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Retirement-Related Benefits (Tables)
 12 Months Ended
Dec. 31, 2015
Defined Benefit Plans and Other Postretirement Benefit Plans  
Retirement-related benefits net periodic (income)/cost in the Consolidated Statement of Earnings
($ in millions)
U.S. PlansNon-U.S. PlansTotal
For the year ended December 31:201520142013201520142013201520142013
Defined benefit pension plans$(284)$(833)$(223)$1,421$1,267$1,396$1,137$434$1,173
Retention Plan231521———231521
Total defined benefit pension plans
(income)/cost$(261)$(818)$(202)$1,421$1,267$1,396$1,160$449$1,195
IBM 401(k) Plus Plan and
non-U.S. plans$676$713$785$442$526$575$1,117$1,239$1,361
Excess 401(k)211424———211424
Total defined contribution plans cost$697$727$809$442$526$575$1,138$1,253$1,384
Nonpension postretirement benefit
plans cost$218$206$218$55$66$79$273$272$298
Total retirement-related benefits
net periodic cost$654$115$826$1,918$1,859$2,051$2,572$1,974$2,876
Summary of the total projected benefit obligation (PBO) for defined benefit plans, accumulated postretirement benefit obligation (APBO) for nonpension postretirement benefit plans (benefit obligations), fair value of plan assets and the associated funded status
($ in millions)
Benefit ObligationsFair Value of Plan AssetsFunded Status*
At December 31:201520142015201420152014
U.S. Plans
Overfunded plans
Qualified PPP$51,287$54,708$51,716$55,772$429$1,065
Underfunded plans
Excess PPP$1,522$1,602$—$—$(1,522)$(1,602)
Retention Plan312334——(312)(334)
Nonpension postretirement benefit plan4,6525,0537116(4,582)(5,037)
Total underfunded U.S. plans$6,486$6,989$71$16$(6,415)$(6,973)
Non-U.S. Plans
Overfunded plans
Qualified defined benefit pension plans$16,766$16,794$18,070$17,888$1,304$1,094
Nonpension postretirement benefit plans01101100
Total overfunded non-U.S. plans$16,766$16,804$18,070$17,898$1,304$1,094
Underfunded plans
Qualified defined benefit pension plans$22,039$26,278$17,677$21,655$(4,362)$(4,623)
Nonqualified defined benefit pension plans5,9116,762——(5,911)(6,762)
Nonpension postretirement benefit plans6188065973(558)(733)
Total underfunded non-U.S. plans$28,568$33,846$17,737$21,729$(10,832)$(12,118)
Total overfunded plans$68,053$71,512$69,786$73,671$1,734$2,159
Total underfunded plans$35,054$40,836$17,807$21,745$(17,247)$(19,091)

* Funded status is recognized in the Consolidated Statement of Financial Position as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability).
Changes in benefit obligations and plan assets
($ in millions)
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
20152014201520142015201420152014
Change in benefit obligation
Benefit obligation at January 1$56,643$51,034$49,834$48,620$5,053$4,633$817$832
Service cost——454449242677
Interest cost2,0282,2111,0751,5331631875063
Plan participants’ contributions——34375261——
Acquisitions/divestitures, net——39(90)(8)000
Actuarial losses/(gains)(1,920)6,968(861)6,662(204)548(52)38
Benefits paid from trust(3,514)(3,455)(1,784)(1,985)(406)(388)(5)(5)
Direct benefit payments(117)(114)(402)(465)(23)(37)(26)(26)
Foreign exchange impact——(3,907)(5,073)——(174)(91)
Medicare/Government subsidies————123——
Amendments/curtailments/
settlements/other——235146000(1)
Benefit obligation at December 31$53,120$56,643$44,717$49,834$4,652$5,053$618$817
Change in plan assets
Fair value of plan assets at January 1$55,772$53,954$39,543$39,464$16$177$84$92
Actual return on plan assets(542)5,2744175,5790079
Employer contributions——47446540916600
Acquisitions/divestitures, net——53(59)0000
Plan participants’ contributions——34375261——
Benefits paid from trust(3,514)(3,455)(1,784)(1,985)(406)(388)(5)(5)
Foreign exchange impact——(3,004)(4,049)——(26)(11)
Amendments/curtailments/
settlements/other——14*93*——(1)0
Fair value of plan assets at
December 31$51,716$55,772$35,748$39,543$71$16$59$84
Funded status at December 31$(1,405)$(871)$(8,969)$(10,291)$(4,582)$(5,037)$(558)$(733)
Accumulated benefit obligation**$53,120$56,643$44,071$47,516N/AN/AN/AN/A

* Includes the reinstatement of certain plan assets in Brazil due to government rulings in 2011 and 2013 allowing certain previously restricted plan assets to be returned to IBM. Return of assets to IBM over a three-year period began June 2011 and September 2013 respectively, with approximately $33 million returned in 2015 and $122 million returned during 2014. The remaining surplus in Brazil at December 31, 2015 is excluded from total plan assets due to continued restrictions imposed by the government on the use of those plan assets.

