PENSION AND OTHER POSTRETIREMENT BENEFITS

12 Months Ended

Dec. 31, 2011

Pension and Other Post Retirements Disclosure Paragraph Details [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFITS

Note22. Pension and Other Postretirement Benefits

We sponsor both funded and unfunded U.S. and non-U.S. defined benefit pension plans covering the majority of our employees and retirees. Pension benefits for substantially all U.S. employees are provided through non-contributory, qualified and non-qualified defined benefit pension plans. U.S. defined benefit pension plans comprise 77 percent of our projected benefit obligation. Non-U.S. employees, who are not U.S. citizens, are covered by various retirement benefit arrangements, some of which are considered to be defined benefit pension plans for accounting purposes. Non-U.S. defined benefit pension plans comprise 23 percent of our projected benefit obligation.

We also sponsor postretirement benefit plans that provide health care benefits and life insurance coverage to eligible retirees. Our retiree medical plans mainly cover U.S. employees who retire with pension eligibility for hospital, professional and other medical services. Most of the U.S. retiree medical plans require deductibles and copayments, and virtually all are integrated with Medicare. Retiree contributions are generally required based on coverage type, plan and Medicare eligibility.All non-union hourly and salaried employees joining Honeywell after January 1, 2000 are not eligible to participate in our retiree medical and life insurance plans. Only approximately 5 percent of Honeywell's U.S. employees are eligible for a retiree medical subsidy from the Company; and this subsidy is limited to a fixed-dollar amount. In addition more than half of its current retirees either have no Company subsidy or have a fixed dollar subsidy amount. This significantly limits our exposure to the impact of future health care cost increases. The retiree medical and life insurance plans are not funded. Claims and expenses are paid from our operating cash flow.

In 2011, in connection with new collective bargaining agreements reached with several of its union groups, Honeywell amended its U.S. retiree medical plans eliminating the subsidy for those union employeesresulting in curtailment gains totaling $167 million. The curtailment gains represent the recognition innet periodic postretirement benefit cost ofprior service credits attributable to the future years of service of the union groups for which future accrual of benefits has been eliminated.

In 2010, Honeywell amended its U.S. retiree medical plan to no longer offer certain post-age-65 retirees Honeywell group coverage and facilitate their purchase of an individual plan in the Medicare marketplace. This plan amendment reduced the accumulated postretirement benefit obligation by $137 million which will be recognized as part of net periodic postretirement benefit cost over the average future service period to full eligibility of the remaining active union employees still eligible for a retiree medical subsidy.Also in 2010, in connection with a new collective bargaining agreement reached with one of its union groups, Honeywell amended its U.S. retiree medical plan eliminating the subsidy for those union employees who retire after February 1, 2013. This plan amendment reduced the accumulated postretirement benefit obligation by $39 million which will be recognized as part of net periodic postretirement benefit cost over the average future service period to full eligibility of the remaining active union employees still eligible for a retiree medical subsidy. This plan amendment also resulted in a curtailment gain of $37 million in 2010 which represented the recognition in net periodic postretirement benefit cost of prior service credits attributable to the future years of service of the union group for which future accrual of benefits was eliminated.

In 2009, Honeywell amended the U.S. retiree medical plan eliminating the subsidy for active non-union employees who retire after September 1, 2009. Employees already retired or who retired on or before September 1, 2009 were not affected by this change. This plan amendment reduced the accumulated postretirement benefit obligation by $180 million representing the elimination of benefits attributable to years of service already rendered by active non-union employees who are not eligible to retire and those eligible non-union employees who were assumed not to retire prior to September 1, 2009. This reduction in the accumulated postretirement benefit obligation will be recognized as part of net periodic postretirement benefit cost over the average future service period to full eligibility of the remaining active union employees still eligible for a retiree medical subsidy. This plan amendment also resulted in a curtailment gain of $98 million in 2009 which represented the recognition in net periodic post retirement benefit cost of prior service credits attributable to the future years of service of the employee group for which future accrual of benefits was eliminated.

