XML 46 R22.htm IDEA: XBRL DOCUMENT v3.20.4
Retirement Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Retirement Plans Retirement Plans
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 totaled $100 million in 2020, $206 million in 2019, and $193 million in 2018. The decrease in expense from 2019 to 2020 was due to significant headcount reductions during the year ended December 31, 2020, coupled with the suspension of discretionary contributions in 2020.
-    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, 2020, the projected benefit obligation was $1.2 billion and the fair value of plan assets was $1.1 billion, which resulted in an unfunded obligation of $152 million. 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. The accumulated benefit obligation for our international plans was $1.1 billion at December 31, 2020 and $1.0 billion at December 31, 2019.

The following table presents additional information about our international pension plans.
December 31
Millions of dollars20202019
Amounts recognized on the Consolidated Balance Sheets
Other Assets$45 $85 
Accrued employee compensation and benefits8 7 
Employee compensation and benefits189 189 
Pension plans in which projected benefit obligation exceeded plan assets
Projected benefit obligation$228 $214 
Fair value of plan assets31 18 
Pension plans in which accumulated benefit obligation exceeded plan assets
Accumulated benefit obligation$126 $121 
Fair value of plan assets25 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 dollarsLevel 1Level 2Level 3Net Asset Value (a)Total
Cash and equivalents$— $136 $— $— $136 
Equity funds (b)— 170 — — 170 
Bond funds (c)— 319 — 149 468 
Alternatives funds (d)— 4 — 163 167 
Real estate funds (e)— 68 — 28 96 
Other investments (f)5 21 14 — 40 
Fair value of plan assets at December 31, 2020$5 $718 $14 $340 $1,077 
Cash and equivalents$— $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 
(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 include investments in insurance contracts, balanced funds, and government bonds.

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 81% of our international pension plans’ projected benefit obligation at December 31, 2020 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 $30 million in 2020, $23 million in 2019, and $32 million in 2018.

Actuarial assumptions
Certain weighted-average actuarial assumptions used to determine benefit obligations of our international pension plans at December 31 were as follows:
20202019
Discount rate1.8%2.5%
Rate of compensation increase5.9%6.0%

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:
202020192018
Discount rate2.5%3.3%2.8%
Expected long-term return on plan assets3.5%4.4%4.1%
Rate of compensation increase6.0%5.8%5.5%
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 2021.

Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $46 million in 2021, $44 million in 2022, $45 million in 2023, $45 million in 2024, $47 million in 2025, and an aggregate $266 million in years 2026 through 2030.