Pensions and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Pensions and Other Postretirement Benefits

Pensions and Other Postretirement Benefits

U.S. Pension Annuity Contracts

In March 2023, the Company purchased group annuity contracts that transferred to third-party insurance companies pension benefit obligations for certain of the Company’s retirees in the U.S. who were receiving their monthly retirement benefit payments from the U.S. pension plan. 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 U.S. plans. By transferring the obligations and assets to the insurance companies, the Company reduced its overall pension projected benefit obligation by $309 million and recognized a non-cash Pension settlement charge of $190 million.

The service cost component of net periodic pension benefit cost/(income) and other postretirement benefit cost is included in Cost of sales, exclusive of depreciation and amortization, Selling, general and administrative, and Research and development, net in the accompanying condensed consolidated statement of income. Except for the Pension settlement charge in the quarter ended March 31, 2023, all other components of net periodic benefit cost are recorded in Other charges/(income), net in the accompanying condensed consolidated statement of income.

Net periodic pension benefit cost/(income) and other postretirement benefit cost for the three and six months ended June 30, 2023 and 2022 was as follows:

	Pension
	Three Months Ended June 30		Six Months Ended June 30
($ in millions)	2023	2022	2023	2022
Service cost	$2	$2	$4	$4
Interest cost	24	18	55	37
Expected return on plan assets	(24)	(35)	(55)	(71)
Amortization of actuarial losses	3	9	10	17
Settlements	1	—	191	—
Net periodic benefit cost/(income)	$6	($6)	$205	($13)

	Other Postretirement Benefits
	Three Months Ended June 30		Six Months Ended June 30
($ in millions)	2023	2022	2023	2022
Service cost	$1	$1	$2	$4
Interest cost	6	4	13	8
Amortization of actuarial (gains)/losses	(1)	2	(1)	6
Amortization of prior service credit	(1)	(2)	(3)	(5)
Net periodic benefit cost	$5	$5	$11	$13

Net periodic pension cost was higher for both the three and six months ended June 30, 2023 compared to 2022, primarily due the Pension settlement charge recognized in the first quarter 2023 and higher interest cost driven by an increase in discount rates. In addition, declines in the market value of pension investments during 2022 resulted in a lower asset base to generate returns on plan assets in 2023.

PPG expects 2023 full year net periodic pension cost of approximately $220 million, which includes the impact of the $190 million Pension settlement charge recognized during the first quarter 2023. PPG expects 2023 full year net periodic other postretirement benefit cost of approximately $25 million.

Contributions to Defined Benefit Pension Plans

	Three Months Ended June 30		Six Months Ended June 30
($ in millions)	2023	2022	2023	2022
Non-U.S. defined benefit pension mandatory contributions	$1	$1	$2	$2

PPG expects to make contributions to its defined benefit pension plans in the range of $5 million to $10 million during the remaining six months of 2023. PPG may make voluntary contributions to its defined benefit pension plans in 2023 and beyond.