Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans [Text Block]

Note 10 – Employee Benefit Plans

Pension Plans

We have noncontributory defined benefit pension plans for eligible employees hired prior to January 1, 2019. Eligible employees earn compensation credits based on a cash balance formula. As of January 1, 2020, certain active employees are no longer eligible to receive compensation credits. At the time of retirement, participants may elect, to the extent they are eligible for the various options, to receive annuity payments, a lump-sum payment, or a combination of annuity and lump-sum payments.

We recognized a pre-tax, noncash settlement charge of $23 million in 2018, which is substantially reported in Other income (expense) – net below Operating income (loss) in the Consolidated Statement of Operations. This amount is included within the subsequent tables of net periodic benefit cost (credit) and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) before taxes.

Other Postretirement Benefits

We currently provide subsidized retiree medical and life insurance benefits to certain eligible participants. Generally, employees hired after December 31, 1991, are not eligible for the subsidized retiree medical benefits, except for participants that were employees or retirees of Transco Energy Company on December 31, 1995. Subsidized retiree medical benefits for eligible participants age 65 and older are paid through contributions to health reimbursement accounts. Subsidized retiree medical benefits for eligible participants under age 65 are provided through a self-insured medical plan sponsored by us. The self-insured retiree medical plan provides for retiree

contributions and contains other cost-sharing features such as deductibles, co-payments, and co-insurance. The accounting for this plan anticipates estimated future increases to our contribution levels to the health reimbursement accounts for participants age 65 and older, as well as future cost-sharing that is consistent with our expressed intent to increase the retiree contribution level generally in line with health care cost increases for participants under age 65.

Defined Contribution Plan

We have a defined contribution plan for the benefit of substantially all employees. Plan participants may contribute a portion of their compensation on a pre-tax or after-tax basis. Generally, we match employee contributions up to 6 percent of eligible compensation. Additionally, eligible active employees that are not eligible to receive compensation credits under the defined benefit pension plan are eligible for a fixed annual contribution made by us to the defined contribution plan. Our contributions charged to expense were $42 million in 2020, $36 million in 2019, and $35 million in 2018.

Funded Status

The following table presents the changes in benefit obligations and plan assets for pension benefits and other postretirement benefits for the years indicated:

	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(Millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,237	$	1,187	$	215	$	186
Service cost	31		45		1		1
Interest cost	36		50		7		8
Plan participants’ contributions	—		—		2		2
Benefits paid	(41)		(111)		(14)		(12)
Net actuarial loss (gain)	47		69		9		30
Settlements	(127)		(3)		—		—
Net increase (decrease) in benefit obligation	(54)		50		5		29
Benefit obligation at end of year	1,183		1,237		220		215
Change in plan assets:
Fair value of plan assets at beginning of year	1,299		1,132		247		214
Actual return on plan assets	212		218		37		38
Employer contributions	14		63		6		5
Plan participants’ contributions	—		—		2		2
Benefits paid	(41)		(111)		(14)		(12)
Settlements	(127)		(3)		—		—
Net increase (decrease) in fair value of plan assets	58		167		31		33
Fair value of plan assets at end of year	1,357		1,299		278		247
Funded status — overfunded (underfunded)	$	174	$	62	$	58	$	32
Accumulated benefit obligation	$	1,167	$	1,221

The overfunded (underfunded) status of our pension plans and other postretirement benefit plan presented in the previous table are recognized in the Consolidated Balance Sheet within the following accounts:

	December 31,
	2020		2019
	(Millions)
Overfunded (underfunded) pension plans:
Noncurrent assets	$	203	$	92
Current liabilities	(3)		(3)
Noncurrent liabilities	(26)		(27)
Overfunded (underfunded) other postretirement benefit plan:
Noncurrent assets	64		38
Current liabilities	(6)		(6)

The plan assets within our other postretirement benefit plan are intended to be used for the payment of benefits for certain groups of participants. The Current liabilities for the other postretirement benefit plan represent the current portion of benefits expected to be payable in the subsequent year for the groups of participants whose benefits are not expected to be paid from plan assets.

The pension plans’ benefit obligation Net actuarial loss (gain) of $47 million in 2020 and $69 million in 2019 are primarily due to the impact of decreases in the discount rates utilized to calculate the benefit obligation, partially offset by the impact of decreases in the cash balance interest crediting rate assumption.

The 2020 benefit obligation Net actuarial loss (gain) of $9 million for our other postretirement benefit plan is primarily due to a decrease in the discount rate used to calculate the benefit obligation, partially offset by the net impact of experience related items. The 2019 benefit obligation Net actuarial loss (gain) of $30 million for our other postretirement benefit plan is primarily due to a decrease in the discount rate used to calculate the benefit obligation and other assumption changes, partially offset by the impact of benefit payment experience and tax law changes.

The following table summarizes information for pension plans with obligations in excess of plan assets.

