Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Defined Benefit Plans

PPG has defined benefit pension plans that cover certain employees worldwide. The principal defined benefit pension plans are those in the U.S., Canada, Germany, the Netherlands and the U.K. These plans in the aggregate represent approximately 95% of PPG’s total projected benefit obligation at December 31, 2022, of which the U.S. defined benefit pension plans represent the largest component.

As of January 1, 2006, the Company’s U.S. salaried defined benefit plans were closed to new entrants. In 2011 and 2012, the Company approved amendments related to its U.S. and Canadian defined benefit plans pursuant to which employees stopped accruing benefits at certain dates based on the affected employee’s combined age and years of service to PPG. As of December 31, 2020, the Company’s U.S. and Canadian defined benefit plans were frozen for all participants. The Company plans to continue reviewing and potentially amending PPG defined benefit plans in the future.

Canadian pension annuity contracts

In December 2021, the Company purchased group annuity contracts that transferred pension benefit obligations for certain of the Company’s retirees in Canada who were receiving their monthly retirement benefit payments from PPG’s Canadian pension plans to a third-party insurance company. The amount of each affected retiree’s annuity payment is equal to the amount of such individual’s pension benefit. The purchase of group annuity contracts was funded directly by the assets of the Canadian plans. By transferring the obligations and assets to the insurance company, the Company reduced its overall pension projected benefit obligation by approximately $175 million and recognized a non-cash pension settlement charge of $50 million in the consolidated statement of income for the year ended December 31, 2021.

Postretirement medical

PPG sponsors welfare benefit plans that provide postretirement medical and life insurance benefits for certain U.S. and Canadian employees and their dependents of which the U.S. welfare benefit plans represent approximately 87% of PPG’s total projected benefit obligation at December 31, 2022. Salaried and certain hourly employees in the U.S. hired on or after October 1, 2004, or rehired on or after October 1, 2012 are not eligible for postretirement medical benefits. These plans in the U.S. and Canada require retiree contributions based on retiree-selected coverage levels for certain retirees and their dependents and provide for sharing of future benefit cost increases between PPG and participants based on management discretion. The Company has the right to modify, amend or terminate certain of these benefit plans in the future.

Effective January 1, 2017, the Company-sponsored Medicare-eligible plans were replaced by a Medicare private exchange. The announcement of this plan design change triggered a remeasurement of PPG’s retiree medical benefit obligation using prevailing interest rates. The plan design change resulted in a $306 million reduction in the Company's postretirement benefit obligation. PPG accounted for the plan design change prospectively, and the impact was amortized to periodic postretirement benefit cost over a 5.6 year period through mid-2022.

The following table sets forth the changes in projected benefit obligations (“PBO”), plan assets, the funded status and the amounts recognized on the accompanying consolidated balance sheet for the Company’s defined benefit pension and other postretirement benefit plans:

	Defined Benefit Pension Plans
	United States		International		Total PPG
($ in millions)	2022	2021	2022	2021	2022	2021
Projected benefit obligation, January 1	$1,920	$2,042	$1,614	$1,933	$3,534	$3,975
Service cost	—	—	9	9	9	9
Interest cost	45	39	28	26	73	65
Actuarial gains	(449)	(72)	(485)	(91)	(934)	(163)
Benefits paid	(91)	(89)	(49)	(60)	(140)	(149)
Acquisitions	—	—	—	48	—	48
Foreign currency translation adjustments	—	—	(126)	(51)	(126)	(51)
Settlements and curtailments	—	—	(22)	(198)	(22)	(198)
Other	—	—	(8)	(2)	(8)	(2)
Projected benefit obligation, December 31	$1,425	$1,920	$961	$1,614	$2,386	$3,534
Market value of plan assets, January 1	$1,329	$1,335	$1,646	$1,881	$2,975	$3,216
Actual return on plan assets	(228)	66	(506)	42	(734)	108
Company contributions	—	—	11	10	11	10
Benefits paid	(73)	(72)	(41)	(51)	(114)	(123)
Acquisitions	—	—	—	3	—	3
Plan settlements	—	—	(22)	(198)	(22)	(198)
Foreign currency translation adjustments	—	—	(140)	(38)	(140)	(38)
Other	—	—	(2)	(3)	(2)	(3)
Market value of plan assets, December 31	$1,028	$1,329	$946	$1,646	$1,974	$2,975
Funded Status	($397)	($591)	($15)	$32	($412)	($559)
Amounts recognized in the Consolidated Balance Sheet:
Other assets (long-term)	—	—	183	310	183	310
Accounts payable and accrued liabilities	(17)	(23)	(12)	(12)	(29)	(35)
Accrued pensions	(380)	(568)	(186)	(266)	(566)	(834)
Net (liability)/asset recognized	($397)	($591)	($15)	$32	($412)	($559)

