Pension plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Pension plans

(23)Pension plans

Certain of our subsidiaries sponsor defined benefit pension plans. Benefits under the plans are generally based on years of service and compensation or fixed benefit rates. Plan sponsors may make contributions to the plans to meet regulatory requirements and may also make discretionary contributions. The components of our net periodic pension expense for each of the three years ending December 31, 2022 follow (in millions).

	2022			2021			2020
Service cost	$	181		$	257		$	235
Interest cost		482			410			510
Expected return on plan assets		(975	)		(1,008	)		(955	)
Amortization of actuarial losses and other		156			203			171
Net periodic pension expense	$	(156	)	$	(138	)	$	(39	)

The projected benefit obligation (“PBO”) is the actuarial present value of benefits earned based upon service and compensation prior to the valuation date and, if applicable, includes assumptions regarding future compensation levels. Benefit obligations under qualified U.S. defined benefit pension plans are funded through assets held in trusts. Pension obligations under certain non-U.S. plans and non-qualified U.S. plans are unfunded and the aggregate PBOs of such plans were $1.1 billion and $1.4 billion as of December 31, 2022 and 2021, respectively. The cost of certain BHE pension plans are expected to be recoverable through the regulated rate making process.

The funded status reflected in the Consolidated Balance Sheet at year end 2022 and 2021 and reconciliations of the changes in PBOs and plan assets related to BHE’s pension plans and all other pension plans for each of the two years ending December 31, 2022 follow (in millions).

	2022									2021
	BHE			Other			Total			BHE			Other			Total
Benefit obligations
PBO beginning of year	$	4,780		$	14,012		$	18,792		$	5,282		$	15,147		$	20,429
Service cost		36			145			181			46			211			257
Interest cost		118			364			482			109			301			410
Benefits paid		(250	)		(585	)		(835	)		(214	)		(795	)		(1,009	)
Settlements paid		(164	)		(678	)		(842	)		(185	)		(22	)		(207	)
Business acquisition		—			58			58			—			—			—
Actuarial gains and other		(1,305	)		(3,793	)		(5,098	)		(258	)		(830	)		(1,088	)
PBO end of year	$	3,215		$	9,523		$	12,738		$	4,780		$	14,012		$	18,792
Plan assets
Plan assets beginning of year	$	5,158		$	13,462		$	18,620		$	5,158		$	12,780		$	17,938
Employer contributions		29			133			162			41			124			165
Benefits paid		(250	)		(585	)		(835	)		(214	)		(795	)		(1,009	)
Settlements paid		(164	)		(678	)		(842	)		(185	)		(22	)		(207	)
Business acquisition		—			51			51			—			—			—
Actual return on plan assets		(1,162	)		(2,971	)		(4,133	)		382			1,401			1,783
Foreign currency translation and other		(235	)		(196	)		(431	)		(24	)		(26	)		(50	)
Plan assets end of year	$	3,376		$	9,216		$	12,592		$	5,158		$	13,462		$	18,620
Funded status – net (asset) liability	$	(161	)	$	307		$	146		$	(378	)	$	550		$	172

Notes to Consolidated Financial Statements (Continued)

(23)Pension plans (Continued)

The funded status reflected in assets was $1,510 million and in liabilities was $1,656 million at December 31, 2022. The funded status included in assets was $1,954 million and in liabilities was $2,126 million at December 31, 2021.

The accumulated benefit obligation (“ABO”) is the actuarial present value of benefits earned based on service and compensation prior to the valuation date. The ABO was $12.2 billion at December 31, 2022 and $17.9 billion at December 31, 2021. Information for plans with PBOs and ABOs in excess of plan assets as of December 31, 2022 and 2021 follows (in millions).

	2022		2021
PBOs	$	6,422	$	9,643
Plan assets		4,766		7,518
ABOs		5,594		9,111
Plan assets		4,234		7,429

Weighted average assumptions used in determining PBOs and net periodic pension expense follow.

	2022			2021			2020
Discount rate applicable to PBOs		5.2	%		2.7	%		2.3	%
Expected long-term rate of return on plan assets	5.9			6.1			6.2
Rate of compensation increase	2.5			2.6			2.6
Discount rate applicable to net periodic pension expense		2.9			2.4			3.1

Pension benefit payments expected over the next ten years are as follows (in millions): in 2023 – $1,259; in 2024 – $902; in 2025 – $896; in 2026 – $894; in 2027 – $900; and in 2028 to 2032 – $4,438. Sponsoring subsidiaries expect to contribute $176 million to the plans in 2023.

Fair value measurements of plan assets as of December 31, 2022 and 2021 follow (in millions).

	Fair Value								Investments carried at net
	Total		Level 1		Level 2		Level 3		asset value
December 31, 2022
Cash and cash equivalents	$	602	$	523	$	79	$	—	$	—
Equity securities		7,673		7,112		321		240		—
Fixed maturity securities		2,152		1,328		824		—		—
Investment funds and other		2,165		198		394		42		1,531
	$	12,592	$	9,161	$	1,618	$	282	$	1,531
December 31, 2021
Cash and cash equivalents	$	992	$	901	$	91	$	—	$	—
Equity securities		11,343		10,358		660		325		—
Fixed maturity securities		3,422		2,226		1,168		28		—
Investment funds and other		2,863		180		361		57		2,265
	$	18,620	$	13,665	$	2,280	$	410	$	2,265

See Note 20 for a discussion of the three levels of fair value measurements. Plan assets are generally invested with the long-term objective of producing earnings to adequately cover expected benefit obligations, while assuming a prudent level of risk. Allocations may change due to changing market conditions and investment opportunities. The expected rates of return on plan assets reflect subjective assessments of expected long-term investment returns. Generally, past investment returns are not given significant consideration when establishing assumptions for expected long-term rates of return on plan assets. Actual experience will differ from the assumed rates of return.

Notes to Consolidated Financial Statements (Continued)

(23)Pension plans (Continued)

A reconciliation of the pre-tax accumulated other comprehensive income (loss) related to defined benefit pension plans for each of the two years ending December 31, 2022 follows (in millions).

	2022			2021
Balance beginning of year	$	(485	)	$	(2,251	)
Amount included in net periodic pension expense		123			170
Actuarial gains (losses) and other		(376	)		1,596
Balance end of year	$	(738	)	$	(485	)

Several of our subsidiaries also sponsor defined contribution retirement plans, such as 401(k) or profit-sharing plans. Employee contributions are subject to regulatory limitations and the specific plan provisions. Several plans provide for employer matching contributions up to levels specified in the plans and provide for additional discretionary contributions as determined by management. Our defined contribution plan expense was approximately $0.8 billion in 2022, $1.0 billion in 2021 and $1.4 billion in 2020.