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Employee Benefits
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Employee Benefits Employee Benefits
The Corporation and certain of its subsidiaries provide various benefit programs, including defined benefit pension and defined contribution plans. A description of each major plan and related disclosures are provided below.
Pension. A noncontributory qualified defined benefit pension plan covers substantially all U.S. employees of Northern Trust. Employees of certain European subsidiaries retain benefits in local defined benefit plans, although those plans are closed to new participants and to future benefit accruals. Employees continue to accrue benefits under the Swiss pension plan, which is accounted for as a defined benefit plan under U.S. GAAP.
Northern Trust also maintains a noncontributory supplemental pension plan for participants whose retirement benefits under the U.S. Qualified Plan are expected to exceed the limits imposed by federal tax law. Northern Trust has a nonqualified trust, referred to as a “Rabbi” Trust, used to hold assets designated for the funding of benefits in excess of those permitted in certain of its qualified retirement plans. This arrangement offers participants a degree of assurance for payment of benefits in excess of those permitted in the related qualified plans. As the “Rabbi” Trust assets remain subject to the claims of creditors and are not the property of the employees, they are accounted for as corporate assets and are included in Other Assets on the consolidated balance sheets. Total assets in the “Rabbi” Trust related to the nonqualified pension plan at December 31, 2025 and 2024 amounted to $86.3 million and $83.3 million, respectively. Contributions of $12.9 million and $8.0 million were made to the “Rabbi” Trust in 2025 and 2024, respectively.
The following tables set forth the status, amounts included in AOCI, and net periodic pension expense of the U.S. Qualified Plan, Non-U.S. Pension Plans, and U.S. Non-Qualified Plan.
TABLE 93: EMPLOYEE BENEFIT PLAN STATUS
U.S. QUALIFIED PLANNON-U.S. PENSION PLANSU.S. NON-QUALIFIED PLAN
($ In Millions)202520242025202420252024
Accumulated Benefit Obligation$1,055.6 $1,005.9 $132.2 $125.7 $86.3 $88.9 
Projected Benefit Obligation$1,196.4 $1,139.0 $137.1 $130.7 $103.4 $103.8 
Plan Assets at Fair Value1,535.3 1,338.1 153.2 139.8 — — 
Funded Status at December 31$338.9 $199.1 $16.1 $9.1 $(103.4)$(103.8)
Weighted-Average Assumptions:
Discount Rates5.53 %5.70 %3.68 %3.32 %5.22 %5.55 %
Rate of Increase in Compensation Level5.76 5.56 1.50 1.50 5.76 5.56 
Expected Long-Term Rate of Return on Assets7.25 7.25 4.02 3.89 N/AN/A
TABLE 94: AMOUNTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME
U.S. QUALIFIED PLANNON-U.S. PENSION PLANSU.S. NON-QUALIFIED PLAN
(In Millions)202520242025202420252024
Net Actuarial Loss$499.5 $516.5 $27.5 $29.8 $56.5 $56.6 
Prior Service (Credit) Cost— — (0.1)(0.2)— — 
Gross Amount in Accumulated Other Comprehensive Income499.5 516.5 27.4 29.6 56.5 56.6 
Income Tax Effect125.3 129.5 1.0 3.7 14.2 14.2 
Net Amount in Accumulated Other Comprehensive Income$374.2 $387.0 $26.4 $25.9 $42.3 $42.4 
TABLE 95: NET PERIODIC PENSION EXPENSE
U.S. QUALIFIED PLANNON-U.S. PENSION PLANSU.S. NON-QUALIFIED PLAN
($ In Millions)202520242023202520242023202520242023
Service Cost$54.9$53.6$46.0$2.1$1.9$1.6$4.7$4.7$4.8
Interest Cost62.155.653.94.64.54.85.35.05.3
Expected Return on Plan Assets(122.5)(115.7)(100.9)(7.0)(6.7)(6.7)———
Amortization:
Net Actuarial Loss (Gain)7.77.81.5—0.1(0.4)4.55.15.3
Prior Service (Credit) Cost———(0.1)(0.1)————
Net Periodic Pension Expense$2.2$1.3$0.5$(0.4)$(0.3)$(0.7)$14.5$14.8$15.4
Settlement Expense———(0.1)0.2————
Total Pension Expense$2.2$1.3$0.5$(0.5)$(0.1)$(0.7)$14.5$14.8$15.4
Weighted-Average Assumptions:
Discount Rates5.70%5.03%5.22%3.32 %3.12 %3.76 %5.55 %4.95 %5.15 %
Rate of Increase in Compensation Level5.565.56 5.56 1.501.75 1.75 5.565.56 5.56 
Expected Long-Term Rate of Return on Assets7.257.257.25 3.893.90 3.99 N/AN/AN/A
The components of net periodic pension expense are included in Employee Benefits expense on the consolidated statements of income. Assumptions utilized to determine net periodic pension expense for 2025, 2024, and 2023 are set as of December 31, 2024, 2023, and 2022, respectively.
