dollars	2019		2018
Amounts recognized on the Consolidated Balance Sheets
Other Assets	$	85	$	39
Accrued employee compensation and benefits	7		8
Employee compensation and benefits	189		150
Pension plans in which projected benefit obligation exceeded plan assets
Projected benefit obligation	$	214	$	176
Fair value of plan assets	18		18
Pension plans in which accumulated benefit obligation exceeded plan assets
Accumulated benefit obligation	$	121	$	105
Fair value of plan assets	18		18

Fair value measurements of plan assets

The fair value of our plan assets categorized within level 1 on the fair value hierarchy is based on quoted prices in active markets for identical assets. The fair value of our plan assets categorized within level 2 on the fair value hierarchy is based on significant observable inputs for similar assets. The fair value of our plan assets categorized within level 3 on the fair value hierarchy is based on significant unobservable inputs.

The following table sets forth the fair values of assets held by our international pension plans by level within the fair value hierarchy.



Millions of dollars	Level 1		Level 2		Level 3		Net Asset Value (a)		Total
Cash and equivalents	$	—	$	151	$	—	$	—	$	151
Equity funds (b)	—		118		—		—		118
Bond funds (c)	—		292		—		99		391
Alternatives funds (d)	—		—		—		197		197
Real estate funds (e)	—		74		—		29		103
Other investments (f)	6		21		15		—		42
Fair value of plan assets at December 31, 2019	$	6	$	656	$	15	$	325	$	1,002
Cash and equivalents	$	—	$	12	$	—	$	—	$	12
Equity funds (b)	—		137		—		—		137
Bond funds (c)	—		267		21		36		324
Alternatives funds (d)	—		—		—		209		209
Real estate funds (e)	—		80		—		28		108
Other investments (f)	6		21		15		—		42
Fair value of plan assets at December 31, 2018	$	6	$	517	$	36	$	273	$	832

(a) Represents investments measured at fair value using the Net Asset Value (NAV) per share practical expedient and thus has not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of our international pension plans assets.

(b) Strategy of equity funds is to invest in diversified funds of global common stocks.

(c) Strategy of bond funds is to invest in diversified funds of fixed income securities of varying geographies and credit quality.

(d) Strategy of alternative funds is to invest in a fund of diversifying investments, including but not limited to reinsurance, commodities and currencies.

(e) Strategy of real estate funds is to invest in diversified funds of real estate investment trusts and private real estate.

(f) Other investments primarily includes investments in insurance contracts.

Risk management practices for these plans include diversification by issuer, industry and geography, as well as the use of multiple asset classes and investment managers within each asset class. Our investment strategy for our United Kingdom pension plan, which constituted 79% of our international pension plans’ projected benefit obligation at December 31, 2019 and is no longer accruing service benefits, aims to achieve full funding of the benefit obligation, with the plan's assets increasingly composed of investments whose cash flows match the projected liabilities of the plan.

Net periodic benefit cost

Net periodic benefit cost for our international pension plans was $23 million in 2019, $32 million in 2018 and $30 million in 2017.

Actuarial assumptions

Certain weighted-average actuarial assumptions used to determine benefit obligations of our international pension plans at December 31 were as follows:



	2019	2018
Discount rate	2.5%	3.3%
Rate of compensation increase	6.0%	5.8%

Certain weighted-average actuarial assumptions used to determine net periodic benefit cost of our international pension plans for the years ended December 31 were as follows:



	2019	2018	2017
Discount rate	3.3%	2.8%	2.9%
Expected long-term return on plan assets	4.4%	4.1%	4.2%
Rate of compensation increase	5.8%	5.5%	4.8%

Assumed long-term rates of return on plan assets, discount rates for estimating benefit obligations and rates of compensation increases vary by plan according to local economic conditions. Where possible, discount rates were determined based on the prevailing market rates of a portfolio of high-quality debt instruments with maturities matching the expected timing of the payment of the benefit obligations. Expected long-term rates of return on plan assets were determined based upon an evaluation of our plan assets and historical trends and experience, taking into account current and expected market conditions.

Other information

Contributions. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In certain countries the funding requirements are mandatory, while in other countries they are discretionary. We currently expect to contribute $17 million to our international pension plans in 2020.

Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $42 million in 2020, $43 million in 2021, $47 million in 2022, $49 million in 2023, $53 million in 2024 and an aggregate $320 million in years 2025 through 2029.