	Other Postretirement Benefit Plans
	United States		International		Total PPG
($ in millions)	2022	2021	2022	2021	2022	2021
Projected benefit obligation, January 1	$631	$682	$93	$104	$724	$786
Service cost	8	11	—	1	8	12
Interest cost	13	12	3	2	16	14
Actuarial gains	(154)	(33)	(20)	(10)	(174)	(43)
Benefits paid	(40)	(41)	(4)	(4)	(44)	(45)
Foreign currency translation adjustments	—	—	(6)	—	(6)	—
Projected benefit obligation, December 31	$458	$631	$66	$93	$524	$724
Amounts recognized in the Consolidated Balance Sheet:
Accounts payable and accrued liabilities	(44)	(47)	(4)	(5)	(48)	(52)
Other postretirement benefits	(414)	(584)	(62)	(88)	(476)	(672)
Net liability recognized	($458)	($631)	($66)	($93)	($524)	($724)

The PBO is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits attributable to employee service rendered to date, but does not include the effects of estimated future pay increases. The ABO for all defined benefit pension plans as of December 31, 2022 and 2021 was $2.3 billion and $3.5 billion, respectively.

The following table details the pension plans where the benefit liability exceeds the fair value of the plan assets:

	Pensions
($ in millions)	2022	2021
Plans with PBO in Excess of Plan Assets:
Projected benefit obligation	$1,863	$2,232
Fair value of plan assets	$1,270	$1,366
Plans with ABO in Excess of Plan Assets:
Accumulated benefit obligation	$1,833	$2,197
Fair value of plan assets	$1,266	$1,362

Net actuarial losses/(gains) and prior service cost/(credit) deferred in accumulated other comprehensive loss

	Pensions		Other Postretirement Benefits
($ in millions)	2022	2021	2022	2021
Accumulated net actuarial losses/(gains)	$748	$857	($16)	$170
Accumulated prior service cost/(credit)	—	5	(10)	(21)
Total	$748	$862	($26)	$149

The accumulated net actuarial losses (gains) for pensions and other postretirement benefits relate primarily to historical changes in the discount rates. The accumulated net actuarial losses exceeded 10% of the higher of the market value of plan assets or the PBO at the beginning of each of the last three years; therefore, amortization of such excess has been included in net periodic benefit costs for pension and other postretirement benefits in these periods. The amortization period is the average remaining service period of active employees expected to receive benefits unless a plan is mostly inactive in which case the amortization period is the average remaining life expectancy of the plan participants. Accumulated prior service cost (credit) is amortized over the future service periods of those employees who are active at the dates of the plan amendments and who are expected to receive benefits.

The net decrease in Accumulated other comprehensive loss (pretax) in 2022 relating to defined benefit pension and other postretirement benefits is primarily attributable to pension and other postretirement plan discount rate increases, as follows:

($ in millions)	Pensions	Other Postretirement Benefits
Net actuarial gain arising during the year	($60)	($174)
New prior service cost	(5)	—
Amortization of actuarial loss	(34)	(12)
Amortization of prior service credit	—	11
Foreign currency translation adjustments	(9)	—
Impact of settlements	(6)	—
Net decrease	($114)	($175)

The 2022 net actuarial gain related to the Company’s pension and other postretirement benefit plans was primarily due to an increase in the weighted average discount rate used to determine the benefit obligation at December 31, 2022.

