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Pension and Postretirement Benefit Plans and Defined Contribution Plans
 12 Months Ended
Dec. 31, 2011
Pension and Postretirement Benefit Plans and Defined Contribution Plans

11. Pension and Postretirement Benefit Plans and Defined Contribution Plans

The majority of our employees worldwide are covered by defined benefit pension plans, defined contribution plans or both. In the U.S., we have both qualified and supplemental (non-qualified) defined benefit plans. A qualified plan meets the requirements of certain sections of the Internal Revenue Code, 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 and life insurance benefits to certain retirees and their eligible dependents through our postretirement plans. In 2009, we assumed all of Wyeth’s defined benefit obligations and related plan assets for qualified and non-qualified pension plans and postretirement plans in connection with our acquisition of Wyeth (see Note 2A. Acquisitions, Divestitures, Collaborative Arrangements and Equity-Method Investments: Acquisition of Wyeth).

Beginning on January 1, 2011, for employees hired in the U.S. and Puerto Rico after December 31, 2010, we no longer offer a defined benefit plan and, instead, offer an enhanced benefit under our defined eligible contribution plan. In addition to the standard matching contribution by the Company, the enhanced benefit provides an automatic Company contribution for such eligible employees based on age and years of service.

 

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

The annual cost and other amounts recognized in other comprehensive (income)/loss for our benefit plans follow:

     YEAR ENDED DECEMBER 31,  
   

 

PENSION PLANS

                    
    U.S. QUALIFIED(c)     U.S.  SUPPLEMENTAL
(NON-QUALIFIED)(d)		    

INTERNATIONAL(e)

     POSTRETIREMENT
PLANS(f)		  

(MILLIONS OF DOLLARS)

     2011        2010        2009        2011        2010        2009        2011        2010        2009        2011        2010        2009   

Service cost(a)

     $  351        $347        $ 252        $  36        $  28        $  24        $251        $230        $   188        $  68        $  79        $  39   

Interest cost(a)

     734        740        526        72        77        53        453        427        342        195        211        145   

Expected return on plan assets(a)

     (871 )      (782 )      (527 )      —        —        —        (448 )      (434 )      (375 )      (35 )      (31 )      (26 ) 

Amortization of:

                        

    Actuarial losses

     145        151        212        36        29        31        86        67        30        17        15        18   

    Prior service (credits)/costs

     (8 )      2        2        (3 )      (2 )      (2 )      (5 )      (4 )      (3 )      (53 )      (38 )      (3 ) 

Curtailments and settlements—net

     95        (52 )      110        23        1        (2 )      3        (3 )      3        (68 )      (23 )      (3 ) 

Special termination benefits

     23        73        61        26        180        137        4        6        8        3        19        24   

 

Net periodic benefit costs

     469        479        636        190        313        241        344        289        193        127        232        194   

Other changes recognized in other comprehensive (income)/loss(b)

     1,879        260        (783 )      36        117        (23 )      (365 )      152        1,004        421        (183 )      (122 ) 

Total recognized in net periodic benefit costs and other comprehensive (income)/loss

     $2,348        $739        $(147 )      $226        $430        $218        $(21 )      $441        $1,197        $ 548        $  49        $  72   
                                                                                                 
(a) 

The acquisition of Wyeth during fourth quarter 2009 contributed to the increase in certain components of net periodic benefit costs, such as service cost and interest cost, which was largely offset by higher expected returns on plan assets during 2010 from the inclusion of Wyeth plan assets. Further declines in interest rates during 2011 resulted in service costs continuing to increase on an overall basis. The decrease in 2011 postretirement plans’ service and interest costs is largely driven by the harmonization of the Wyeth plans.
(b) 

For details, see Note 6. Other Comprehensive Income/(Loss).
(c) 

2011 vs. 2010 – The decrease in the U.S. qualified pension plans’ net periodic benefit costs was largely driven by lower special termination benefits costs and higher expected returns due to contributions made to the plans, partially offset by lower curtailment gains and an increase in settlement costs associated with on-going restructuring efforts. 2010 vs. 2009 – The decrease in the U.S. qualified pension plans’ net periodic benefit costs was largely driven by curtailment gains and lower settlement charges associated with Wyeth-related restructuring initiatives.
(d) 