TABLE 96: CHANGE IN PROJECTED BENEFIT OBLIGATION
U.S. QUALIFIED PLANNON-U.S. PENSION PLANSU.S. NON-QUALIFIED PLAN
(In Millions)202520242025202420252024
Beginning Balance$1,139.0 $1,151.7 $130.7 $148.6 $103.8 $109.2 
Service Cost54.9 53.6 2.1 1.9 4.7 4.7 
Interest Cost62.1 55.6 4.6 4.5 5.3 5.0 
Employee Contributions— — 0.9 0.8 — — 
Plan Amendment— — 0.2 (0.4)— — 
Actuarial Loss (Gain) 23.4 (60.9)(7.2)(11.9)4.4 (0.8)
Settlements— — (5.1)(1.7)— — 
Benefits Paid(83.0)(61.0)(3.6)(4.3)(14.8)(14.3)
Foreign Exchange Rate Changes— — 14.5 (6.8)— — 
Ending Balance$1,196.4 $1,139.0 $137.1 $130.7 $103.4 $103.8 
Actuarial losses of $20.6 million in 2025 were primarily driven by declining discount rates, while actuarial gains of $73.6 million in 2024 reflected rising discount rates.
TABLE 97: ESTIMATED FUTURE BENEFIT PAYMENTS
(In Millions)U.S. QUALIFIED PLANNON-U.S. PENSION PLANSU.S. NON-QUALIFIED PLAN
2026$103.9 $5.4 $13.2 
2027106.5 6.2 11.4 
2028102.4 6.8 11.1 
2029103.6 6.2 12.6 
2030101.3 7.5 12.8 
2031-2035510.3 38.7 54.6 
TABLE 98: CHANGE IN PLAN ASSETS
U.S. QUALIFIED PLANNON-U.S. PENSION PLANS
(In Millions)2025202420252024
Fair Value of Assets at Beginning of Period$1,338.1 $1,200.8 $139.8 $148.7 
Actual Return on Assets155.2 (1.7)1.9 (1.2)
Employer Contributions125.0 200.0 4.2 4.0 
Employee Contributions— — 0.9 0.8 
Settlements— — (5.1)(1.7)
Benefits Paid(83.0)(61.0)(3.6)(4.3)
Foreign Exchange Rate Changes— — 15.1 (6.5)
Fair Value of Assets at End of Period$1,535.3 $1,338.1 $153.2 $139.8 
The minimum required and maximum deductible contributions for the U.S. Qualified Plan in 2026 are estimated to be zero and $280.0 million, respectively. A cash contribution of $125.0 million for the 2025 plan year and $200.0 million for the 2024 plan year were made to the U.S. Qualified Plan during January 2025 and 2024, respectively.
The investment strategy employed for Northern Trust’s U.S. Qualified Plan utilizes a dynamic glide path based on a set of pre-approved asset allocations to return-seeking and liability-hedging assets that vary in accordance with the U.S. Qualified Plan’s projected benefit obligation funded ratio. In general, as the U.S. Qualified Plan’s projected benefit obligation funded ratio increases beyond an established threshold, the U.S. Qualified Plan’s allocation to liability-hedging assets will increase while the allocation to return-seeking assets will decrease. Conversely, a decrease in the U.S. Qualified Plan’s projected benefit obligation funded ratio beyond an established threshold will generally result in a decrease in the U.S. Qualified Plan’s allocation to liability-hedging assets and increase in the allocation to return-seeking assets. Liability-hedging assets include U.S. long duration credit bonds, and a custom completion strategy which holds U.S. government bonds of varying maturities as well as interest rate derivatives used to hedge more closely the liability duration of projected plan benefits with bond duration across all durations. Return-seeking assets include: U.S. equity, international developed equity, emerging markets equity, real estate, high yield bonds, global listed infrastructure, emerging market debt, private equity and hedge funds. The asset allocation of the U.S. Qualified Plan was kept consistent throughout 2025 and 2024.
Northern Trust utilizes an asset/liability methodology to determine the investment policies that will best meet its short and long-term objectives. The process is performed by modeling current and alternative strategies for asset allocation, funding policy and actuarial methods and assumptions. The financial modeling uses projections of expected capital market returns and expected volatility of those returns to determine alternative asset mixes having the greatest probability of meeting the U.S. Qualified Plan’s investment objectives. Risk tolerance is established through careful consideration of the U.S. Qualified Plan liabilities, funded status, and corporate financial condition. The intent of this strategy is to protect the U.S. Qualified Plan’s funded status and generate returns, which in combination with voluntary contributions are expected to outpace the U.S. Qualified Plan’s liability growth over the long run.
