Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)

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PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Changes in benefit obligations and the fair value of plan assets for our pension and other postretirement benefit plans
The following table sets forth the changes in the benefit obligations and the fair value of plan assets for our pension and other postretirement benefit plans (in millions):
Pension Plans Other Postretirement Benefit Plans
Year Ended December 31, 2021 2020 2021 2020
Benefit obligation at beginning of year1
$ 9,414  $ 8,757  $ 769  $ 757 
Service cost 97  112  9  11 
Interest cost 183  235  15  21 
Participant contributions 5  1  13  12 
Foreign currency exchange rate changes (33) 67  (1) (1)
Amendments —  3  (13) — 
Net actuarial loss (gain)2
(226) 746  (28) 22 
Benefits paid (375) (485) (67) (59)
Settlements3
(491) (81) —  — 
Curtailments3
—  (15) (1) 6 
Special termination benefits 3  2  —  — 
Other 3  72  —  — 
Benefit obligation at end of year1
$ 8,580  $ 9,414  $ 696  $ 769 
Fair value of plan assets at beginning of year $ 8,639  $ 8,080  $ 396  $ 339 
Actual return on plan assets 1,003  830  15  51 
Employer contributions 33  30  —  — 
Participant contributions 6  1  8  7 
Foreign currency exchange rate changes (42) 97  —  — 
Benefits paid (315) (419) —  (1)
Settlements3
(421) (53) —  — 
Other 2  73  —  — 
Fair value of plan assets at end of year $ 8,905  $ 8,639  $ 419  $ 396 
Net asset (liability) recognized $ 325  $ (775) $ (277) $ (373)
1 For pension plans, the benefit obligation is the projected benefit obligation. For other postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation. The accumulated benefit obligation for our pension plans was $8,431 million and $9,263 million as of December 31, 2021 and 2020, respectively.
2 A change in the weighted-average discount rate was the primary driver of net actuarial loss (gain) during 2021 and 2020. For our primary U.S. pension plan, an increase in the discount rate resulted in an actuarial gain of $197 million during 2021, and a decrease in the discount rate resulted in an actuarial loss of $491 million during 2020. Other drivers of net actuarial loss (gain) included assumption updates, plan experience and our strategic realignment initiatives. Refer to Note 18.
3 Settlements and curtailments were primarily related to our strategic realignment initiatives. Refer to Note 18.
Pension and other benefit amounts recognized in consolidated balance sheets
Pension and other postretirement benefit plan amounts recognized in our consolidated balance sheets were as follows (in millions):
Pension Plans Other Postretirement Benefit Plans
December 31, 2021 2020 2021 2020
Other noncurrent assets $ 1,545  $ 1,151  $ —  $ — 
Accounts payable and accrued expenses (70) (116) (18) (19)
Other noncurrent liabilities (1,150) (1,810) (259) (354)
Net asset (liability) recognized $ 325  $ (775) $ (277) $ (373)
Schedule of pension plans with projected benefit obligation in excess of fair value of plan assets
Certain of our pension plans have a projected benefit obligation in excess of the fair value of plan assets. For these plans, the projected benefit obligation and the fair value of plan assets were as follows (in millions):
December 31, 2021 2020
Projected benefit obligation $ 6,862  $ 7,722 
Fair value of plan assets 5,641  5,796 
Accumulated benefit obligations in excess of fair value of plan assets
Certain of our pension plans have an accumulated benefit obligation in excess of the fair value of plan assets. For these plans, the accumulated benefit obligation and the fair value of plan assets were as follows (in millions):
December 31, 2021 2020
Accumulated benefit obligation $ 6,689  $ 7,553 
Fair value of plan assets 5,584  5,745 
Total pension assets for U.S. and non-U.S. plans
The following table presents total assets by asset class for our U.S. and non-U.S. pension plans (in millions):
U.S. Pension Plans Non-U.S. Pension Plans
December 31, 2021 2020 2021 2020
Cash and cash equivalents $ 272  $ 279  $ 233  $ 399 
Equity securities:
U.S.-based companies 1,463  1,382  968  757 
International-based companies 876  988  830  738 
Fixed-income securities:
Government bonds 182  220  495  417 
Corporate bonds and debt securities 899  926  124  116 
Mutual, pooled and commingled funds1
290  301  560  513 
Hedge funds/limited partnerships 682  588  38  34 
Real estate 381  326  8  6 
Derivative financial instruments (1) (1) (8) (14)
Other 339  364  274  300 
Total pension plan assets2
$ 5,383  $ 5,373  $ 3,522  $ 3,266 
1 Mutual, pooled and commingled funds include investments in equity securities, fixed-income securities and combinations of both. There are a significant number of mutual, pooled and commingled funds from which investors can choose. The selection of the type of fund is dictated by the specific investment objectives and needs of a given plan. These objectives and needs vary greatly between plans.
2 Fair value disclosures related to our pension plan assets are included in Note 16. Fair value disclosures include, but are not limited to, the levels within the fair value hierarchy in which the fair value measurements in their entirety fall; a reconciliation of the beginning and ending balances of Level 3 assets; and information about the valuation techniques and inputs used to measure the fair value of our pension plan assets.