 **     Represents the benefit obligation assuming no future participant compensation increases.

 N/A—Not applicable
Net funded status
($ in millions)
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
At December 31:20152014201520142015201420152014
Prepaid pension assets$429$1,065$1,304$1,095$0$0$0$0
Current liabilities—
compensation and benefits(116)(111)(297)(326)(320)(381)(11)(13)
Noncurrent liabilities—retirement
and nonpension postretirement
benefit obligations(1,718)(1,825)(9,976)(11,060)(4,262)(4,656)(547)(720)
Funded status—net$(1,405)$(871)$(8,969)$(10,291)$(4,582)$(5,037)$(558)$(733)
Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in other comprehensive income/(loss) and the changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in accumulated other comprehensive income/(loss)
($ in millions)
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
20152014201520142015201420152014
Net loss at January 1$18,442$13,709$21,676$19,777$852$304$189$161
Current period loss/(gain)2,5765,7896613,324(204)548(51)38
Curtailments and settlements——(33)(25)——01
Amortization of net loss included in
net periodic (income)/cost(1,654)(1,056)(1,581)(1,400)(39)0(10)(11)
Net loss at December 31$19,363$18,442$20,724$21,676$609$852$128$189
Prior service costs/(credits) at January 1$110$120$(386)$(496)$23$15$(26)$(32)
Current period prior service costs/(credits)——(6)(1)——00
Amortization of prior service (costs)/
credits included in net periodic
(income)/cost(10)(10)981117755
Prior service costs/(credits) at
December 31$101$110$(294)$(386)$30$23$(21)$(26)
Transition (assets)/liabilities at January 1$—$—$0$0$—$—$0$0
Amortization of transition assets/
(liabilities) included in net periodic
(income)/cost——00——00
Transition (assets)/liabilities at
December 31$—$—$0$0$—$—$0$0
Total loss recognized in accumulated
other comprehensive income/(loss)*$19,464$18,552$20,429$21,290$639$875$106$163

*            See note L, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans.

Pre-tax estimated net loss, estimated prior service costs/(credits) and estimated transition (assets)/liabilities of the retirement-related benefit plans that will be amortized from accumulated other comprehensive income/(loss) into net periodic (income)/cost and recorded in the Consolidated Statement of Earnings in next year
($ in millions)
Defined BenefitNonpension Postretirement
Pension PlansBenefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
Net loss$1,331$1,361$19$8
Prior service costs/(credits)10(96)(7)(4)
Transition (assets)/liabilities––––
Defined benefit pension plans' major asset classes and their associated fair value

The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2015. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries.

($ in millions)
U.S. PlanNon-U.S. Plans
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Equity
Equity securities(1)$11,210$1$—$11,211$4,631$0$—$4,631
Equity commingled/mutual funds(2)(3)992,036—2,134906,200—6,290
Fixed income
Government and related(4)—9,854—9,854—7,482167,499
Corporate bonds(5)—17,088217,090—1,89641,899
Mortgage and asset-backed securities—63310643—219—219
Fixed income commingled/
mutual funds(2)(6)313192401907389,082—9,120
Insurance contracts—————1,079—1,079
Cash and short-term investments(7)2442,305—2,549142467—610
Hedge funds—1,4199122,331—659—659
Private equity(8)——2,7902,790——582582
Private real estate(8)——2,4292,429——661661
Derivatives(9)(82)2—(80)(1)481—480
Other commingled/mutual funds(2)(10)————1151,6373172,069
Subtotal11,78433,5316,54451,8595,01629,2021,58035,798
Other(11)———(143)———(50)
Fair value of plan assets$11,784$33,531$6,544$51,716$5,016$29,202$1,580$35,748

  • Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $34 million, representing 0.1 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $14 million, representing 0.04 percent of the non-U.S. Plans assets.
  • Commingled funds represent pooled institutional investments.
  • Invests in predominantly equity securities.
  • Includes debt issued by national, state and local governments and agencies.
  • The U.S. Plan includes IBM corporate bonds of $23 million, representing 0.04 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $1 million representing 0.004 percent of the non-U.S. Plan assets.
  • Invests in predominantly fixed-income securities.
  • Includes cash and cash equivalents and short-term marketable securities.
  • Primarily includes limited partnerships.
  • Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives.
  • Invests in both equity and fixed-income securities.
  • Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.