As of December 31, 2025, the target allocation of the U.S. Qualified Plan assets consisted of 45% U.S. long duration credit bonds, 20% global equities (U.S., international developed and emerging markets), 10% custom completion strategy, 5% private equity, 5% high yield bonds, 4% emerging market debt, 4% global listed infrastructure, 4% private real estate, and 3% hedge funds.
Global equity investments include common stocks that are listed on an exchange and investments in commingled funds that invest primarily in publicly traded equities. Equity investments are diversified across country, region, investment style and market capitalization. Fixed income securities held include U.S. treasury securities, corporate bonds, and investments in commingled funds that invest in a diversified blend of longer duration fixed income securities; the custom completion strategy uses U.S. treasury securities and interest rate derivatives to align more closely with the target hedge ratio across maturities. Diversifying investments, including private equity, hedge funds, private real estate, emerging market debt, high yield bonds, and global listed infrastructure, are used judiciously to enhance long-term returns while improving portfolio diversification. Private equity assets consist primarily of investments in limited partnerships that invest in individual companies in the form of non-public equity or non-public debt positions. Direct or co-investment in non-public stock by the U.S. Qualified Plan is prohibited. The U.S. Qualified Plan’s private equity investments are limited to 20% of each of the total limited partnership or fund of funds and the maximum allowable loss cannot exceed the commitment amount. The U.S. Qualified Plan invests in a hedge fund of funds, which invests, either directly or indirectly, in diversified portfolios of funds or other pooled investment vehicles. Investments in private real estate, high yield bonds, emerging market debt, and global listed infrastructure are designed to provide income and added diversification.
Derivatives may be used, depending on the nature of the asset class to which they relate, to gain market exposure in an efficient and timely manner, to hedge foreign currency exposure or interest rate risk, or to alter the duration of a portfolio. There were five fixed income derivatives held by the U.S. Qualified Plan at December 31, 2025 and four at December 31, 2024.
Investment risk is measured and monitored on an ongoing basis through monthly liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. Standards used to evaluate the U.S. Qualified Plan’s investment manager performance include, but are not limited to, the achievement of objectives, operation within guidelines and policy, and comparison against a benchmark. In addition, each manager of the investment funds held by the U.S. Qualified Plan is ranked against a universe of peers and compared to a benchmark. Total U.S. Qualified Plan performance analysis includes an analysis of the market environment, asset allocation impact on performance, risk and return relative to other ERISA plans, and manager impacts upon U.S. Qualified Plan performance.
The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies used by Northern Trust for the U.S. Qualified Plan assets measured at fair value.
Level 1 – Quoted, active market prices for identical assets or liabilities. The U.S. Qualified Plan’s Level 1 assets are comprised primarily of U.S. treasury securities, mutual funds, and common stocks. The U.S. Qualified Plan’s Level 1 investments that are exchange traded are valued at the closing price reported by the respective exchanges on the day of valuation.
Level 2 – Observable inputs other than Level 1 prices, such as quoted active market prices for similar assets or liabilities, quoted prices for identical or similar assets in inactive markets, and model-derived valuations in which all significant inputs are observable in active markets. The U.S. Qualified Plan’s Level 2 assets are comprised of collective trust funds, corporate bonds, non-U.S. government obligations, and municipal and provincial bonds. The investments in collective trust funds fair values are calculated on a scheduled basis using the closing market prices and accruals of securities in the funds (total value of the funds) divided by the number of fund shares currently issued and outstanding. Redemptions of the collective trust funds occur by contract at the respective fund’s redemption date net asset value (NAV).
Level 3 – Valuation techniques in which one or more significant inputs are unobservable in the marketplace. The U.S. Qualified Plan did not hold Level 3 assets as of December 31, 2025 and 2024.
Assets valued at fair value using NAV per share - The U.S. Qualified Plan’s assets valued at fair value using NAV per share include investments in private equity funds and a hedge fund, which invest in underlying groups of investment funds or other pooled investment vehicles that are selected by the respective funds’ investment managers. The investment funds and the underlying investments held by these investment funds are valued at fair value. In determining the fair value of the underlying investments of each fund, the fund’s investment manager or general partner takes into account the estimated value reported by the underlying funds as well as any other considerations that may, in their judgment, increase or decrease such estimated value. The investments in the private equity funds and the hedge fund are considered to be long-term investments. There are no capital withdrawal options related to the investments in the private equity funds. However, capital is periodically distributed as underlying investments are sold. It is estimated that the current private equity investments would be materially liquidated over 1 year to 15 years, depending on the vintage year of a particular fund. With sixty days advance notice, the Plan’s investment in the hedge fund can be withdrawn at the next calendar quarter end.
