Employee Benefits

9 Months Ended

Sep. 30, 2023

Retirement Benefits [Abstract]

Employee Benefits

Employee benefits

The Company sponsors a number of U.S. and foreign pension plans as well as other nonpension postretirement and postemployment plans to provide various benefits for its employees. These plans are described within the footnotes to the Consolidated Financial Statements included in the Company’s 2022 Annual Report on Form 10-K. Components of Company benefit plan (income) expense for the periods presented are included in the tables below. Excluding the service cost component, these amounts are included within Other income (expense) in the Consolidated Statement of Income.

In connection with the planned separation transaction, the company amended and legally split certain pension and postretirement benefit plans, several remeasurements occurred during the third quarter of 2023.

Pension

	Quarter ended				Year-to-date period ended
(millions)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Service cost	$	6	$	6	$	18	$	23
Interest cost	44		34		132		91
Expected return on plan assets	(54)		(57)		(161)		(200)
Amortization of unrecognized prior service cost	2		2		7		7
Recognized net loss (gain)	10		(15)		10		(46)
Total pension income	$	8	$	(30)	$	6	$	(125)

For the quarter and year-to-date periods ended September 30, 2023, the Company recognized a loss of $10 million related to the remeasurement of a U.S. pension plan. The remeasurement was due to the amendment of the plan to split the pension plan in anticipation of the separation transaction. The remeasurement recognized was due primarily to a lower than expected return on plan assets.

For the quarter and year-to-date periods ended October 1, 2022, the Company recognized a gain of $15 million and $46 million, respectively, related to the remeasurement of two U.S. pension plans. These remeasurements were the result of distributions that exceeded service and interest costs resulting in settlement accounting for those specific plans. The remeasurements recognized were due primarily to an increase in the discount rate relative to the previous remeasurement date partially offset by lower than expected return on plan assets.

Other nonpension postretirement

	Quarter ended				Year-to-date period ended
(millions)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Service cost	$	2	$	2	$	5	$	8
Interest cost	11		6		31		18
Expected return on plan assets	(25)		(28)		(73)		(83)
Amortization of unrecognized prior service cost	(2)		(2)		(7)		(7)
Recognized net (gain) loss	(67)		—		(67)		—
Total postretirement benefit income	$	(81)	$	(22)	$	(111)	$	(64)

For the quarter and year-to-date periods ended September 30, 2023, the Company recognized a gain of $67 million related to the remeasurement of other postretirement benefit plans. These remeasurements were the result of separating the other postretirement benefit plans impacted by the separation transaction. The remeasurements recognized were due primarily to a higher than expected return on plan assets.

Postemployment

	Quarter ended				Year-to-date period ended
(millions)	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Service cost	$	1	$	—	$	2	$	2
Interest cost	1		1		2		1
Recognized net experience gain	(1)		—		(2)		(2)
Total postemployment expense	$	1	$	1	$	2	$	1

For the quarter and year-to-date periods ended September 30, 2023, the Company recognized a gain of $1 million and $2 million, respectively, related to the remeasurement of a U.S. postemployment benefit plan. The remeasurement was the result of separating the postemployment plan impacted by the separation transaction. The remeasurement recognized was due primarily to a higher than expected return on plan assets.

In May 2023, the Company purchased a group annuity to cover pension benefit obligations of certain participants of the United Kingdom defined benefit pension plan for approximately $590 million. This transaction represents an annuity buy-in, under which the Company retains both the fair value of the annuity contract (within plan assets) and the pension benefit obligation related to these participants.

Company contributions to employee benefit plans are summarized as follows:

(millions)	Pension		Nonpension postretirement		Total
Quarter ended:
September 30, 2023	$	—	$	3	$	3
October 1, 2022	$	1	$	4	$	5
Year-to-date period ended:
September 30, 2023	$	—	$	13	$	13
October 1, 2022	$	2	$	15	$	17
Full year:
Fiscal year 2023 (projected)	$	5	$	21	$	26
Fiscal year 2022 (actual)	$	3	$	20	$	23

Plan funding strategies may be modified in response to management's evaluation of tax deductibility, market conditions, and competing investment alternatives.