Net periodic benefit (income)/cost

	Pensions			Other Postretirement Benefits
($ in millions)	2022	2021	2020	2022	2021	2020
Service cost	$9	$9	$24	$8	$12	$10
Interest cost	73	65	87	16	14	20
Expected return on plan assets	(140)	(152)	(144)	—	—	—
Amortization of prior service credit	—	—	—	(11)	(54)	(59)
Amortization of actuarial losses	34	39	71	12	20	15
Settlements, curtailments, and special termination benefits	6	53	18	—	—	—
Net periodic benefit (income)/cost	($18)	$14	$56	$25	($8)	($14)

Service cost for net periodic pension and other postretirement benefit costs is included in Cost of sales, exclusive of depreciation and amortization, Selling, general and administrative, and Research and development, net in the accompanying consolidated statements of income. Except for the Canadian pension settlement charge in 2021, all other components of net periodic benefit cost are recorded in Other (income)/charges, net in the accompanying consolidated statements of income.

Key assumptions

The following weighted average assumptions were used to determine the benefit obligation for the Company’s defined benefit pension and other postretirement plans as of December 31, 2022 and 2021:

	United States				International				Total PPG
	2022		2021		2022		2021		2022		2021
Discount rate	5.4	%	2.8	%	4.9	%	2.0	%	5.2	%	2.5	%
Rate of compensation increase	2.5	%	2.5	%	3.1	%	2.8	%	2.7	%	2.6	%

The following weighted average assumptions were used to determine the net periodic benefit cost for the Company’s defined benefit pension and other postretirement benefit plans for the three years in the period ended December 31, 2022:

	2022		2021		2020
Discount rate	2.5	%	2.1	%	2.8	%
Expected return on assets	5.0	%	4.8	%	5.0	%
Rate of compensation increase	2.6	%	1.5	%	2.6	%

These assumptions for each plan are reviewed on an annual basis. In determining the expected return on plan asset assumption, the Company evaluates the mix of investments that comprise each plan’s assets and external forecasts of future long-term investment returns. The Company compares the expected return on plan assets assumption to actual historic returns to ensure reasonability. For 2022, the return on plan assets assumption for PPG’s U.S. defined benefit pension plans was 7.4%. A change in the rate of return of 75 basis points, with other assumptions held constant, would impact 2023 net periodic pension expense by $8 million. The global expected return on plan assets assumption to be used in determining 2023 net periodic pension expense will be 6.5% (7.4% for the U.S. plans only).

The discount rates used in accounting for pension and other postretirement benefits are determined using a yield curve constructed of high-quality fixed-income securities as of the measurement date and using the plans’ projected benefit payments. The Company has elected to use a full yield curve approach in the estimation of the service and interest cost components of net periodic pension benefit cost (income) for countries with significant pension plans. The full yield curve approach (also known as the split-rate or spot-rate method) allows the Company to align the applicable discount rates with the cost of additional service being earned and the interest being accrued on these obligations. A change in the discount rate of 75 basis points, with all other assumptions held constant, would impact 2023 net periodic benefit expense for our defined benefit pension and other postretirement benefit plans by $5 million and $1 million, respectively.

The weighted-average health care cost trend rate (inflation) used for 2022 was 5.4% declining to a projected 4.0% in the year 2046. For 2023, the assumed weighted-average health care cost trend rate used will be 5.8% declining to a projected 3.9% between 2023 and 2047 for medical and prescription drug costs, respectively. These assumptions are reviewed on an annual basis. In selecting rates for current and long-term health care cost assumptions, the Company takes into consideration a number of factors, including the Company’s actual health care cost increases, the design of the Company’s benefit programs, the demographics of the Company’s active and retiree populations and external expectations of future medical cost inflation rates.

Contributions to defined benefit pension plans

($ in millions)	2022	2021	2020
Non-U.S. defined benefit pension plans	$11	$10	$17

Contributions made to PPG’s non-U.S. defined benefit pension plans in 2022, 2021, and 2020 were required by local funding requirements. PPG expects to make contributions to its defined benefit pension plans in the range of $10 million to $20 million in 2023. PPG may make voluntary contributions to its defined benefit pension plans in 2023 and beyond.