2011 vs. 2010 – The decrease in the U.S. supplemental (non-qualified) plans’ net periodic benefit costs was primarily driven by lower special termination benefits costs associated with Wyeth-related restructuring initiatives. 2010 vs. 2009 – The increase in the U.S. supplemental (non-qualified) plans’ net periodic benefit costs was primarily driven by special termination benefits recognized for certain executives as part of ongoing Wyeth-related restructuring initiatives.
(e) 

2011 vs. 2010 and 2010 vs. 2009 – The increase in the international plans’ net periodic benefit costs as compared to the prior year was primarily driven by changes in assumptions, including the decrease in discount rates across most plans.
(f) 

2011 vs. 2010 – The decrease in the postretirement plans’ net periodic benefit costs was due to the harmonization of the Wyeth postretirement medical program initiated in mid-2010. 2010 vs. 2009 – The increase postretirement plans’ net periodic benefit costs was due to the Wyeth acquisition, offset partially by the postretirement harmonization program.

The amounts in Accumulated other comprehensive income/(loss) expected to be amortized into 2012 net periodic benefit costs follow:

      PENSION PLANS          
(MILLIONS OF DOLLARS)    U.S. QUALIFIED      U.S. SUPPLEMENTAL
(NON-QUALIFIED)		      INTERNATIONAL       POSTRETIREMENT 
PLANS 		  

Actuarial losses

      $(320)         $(44)          $(69)         $(33)   

Prior service credits and other

      15          3           7          50    

Total

      $(305)         $(41)          $(62)         $17    
                                     

 

B. Actuarial Assumptions

The weighted-average actuarial assumptions of our benefit plans follow:

(PERCENTAGES)    2011         2010         2009  

Weighted-average assumptions used to determine benefit obligations:

       

    Discount rate:

       

        U.S. qualified pension plans

      5.1 %      5.9 %      6.3 % 

        U.S. non-qualified pension plans

      5.0        5.8        6.2   

        International pension plans

      4.7        4.8        5.1   

        Postretirement plans

      4.8        5.6        6.0   

    Rate of compensation increase:

       

        U.S. qualified pension plans

      3.5        4.0        4.0   

        U.S. non-qualified pension plans

      3.5        4.0        4.0   

        International pension plans

      3.3        3.5        3.6   

Weighted-average assumptions used to determine net periodic benefit cost:

       

    Discount rate:

       

        U.S. qualified pension plans

      5.9        6.3        6.4   

        U.S. non-qualified pension plans

      5.8        6.2        6.4   

        International pension plans

      4.8        5.1        5.6   

        Postretirement plans

      5.6        6.0        6.4   

    Expected return on plan assets:

       

        U.S. qualified pension plans

      8.5        8.5        8.5   

        International pension plans

      6.0        6.4        6.7   

        Postretirement plans

      8.5        8.5        8.5   

    Rate of compensation increase:

       

        U.S. qualified pension plans

      4.0        4.0        4.3   

        U.S. non-qualified pension plans

      4.0        4.0        4.3   

        International pension plans

      3.5        3.6        3.2   
                          

The assumptions above are used to develop the benefit obligations at fiscal year-end and to develop the net periodic benefit cost for the subsequent fiscal year. Therefore, the assumptions used to determine net periodic benefit cost for each year are established at the end of each previous year, while the assumptions used to determine benefit obligations are established at each year-end.

The net periodic benefit cost and the benefit obligations are based on actuarial assumptions that are reviewed on an annual basis. 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 expected rates of return on plan assets for our U.S. qualified, international and postretirement plans represent our long-term assessment of return expectations, which we may change based on shifts in economic and financial market conditions. The 2011 expected rates of return for these plans reflect our long-term outlook for a globally diversified portfolio, which is influenced by a combination of return expectations for individual asset classes, actual historical experience and our diversified investment strategy. The historical returns are one of the inputs used to provide context for the development of our expectations for future returns. Using this information, we develop ranges of returns for each asset class and a weighted-average expected return for our targeted portfolio, which includes the impact of portfolio diversification and active portfolio management.