Other postretirement benefit plan assets
The following table presents total assets by asset class for our other postretirement benefit plans (in millions):
December 31, 2021 2020
Cash and cash equivalents $ 33  $ 30 
Equity securities:
U.S.-based companies 184  170 
International-based companies 12  12 
Fixed-income securities:
Government bonds 3  3 
Corporate bonds and debt securities 82  80 
Mutual, pooled and commingled funds 87  86 
Hedge funds/limited partnerships 9  7 
Real estate 5  4 
Other 4  4 
Total other postretirement benefit plan assets1
$ 419  $ 396 
1Fair value disclosures related to our other postretirement benefit plan assets are included in Note 16. Fair value disclosures include, but are not limited to, the levels within the fair value hierarchy in which the fair value measurements in their entirety fall and information about the valuation techniques and inputs used to measure the fair value of our other postretirement benefit plan assets.
Net periodic benefit cost for pension and other postretirement benefit plans
Net periodic benefit cost or income for our pension and other postretirement benefit plans consisted of the following (in millions):
Pension Plans Other Postretirement Benefit Plans
Year Ended December 31, 2021 2020 2019 2021 2020 2019
Service cost $ 97  $ 112  $ 104  $ 9  $ 11  $ 9 
Interest cost 183  235  291  15  21  28 
Expected return on plan assets1
(606) (587) (552) (17) (16) (13)
Amortization of prior service cost (credit) —  3  (4) (2) (3) (2)
Amortization of net actuarial loss2
146  171  151  4  5  2 
Net periodic benefit cost (income) (180) (66) (10) 9  18  24 
Settlement charges3
117  23  6  —  —  — 
Curtailment charges (credits) (1) 1  —  (1) 6  (2)
Special termination benefits 3  2  1  —  —  — 
Other —  (4) 1  —  —  — 
Total cost (income) $ (61) $ (44) $ (2) $ 8  $ 24  $ 22 
1The Company has elected to use the actual fair value of plan assets as the market-related value of assets in the determination of the expected return on plan assets.
2Actuarial gains and losses are amortized using a corridor approach. The gain/loss corridor is equal to 10 percent of the greater of the benefit obligation and the market-related value of assets. Gains and losses in excess of the corridor are generally amortized over the average future working lifetime of the plan participants.
3Settlement charges were primarily related to our strategic realignment initiatives. Refer to Note 18
Changes and amounts in AOCI for pension and other postretirement benefit plans
The following table sets forth the pretax changes in AOCI for our pension and other postretirement benefit plans (in millions):
Pension Plans Other Postretirement Benefit Plans
Year Ended December 31, 2021 2020 2021 2020
Balance in AOCI at beginning of year $ (3,012) $ (2,678) $ (47) $ (59)
Recognized prior service cost (credit) 1  3 

(2) (3)
Recognized net actuarial loss 261 
1
 195 
2
 3  11 
Prior service credit (cost) occurring during the year —  (3) 13  — 
Net actuarial (loss) gain occurring during the year 623  (488)
3
 27  7 
Net foreign currency translation adjustments 2  (41) 2  (3)
Balance in AOCI at end of year $ (2,125) $ (3,012) $ (4) $ (47)
1    Includes $117 million of recognized net actuarial loss due to the impact of settlements, which were primarily related to our strategic realignment initiatives. Refer to Note 18.
2    Includes $23 million of recognized net actuarial loss due to the impact of settlements, which were primarily related to our strategic realignment initiatives. Refer to Note 18.
3    Includes $15 million of net actuarial loss occurring during the year due to the impact of curtailments.
The following table sets forth the pretax amounts in AOCI for our pension and other postretirement benefit plans (in millions):
Pension Plans Other Postretirement Benefit Plans
December 31, 2021 2020 2021 2020
Prior service credit (cost) $ (9) $ (10) $ 28  $ 17 
Net actuarial loss (2,116) (3,002) (32) (64)
Balance in AOCI at end of year $ (2,125) $ (3,012) $ (4) $ (47)
Certain weighted average assumptions used in computing the benefit obligations and net periodic benefit cost
Certain weighted-average assumptions used in computing the benefit obligations for our pension and other postretirement benefit plans were as follows:
Pension Plans Other Postretirement Benefit Plans
December 31, 2021 2020 2021 2020
Discount rate 3.00  % 2.50  % 3.25  % 2.75  %
Interest crediting rate 3.00  % 3.00  % N/A N/A
Rate of increase in compensation levels 3.75  % 3.75  % N/A N/A
Certain weighted-average assumptions used in computing net periodic benefit cost or income were as follows:
Pension Plans Other Postretirement Benefit Plans
Year Ended December 31, 2021 2020 2019 2021 2020 2019
Discount rate 2.50  % 3.25  % 4.00  % 2.75  % 3.50  % 4.25  %
Interest crediting rate 3.00  % 3.50  % 3.75  % N/A N/A N/A
Rate of increase in compensation levels 3.75  % 3.75  % 3.75  % N/A N/A N/A
Expected long-term rate of return on plan assets 7.25  % 7.50  % 7.75  % 4.25  % 4.50  % 4.50  %
Assumed health care cost trend rates
The weighted-average assumptions for health care cost trend rates were as follows:
December 31, 2021 2020
Health care cost trend rate assumed for next year 6.75  % 6.75  %
Rate to which the trend rate is assumed to decline (the ultimate trend rate) 5.25  % 5.25  %
Year that the trend rate reaches the ultimate trend rate 2027 2025
Estimated future benefit payments for pension and other postretirement benefit plans
The expected benefit payments for our pension and other postretirement benefit plans for the 10 years succeeding December 31, 2021 are as follows (in millions):
Year Ended December 31, 2022 2023 2024 2025 2026 2027-2031
Benefit payments for pension plans $ 486  $ 454  $ 464  $ 470  $ 471  $ 2,390 
Benefit payments for other postretirement
   benefit plans		 59  56  53  51  48  211 
Total $ 545  $ 510  $ 517  $ 521  $ 519  $ 2,601