The company’s defined benefit plans for salaried employees, as well as those for hourly employees in Sweden, Switzerland, the U.K. and Ireland, provide pension benefits based on employee compensation and years of service. Plans for North American hourly employees provide benefits based on fixed rates for each year of service. While the German, Swedish and certain U.S. plans are not funded, the company maintains liabilities, and annual additions to such liabilities are generally tax-deductible. With the exception of the unfunded German, Swedish and certain U.S. plans, the company’s policy is to fund the defined benefit plans in amounts at least sufficient to satisfy statutory funding requirements, taking into consideration deductibility under existing tax laws and regulations. The company closed its pension plans to all non-unionized new entrants in the United States effective for anyone hired after December 31, 2021. Anyone employed by Ball prior to that date is unaffected by this change.

Amounts recognized in the consolidated balance sheets for the funded status of the company’s defined benefit pension plans consisted of:

(a)

Included is an unfunded, non-qualified U.S. plan obligation of $22 million at December 31, 2022, that has been annuitized with a corresponding asset of $21 million. At December 31, 2021, the unfunded non-qualified U.S. plan obligation of $32 million was annuitized with a corresponding asset of $28 million.

An analysis of the change in benefit accounts for 2022 and 2021 follows:


	December 31,
	2022							2021
($ in millions)	U.S.			Non-U.S.		Total		U.S.			Non-U.S.		Total

Change in projected benefit obligation:
Benefit obligation at prior year end	$	2,304		$	3,189	$	5,493	$	2,752		$	3,479	$	6,231
Service cost		88			10		98		83			13		96
Interest cost		54			47		101		50			36		86
Benefits paid		(200)			(140)		(340)		(143)			(150)		(293)
Net actuarial (gains) losses		(557)			(999)		(1,556)		(76)			(138)		(214)
Settlements and other		(20)	(a)		—		(20)		(362)	(a)		—		(362)
Plan amendments		—			—		—		—			—		—
Other		2			(1)		1		—			2		2
Effect of exchange rates		—			(304)		(304)		—			(53)		(53)
Benefit obligation at year end		1,671			1,802		3,473		2,304			3,189		5,493
Change in plan assets:
Fair value of assets at prior year end		1,960			3,530		5,490		2,085			3,753		5,838
Actual return on plan assets		(425)			(1,075)		(1,500)		205			(58)		147
Employer contributions (b)		100			3		103		187			5		192
Contributions to unfunded plans (b)		6			15		21		6			18		24
Benefits paid		(200)			(140)		(340)		(143)			(150)		(293)
Settlements and other		(24)	(a)		—		(24)		(380)	(a)		—		(380)
Other		—			2		2		—			2		2
Effect of exchange rates		—			(347)		(347)		—			(40)		(40)
Fair value of assets at end of year		1,417			1,988		3,405		1,960			3,530		5,490
Funded status	$	(254)		$	186	$	(68)	$	(344)		$	341	$	(3)

(a)

Includes the purchase of non-participating group annuity contracts and term-vested lump sum payments discussed below.

(b)

Employer contribtuions are presented in other, net, in the operating activities section in the consolidated statements of cash flows for the years ended December 31, 2022 and 2021.

The company’s German, Swedish and certain U.S. plans are unfunded and the liabilities are included in the consolidated balance sheets. Benefits are paid directly by the company to the participants.

Amounts recognized in accumulated other comprehensive earnings (loss), including other postemployment benefits, consisted of:


	December 31,
	2022						2021
($ in millions)	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Net actuarial (loss) gain	$	(208)	$	(57)	$	(265)	$	(290)	$	83	$	(207)
Net prior service (cost) credit		14		(43)		(29)		15		(51)		(36)
Tax effect and currency exchange rates		58		9		67		80		(6)		74
	$	(136)	$	(91)	$	(227)	$	(195)	$	26	$	(169)

Net actuarial losses increased by $58 million during 2022, principally due to asset experience losses and participant demographic experience losses. These were offset by gains in actuarial assumptions, primarily the increase in global discount rates, and the effects of settlement accounting in the U.S., wherein deferred losses were released into the consolidated statement of earnings.

