EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

Pension Plans

We historically sponsored several defined benefit pension plans covering most employees not covered by union-administered plans, including certain employees in foreign countries. These plans generally provided participants with benefits based on years of service and career-average compensation levels.

In past years, we made amendments to defined benefit retirement plans that froze the retirement benefits for non-grandfathered and certain non-union employees in the U.S., Canada and the U.K. As of December 31, 2023, our U.S., Canadian and U.K. pension plans are frozen for all remaining active employees. These employees have ceased accruing further benefits under the defined benefit pension plans and began receiving benefits under enhanced defined contribution plans. All pension benefits earned were fully preserved and will be paid in accordance with plan and legal requirements. We recognized curtailment losses in 2020 of $9 million in Non-operating pension costs, net with an offset to Accumulated other comprehensive loss as a result of the freeze of the pension plans. We maintain an active $12 million unfunded pension plan in Mexico.

In September 2023, we executed a bulk annuity contract with a U.K. insurance company to fully settle our $250 million U.K. pension benefit obligation. This transaction secured all future pension benefits to the pension plan members. We are targeting a pension plan termination in 18-24 months. At that time, the pension plan will distribute individual annuities to each pension plan member and the U.K. insurance company will assume all administrative and financial responsibilities of the

pension plan. This bulk annuity transaction will have no impact to our financial position or statement of earnings until we terminate the pension plan.

We also have a non-qualified supplemental pension plan covering certain U.S. employees, which provides for incremental pension payments so that the participants' payments equal the amounts that could have been received under our qualified pension plan if it were not for limitations imposed by income tax regulations. The accrued pension liability related to this plan was $45 million as of December 31, 2023 and 2022.

Net Pension Expense

Components of net pension expense for defined benefit pension plans were as follows:

	Years ended December 31,
(In millions)	2023		2022		2021
Company-administered plans:
Service cost	$	1	$	1	$	1
Interest cost	90		63		58
Expected return on plan assets	(77)		(74)		(86)
Amortization of net actuarial loss and prior service cost	27		21		28
Net pension expense	$	41	$	11	$	1
Company-administered plans:
U.S.	$	31	$	13	$	9
Non-U.S.	10		(2)		(8)
Net pension expense	$	41	$	11	$	1

Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized.

The following table sets forth the weighted-average actuarial assumptions used in determining our annual net pension expense:

	U.S. Plans Years ended December 31,			Non-U.S. Plans Years ended December 31,
	2023	2022	2021	2023	2022	2021
Discount rate	5.50%	2.95%	2.60%	5.05%	2.14%	1.53%
Expected long-term rate of return on plan assets	5.40%	3.60%	3.90%	3.80%	2.79%	3.89%
Gain and loss amortization period (years)	20	21	21	24	25	24

The return on plan assets assumption reflects the weighted-average of the expected long-term rates of return for the broad categories of investments held in the plans net of fees. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns or in asset allocation strategies of the plan assets.

Obligations and Funded Status

The following table sets forth the benefit obligations, assets and funded status associated with our pension plans:

(In millions)	2023		2022
Change in benefit obligations:
Benefit obligations at January 1	$	1,705	$	2,344
Service cost	1		1
Interest cost	90		63
Actuarial loss (gain)	155		(547)
Pension curtailment and settlement	—		1
Benefits paid	(111)		(111)
Foreign currency exchange rate changes	18		(46)
Benefit obligations at December 31	1,858		1,705
Change in plan assets:
Fair value of plan assets at January 1	1,600		2,294
Actual return on plan assets	114		(549)
Employer contribution	21		23
Benefits paid	(111)		(111)
Foreign currency exchange rate changes	18		(57)
Fair value of plan assets at December 31	1,642		1,600
Funded status	$	(216)	$	(105)
Funded percent	88%		94%

The funded status of our pension plans was presented in the Consolidated Balance Sheets as follows:

	December 31,
(In millions)	2023		2022
Noncurrent asset	$	7	$	65
Current liability	(4)		(4)
Noncurrent liability	(219)		(166)
Net amount recognized	$	(216)	$	(105)

Amounts recognized in Accumulated other comprehensive loss (pre-tax) consisted of:

	December 31,
(In millions)	2023		2022
Prior service cost	$	26	$	3
Net actuarial loss	830		759
Net amount recognized	$	856	$	762

In 2024, we expect to amortize $31 million of net actuarial loss and prior service cost as a component of pension expense.