The healthcare cost trend rate assumptions for our U.S. postretirement benefit plans follow:

0000000000000 0000000000000
      2011     2010  

Healthcare cost trend rate assumed for next year

      7.8 %      8.0 % 

Rate to which the cost trend rate is assumed to decline

      4.5 %      4.5 % 

Year that the rate reaches the ultimate trend rate

      2027        2027   
                  

A one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits would have the following effects as of December 31, 2011:

0000000000 0000000000
(MILLIONS OF DOLLARS)    INCREASE      DECREASE  

Effect on total service and interest cost components

      $  18         $  (17 ) 

Effect on postretirement benefit obligation

      304         (270 ) 
                   

Actuarial and other assumptions for pension and postretirement plans can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. For a description of the risks associated with estimates and assumptions, see Note 1C. Significant Accounting Policies: Estimates and Assumptions.

C. Obligations and Funded Status

An analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans follow:

 

      YEAR ENDED DECEMBER 31,  
     PENSION PLANS                   
     U.S. QUALIFIED(a)      U.S. SUPPLEMENTAL
(NON-QUALIFIED)(b)		      INTERNATIONAL(c)         POSTRETIREMENT
PLANS(d)		  

(MILLIONS OF DOLLARS)

      2011          2010          2011          2010          2011          2010           2011          2010    

 

Change in benefit obligation:

                         

Benefit obligation at beginning of year

      $13,035          $12,578          $ 1,401          $ 1,368          $ 9,132          $ 9,049           $ 3,582          $ 3,733      

Service cost

      351          347          36          28          251          230           68          79      

Interest cost

      734          740          72          77          453          427           195          211      

Employee contributions

      —          —          —          —          16          18           45          22      

Plan amendments

      (73)         (46)         (9)         (6)         4          (3)          (28)         (495)     

Changes in actuarial assumptions and other

      1,808          980          111          180          (536)         361           300          281      

Foreign exchange impact

      —          —          —          —          311          (504)          —          4      

Acquisitions

      56          1          —          (1)         2          10           14          —      

Curtailments

      (97)         (233)         (10)         (29)         (121)         (33)          17          1      

Settlements

      (476)         (905)         (128)         (235)         (64)         (53)          —          —      

Special termination benefits

      23          73          26          180          4          6           3          19      

Benefits paid

      (526)         (500)         (68)         (161)         (398)         (376)          (296)         (273)     

Benefit obligation at end of year(e)

      14,835          13,035          1,431          1,401          9,054          9,132           3,900          3,582      

 

Change in plan assets:

                         

Fair value of plan assets at beginning of year

      10,596          9,977          —          —          6,699          6,516           414          370      

Actual gain on plan assets

      398          1,123          —          —          171          454           9          46      

Company contributions

      1,969          901          196          396          491          455           250          249      

Employee contributions

      —          —          —          —          16          18           45          22      

Foreign exchange impact

      —          —          —          —          203          (315)          —          —      

Acquisitions

      44          —          —          —          —          —           —          —      

Settlements

      (476)         (905)         (128)         (235)         (64)         (53)          —          —      

Benefits paid

      (526)         (500)         (68)         (161)         (398)         (376)          (296)         (273)     

Fair value of plan assets at end of year(f)

      12,005          10,596          —          —          7,118          6,699           422          414      

Funded status—Plan assets less than the benefit obligation at end of year

      $(2,830)         $(2,439)         $(1,431)         $(1,401)         $(1,936)         $(2,433)            $(3,478)         $(3,168)     
                                                                            
(a) 

The unfavorable change in our U.S. qualified plans’ projected benefit obligations funded status was largely driven by changes in interest rates and lower than expected asset returns, partially offset by plan contributions of $2.0 billion.
(b) 

The U.S. supplemental (non-qualified) pension plans are not generally funded and these obligations, which are substantially greater than the annual cash outlay for these liabilities, are paid from cash generated from operations.
(c) 

The favorable change in our international plans’ projected benefit obligations funded status was largely driven by changes in actuarial assumptions, partially offset by the weakening of the U.S. dollar against the U.K. pound and euro. Outside the U.S., in general, we fund our defined benefit plans to the extent that tax or other incentives exist and we have accrued liabilities on our consolidated balance sheet to reflect those plans that are not fully funded.
(d) 

The unfavorable change in our postretirement plans’ accumulated benefit obligations (ABO) funded status was largely driven by changes in actuarial assumptions.
(e) 

For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the benefit obligation is the accumulated postretirement benefit obligation. The ABO for all of our U.S. qualified pension plans was $13.8 billion in 2011 and $12.0 billion in 2010. The ABO for our U.S. supplemental (non-qualified) pension plans was $1.2 billion in both 2011 and 2010. The ABO for our international pension plans was $8.3 billion in 2011 and $8.1 billion in 2010.
(f) 