The following tables summarize the balance sheet impact, including the benefit obligations, assets and funded status associated with our significant pension and other postretirement benefit plans at December 31, 2011 and 2010.

		Pension Benefits
		U.S. Plans				Non-U.S. Plans
		2011		2010		2011		2010
Change in benefit obligation:
	Benefit obligation at beginning of year	$	14,990	$	13,620	$	4,373	$	4,266
	Service cost		232		221		59		51
	Interest cost		761		768		239		228
	Plan amendments		5		117		-		-
	Actuarial losses		566		1,211		171		150
	Divestitures		(26)		-		-		-
	Benefits paid		(952)		(947)		(189)		(181)
	Settlements and curtailments		-		-		(25)		-
	Other		24		-		20		(141)
	Benefit obligation at end of year		15,600		14,990		4,648		4,373
Change in plan assets:
	Fair value of plan assets at beginning of year		12,181		10,306		3,939		3,488
	Actual return on plan assets		(41)		1,788		87		414
	Company contributions		1,681		1,034		124		313
	Divestitures		(33)		-		-		-
	Benefits paid		(952)		(947)		(189)		(181)
	Settlements and curtailments		-		-		(25)		-
	Other		-		-		22		(95)
	Fair value of plan assets at end of year		12,836		12,181		3,958		3,939
Funded status of plans		$	(2,764)	$	(2,809)	$	(690)	$	(434)
Amounts recognized in Consolidated Balance
Sheet consist of:
	Prepaid pension benefit cost(1)	$	-	$	-	$	84	$	135
	Accrued pension liability(2)		(2,764)		(2,809)		(774)		(569)
Net amount recognized		$	(2,764)	$	(2,809)	$	(690)	$	(434)
(1) Included in Other Assets on Consolidated Balance Sheet
(2) Included in Other Liabilities - Non-Current on Consolidated Balance Sheet

		Other Postretirement Benefits
		2011		2010
Change in benefit obligation:
	Benefit obligation at beginning of year	$	1,628	$	1,748
	Service cost		1		2
	Interest cost		69		81
	Plan amendments		(22)		(176)
	Actuarial losses		6		160
	Benefits paid		(138)		(187)
	Settlements and curtailments		(10)		-
	Benefit obligation at end of year		1,534		1,628
Change in plan assets:
	Fair value of plan assets at beginning of year		-		-
	Actual return on plan assets		-		-
	Company contributions		-		-
	Benefits paid		-		-
	Fair value of plan assets at end of year		-		-
Funded status of plans		$	(1,534)	$	(1,628)
Amounts recognized in Consolidated Balance Sheet consist of:
	Accrued liabilities		(167)		(197)
	Postretirement benefit obligations other than pensions(1)		(1,367)		(1,431)
Net amount recognized		$	(1,534)	$	(1,628)
(1) Excludes Non-U.S. plans of $50 and $46 million in 2011 and 2010, respectively.

Amounts recognized in Accumulated Other Comprehensive (Income) Loss associated with our significant pension and other postretirement benefit plans at December 31, 2011 and 2010 are as follows.

	Pension Benefits
	U.S. Plans				Non-U.S. Plans
	2011		2010		2011		2010
Transition obligation	$	-	$	-	$	7	$	9
Prior service cost (credit)		148		177		(17)		(19)
Net actuarial loss		1,559		1,499		430		321
Net amount recognized	$	1,707	$	1,676	$	420	$	311

	Other Postretirement Benefits
	2011		2010
Prior service (credit)	$	(67)	$	(264)
Net actuarial loss		391		425
Net amount recognized	$	324	$	161

The components of net periodic benefit cost and other amounts recognized in other comprehensive (income) loss for our significant plans for the years ended December 31, 2011, 2010, and 2009 include the following components:

