Pension and Postretirement Benefit Plans and Defined Contribution Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Pension and Postretirement Benefit Plans and Defined Contribution Plans

Pension and Postretirement Benefit Plans and Defined Contribution Plans

The majority of our employees worldwide are eligible for retirement benefits provided through defined benefit pension plans, defined contribution plans or both. In the U.S., we sponsor both IRC-qualified and supplemental (non-qualified) defined benefit plans and defined contribution plans. A qualified plan meets the requirements of certain sections of the IRC, and, generally, contributions to qualified plans are tax deductible. A qualified plan typically provides benefits to a broad group of employees with restrictions on discriminating in favor of highly compensated employees with regard to coverage, benefits and contributions. A supplemental (non-qualified) plan provides additional benefits to certain employees. In addition, we provide medical insurance benefits to certain retirees and their eligible dependents through our postretirement plans.

A. Components of Net Periodic Benefit Costs and Changes in Other Comprehensive Income/(Loss)

The following summarizes the components of net periodic benefit cost/(credit) and the changes in Other comprehensive income/(loss) for our benefit plans:
	Pension Plans												Postretirement Plans
	U.S.						International
	Year Ended December 31,
(MILLIONS)	2023		2022		2021		2023		2022		2021		2023		2022		2021
Service cost	$	—	$	—	$	—	$	85	$	116	$	130	$	12	$	29	$	36
Interest cost	589		534		455		287		157		146		21		27		29
Expected return on plan assets	(778)		(862)		(1,052)		(304)		(296)		(327)		(44)		(47)		(39)
Amortization of prior service cost/(credit)	2		2		(2)		—		(1)		(1)		(119)		(130)		(151)
Actuarial (gains)/losses(a)	(410)		225		(684)		102		(11)		(690)		51		(440)		(167)
Curtailments	—		—		—		(2)		(11)		(4)		(12)		(18)		(82)
Special termination benefits	6		18		17		—		1		—		—		1		2
Net periodic benefit cost/(credit) reported in income	(592)		(84)		(1,265)		169		(45)		(746)		(90)		(578)		(372)
Cost/(credit) reported in Other comprehensive income/(loss)	(2)		(2)		2		31		(1)		4		128		169		107
Cost/(credit) recognized in Comprehensive income	$	(594)	$	(86)	$	(1,264)	$	199	$	(46)	$	(742)	$	38	$	(410)	$	(265)

(a)Reflects: (i) actuarial remeasurement net gains in 2023, primarily due to favorable asset performance in the U.S. and increases in discount rates for the international plans, partially offset by unfavorable asset performance for certain international plans, (ii) actuarial remeasurement net gains in 2022, primarily due to increases in discount rates, partially offset by unfavorable plan asset performance, and (iii) actuarial remeasurement gains in 2021, primarily due to favorable plan asset performance and increases in discount rates.

The components of net periodic benefit cost/(credit) other than the service cost component are primarily included in Other (income)/deductions––net (see Note 4).

B. Actuarial Assumptions

	Pension Plans												Postretirement Plans
	U.S.						International
	Year Ended December 31,
(PERCENTAGES)	2023		2022		2021		2023		2022		2021		2023		2022		2021
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate:
Pension plans/postretirement plans	5.4	%	2.9	%	2.6	%							5.5	%	2.9	%	2.5	%
Interest cost							3.8	%	1.5	%	1.2	%
Service cost							3.6	%	1.7	%	1.4	%
Expected return on plan assets	7.5	%	6.3	%	6.8	%	4.5	%	3.1	%	3.4	%	7.5	%	6.3	%	6.8	%
Rate of compensation increase(a)							3.0	%	2.8	%	2.9	%
Weighted-average assumptions used to determine benefit obligations at fiscal year-end:
Discount rate	5.4	%	5.4	%	2.9	%	4.4	%	3.8	%	1.6	%	5.4	%	5.5	%	2.9	%
Rate of compensation increase(a)							3.2	%	3.0	%	2.8	%

(a)The rate of compensation increase is not used to determine the net periodic benefit cost and benefit obligation for the U.S. pension plans as these plans are frozen.

All of the assumptions are reviewed at least annually. We revise these assumptions based on an annual evaluation of long-term trends as well as market conditions that may have an impact on the cost of providing retirement benefits.