Benefit payments

The estimated benefits expected to be paid under the Company’s defined benefit pension and other postretirement benefit plans are:

($ in millions)	Pensions	Other Postretirement Benefits
2023	$148	$48
2024	$166	$47
2025	$153	$46
2026	$157	$43
2027	$160	$42
2028 to 2032	$825	$192

Plan assets

Each PPG sponsored defined benefit pension plan is managed in accordance with the requirements of local laws and regulations governing defined benefit pension plans for the exclusive purpose of providing pension benefits to participants and their beneficiaries. Investment committees comprised of PPG managers have fiduciary responsibility to oversee the management of pension plan assets by third party asset managers. Pension plan assets are held in trust by financial institutions and managed on a day-to-day basis by the asset managers. The asset managers receive a mandate from each investment committee that is aligned with the asset allocation targets established by each investment committee to achieve the plan’s investment strategies. The performance of the asset managers is monitored and evaluated by the investment committees throughout the year. 

Pension plan assets are invested to generate investment earnings over an extended time horizon to help fund the cost of benefits promised under the plans while mitigating investment risk. The asset allocation targets established for each pension plan are intended to diversify the investments among a variety of asset categories and among a variety of individual securities within each asset category to mitigate investment risk and provide each plan with sufficient liquidity to fund the payment of pension benefits to retirees.

The following summarizes the weighted average target pension plan asset allocation as of December 31, 2022 and 2021 for all PPG defined benefit plans:

Asset Category	2022	2021
Equity securities	15-45%	15-45%
Debt securities	30-65%	30-65%
Real estate	0-10%	0-10%
Other	20-40%	20-40%

The fair values of the Company’s pension plan assets at December 31, 2022 and 2021, by asset category, are as follows:

	December 31, 2022				December 31, 2021
($ in millions)	Level 1(1)	Level 2(1)	Level 3(1)	Total	Level 1(1)	Level 2(1)	Level 3(1)	Total
Asset Category
Equity securities:
U.S.
Large cap	$66	$43	$—	$109	$79	$78	$—	$157
Small cap	25	—	—	25	48	—	—	48
Non-U.S.
Developed and emerging markets(2)	99	43	—	142	130	76	—	206
Debt securities:
Cash and cash equivalents	7	47	—	54	8	42	—	50
Corporate(3)
U.S.(4)	—	168	80	248	—	232	100	332
Developed and emerging markets(2)	—	1	—	1	—	1	—	1
Diversified(5)	—	13	—	13	—	57	—	57
Government
U.S.(4)	49	10	—	59	68	13	—	81
Developed and emerging markets(2)	—	6	—	6	—	10	—	10
Other(6)	—	—	235	235	—	—	367	367
Real estate, hedge funds, and other	—	275	362	637	—	562	487	1,049
Total assets in the fair value hierarchy	$246	$606	$677	$1,529	$333	$1,071	$954	$2,358
Common-collective trusts(7)	—	—	—	445	—	—	—	617
Total Investments	$246	$606	$677	$1,974	$333	$1,071	$954	$2,975

(1)These levels refer to the accounting guidance on fair value measurement described in Note 11, “Financial Instruments, Hedging Activities and Fair Value Measurements.”

(2)These amounts represent holdings in investment grade debt or equity securities of issuers in both developed markets and emerging economies.

(3)This category represents investment grade debt securities from a diverse set of industry issuers.

(4)These investments are primarily long duration fixed income securities.

(5)This category represents commingled funds invested in diverse portfolios of debt securities.

(6)This category includes mortgage-backed and asset backed debt securities, municipal bonds and other debt securities including derivatives.

(7)Certain investments that are measured at net asset value per share (or its equivalent) are not required to be classified in the fair value hierarchy.

The change in the fair value of the Company’s Level 3 pension assets for the years ended December 31, 2022 and 2021 was as follows:

($ in millions)	Real Estate	Other Debt Securities	Hedge Funds and Other Assets	Total
January 1, 2021	$124	$421	$371	$916
Realized gains/(losses)	3	(11)	9	1
Unrealized gains	22	—	8	30
Transfers in/(out), net	8	(14)	44	38
Foreign currency losses	—	(29)	(2)	(31)
December 31, 2021	$157	$367	$430	$954
Realized gains/(losses)	1	(99)	(1)	(99)
Unrealized gains/(losses)	6	—	(3)	3
Transfers out, net	(10)	(12)	(100)	(122)
Foreign currency losses	(5)	(21)	(33)	(59)
December 31, 2022	$149	$235	$293	$677

Real estate properties are externally appraised at least annually by reputable, independent appraisal firms. Property valuations are also reviewed on a regular basis and are adjusted if there has been a significant change in circumstances related to the property since the last valuation.