			Pension Benefits
			U.S. Plans						Non-U.S. Plans
Net Periodic Benefit Cost			2011		2010		2009		2011		2010		2009
Service cost			$	232	$	221	$	183	$	59	$	51	$	41
Interest cost				761		768		785		239		228		208
Expected return on plan assets				(1,014)		(902)		(767)		(284)		(248)		(221)
Amortization of transition
	obligation			-		-		-		2		1		1
Amortization of prior service
	cost (credit)			33		32		26		(2)		(1)		(1)
Recognition of actuarial losses				1,568		182		447		234		289		308
Settlements and curtailments				24		-		-		1		4		-
Net periodic benefit cost			$	1,604	$	301	$	674	$	249	$	324	$	336
Other Changes in Plan Assets and
Benefits Obligations Recognized in			U.S. Plans						Non-U.S. Plans
Other Comprehensive (Income) Loss			2011		2010		2009		2011		2010		2009
Actuarial (gains)/losses			$	1,628	$	325	$	686	$	368	$	(20)	$	449
Prior service cost (credit)				5		117		-		-		-		2
Transition obligation
	recognized during year			-		-		-		(2)		(1)		(1)
Prior service (cost) credit
	recognized during year			(33)		(32)		(26)		2		1		1
Actuarial losses recognized
	during year			(1,568)		(182)		(447)		(234)		(289)		(308)
Foreign exchange translation
	adjustments			-		-		-		(11)		(17)		42
	Total recognized in other
		comprehensive (income) loss	$	32	$	228	$	213	$	123	$	(326)	$	185
	Total recognized in net periodic
		benefit cost and other
		comprehensive (income) loss	$	1,636	$	529	$	887	$	372	$	(2)	$	521

The estimated prior service cost for pension benefits that will be amortized from accumulated other comprehensive (income) loss into net periodic benefit cost in 2012 are expected to be $28 million and $(2) million for U.S. and Non-U.S. benefit plans, respectively.

		Other Postretirement Benefits
		Years Ended December 31,
Net Periodic Benefit Cost		2011		2010		2009
Service cost		$	1	$	2	$	6
Interest cost			69		81		104
Amortization of prior service (credit)			(34)		(44)		(44)
Recognition of actuarial losses			38		34		13
Settlements and curtailments			(167)		(47)		(98)
Net periodic benefit (income) cost		$	(93)	$	26	$	(19)
		Years Ended December 31,
Other Changes in Plan Assets and Benefits Obligations		2011		2010		2009
Recognized in Other Comprehensive (Income) Loss
Actuarial losses		$	6	$	160	$	46
Prior service (credit)			(21)		(176)		(180)
Prior service credit recognized during year			34		44		44
Actuarial losses recognized during year			(38)		(34)		(13)
Settlements and curtailments			167		47		98
Total recognized in other comprehensive loss (income)		$	148	$	41	$	(5)
Total recognized in net periodic benefit cost and other
	comprehensive loss (income)	$	55	$	67	$	(24)

The estimated net loss and prior service (credit) for other postretirement benefits that will be amortized from accumulated other comprehensive (income) loss into net periodic benefit cost in 2012 are expected to be $40 and $(15) million, respectively.

Major actuarial assumptions used in determining the benefit obligations and net periodic benefit cost for our significantbenefit plans are presented in the following table.

	Pension Benefits
	U.S. Plans						Non-U.S. Plans
	2011		2010		2009		2011		2010		2009
Actuarial assumptions used to determine
benefit obligations as of December 31:
Discount rate	4.89	%	5.25	%	5.75	%	4.84	%	5.40	%	5.71	%
Expected annual rate of
compensation increase	4.50	%	4.50	%	4.50	%	3.67	%	3.79	%	3.87	%
Actuarial assumptions used to determine
net periodic benefit cost for years
ended December 31:
Discount rate	5.25	%	5.75	%	6.95	%	5.40	%	5.71	%	6.21	%
Expected rate of return
on plan assets	8.00	%	9.00	%	9.00	%	7.06	%	7.51	%	7.52	%
Expected annual rate of
compensation increase	4.50	%	4.50	%	4.50	%	3.79	%	3.87	%	3.33	%