The weighted-average discount rate for our U.S. defined benefit plans is set with reference to the prevailing market rate of a portfolio of high-quality fixed income investments, rated AA/Aa or better that reflect the rates at which the pension benefits could be effectively settled. For our international plans, the discount rates are set by benchmarking against investment grade corporate bonds rated AA/Aa or better, including, when there is sufficient data, a yield curve approach. These rate determinations are made consistent with local requirements. Overall, the yield curves used to measure the benefit obligations at year-end 2023 resulted in broadly unchanged discount rates for the U.S. pension and postretirement plans and higher discount rates for the international pension plans as compared to the prior year.

The following provides the healthcare cost trend rate assumptions for our U.S. postretirement benefit plans:
	As of December 31,
	2023		2022
Healthcare cost trend rate assumed for next year	7.9	%	6.4	%
Rate to which the cost trend rate is assumed to decline	4.0	%	4.0	%
Year that the rate reaches the ultimate trend rate	2047		2045

C. Obligations and Funded Status

The following provides: (i) an analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans, (ii) the funded status recognized in our consolidated balance sheets and (iii) the pre-tax components of cumulative amounts recognized in Accumulated other comprehensive loss:
	Pension Plans								Postretirement Plans
	U.S.				International
	Year Ended December 31,
(MILLIONS)	2023		2022		2023		2022		2023		2022
Change in benefit obligation(a)
Benefit obligation, beginning	$	11,420	$	17,150	$	7,497	$	11,657	$	410	$	995
Service cost	—		—		85		116		12		29
Interest cost	589		534		287		157		21		27
Employee contributions	—		—		11		9		52		75
Plan amendments	—		—		25		—		—		24
Changes in actuarial assumptions and other(b)	(127)		(4,187)		(518)		(2,931)		96		(593)
Foreign exchange impact	—		(1)		280		(1,065)		(1)		(5)
Upjohn spin-off	—		—		—		37		—		—
Acquisitions/divestitures, net	—		61		13		(50)		—		—
Curtailments and special termination benefits	6		18		—		(10)		(3)		(3)
Settlements(c)	(675)		(1,698)		(56)		(64)		—		(39)
Benefits paid	(457)		(457)		(334)		(359)		(137)		(101)
Benefit obligation, ending(a)	10,756		11,420		7,292		7,497		450		410
Change in plan assets
Fair value of plan assets, beginning	10,871		16,346		6,865		10,729		647		753
Actual return on plan assets	1,061		(3,550)		(316)		(2,624)		89		(106)
Company contributions	134		230		154		156		(15)		65
Employee contributions	—		—		11		9		52		75
Foreign exchange impact	—		—		214		(1,037)		—		—
Upjohn spin-off	—		—		—		45		—		—
Acquisitions/divestitures, net	—		1		13		9		—		—
Settlements(c)	(675)		(1,698)		(56)		(64)		—		(39)
Benefits paid	(457)		(457)		(334)		(359)		(137)		(101)
Fair value of plan assets, ending	10,935		10,871		6,552		6,865		636		647
Funded status	$	179	$	(549)	$	(740)	$	(632)	$	186	$	238
Amounts recorded in our consolidated balance sheet:
Noncurrent assets	$	1,010	$	346	$	644	$	783	$	266	$	322
Current liabilities	(94)		(110)		(28)		(27)		(6)		(6)
Noncurrent liabilities	(738)		(785)		(1,355)		(1,388)		(74)		(78)
Funded status	$	179	$	(549)	$	(740)	$	(632)	$	186	$	238
Pre-tax components of cumulative amounts recognized in Accumulated other comprehensive loss:
Prior service (costs)/credits	$	(2)	$	(4)	$	(65)	$	(34)	$	285	$	413
Information related to the funded status of pension plans with an ABO in excess of plan assets(d):
Fair value of plan assets	$	—	$	86	$	579	$	343
ABO	831		981		1,834		1,600
Information related to the funded status of pension plans with a PBO in excess of plan assets(d):
Fair value of plan assets	$	—	$	86	$	964	$	1,081
PBO	831		981		2,347		2,496

(a)For the U.S. pension plans, the benefit obligation is both the PBO and ABO as these plans are frozen and future benefit accruals no longer increase with future compensation increases. For the international pension plans, the benefit obligation is the PBO. The ABO for our international pension plans was $7.0 billion in 2023 and $7.2 billion in 2022. For the postretirement plans, the benefit obligation is the ABO.

