Employee Benefits

3 Months Ended

Mar. 31, 2012

Employee Benefits [Abstract]

Employee Benefits

Note 8. 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 March  31
	2012				2011
	(Millions of dollars)
Pension Benefits
United States
Service cost		$	113			$	94
Interest cost			109				116
Expected return on plan assets			(159	)			(153	)
Amortization of prior service credits			(2	)			(2	)
Amortization of actuarial losses			118				77
Settlement losses			74				91
Total United States			253				223
International
Service cost			44				45
Interest cost			79				82
Expected return on plan assets			(66	)			(71	)
Amortization of prior service costs			5				6
Amortization of actuarial losses			33				26
Curtailment losses			—				27
Total International			95				115
Net Periodic Pension Benefit Costs		$	348			$	338
Other Benefits*
Service cost		$	15			$	14
Interest cost			39				45
Amortization of prior service credits			(18	)			(18	)
Amortization of actuarial losses			15				16
Settlement gains			(26	)			—
Net Periodic Other Benefit Costs		$	25			$	57

* 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 March 31, 2012, a total of $345 million was contributed (including $312 million to the U.S. plans). The estimated total contributions for the full year remain at $900 million. 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 three months of 2012, the company contributed $51 million to its OPEB plans. The company anticipates contributing approximately $170 million during the remainder of 2012.