The U.S. qualified pension plans loan securities to other companies. Such securities may be onward loaned, sold or pledged by the other companies, but they may be required to be returned in a short period of time. We also require cash collateral from these companies and a maintenance margin of 103% of the fair value of the collateral relative to the fair value of the loaned securities. As of December 31, 2011, the fair value of collateral received was $2 million and, as of December 31, 2010, the fair value of collateral received was $581 million. The securities loaned continue to be included in the table above in Fair value of plan assets, and the securities-lending program for the pension plans will be discontinued in 2012.

The funded status is recognized in our consolidated balance sheets as follows:

      AS OF DECEMBER 31,  
     PENSION PLANS                     
     U.S. QUALIFIED      U.S. SUPPLEMENTAL
(NON-QUALIFIED)		      INTERNATIONAL           POSTRETIREMENT
PLANS		  
(MILLIONS OF DOLLARS)    2011       2010       2011       2010       2011       2010            2011       2010   

Noncurrent assets(a)

      $         —          $       —          $      —          $       —          $    329          $     118             $         —          $       —    

Current liabilities(b)

      —          —          (130)         (156)         (41)         (41)            (134)         (133)   

Noncurrent liabilities(c)

      (2,830)         (2,439)         (1,301)         (1,245)         (2,224)         (2,510)            (3,344)         (3,035)   

Funded status

      $  (2,830)         $(2,439)         $(1,431)         $(1,401)         $(1,936)         $(2,433)              $  (3,478)         $(3,168)   
                                                                              
(a) 

Included primarily in Taxes and other noncurrent assets.
(b) 

Included in Other current liabilities.
(c) 

Included in Pension benefit obligations and Postretirement benefit obligations, as appropriate.

The components of amounts recognized in Accumulated other comprehensive income/(loss) follow:

      AS OF DECEMBER 31,  
     PENSION PLANS                     
     U.S. QUALIFIED      U.S. SUPPLEMENTAL
(NON-QUALIFIED)		      INTERNATIONAL           POSTRETIREMENT
PLANS		  
(MILLIONS OF DOLLARS)    2011       2010       2011       2010       2011       2010            2011       2010   

Actuarial losses(a)

      $    (4,638)         $(2,699)         $    (566)         $  (525)         $    (2,020)         $(2,388)            $    (759)         $    (451)   

Prior service (costs)/credits and other

      123          63          26          21          (21)         (18)            468          581    

Total

      $    (4,515)         $(2,636)         $    (540)         $  (504)         $    (2,041)         $(2,406)              $    (291)         $     130    
                                                                              
(a) 

The actuarial losses primarily represent the cumulative difference between the actuarial assumptions and actual return on plan assets, changes in discount rates and changes in other assumptions used in measuring the benefit obligations. These actuarial losses are recognized in Accumulated other comprehensive income/(loss) and are amortized into net periodic benefit costs over an average period of 9.9 years for our U.S. qualified plans, an average period of 9.7 years for our U.S. supplemental (non-qualified) plans, an average period of 14 years for our international plans and an average period of 11.1 years for our postretirement plans.

Information related to the funded status of selected benefit plans follows:

      AS OF DECEMBER 31,  
     PENSION PLANS  
     U.S. SUPPLEMENTAL  
     U.S. QUALIFIED      (NON-QUALIFIED)          INTERNATIONAL  

(MILLIONS OF DOLLARS)

      2011          2010         2011         2010         2011         2010   

Pension plans with an accumulated benefit obligation in excess of plan assets:

                  

    Fair value of plan assets

      $  12,005          $10,596         $      —         $      —         $  2,529         $ 2,228   

    Accumulated benefit obligation

      13,799          11,953         1,225         1,177         4,446         4,069   

Pension plans with a projected benefit obligation in excess of plan assets:

                  

    Fair value of plan assets

      12,005          10,596         —         —         2,686         5,731   

    Projected benefit obligation

      14,835          13,035         1,431         1,401         4,951         8,283   
                                                       

All of our U.S. plans were underfunded as of December 31, 2011.