The following table sets forth the weighted-average actuarial assumptions used in determining funded status:

	U.S. Plans December 31,		Non-U.S. Plans December 31,
	2023	2022	2023	2022
Discount rate	5.15%	5.50%	4.25%	5.05%

As of December 31, 2023 and 2022, our total accumulated benefit obligations, as well as our pension plan obligations (projected benefit obligations (PBO) and accumulated benefit obligations (ABO)) in excess of the fair value of the related plan assets, for our U.S. and foreign plans were as follows:

	U.S. Plans December 31,				Non-U.S. Plans December 31,				Total December 31,
(In millions)	2023		2022		2023		2022		2023		2022
Total accumulated benefit obligations	$	1,444	$	1,387	$	411	$	316	$	1,855	$	1,703
Plans with pension obligations in excess of plan assets:
PBO	1,444		1,387		352		11		1,796		1,398
ABO	1,444		1,387		349		9		1,793		1,396
Fair value of plan assets	1,241		1,229		—		—		1,241		1,229

Investment Policy and Fair Value of Plan Assets 

We have a liability hedging investment strategy for our qualified pension plans that reduces the volatility of our pension assets relative to our pension liabilities. The overall objective is to achieve attractive risk-adjusted returns that will balance the liquidity requirements related to the plans’ liabilities while striving to minimize the risk of significant funded status deterioration. As the funded status of each plan improves, we (1) gradually increase the liability hedging portfolio, which consists of high quality, longer-term fixed income securities and (2) reduce our allocation of equity investments. The plans utilize several investment strategies, including actively and passively managed fixed income strategies and passively managed equity strategies. The investment policy establishes targeted allocations for each asset class that incorporate measures of asset and liability risks. Deviations between actual pension plan asset allocations and targeted asset allocations may occur as a result of investment performance and changes in the funded status from time to time. Rebalancing of our pension plan asset portfolios is evaluated periodically and rebalanced if actual allocations exceed an acceptable range. U.S. plans account for approximately 76% of our total pension plan assets. Fixed income and equity securities in our international plans include actively and passively managed funds.

The following table presents the fair value of each major category of pension plan assets and the level of inputs used to measure fair value as of December 31, 2023 and 2022:

(In millions)	Fair Value Measurements at December 31, 2023
Asset Category	Total		Level 1		Level 2			Level 3
Commingled funds:
Equity funds	$	155	$	—	$	155		$	—
Fixed income funds	70		—		65			5
Fixed income securities	969		—		969		0	—
Alternative investments:
Private equity fund	38		—		—			38
Hedge fund	67		—		—			67
Bulk annuity contract	327		—		—			327
Cash and cash equivalents	16		—		16			—
Total	$	1,642	$	—	$	1,205		$	437

 

(In millions)	Fair Value Measurements at December 31, 2022
Asset Category	Total		Level 1		Level 2		Level 3
Commingled funds:
Equity funds	$	173	$	—	$	173	$	—
Fixed income funds	395		—		390		5
Fixed income securities	917		—		917		—
Alternative investments:
Private equity fund	47		—		—		47
Hedge fund	63		—		—		63
Cash and cash equivalents	5		—		5		—
Total	$	1,600	$	—	$	1,485	$	115

The following is a description of the valuation methodologies used for our pension assets as well as the level of input used to measure fair value:

Equity securities — These investments include common and preferred stocks and index common collective trusts that track U.S. and foreign indices. The common collective trusts were valued at the unit prices established by the funds’ sponsors based on the fair value of the assets underlying the funds. Since the units of the funds are not actively traded, the fair value measurements have been classified within Level 2 of the fair value hierarchy.