			Other Postretirement Benefits
			2011		2010		2009
Actuarial assumptions used to determine benefit
	obligations as of December 31:
		Discount rate	4.00	%	4.70	%	5.25	%
Actuarial assumptions used to determine net periodic
	benefit cost for years ended December 31:
		Discount rate	4.70	%	5.25	%	6.00	%

The discount rate for our U.S. pension and other postretirement benefits plans reflects the current rate at which the associated liabilities could be settled at the measurement date of December 31. To determine discount rates for our U.S. pension and other postretirement benefit plans, we use a modeling process that involves matching the expected cash outflows of our benefit plans to a yield curve constructed from a portfolio of high quality, fixed-income debt instruments. We use the average yield of this hypothetical portfolio as a discount rate benchmark. The discount rate used to determine the other postretirement benefit obligation is lower principally due to a shorter expected duration of other postretirement plan obligations as compared to pension plan obligations.

Our expected rate of return on U.S. plan assets of 8 percent is a long-term rate based on historical plan asset returns over varying long-term periods combined with our expectations on future market conditions and the asset mix of the plan's investments.We review the expected rate of return on an annual basis and revise it as appropriate.

For non-U.S. benefit plans, none of which was individually material, assumptions reflect economic assumptions applicable to each country.

Pension Benefits

Included in the aggregate data in the tables above are the amounts applicable to our pension plans with accumulated benefit obligations exceeding the fair value of plan assets. Amounts related to such plans were as follows:

	December 31,
	U.S. Plans		Non-U.S. Plans
	2011	2010	2011	2010
Projected benefit obligation	$15,600	$14,990	$4,141	$1,990
Accumulated benefit obligation	$14,845	$14,260	$3,912	$1,883
Fair value of plan assets	$12,836	$12,181	$3,367	$1,474

Accumulated benefit obligation for our U.S. defined benefit pension planswere $14.8 and $14.3 billion and our Non-U.S. defined benefit plans were $4.4 and $4.1billion at December 31, 2011 and 2010, respectively.

Our asset investment strategy for our U.S. pension plans focuses on maintaining a diversified portfolio using various asset classes in order to achieve our long-term investment objectives on a risk adjusted basis. Our actual invested positions in various securities change over time based on short and longer-term investment opportunities. To achieve our objectives, we have established long-term target allocations as follows: 60-70 percent equity securities, 10-20 percent fixed income securities and cash, 5-15 percent real estate investments, and 10-20 percent other types of investments. Equity securities include publicly-traded stock of companies located both inside and outside the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities, and U.S. Treasuries. Real estate investments include direct investments in commercial properties and investments in real estate funds. Other types of investments include investments in private equity and hedge funds that follow several different strategies. We review our assets on a regular basis to ensure that we are within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations.

Our non-U.S. pension assets are typically managed by decentralized fiduciary committees with the Honeywell Corporate Investments group providing standard funding and investment guidance. Local regulations, local funding rules, and local financial and tax considerations are part of the funding and investment allocation process in each country. While our non-U.S. investment policies are different for each country, the long-term investment objectives are generally the same as those for the U.S. pension assets.

