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 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 employee benefit (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 2014 and 2013 are as follows:



	Three Months Ended June 30						Six Months Ended June 30
	2014			2013			2014			2013
	(Millions of dollars)
Pension Benefits
United States
Service cost	$	112		$	123		$	225		$	247
Interest cost	123			118			247			236
Expected return on plan assets	(197		)	(175		)	(394		)	(350		)
Amortization of prior service (credits)	(2		)	1			(4		)	1
Amortization of actuarial losses	53			122			105			243
Settlement losses	33			57			66			114
Total United States	122			246			245			491
International
Service cost	50			49			97			97
Interest cost	89			82			173			159
Expected return on plan assets	(76		)	(68		)	(152		)	(136		)
Amortization of prior service costs	5			5			10			10
Amortization of actuarial losses	27			39			51			75
Total International	95			107			179			205
Net Periodic Pension Benefit Costs	$	217		$	353		$	424		$	696
Other Benefits*
Service cost	$	12		$	18		$	25		$	36
Interest cost	38			40			75			80
Amortization of prior service costs (credits)	4			(13		)	7			(25		)
Amortization of actuarial losses	1			14			3			27
Net Periodic Other Benefit Costs	$	55		$	59		$	110		$	118

_________________________________

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

At the end of 2013, the company estimated it would contribute $700 million to employee pension plans during 2014 (composed of $350 million for the U.S. plans and $350 million for the international plans). Through June 30, 2014, a total of $159 million was contributed (including $63 million to the U.S. plans). Total contributions for the full year are currently estimated to be $450 million ($100 million for the U.S. plans and $350 million for the international plans). The company anticipates it will not make contributions to the primary U.S. pension plan for the remainder of 2014. 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 six months of 2014, the company contributed $103 million to its OPEB plans. The company anticipates contributing approximately $112 million during the remainder of 2014.