Employee Benefits

6 Months Ended

Jun. 30, 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 June  30								Six Months Ended June  30
	2012				2011				2012				2011
	(Millions of dollars)
Pension Benefits
United States
Service cost		$	113			$	93			$	226			$	187
Interest cost			109				115				218				231
Expected return on plan assets			(158	)			(153	)			(317	)			(306	)
Amortization of prior service credits			(2	)			(2	)			(4	)			(4	)
Amortization of actuarial losses			117				78				235				155
Settlement losses			65				53				139				144
Total United States			244				184				497				407
International
Service cost			46				43				90				88
Interest cost			83				80				162				162
Expected return on plan assets			(68	)			(66	)			(134	)			(137	)
Amortization of prior service costs			4				6				9				12
Amortization of actuarial losses			37				30				70				56
Curtailment losses			—				9				—				36
Total International			102				102				197				217
Net Periodic Pension Benefit Costs		$	346			$	286			$	694			$	624
Other Benefits*
Service cost		$	15			$	16			$	30			$	30
Interest cost			38				45				77				90
Amortization of prior service credits			(18	)			(18	)			(36	)			(36	)
Amortization of actuarial losses			14				15				29				31
Settlement gains			—				—				(26	)			—
Net Periodic Other Benefit Costs		$	49			$	58			$	74			$	115

* 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 June 30, 2012, a total of $679 million was contributed (including $570 million to the U.S. plans). In July 2012, the company contributed $250 million to the U.S. plan. Total contributions for the full year are currently estimated to be $1.15 billion ($850 for the U.S. plans and $300 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 six months of 2012, the company contributed $101 million to its OPEB plans. The company anticipates contributing approximately $120 million during the remainder of 2012.