The fair values of both our U.S. and non-U.S. pension plans assets at December 31, 2011and 2010 by asset category are as follows

		U.S. Plans
		December 31, 2011
			Total		Level 1		Level 2		Level 3
Common stock/preferred stock:
	Honeywell common stock	$	1,012	$	1,012	$	-	$	-
	U.S. large cap stocks		2,697		2,416		281		-
	U.S. mid cap stocks		1,087		1,087		-		-
	U.S. small cap stocks		272		272		-		-
	International stocks		2,010		1,993		17		-
	Real estate investment trusts		32		32		-		-
Fixed income investments:
	Short term investments		941		941		-		-
	Government securities		291		-		291		-
	Corporate bonds		1,984		-		1,984		-
	Mortgage/Asset-Backed securities		435		-		435		-
	Insurance contracts		6		-		6		-
Investments in private funds:
	Private funds		1,039		-		-		1,039
	Hedge funds		60		-		-		60
	Real estate funds		256		-		-		256
Direct investments:
	Direct private investments		161		-		-		161
	Real estate properties		553		-		-		553
		$	12,836	$	7,753	$	3,014	$	2,069

		U.S. Plans
		December 31, 2010
			Total		Level 1		Level 2		Level 3
Common stock/preferred stock:
	Honeywell common stock	$	986	$	986	$	-	$	-
	U.S. large cap stocks		2,349		2,349		-		-
	U.S. mid cap stocks		1,049		1,049		-		-
	U.S. small cap stocks		301		301		-		-
	International stocks		2,197		2,176		21		-
	Real estate investment trusts		38		38		-		-
Fixed income investments:
	Short term investments		1,242		1,242		-		-
	Government securities		240		-		240		-
	Corporate bonds		1,342		-		1,342		-
	Mortgage/Asset-Backed securities		422		-		422		-
	Insurance contracts		10		-		10		-
Investments in private funds:
	Private funds		1,053		-		-		1,053
	Hedge funds		77		-		-		77
	Real estate funds		214		-		-		214
Direct investments:
	Direct private investments		167		-		-		167
	Real estate properties		494		-		-		494
		$	12,181	$	8,141	$	2,035	$	2,005

		Non-U.S. Plans
		December 31, 2011
			Total		Level 1		Level 2		Level 3
Common stock/preferred stock:
	U.S. companies	$	371	$	249	$	122	$	-
	Non-U.S. companies		1,343		233		1,110		-
Fixed income investments:
	Short-term investments		78		78		-		-
	Government securities		1,175		-		1,175		-
	Corporate bonds		463		-		463		-
	Mortgage/Asset-backed securities		5		-		5		-
	Insurance contracts		197		-		197		-
Investments in private funds:
	Private funds		112		-		-		112
	Hedge funds		54		-		-		54
	Real estate funds		160		-		-		160
		$	3,958	$	560	$	3,072	$	326

		Non-U.S. Plans
		December 31, 2010
			Total		Level 1		Level 2		Level 3
Common stock/preferred stock:
	U.S. companies	$	338	$	327	$	11	$	-
	Non-U.S. companies		1,556		336		1,220		-
Fixed income investments:
	Short-term investments		176		176		-		-
	Government securities		915		-		915		-
	Corporate bonds		431		-		431		-
	Mortgage/Asset-backed securities		14		-		14		-
	Insurance contracts		196		-		196		-
Investments in private funds:
	Private funds		89		-		-		89
	Hedge funds		55		-		-		55
	Real estate funds		169		-		-		169
		$	3,939	$	839	$	2,787	$	313

The following tables summarize changes in the fair value of Level 3 assets for the years ended December 31, 2011and 2010:

			U.S. Plans
						Direct
				Private		Private		Hedge		Real Estate		Real Estate
				Funds		Investments		Funds		Funds		Properties
Balance at December 31, 2009				$	911	$	149	$	78	$	132	$	452
Actual return on plan assets:
	Relating to assets still held
		at year-end			42		(9)		11		36		45
	Relating to assets sold
		during the year			29		-		1		1		10
Purchases, sales and
		settlements			71		27		(13)		45		(13)
Balance at December 31, 2010					1,053		167		77		214		494
Actual return on plan assets:
	Relating to assets still held
		at year-end			(9)		4		(7)		26		41
	Relating to assets sold
		during the year			-		8		4		-		-
Purchases, sales and
		settlements			(5)		(18)		(14)		16		18
Balance at December 31, 2011				$	1,039	$	161	$	60	$	256	$	553
						Non-U.S. Plans
						Private		Hedge		Real Estate
						Funds		Funds		Funds
Balance at December 31, 2009						$	81	$	51	$	137
Actual return on plan assets:
	Relating to assets still held
		at year-end					2		4		2
	Relating to assets sold
		during the year					3		-		5
Purchases, sales and
		settlements					3		-		25
Balance at December 31, 2010							89		55		169
Actual return on plan assets:
	Relating to assets still held
		at year-end					2		(1)		7
	Relating to assets sold
		during the year					3		-		2
Purchases, sales and
		settlements					18		-		(18)
Balance at December 31, 2011						$	112	$	54	$	160