The accumulated benefit obligation for all U.S. defined benefit pension plans was $1,590 million and $2,171 million at December 31, 2022 and 2021, respectively. The accumulated benefit obligation for all non-U.S. defined benefit pension plans was $1,800 million and $3,185 million at December 31, 2022 and 2021, respectively. Following is the information for defined benefit plans with a projected benefit obligation, or an accumulated benefit obligation, in excess of plan assets:


	December 31,
	2022						2021
($ in millions)	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Projected benefit obligation	$	1,671	$	181	$	1,852	$	2,304	$	311	$	2,615
Accumulated benefit obligation		1,590		178		1,768		2,171		307		2,478
Fair value of plan assets (a)		1,417		11		1,428		1,960		73		2,033

(a)	The German, Swedish and certain U.S. plans are unfunded and, therefore, there is no fair value of plan assets associated with these plans.

Components of net periodic benefit cost were as follows:


	Years Ended December 31,
	2022						2021						2020
($ in millions)	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total

Ball-sponsored plans:
Service cost	$	88	$	10	$	98	$	83	$	13	$	96	$	64	$	13	$	77
Interest cost		54		47		101		50		36		86		72		56		128
Expected return on plan assets		(108)		(61)		(169)		(117)		(65)		(182)		(119)		(85)		(204)
Amortization of prior service cost		1		2		3		1		3		4		2		2		4
Recognized net actuarial loss		28		4		32		45		5		50		40		5		45
Settlement losses and other one-time charges (a)		14		—		14		135		—		135		120		—		120
Net periodic benefit cost for Ball sponsored plans	$	77	$	2	$	79	$	197	$	(8)	$	189	$	179	$	(9)	$	170

(a)

Settlement losses and other one-time charges resulted from regular lump sum payments, purchases of non-participating group annuity contracts, headcount reduction actions and terminated vested buy-out activities. These settlement losses were recorded in business consolidation and other activities. The company’s impacted U.S. pension obligations were remeasured in connection with the settlements.

Non-service pension income of $33 million in 2022, $42 million in 2021 and $27 million in 2020, is included in selling, general, and administrative (SG&A) expenses.

Contributions to the company’s defined benefit pension plans are expected to be approximately $33 million in 2023. This estimate may change based on changes in the Pension Protection Act, actual plan asset performance and available company cash flow, among other factors. Benefit payments related to the plans are expected to be approximately $282 million, $279 million, $283 million, $293 million and $296 million for the years ending December 31, 2023 through 2027, respectively, and approximately $1.57 billion in total for the years ending December 31, 2028 through 2032.

Weighted average assumptions used to determine benefit obligations for the company’s significant U.S. plans at December 31 were as follows:


	U.S.
	2022		2021		2020
Discount rate	5.52	%	2.87	%	2.49	%
Rate of compensation increase	4.47	%	4.48	%	4.05	%

Weighted average assumptions used to determine benefit obligations for the company’s significant European plans at December 31 were as follows:


	U.K.						Germany
	2022		2021		2020		2022		2021		2020
Discount rate	5.01	%	1.81	%	1.39	%	3.69	%	1.12	%	0.80	%
Rate of compensation increase	3.50	%	3.50	%	3.50	%	2.68	%	2.50	%	2.50	%
Pension increase	3.43	%	3.64	%	3.19	%	1.80	%	1.70	%	1.50	%

Weighted average assumptions used to determine net periodic benefit cost for the company’s significant U.S. plans for the years ended December 31 were as follows:


	U.S.
	2022		2021		2020
Discount rate	2.87	%	2.49	%	3.35	%
Rate of compensation increase	4.48	%	4.05	%	4.03	%
Expected long-term rate of return on assets	6.11	%	6.32	%	6.00	%

Weighted average assumptions used to determine net periodic benefit cost for the company’s significant European plans for the years ended December 31 were as follows:


	U.K.						Germany
	2022		2021		2020		2022		2021		2020
Discount rate	1.81	%	1.39	%	2.07	%	1.12	%	0.80	%	1.11	%
Rate of compensation increase	3.50	%	3.50	%	3.50	%	2.50	%	2.50	%	2.50	%
Pension increase	3.64	%	3.19	%	3.22	%	1.70	%	1.50	%	1.50	%
Expected long-term rate of return on assets	1.91	%	1.74	%	2.57	%	N/A		N/A		N/A

The discount and compensation increase rates used above to determine the December 31, 2022, benefit obligations will be used to determine net periodic benefit cost for 2023. A reduction of the expected return on pension assets assumption by one quarter of a percentage point would result in an approximate $9 million increase in 2023 pension expense, while a quarter of a percentage point reduction in the discount rate applied to the pension liability would result in an approximate $8 million increase to pension expense in 2023.