Fixed income securities — These investments include investment grade bonds of U.S. issuers from diverse industries, government issuers, index common collective trusts that track the Barclays Aggregate Index and other fixed income investments (primarily mortgage-backed securities). Fair values for the corporate bonds were valued using third-party pricing services. These sources determine prices utilizing market income models which factor in, where applicable, transactions of similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap spreads and volatility. Since the corporate bonds are not actively traded, the fair value measurements have been classified within Level 2 of the fair value hierarchy. The common collective trusts were valued at the unit prices established by the funds’ sponsors based on the fair value of the assets underlying the funds. Since the units of the funds are not actively traded, the fair value measurements have been classified within Level 2 of the fair value hierarchy. The other investments are not actively traded and fair values are estimated using bids provided by brokers, dealers or quoted prices of similar securities with similar characteristics or pricing models. Therefore, the other investments have been classified within Level 2 of the fair value hierarchy.

Private equity and hedge funds — These investments represent limited partnership interests in private equity and hedge funds. The partnership interests are valued by the general partners based on the underlying assets in each fund. The limited partnership interests are valued using unobservable inputs and have been classified within Level 3 of the fair value hierarchy.

Bulk annuity contract — The bulk annuity contract is a U.K insurance policy issued by an authorized U.K. life insurer. This contract is valued by the insurer using unobservable inputs not traded on an open market. Accordingly, this contract was categorized as Level 3.

The following table presents a summary of changes in the fair value of the pension plans’ Level 3 assets for 2023 and 2022: 

(In millions)	2023		2022
Beginning balance at January 1	$	115	$	122
Return on plan assets:
Relating to assets still held at the reporting date	(3)		(9)
Purchases, sales, settlements and expenses	325		2
Ending balance at December 31	$	437	$	115

Funding Policy and Contributions

The funding policy for these plans is to make contributions when required by statute. We may, from time to time, make voluntary contributions to our pension plans, which exceed the amount required by statute. The majority of the plans’ assets are invested in a master trust that, in turn, is invested primarily in commingled funds whose investments are listed stocks and bonds. During 2023, total global pension contributions were $21 million compared with $23 million in 2022. We estimate total 2024 required contributions to our pension plans to be approximately $4 million, and we do not expect to make voluntary contributions.

Estimated Future Benefits Payments

The following table details pension benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter:

	(In millions)
2024	$	206
2025	154
2026	141
2027	136
2028	130
2029-2033	600

Savings Plans

Employees who are not covered by union-administered plans are generally eligible to participate in enhanced savings plans. These plans provide for (1) a company contribution even if employees do not make contributions for employees hired before January 1, 2016, (2) a company match of employee contributions of eligible pay, subject to tax limits and (3) a discretionary company match. Savings plan costs totaled $48 million, $49 million and $45 million in 2023, 2022 and 2021, respectively.

Deferred Compensation and Long-Term Compensation Plans

We have deferred compensation plans that permit eligible U.S. employees, officers and directors to defer a portion of their compensation. The deferred compensation liability, including Ryder matching amounts and accumulated earnings, was $108 million and $85 million as of December 31, 2023 and 2022, respectively.

We have established grantor trusts (Rabbi Trusts) to provide funding for benefits payable under the supplemental pension plan, deferred compensation plans and long-term incentive compensation plans. The assets held in the trusts were $109 million and $85 million as of December 31, 2023 and 2022, respectively. The Rabbi Trusts’ assets consist of short-term cash investments and a managed portfolio of equity securities, including our common stock. These assets, except for the investment in our common stock, are included in “Sales-type leases and other assets” because they are available to our general creditors in the event of insolvency. The equity securities are classified as trading securities and stated at fair value. The realized and unrealized investment income (loss) recognized in "Miscellaneous income, net" was a $17 million income for 2023, $15 million loss for 2022 and $11 million of income for 2021. The Rabbi Trusts’ investments in our common stock as of both December 31, 2023 and 2022 were not material. Investments held in Rabbi Trusts are assets measured at fair value on a recurring basis. All investments are considered Level 1 of the fair value hierarchy.