Our U.S. pension assets at December 31, 2011 and 2010 include $976 and $834 million, respectively, in notional derivative exposure primarily related to outstanding equity futures contracts. The Company enters into futures contracts to gain exposure to certain markets.

Common stocks, preferred stocks, real estate investment trusts, and short-term investments are valued at the closing price reported in the active market in which the individual securities are traded. Corporate bonds, mortgages, asset-backedsecurities, and government securities are valued either by using pricing models, bids provided by brokers or dealers, quoted prices of securities with similar characteristics or discounted cash flows and as such include adjustments for certain risks that may not be observable such as credit and liquidity risks. Certain securities are held in commingled funds which are valued using net asset values provided by the administrators of the funds. Investments in private equity, debt, real estate and hedge funds and direct private investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. Investments in real estate properties are valued on a quarterly basis using the income approach. Valuation estimates are periodically supplemented bythird party appraisals.

Our general funding policy for qualified pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. In 2011, 2010 and 2009, we were not required to make contributions to our U.S. pension plans, however, we made voluntary contributions of $1,650, $1,000 and $740 million, respectively, primarily to improve the funded status of our plans. These contributions do not reflect benefits paid directly from Company assets. In 2012, we expect to make cash contributions of $800 million to $1 billion ($250 million was made in January 2012)to our global defined benefit pension plans principally to improve the funded status of our plans and also to satisfy regulatory funding standards in our non-U.S. plans.

Benefit payments, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are expected to be paid as follows:

		U.S. Plans		Non-U.S. Plans
2012	$	1,025	$	185
2013		1,025		189
2014		1,051		193
2015		1,101		197
2016		1,084		203
2017-2021		5,473		1,097

Other Postretirement Benefits

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) provides subsidies for employers that sponsor postretirement health care plans that provide prescription drug coverage that is at least actuarially equivalent to that offered by Medicare Part D. The March 2010 enactment of the Patient Protection and Affordable Care Act, including modifications made in the Health Care and Education Reconciliation Act of 2010 resulted in a one-time, non-cash charge of $13 million related to income taxes in the first quarter of 2010. The charge results from a change in the tax treatment of the Medicare Part D program.

		December 31,
		2011			2010
Assumed health care cost trend rate:
	Health care cost trend rate assumed for next year		7.50	%		8.00	%
	Rate that the cost trend rate gradually declines to		5.00	%		5.00	%
	Year that the rate reaches the rate it is assumed to remain at		2017			2017

The assumed health care cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:

	1 percentage point
	Increase		Decrease
Effect on total of service and interest cost components	$	5	$	(3)
Effect on postretirement benefit obligation	$	126	$	(80)

Benefit payments reflecting expected future service, as appropriate, are expected to be paid as follows:

	Without Impact of			Net of
	Medicare Subsidy			Medicare Subsidy
2012		$	180		$	167
2013			168			156
2014			157			145
2015			147			136
2016			137			126
2017-2021			551			499

Employee Savings Plans

We sponsor employee savings plans under which we match, in the form of our common stock, savings plan contributions for certain eligible employees. Shares issued under the stock match plans were 2.6, 2.4,and 4.8million at a cost of $138, $105 and $158 million in 2011, 2010, and2009, respectively.