The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2014. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries.

($ in millions)
U.S. PlanNon-U.S. Plans
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Equity
Equity securities(1)$11,527$1$—$11,528$5,652$—$—$5,652
Equity commingled/mutual funds(2)(3)852,277—2,3621267,415—7,540
Fixed income
Government and related(4)—7,883—7,883—8,159328,191
Corporate bonds (5)—18,828418,832—2,06312,063
Mortgage and asset-backed securities—56720587—238—238
Fixed income commingled/
mutual funds(2)(6)3123,1182953,725879,715—9,802
Insurance contracts—————1,053—1,053
Cash and short-term investments(7)3452,304—2,650158393—551
Hedge funds—1,4748892,362—745—745
Private equity(8)——3,2873,287——513513
Private real estate(8)——2,9422,942——664664
Derivatives(9)(55)3—(53)2846—848
Other commingled/mutual funds(2)(10)————331,5132201,766
Subtotal12,21436,4557,43756,1066,05632,1391,42939,625
Other(11)———(333)———(82)
Fair value of plan assets$12,214$36,455$7,437$55,772$6,056$32,139$1,429$39,543

  • Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $55 million, representing 0.1 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $21 million, representing 0.1 percent of the non-U.S. Plans assets.
  • Commingled funds represent pooled institutional investments.
  • Invests in predominantly equity securities.
  • Includes debt issued by national, state and local governments and agencies.
  • The U.S. Plan includes IBM corporate bonds of $10 million, representing 0.02 percent of the U.S. Plan assets. Non-U.S. plans include IBM corporate bonds of $4 million representing 0.01 percent of the non-U.S. Plan assets.
  • Invests in predominantly fixed-income securities.
  • Includes cash and cash equivalents and short-term marketable securities.
  • Primarily includes limited partnerships.
  • Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives.
  • Invests in both equity and fixed-income securities.
  • Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.
Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets

($ in millions)

20152014
BenefitPlanBenefitPlan
At December 31:ObligationAssetsObligationAssets
Plans with PBO in excess of plan assets$29,784$17,677$34,976$21,655
Plans with ABO in excess of plan assets29,13517,49233,14820,680
Plans with assets in excess of PBO68,05369,78671,50173,660
Defined Benefit Pension Plans  
Defined Benefit Plans and Other Postretirement Benefit Plans  
Components of net periodic (income)/cost of the company's retirement-related benefit plans
($ in millions)
Defined Benefit Pension Plans
U.S. PlansNon-U.S. Plans
For the year ended December 31:201520142013201520142013
Service cost$—$—$—$454$449$501
Interest cost2,0282,2111,9801,0751,5331,524
Expected return on plan assets(3,953)(4,096)(3,981)(1,919)(2,247)(2,195)
Amortization of transition assets———000
Amortization of prior service costs/(credits)101010(98)(111)(119)
Recognized actuarial losses1,6541,0561,7901,5811,4001,600
Curtailments and settlements———35260
Multi-employer plans/other costs*———29321785
Total net periodic (income)/cost$(261)$(818)$(202)$1,421$1,267$1,396
Assumptions used to measure the net periodic (income)/cost and benefit obligations
Defined Benefit Pension Plans
U.S. PlansNon-U.S. Plans
201520142013201520142013
Weighted-average assumptions used to measure net
periodic (income)/cost for the year ended December 31
Discount rate3.70%4.50%3.60%2.34%3.32%3.23%
Expected long-term returns on plan assets7.50%8.00%8.00%5.67%6.08%6.21%
Rate of compensation increaseN/AN/AN/A2.49%2.52%2.51%
Weighted-average assumptions used to measure
benefit obligations at December 31
Discount rate4.00%3.70%4.50%2.40%2.34%3.32%
Rate of compensation increaseN/AN/AN/A2.40%2.49%2.52%

