Employee Benefits

9 Months Ended

Sep. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Employee Benefits

Employee Benefits

Chevron has defined benefit pension plans for many employees. The company typically prefunds defined benefit plans as required by local regulations or in certain situations where prefunding provides economic advantages. In the United States, all qualified plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. The company does not typically fund U.S. nonqualified pension plans that are not subject to funding requirements under laws and regulations because contributions to these pension plans may be less economic and investment returns may be less attractive than the company’s other investment alternatives.

The company also sponsors other postretirement (OPEB) plans that provide medical and dental benefits, as well as life insurance for some active and qualifying retired employees. The plans are unfunded, and the company and the retirees share the costs. Medical coverage for Medicare-eligible retirees in the company’s main U.S. medical plan is secondary to Medicare (including Part D) and the increase to the company contribution for retiree medical coverage is limited to no more than 4 percent each year. Certain life insurance benefits are paid by the company.

The components of net periodic benefit costs for 2012 and 2011 are as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2012			2011			2012			2011
	(Millions of dollars)
Pension Benefits
United States
Service cost	$	113		$	94		$	339		$	281
Interest cost	109			116			327			347
Expected return on plan assets	(158		)	(154		)	(475		)	(460		)
Amortization of prior service credits	(2		)	(2		)	(6		)	(6		)
Amortization of actuarial losses	117			77			352			232
Settlement losses	65			52			204			196
Total United States	244			183			741			590
International
Service cost	45			44			135			132
Interest cost	79			81			241			243
Expected return on plan assets	(67		)	(71		)	(201		)	(208		)
Amortization of prior service costs	5			3			14			15
Amortization of actuarial losses	32			23			102			79
Curtailment losses	—			—			—			36
Total International	94			80			291			297
Net Periodic Pension Benefit Costs	$	338		$	263		$	1,032		$	887
Other Benefits*
Service cost	$	16		$	14		$	46		$	44
Interest cost	37			46			114			136
Amortization of prior service credits	(18		)	(18		)	(54		)	(54		)
Amortization of actuarial losses	13			17			42			48
Settlement gains	—			—			(26		)	—
Net Periodic Other Benefit Costs	$	48		$	59		$	122		$	174

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* Includes costs for U.S. and international OPEB plans. Obligations for plans outside the U.S. are not significant relative to the company’s total OPEB obligation.

At the end of 2011, the company estimated it would contribute $900 million to employee pension plans during 2012 (composed of $600 million for the U.S. plans and $300 million for the international plans). Through September 30, 2012, a total of $1.03 billion was contributed (including $840 million to the U.S. plans). Total contributions for the full year are currently estimated to be $1.15 billion ($850 million for the U.S. plans and $300 million for the international plans). Actual contribution amounts are dependent upon plan investment returns, changes in pension obligations, regulatory requirements and other economic factors. Additional funding may ultimately be required if investment returns are insufficient to offset increases in plan obligations.

During the first nine months of 2012, the company contributed $150 million to its OPEB plans. The company anticipates contributing approximately $70 million during the remainder of 2012.