The U.S. Qualified Plan’s assets valued at fair value using NAV per share also include investments in a real estate fund, which invests in real estate assets. The investment in properties by the real estate fund are carried at fair value, which is estimated based on the price that would be received to sell an asset in an orderly transaction between marketplace participants at the measurement date. The valuation for each real estate investment is subject to review on an annual basis which is based on either an external appraisal from appraisal firms or internal valuations prepared by the real estate fund’s investment advisor. The Plan’s investment in the real estate fund is considered to be a long-term investment and, with forty-five days advance notice, can be withdrawn at the next calendar quarter end to the extent the real estate fund has liquid assets, as determined at the sole discretion of the fund manager.
As investments in the private equity funds, hedge fund, and real estate fund are valued at fair value using NAV per share, they are not required to be categorized within the fair value hierarchy.
While Northern Trust believes its valuation methods for U.S. Qualified Plan assets are appropriate and consistent with other market participants, the use of different methodologies or assumptions could have a material effect on the computation of the estimated fair values.
The following table presents the fair values of Northern Trust’s U.S. Qualified Plan assets, by major asset category, and their level within the fair value hierarchy defined by GAAP as of December 31, 2025 and 2024.
TABLE 99: FAIR VALUE OF U.S. QUALIFIED PLAN ASSETS
DECEMBER 31, 2025
(In Millions)LEVEL 1LEVEL 2LEVEL 3TOTAL
Domestic Common Stock$62.7 $— $— $62.7 
Foreign Common Stock29.5 — — 29.5 
Domestic Corporate Bonds— 274.1 — 274.1 
Foreign Corporate Bonds— 26.0 — 26.0 
U.S. Government Obligations102.9 — — 102.9 
Non-U.S. Government Obligations— 15.3 — 15.3 
Domestic Municipal and Provincial Bonds— 18.0 — 18.0 
Foreign Municipal and Provincial Bonds— 0.2 — 0.2 
Collective Trust Funds— 837.2 — 837.2 
Cash and Other(1)
(0.7)— — (0.7)
Total Assets at Fair Value in the Fair Value Hierarchy$194.4 $1,170.8 $— $1,365.2 
Assets Valued at NAV per share
Northern Trust Private Equity Funds62.2 
Northern Trust Hedge Fund41.5 
Real Estate Funds66.4 
Total Assets at Fair Value$1,535.3 
(1) Negative balance in Cash and Other as of December 31, 2025 primarily relates to variation margin.
DECEMBER 31, 2024
(In Millions)LEVEL 1LEVEL 2LEVEL 3TOTAL
Domestic Common Stock$17.6 $— $— $17.6 
Foreign Common Stock0.3 — — 0.3 
Domestic Corporate Bonds— 244.9 — 244.9 
Foreign Corporate Bonds— 30.1 — 30.1 
U.S. Government Obligations58.3 — — 58.3 
Non-U.S. Government Obligations— 17.0 — 17.0 
Domestic Municipal and Provincial Bonds— 14.3 — 14.3 
Foreign Municipal and Provincial Bonds— 0.2 — 0.2 
Collective Trust Funds— 734.9 — 734.9 
Mutual Funds56.3 — — 56.3 
Cash and Other(1)
(1.2)— — (1.2)
Total Assets at Fair Value in the Fair Value Hierarchy$131.3 $1,041.4 $— $1,172.7 
Assets Valued at NAV per share
Northern Trust Private Equity Funds53.2 
Northern Trust Hedge Fund39.2 
Real Estate Funds73.0 
Total Assets at Fair Value$1,338.1 
(1) Negative balance in Cash and Other as of December 31, 2024 primarily relates to due to broker for securities purchased.
A building block approach is employed for Northern Trust’s U.S. Qualified Plan in determining the long-term rate of return on plan assets. Historical markets and long-term historical relationships between equities, fixed income and other asset classes are studied using the widely accepted capital market principle that assets with higher volatility generate a greater return over the long-run. Current market factors such as inflation expectations and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio rate of return is established with consideration given to diversification and rebalancing. The rate is reviewed against peer data and historical returns to verify the return is reasonable and appropriate. Based on this approach and the U.S. Qualified Plan’s target asset allocation, the expected long-term rate of return on assets as of the U.S. Qualified Plan’s December 31, 2025 measurement date was set at 7.25%.
Defined Contribution Plans. The Corporation and its subsidiaries maintain various defined contribution plans covering substantially all employees. The Corporation’s contribution to the U.S. plan and to certain European-based plans includes a matching component. The expense associated with defined contribution plans is charged to Employee Benefits expense on the consolidated statements of income and totaled $92.3 million in 2025, $78.8 million in 2024, and $72.4 million in 2023.