Other debt securities consist of insurance contracts, which are valued externally by insurance companies based on the present value of the expected future cash flows.

Hedge funds consist of a wide range of investments which target a relatively stable investment return. The underlying funds are valued at different frequencies, some monthly and some quarterly, based on the value of the underlying investments. Other assets consist primarily of small investments in private equity funds and senior secured debt obligations of non-investment grade borrowers.

Other Plans

Employee savings plans

PPG’s Employee Savings Plans (“Savings Plans”) cover substantially all employees in the U.S., Puerto Rico and Canada. The Company makes matching contributions to the Savings Plans, at management’s discretion, based upon participants’ savings, subject to certain limitations. For most participants, Company-matching contributions are established each year at the discretion of the Company and are applied to participant accounts up to a maximum of 6% of eligible participant compensation. The Company-matching contribution remained at 100% for 2022.

Compensation expense and cash contributions related to the Company match of participant contributions to the Savings Plans for 2022, 2021, and 2020 totaled $56 million, $52 million and $50 million, respectively. A portion of the Savings Plans qualifies under the Internal Revenue Code as an Employee Stock Ownership Plan. Accordingly, dividends received on PPG shares held in that portion of the Savings Plans totaling $11 million, $10 million, and $11 million for 2022, 2021, and 2020, respectively, are deductible for PPG’s U.S. Federal tax purposes.

Defined contribution plans

Additionally, the Company has defined contribution plans for certain employees in the U.S., China, United Kingdom, Australia, Italy and other countries. The U.S. defined contribution plan is part of the Employee Savings Plan, and eligible employees receive a contribution equal to between 2% and 5% of annual compensation, based on age and years of service. For the years ended December 31, 2022, 2021 and 2020, the Company recognized expense for its defined contribution retirement plans of $92 million, $88 million and $64 million, respectively. The Company’s annual cash contributions to its defined contribution retirement plans approximated the expense recognized in each year.

Deferred compensation plan

The Company has a deferred compensation plan for certain key managers which allows them to defer a portion of their compensation in a phantom PPG stock account or other phantom investment accounts. The amount deferred earns a return based on the investment options selected by the participant. The amount owed to participants is an unfunded and unsecured general obligation of the Company. Upon retirement, death, disability, termination of employment, scheduled payment or unforeseen emergency, the compensation deferred and related accumulated earnings are distributed in accordance with the participant’s election in cash or in PPG stock, based on the accounts selected by the participant.

The plan provides participants with investment alternatives and the ability to transfer amounts between the phantom non-PPG stock investment accounts. To mitigate the impact on compensation expense of changes in the market value of the liability, the Company has purchased a portfolio of marketable securities that mirror the phantom non-PPG stock investment accounts selected by the participants, except the money market accounts. These investments are carried by PPG at fair market value, and the changes in market value of these securities are also included in Income before income taxes in the consolidated statement of income. Trading occurs in this portfolio to align the securities held with the participant’s phantom non-PPG stock investment accounts, except the money market accounts.

The cost of the deferred compensation plan, comprised of dividend equivalents accrued on the phantom PPG stock account, investment income and the change in market value of the liability, was $23 million, $20 million and $25 million in 2022, 2021 and 2020, respectively. These amounts are included in Selling, general and administrative in the consolidated statements of income. The change in market value of the investment portfolio was income of $24 million, $18 million, and $24 million in 2022, 2021 and 2020, respectively, and is also included in Selling, general and administrative in the consolidated statements of income.

The Company’s obligations under this plan, which are included in Accounts payable and accrued liabilities and Other liabilities on the consolidated balance sheet, totaled $105 million and $139 million as of December 31, 2022 and 2021, respectively, and the investments in marketable securities, which are included in Investments and Other current assets on the accompanying consolidated balance sheet, were $70 million and $104 million as of December 31, 2022 and 2021, respectively.