(b)For 2023, primarily includes actuarial gains resulting from increases in discount rates for the international pension plans. For 2022, primarily includes actuarial gains resulting from increases in discount rates, offset by increases in inflation assumptions for the international plan.

(c)As a result of a group annuity contract entered into between Pfizer and a third-party insurance company in July 2022, the third party insurance company assumed future benefit obligations and responsibility for the annuity payments of certain retirees in the Pfizer Consolidated Pension Plan. Benefit obligations of $586 million and plan assets of $588 million were associated with this contract. In February 2024, regulatory approval was received for this contract.

(d)Our main U.S. qualified plan, U.S. postretirement plan and many of our larger funded international plans were overfunded as of December 31, 2023.

D. Plan Assets

The following provides the components of plan assets:
			As of December 31, 2023										As of December 31, 2022
					Fair Value										Fair Value
(MILLIONS EXCEPT TARGET ALLOCATION PERCENTAGE)	Target Allocation Percentage		Total		Level 1		Level 2		Level 3		Assets Measured at NAV(a)		Total		Level 1		Level  2		Level 3		Assets Measured at NAV(a)
U.S. pension plans
Cash and cash equivalents	0-10%		$	606	$	47	$	559	$	—	$	—	$	828	$	49	$	779	$	—	$	—
Equity securities:	10-40%
Global equity securities			1,537		1,537		—		1		—		1,555		1,553		1		1		—
Equity commingled funds			100		—		100		—		—		165		—		165		—		—
Fixed income securities:	45-80%
Corporate debt securities			3,668		1		3,667		—		—		3,512		5		3,507		—		—
Government and agency obligations(b)			1,971		—		1,971		—		—		1,772		—		1,772		—		—
Fixed income commingled funds			25		—		14		—		11		16		—		16		—		—
Other investments:	5-35%
Partnership investments(c)			2,449		—		—		—		2,449		2,152		—		—		—		2,152
Insurance contracts			99		—		99		—		—		116		—		116		—		—
Other commingled funds(d)			479		—		—		—		479		756		—		—		—		756
Total	100	%	$	10,935	$	1,585	$	6,410	$	1	$	2,939	$	10,871	$	1,607	$	6,355	$	1	$	2,908
International pension plans
Cash and cash equivalents	0-10%		$	268	$	120	$	148	$	—	$	—	$	221	$	58	$	163	$	—	$	—
Equity securities:	10-20%
Equity commingled funds			633		—		587		—		46		714		—		672		—		42
Fixed income securities:	45-70%
Corporate debt securities			617		—		617		—		—		569		—		569		—		—
Government and agency obligations(b)			848		—		848		—		—		862		—		862		—		—
Fixed income commingled funds			1,852		—		872		—		980		2,053		—		1,045		—		1,008
Other investments:	15-35%
Partnership investments(c)			145		—		2		—		142		128		—		1		—		126
Insurance contracts			1,151		—		55		1,096		—		1,197		—		54		1,143		—
Other(d)			1,039		—		167		244		628		1,122		—		133		312		677
Total	100	%	$	6,552	$	120	$	3,295	$	1,340	$	1,796	$	6,865	$	58	$	3,498	$	1,455	$	1,853
U.S. postretirement plans(e)
Cash and cash equivalents	0-5%		$	3	$	1	$	2	$	—	$	—	$	97	$	1	$	96	$	—	$	—
Insurance contracts	95-100%		633		—		633		—		—		551		—		551		—		—
Total	100	%	$	636	$	1	$	635	$	—	$	—	$	647	$	1	$	646	$	—	$	—

(a)Certain investments that are measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The NAV amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.

(b)Government and agency obligations are inclusive of repurchase agreements.

(c)Mainly includes investments in private equity, private debt and real estate.

(d)Mostly includes investments in hedge funds and real estate.

(e)Reflects postretirement plan assets, which support our U.S. retiree medical plans.