N/A—Not applicable
Total expected benefit payments
($ in millions)
QualifiedNonqualifiedQualifiedNonqualifiedTotal Expected
U.S. PlanU.S. PlansNon-U.S. PlansNon-U.S. PlansBenefit
PaymentsPaymentsPaymentsPaymentsPayments
2016$3,5131181,7563115,698
20173,5011181,7513065,675
20183,5011201,7803135,714
20193,4961211,8143265,757
20203,5481221,8573415,868
2021–202517,2796049,8551,88829,625
Nonpension Postretirement Plans  
Defined Benefit Plans and Other Postretirement Benefit Plans  
Components of net periodic (income)/cost of the company's retirement-related benefit plans
($ in millions)
Nonpension Postretirement Benefit Plans
U.S. PlanNon-U.S. Plans
For the year ended December 31:201520142013201520142013
Service cost$24$26$35$7$7$10
Interest cost163187164506360
Expected return on plan assets00(1)(7)(9)(9)
Amortization of transition assets———000
Amortization of prior service costs/(credits)(7)(7)—(5)(5)(5)
Recognized actuarial losses39021101123
Curtailments and settlements———000
Total net periodic cost$218$206$218$55$66$79

* The non-U.S. plans amount includes $ 233 million and $148 million related to the IBM Spain pension litigation for 2015 and 2014, respectively. See page 115 for additional information.

Assumptions used to measure the net periodic (income)/cost and benefit obligations
Nonpension Postretirement Benefit Plans
U.S. PlanNon-U.S. Plans
201520142013201520142013
Weighted-average assumptions used to measure
net periodic cost for the year ended December 31
Discount rate3.40%4.10%3.30%7.51%7.78%6.43%
Expected long-term returns on plan assetsN/AN/A0.35%10.17%10.22%9.01%
Weighted-average assumptions used to measure
benefit obligations at December 31
Discount rate3.70%3.40%4.10%7.06%7.51%7.78%
N/A—Not applicable
Total expected benefit payments
($ in millions)
Total
QualifiedNonqualifiedExpected
U.S. PlanNon-U.S. PlansNon-U.S. PlansBenefit
PaymentsPaymentsPaymentsPayments
2016$393$5$26$424
2017399630434
2018401633439
2019406735448
2020401739447
2021–20251,797492402,087
U.S. Defined Benefit Pension Plans  
Defined Benefit Plans and Other Postretirement Benefit Plans  
Reconciliation of the beginning and ending balances of Level 3 assets
($ in millions)
Mortgage
and Asset-Fixed Income
GovernmentCorporateBackedCommingled/HedgePrivatePrivate
and RelatedBondsSecuritiesMutual FundsFundsEquityReal EstateTotal
Balance at January 1, 2015$—$4$20$295$889$3,287$2,942$7,437
Return on assets held at end of year—00923(199)(210)(377)
Return on assets sold during the year—100—429460889
Purchases, sales and settlements, net—(5)(2)98—(727)(763)(1,399)
Transfers, net—2(8)——0—(6)
Balance at December 31, 2015$—$2$10$401$912$2,790$2,429$6,544
($ in millions)
Mortgage
and Asset-Fixed Income
GovernmentCorporateBackedCommingled/HedgePrivatePrivate
and RelatedBondsSecuritiesMutual FundsFundsEquityReal EstateTotal
Balance at January 1, 2014$1$5$19$274$860$3,771$3,038$7,968
Return on assets held at end of year—002128(10)197238
Return on assets sold during the year—00——332199531
Purchases, sales and settlements, net—0(3)——(807)(492)(1,302)
Transfers, net(1)(1)4————2
Balance at December 31, 2014$—$4$20$295$889$3,287$2,942$7,437
Non-U.S. Defined Benefit Pension Plans  
Defined Benefit Plans and Other Postretirement Benefit Plans  
Reconciliation of the beginning and ending balances of Level 3 assets
($ in millions)
Other
GovernmentCorporatePrivatePrivateCommingled/
and RelatedBondsEquityReal EstateMutual FundsTotal
Balance at January 1, 2015$32$1$513$664$220$1,429
Return on assets held at end of year(2)0(25)452847
Return on assets sold during the year006246—107
Purchases, sales and settlements, net(10)373(62)8488
Transfers, net——————
Foreign exchange impact(3)0(42)(31)(15)(91)
Balance at December 31, 2015$16$4$582$661$317$1,580
($ in millions)
Other
GovernmentCorporatePrivatePrivateCommingled/
and RelatedBondsEquityReal EstateMutual FundsTotal
Balance at January 1, 2014$42$4$410$655$—$1,110
Return on assets held at end of year30268326138
Return on assets sold during the year0046(12)—34
Purchases, sales and settlements, net(8)(3)75(13)104155
Transfers, net——0—102102
Foreign exchange impact(5)0(45)(49)(12)(110)
Balance at December 31, 2014$32$1$513$664$2201,429