Accounting for pensions and postretirement benefit plans requires that the benefit obligation be discounted to reflect the time value of money at the measurement date and the rates of return currently available on high-quality, fixed-income securities whose cash flows (via coupons and maturities) match the timing and amount of future benefit plan payments. Other factors used in measuring the obligation include compensation increases, health care cost increases, future rates of inflation, mortality and employee turnover.

Actual results may differ from the company’s actuarial assumptions, which may have an impact on the amount of reported expense or liability for pensions or postretirement benefits. In 2022, the company recorded pension expense of $79 million for Ball-sponsored plans, including $10 million of settlement charges, and the company currently expects its 2023 pension expense to be $22 million, using currency exchange rates in effect at December 31, 2022. The expected decrease in pension expense is primarily the result of closing the U.S. pension plan to new entrants hired after December 31, 2021, a reduction in U.S. employees, an increase in discount rates and higher estimated return on pension plan assets for 2023.

The assumption related to the expected long-term rate of return on plan assets reflects the average rate of earnings expected on the funds invested to provide for pension benefits over the life of the plans. The assumption was based upon Ball’s pension plan asset allocations, investment strategies and the views of its investment managers, consultants and other large pension plan sponsors. Some reliance was placed on the historical and expected asset returns of the company’s plans. An asset-allocation optimization model was used to project future asset returns using simulation and asset class correlation. The analysis included expected future risk premiums, forward-looking return expectations derived from the yield on long-term bonds and the price earnings ratios of major stock market indexes, expected inflation levels and real risk-free interest rate assumptions and the fund’s expected asset allocation.

The expected long-term rates of return on assets were calculated by applying the expected rate of return to a market-related value of plan assets at the beginning of the year, adjusted for the weighted average expected contributions and benefit payments. The market-related value of plan assets used to calculate the expected return was $3,651 million for 2022, $5,633 million for 2021 and $5,573 million for 2020.

Defined Benefit Pension Plan Assets

Policies and Allocation Information

Pension investment committees or scheme trustees of the company and its relevant subsidiaries establish investment policies and strategies for the company’s pension plan assets. The investment policies and strategies include the following common themes to: (1) provide for long-term growth of principal without undue exposure to risk, (2) minimize contributions to the plans, (3) minimize and stabilize pension expense and (4) achieve a rate of return equal to or above the market average for each asset class over the long term. The pension investment committees are required to regularly, but no less frequently than annually, review asset mix and asset performance, as well as the performance of the investment managers. Based on their reviews, which are generally conducted quarterly, investment policies and strategies are revised as appropriate.

Target asset allocations are set using a minimum and maximum range for each asset category as a percent of the total funds’ market value. Following are the target asset allocations established as of December 31, 2022:


	U.S.		U.K.

Cash and cash equivalents	—	%	80-100	%(a)
Equity securities	20-40	%	0-15	%
Fixed income securities	40-70	%	80-100	%(a)
Alternative investments	5-25	%	—	%

(a)	The combined target allocation for fixed income securities and cash and cash equivalents is 80 to 100 percent.

The actual weighted average asset allocations for Ball’s defined benefit pension plans, which individually were within the established targets for each country for that year, were as follows at December 31:


	2022		2021
Cash and cash equivalents	2	%	—	%
Equity securities	16	%	17	%
Fixed income securities	77	%	81	%
Alternative investments	5	%	2	%
	100	%	100	%

Fair Value Measurements of Pension Plan Assets

Following is a description of the valuation methodologies used for pension assets measured at fair value:

Cash and cash equivalents: Consist of cash on deposit with brokers and short-term U.S. Treasury money market funds with a maturity of less than 90 days, and such amounts are shown net of receivables and payables for securities traded at period end but not yet settled. All cash and cash equivalents are stated at cost, which approximates fair value.

Corporate equity securities: Valued at the closing price reported on the active market on which the individual security is traded.

U.S. government and agency securities: Valued using the pricing of similar agency issues, live trading feeds from several vendors and benchmark yields.

Corporate bonds and notes: Valued using market inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data including market research publications. Inputs may be prioritized differently at certain times based on market conditions.

Commingled funds: The shares held are valued at their net asset value (NAV) at year end.