The following provides an analysis of the changes in our more significant investments valued using significant unobservable inputs:
	International Pension Plans
	Year Ended December 31,
(MILLIONS)	2023		2022
Fair value, beginning	$	1,455	$	1,677
Actual return on plan assets:
Assets held, ending	(96)		(177)
Assets sold during the period	(3)		4
Purchases, sales, and settlements, net	(155)		(129)
Transfer into/(out of) Level 3	81		241
Exchange rate changes	59		(161)
Fair value, ending	$	1,340	$	1,455

The following methods and assumptions were used to estimate the fair value of our pension and postretirement plans’ assets:

•Cash and cash equivalents: Level 1 investments may include cash, cash equivalents and foreign currency valued using exchange rates. Level 2 investments may include short-term investment funds which are commingled funds priced at a stable NAV by the administrator of the funds.

•Equity securities: Level 1 investments may include individual securities that are valued at the closing price or last trade reported on the major market on which they are traded. Level 1 and Level 2 investments may include commingled funds that have a readily determinable fair value based on quoted prices on an exchange or a published NAV derived from the quoted prices in active markets of the underlying securities. Level 3 investments may include individual securities that are unlisted, delisted, suspended, or illiquid and are typically valued using their last available price.

•Fixed income securities: Level 1 investments may include individual securities that are valued at the closing price or last trade reported on the major market on which they are traded. Level 2 investments may include commingled funds that have a readily determinable fair value based on observable prices of the underlying securities. Level 2 investments may include corporate bonds, government and government agency obligations and other fixed income securities valued using bid evaluation pricing models or quoted prices of securities with similar characteristics. Level 3 investments may include securities that are valued using alternative pricing sources, such as investment managers or brokers, which use proprietary pricing models that incorporate unobservable inputs.

•Other investments: Level 1 investments may include individual securities that are valued at the closing price or last trade reported on the major market on which they are traded. Level 2 investments may include insurance contracts which invest in interest bearing cash, U.S. government securities and corporate debt instruments. Level 3 investments may include securities or insurance contracts that are valued using alternative pricing sources, such as investment managers or brokers, which use proprietary pricing models that incorporate unobservable inputs.

Equity securities, Fixed income securities and Other investments may each be combined into commingled funds. Most commingled funds are valued to reflect the interest in the fund based on the reported year-end NAV. Partnership and Other investments are valued based on year-end reported NAV (or its equivalent), with adjustments as appropriate for lagged reporting of up to three months.

Certain investments are authorized to include derivatives, such as equity or bond futures, swaps, options and currency futures or forwards for managing risks and exposures.

Global plan assets are managed with the objective of generating returns that will enable the plans to meet their future obligations, while seeking to manage net periodic benefit costs and cash contributions over the long-term. We utilize long-term asset allocation ranges in the management of our plans’ invested assets. Our long-term return expectations are developed based on a diversified, global investment strategy that takes into account historical experience, as well as the impact of portfolio diversification, active portfolio management, and our view of current and future economic and financial market conditions. As market conditions and other factors change, we may adjust our targets accordingly and our asset allocations may vary from the target allocations.

E. Cash Flows

It is our practice to fund amounts for our qualified pension plans that are at least sufficient to meet the minimum requirements set forth in applicable employee benefit laws and local tax laws.

The following provides the expected future cash flow information related to our benefit plans:
	Pension Plans				Postretirement Plans
(MILLIONS)	U.S.		International
Expected employer contributions:
2024	$	94	$	162	$	39
Expected benefit payments:
2024	$	1,009	$	372	$	43
2025	907		361		45
2026	894		371		46
2027	875		384		47
2028	858		386		47
2029–2033	4,004		2,073		218

The above table reflects the total U.S. and international plan benefits projected to be paid from the plans or from our general assets under the current actuarial assumptions used for the calculation of the benefit obligation.

F. Defined Contribution Plans

We have defined contribution plans in the U.S. and other countries. For the majority of the U.S. defined contribution plans, employees may contribute a portion of their salaries and bonuses to the plans, and we match, in cash, a portion of the employee contributions. We also offer a Retirement Savings Contribution which is an annual non-contributory employer contribution in the U.S. and Puerto Rico. We recorded charges related to the employer contributions to global defined contribution plans of $843 million in 2023, $770 million in 2022 and $732 million in 2021.