D. Plan Assets

The components of plan assets follow:

              FAIR VALUE(a)              FAIR VALUE(a)  
(MILLIONS OF DOLLARS)    AS OF
DECEMBER 31,
2011		      LEVEL 1      LEVEL 2      LEVEL 3      AS OF
DECEMBER 31,
2010		      LEVEL 1      LEVEL 2      LEVEL 3  

U.S. qualified pension plans:

                        

    Cash and cash equivalents

      $    2,111         $     —         $2,111         $    —         $   1,196         $     —         $  1,196         $     —   

    Equity securities:

                        

      Global equity securities

      2,522         2,509         12         1         2,766         2,765         —         1   

      Equity commingled funds

      1,794         —         1,794         —         1,708         —         1,708         ––   

    Debt securities:

                        

      Fixed income commingled funds

      870         —         870         —         817         —         817         —   

      Government bonds

      808         —         805         3         660         —         660         —   

      Corporate debt securities

      1,971         —         1,966         5         2,085         —         2,083         2   

    Other investments:

                        

      Private equity funds

      920         —         —         920         899         —         —         899   

      Insurance contracts

      353            353         —         —         —         —         —   

      Other

      656         —         —         656         465         —         —         465   

Total

      12,005         2,509         7,911         1,585         10,596         2,765         6,464         1,367   

International pension plans:

                        

    Cash and cash equivalents

      311         —         311         —         518         —         518         —   

    Equity securities:

                        

      Global equity securities

      1,513         1,432         81         —         1,458         1,166         292         —   

      Equity commingled funds

      2,047         —         2,047         —         1,881         ––         1,881         —   

    Debt securities:

                        

      Fixed income commingled funds

      786         —         786         —         804         —         804         —   

      Government bonds

      1,015         —         1,015         —         932         —         932         —   

      Corporate debt securities

      542         —         542         —         376         —         376         —   

    Other investments:

                        

      Private equity funds

      55         —         4         51         21         —         4         17   

      Insurance contracts

      433         —         67         366         435         —         69         366   

      Other

      416         —         67         349         274         —         59         215   

Total

      7,118         1,432         4,920         766         6,699         1,166         4,935         598   

U.S. postretirement plans(b):

                        

    Cash and cash equivalents

      19         —         19         —         12         —         12         —   

    Equity securities:

                        

      Global equity securities

      24         24         ––         —         29         29         —         —   

      Equity commingled funds

      17         —         17         —         18         —         18         —   

    Debt securities:

                        

      Fixed income commingled funds

      8         —         8         —         9         —         9         —   

      Government bonds

      8         —         8         —         7         —         7         —   

      Corporate debt securities

      19         —         19         —         21         —         21         —   

    Other investments

                        

      Insurance contracts

      312         —         312         —         306         —         306         —   

      Others

      15         —         15         —         12         —         12         —   

Total

      $    422         $     24         $   398         $    —         $      414         $    29         $     385         $     —   
                                                                         
(a) 

Fair values are determined based on valuation inputs categorized as Level 1, 2 or 3 (see Note 1E. Significant Accounting Policies: Fair Value).
(b) 

Reflects postretirement plan assets, which support a portion of our U.S. retiree medical plans.

 

   An analysis of changes in our more significant investments valued using significant unobservable inputs follows:
              ACTUAL RETURN ON PLAN
ASSETS		         
(MILLIONS OF DOLLARS)   

FAIR VALUE

BEGINNING

OF YEAR

     

ASSETS

HELD,

END OF YEAR

    

ASSETS SOLD

DURING THE

PERIOD

    

PURCHASES,

SALES AND

SETTLEMENTS,

NET

    

TRANSFER

INTO/(OUT OF)

LEVEL 3

    

EXCHANGE

RATE

CHANGES

    

FAIR

VALUE,

END OF

YEAR

  
2011                                            

U.S. qualified pension plans:

                

    Private equity funds

      $    899         $    (246)        $    55        $    212        $    —        $    —        $    920   

    Other

      465         24        (6 )      173        —        —        656   

International pension plans:

                

    Insurance contracts

      366         8        —        (12 )      (15 )      19        366   

    Other

      215         (4 )      —        120        12        6        349   

2010

                

U.S. qualified pension plans:

                

    Private equity funds

      843         45        42        (31 )      —        —        899   

    Other

      454         21        —        (10 )      —        —        465   

International pension plans:

                

    Insurance contracts

      346         12        —        (10 )      52        (34 )      366   

    Other

      127         (3 )      —        37        58        (4 )      215   
                                                           

A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. For a description of our general accounting policies associated with developing fair value estimates, see Note 1E. Significant Accounting Policies: Fair Value. For a description of the risks associated with estimates and assumptions, see Note 1C. Significant Accounting Policies: Estimates and Assumptions.