NAV practical expedient: Includes certain commingled fixed income and equity funds as well as limited partnership and other funds. Certain of the partnership investments receive fair market valuations on a quarterly basis. Certain other commingled funds and partnerships invest in market-traded securities, both on a long and short basis. These investments are valued using quoted market prices.

The preceding methods described may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, although the company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of pension assets and liabilities and their placement within the fair value hierarchy levels. The fair value hierarchy levels assigned to the company’s defined benefit plan assets are summarized in the tables below:


	December 31, 2022
($ in millions)	Level 1		Level 2		Total

U.S. pension assets, at fair value:
Cash and cash equivalents	$	—	$	13	$	13
U.S. government, agency and asset-backed securities:
Municipal bonds		—		11		11
Treasury bonds		147		—		147
Other		—		4		4
Non-U.S. government bonds		—		11		11
Corporate bonds and notes:
Basic materials		—		4		4
Communications		—		18		18
Consumer discretionary		—		6		6
Consumer staples		—		17		17
Energy		—		12		12
Financials		—		99		99
Industrials		—		140		140
Information technology		—		8		8
Private placement		—		1		1
Utilities		—		49		49
Total level 1 and level 2	$	147	$	393		540
Other investments measured at net asset value (a)						877
Total assets					$	1,417

(a)

Certain investments measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified within the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the change in plan assets reconciliation.


	December 31, 2021
($ in millions)	Level 1		Level 2		Total

U.S. pension assets, at fair value:
Cash and cash equivalents	$	—	$	26	$	26
U.S. government, agency and asset-backed securities:
Municipal bonds		—		25		25
Treasury bonds		106		—		106
Other		—		7		7
Non-U.S. government bonds		—		20		20
Corporate bonds and notes:
Basic materials		—		5		5
Communications		—		34		34
Consumer discretionary		—		20		20
Consumer staples		—		41		41
Energy		—		23		23
Financials		—		86		86
Industrials		—		283		283
Information technology		—		12		12
Private placement		—		1		1
Utilities		—		98		98
Other		—		1		1
Total level 1 and level 2	$	106	$	682		788
Other investments measured at net asset value (a)						1,172
Total assets					$	1,960

(a)


	December 31,
($ in millions)	2022		2021

U.K. pension assets, at fair value:
Cash and cash equivalents	$	29	$	5
Equity commingled funds		51		7
U.K. government bonds		1,092		2,493
Other		20		7
Total level 1		1,192		2,512
Level 2: Investment funds - corporate bonds		688		844
Other investments measured at net asset value (a)		56		100
Total assets	$	1,936	$	3,456

(a)

Other Postretirement Benefits

The company sponsors postretirement health care and life insurance plans for certain U.S. and Canadian employees. Employees may also qualify for long-term disability, medical and life insurance continuation and other postemployment

benefits upon termination of active employment prior to retirement. All of the Ball-sponsored postretirement health care and life insurance plans are unfunded with the exception of life insurance benefits, which are self-insured. The benefit obligation associated with these plans was $105 million and $148 million as of December 31, 2022 and 2021, respectively, including current portions of $11 million and $12 million, respectively. Net periodic cost associated with these plans was income of $4 million, $1 million and $3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Weighted average assumptions used to determine benefit obligations for the other postretirement benefit plans at December 31 were as follows:


	U.S.						Canada
	2022		2021		2020		2022		2021		2020
Discount rate	5.45	%	2.79	%	2.39	%	5.00	%	2.75	%	2.25	%
Rate of compensation increase (a)	4.37	%	4.37	%	4.50	%	N/A		N/A		N/A

(a)	The rate of compensation increase is not applicable for certain U.S. other postretirement benefit plans.

Weighted average assumptions used to determine net periodic benefit cost for the other postretirement benefit plans at December 31 were as follows:


	U.S.						Canada
	2022		2021		2020		2022		2021		2020
Discount rate	2.79	%	2.39	%	3.24	%	2.75	%	2.25	%	3.00	%
Rate of compensation increase (a)	4.37	%	4.50	%	4.50	%	N/A		N/A		N/A

(a)	The rate of compensation increase is not applicable for certain U.S. other postretirement benefit plans.

Deferred Compensation Plans

Certain management employees may elect to defer the payment of all or a portion of their annual incentive compensation and certain long-term stock-based compensation into the company’s deferred compensation plan and/or the company’s deferred compensation stock plan. The employee becomes a general unsecured creditor of the company with respect to any amounts deferred.