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

 

•    Cash and cash equivalents, Equity commingled funds, Fixed-income commingled funds––observable prices.

 

•    Global equity securities—quoted market prices.

 

•    Government bonds, Corporate debt securities—observable market prices.

 

•    Other investments—principally unobservable inputs that are significant to the estimation of fair value. These unobservable inputs could include, for example, the investment managers’ assumptions about earnings multiples and future cash flows.

We periodically review the methodologies, inputs and outputs of third-party pricing services for reasonableness.

The long-term target asset allocations ranges and the percentage of the fair value of plan assets for benefit plans follow:

      AS OF DECEMBER 31,  
      TARGET
ALLOCATION
PERCENTAGE		      PERCENTAGE OF PLAN ASSETS  

(PERCENTAGES)

      2011         2011         2010   

U.S. qualified pension plans:

         

Cash and cash equivalents

      0-5         17.6         11.3   

Equity securities

      25-50         36.0         42.2   

Debt securities

      30-55         30.4         33.6   

Real estate and other investments

      10-15         16.0         12.9   

Total

      100         100.0         100.0   

International pension plans:

         

Cash and cash equivalents

      0-5         4.4         7.7   

Equity securities

      25-50         50.0         49.8   

Debt securities

      30-55         32.9         31.6   

Real estate and other investments

      10-15         12.7         10.9   

Total

      100         100.0         100.0   

U.S. postretirement plans:

         

Cash and cash equivalents

      0-5         4.6         2.9   

Equity securities

      5-20         9.7         11.3   

Debt securities

      5-20         8.1         8.9   

Real estate, insurance contracts and other investments

      65-80         77.6         76.9   

Total

      100         100.0         100.0   
                            

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.

Our long-term asset allocation ranges reflect our asset class return expectations and tolerance for investment risk within the context of the respective plans’ long-term benefit obligations. These ranges are supported by analysis that incorporates historical and expected returns by asset class, as well as volatilities and correlations across asset classes and our liability profile. This analysis, referred to as an asset-liability analysis, also provides an estimate of expected returns on plan assets, as well as a forecast of potential future asset and liability balances.

The plans’ assets are managed with the objectives of minimizing pension expense and cash contributions over the long term. Asset liability studies are performed periodically in order to support asset allocations.

The investment managers of each separately managed account are permitted to use derivative securities as described in their investment management agreements.

Investment performance is reviewed on a monthly basis in total, as well as by asset class and individual manager, relative to one or more benchmarks. Investment performance and detailed statistical analysis of both investment performance and portfolio holdings are conducted, a large portion of which is presented to senior management on a quarterly basis. Periodic formal meetings are held with each investment manager to review the investments.

 

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 expected future cash flow information related to our benefit plans follows:

      PENSION PLANS          
(MILLIONS OF DOLLARS)    U.S.
QUALIFIED		      U.S.
SUPPLEMENTAL
(NON-QUALIFIED)		      INTERNATIONAL      POST
RETIREMENT
PLANS		  

Expected employer contributions:

            

2012

      $    19         $  130         $    431         $    394   

Expected benefit payments:

            

2012

      $  874         $  130         $    394         $    295   

2013

      806         173         403         308   

2014

      825         174         416         317   

2015

      819         165         436         326   

2016

      839         141         455         331   

2017–2021

      4,891         706         2,496         1,780   
                                     

The 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 and, therefore, actual benefit payments may differ from projected benefit payments.

F. Defined Contribution Plans

We have savings and investment plans in several countries, including the U.S., U.K., Japan, Spain and the Netherlands. For the U.S. plans, employees may contribute a portion of their salaries and bonuses to the plans, and we match, largely in company stock or company stock units, a portion of the employee contributions. In the U.S., the matching contributions in company stock are sourced through open market purchases. Employees are permitted to subsequently diversify all or any portion of their company matching contribution. The contribution match for certain legacy Pfizer U.S. participants is held in an employee stock ownership plan. We recorded charges related to our plans of $288 million in 2011, $259 million in 2010 and $191 million in 2009.