	December 31,
	2020		2019
	(Millions)
Plans with a projected benefit obligation in excess of plan assets:
Projected benefit obligation	$	29	$	29
Fair value of plan assets	—		—
Plans with an accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation	25		26
Fair value of plan assets	—		—

Pre-tax amounts not yet recognized in Net periodic benefit cost (credit) at December 31 are as follows: 

	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
	(Millions)
Amounts included in Accumulated other comprehensive income (loss):
Net actuarial loss	$	(101)	$	(243)	$	(25)	$	(21)
Amounts included in regulatory liabilities associated with Transco and Northwest Pipeline:
Net actuarial gain	N/A		N/A		$	32	$	11

In addition to the regulatory liabilities included in the previous table, differences in the amount of actuarially determined Net periodic benefit cost (credit) for our other postretirement benefit plan and the other postretirement benefit costs recovered in rates for Transco and Northwest Pipeline are deferred as a regulatory asset or liability. We have regulatory liabilities of $100 million at December 31, 2020 and $106 million at December 31, 2019, related to these deferrals. Additionally, Transco recognizes a regulatory liability for rate collections in excess of its amount funded to the tax-qualified pension plans. At December 31, 2020 and 2019, these regulatory liabilities were $39 million and $43 million, respectively. These pension and other postretirement plans amounts will be reflected in rates based on the rate structures of these gas pipelines.

Net Periodic Benefit Cost (Credit)

Net periodic benefit cost (credit) for the years ended December 31 consist of the following:

	Pension Benefits						Other Postretirement  Benefits
	2020		2019		2018		2020		2019		2018
	(Millions)
Components of net periodic benefit cost (credit):
Service cost	$	31	$	45	$	50	$	1	$	1	$	1
Interest cost	36		50		46		7		8		7
Expected return on plan assets	(53)		(61)		(63)		(11)		(10)		(11)
Amortization of prior service credit	—		—		—		—		—		(2)
Amortization of net actuarial loss	21		15		23		—		—		—
Net actuarial loss from settlements	9		1		23		—		—		—
Reclassification to regulatory liability	—		—		—		2		1		2
Net periodic benefit cost (credit)	$	44	$	50	$	79	$	(1)	$	—	$	(3)

The components of Net periodic benefit cost (credit) other than the service cost component are included in Other income (expense) – net below Operating income (loss) in the Consolidated Statement of Operations.

Items Recognized in Other Comprehensive Income (Loss) and Regulatory Assets and Liabilities

Other changes in plan assets and benefit obligations recognized in Other comprehensive income (loss) before taxes for the years ended December 31 consist of the following:

	Pension Benefits						Other Postretirement  Benefits
	2020		2019		2018		2020		2019		2018
	(Millions)
Other changes in plan assets and benefit obligations recognized in Other comprehensive income (loss):
Net actuarial gain (loss)	$	112	$	88	$	(18)	$	(4)	$	(9)	$	9
Amortization of net actuarial loss	21		15		23		—		—		—
Net actuarial loss from settlements	9		1		23		—		—		—
Other changes in plan assets and benefit obligations recognized in Other comprehensive income (loss)	$	142	$	104	$	28	$	(4)	$	(9)	$	9

Other changes in plan assets and benefit obligations for our other postretirement benefit plan associated with Transco and Northwest Pipeline are recognized in regulatory assets and liabilities. Amounts recognized in regulatory assets and liabilities for the years ended December 31 consist of the following:

	2020		2019		2018
	(Millions)
Other changes in plan assets and benefit obligations recognized in regulatory (assets) and liabilities:
Net actuarial gain (loss)	$	21	$	7	$	(10)
Amortization of prior service credit	—		—		(2)

Key Assumptions

The weighted-average assumptions utilized to determine benefit obligations as of December 31 are as follows: 

	Pension Benefits				Other Postretirement Benefits
	2020		2019		2020		2019
Discount rate	2.45	%	3.19	%	2.59	%	3.27	%
Rate of compensation increase	3.76		3.68		N/A		N/A
Cash balance interest crediting rate	3.00		3.50		N/A		N/A

The weighted-average assumptions utilized to determine Net periodic benefit cost (credit) for the years ended December 31 are as follows: 

	Pension Benefits						Other Postretirement  Benefits
	2020		2019		2018		2020		2019		2018
Discount rate	3.08	%	4.33	%	3.67	%	3.27	%	4.39	%	3.71	%
Expected long-term rate of return on plan assets	4.67		5.26		5.34		4.39		5.01		4.95
Rate of compensation increase	3.68		4.83		4.93		N/A		N/A		N/A
Cash balance interest crediting rate	3.50		4.25		4.25		N/A		N/A		N/A

The mortality assumptions used to determine the benefit obligations for our pension and other postretirement benefit plans reflect generational projection mortality tables. The assumed health care cost trend rate for 2021 is 7.0 percent. This rate decreases to 4.5 percent by 2027.

Plan Assets

Plan assets for our pension and other postretirement benefit plans consist primarily of equity and fixed income securities including mutual funds and commingled investment funds invested in equity and fixed income securities. The plans’ investment policy provides for a strategy in accordance with the Employee Retirement Income Security Act (ERISA), which governs the investment of the assets in a diversified portfolio. The plans follow a policy of diversifying the investments across various asset classes and investment managers.

The investment policy for the pension plans includes a general target asset allocation at December 31, 2020, of 25 percent equity securities and 75 percent fixed income securities. The target allocation includes the investments in equity and fixed income mutual and commingled investment funds.

Equity securities may include U.S. equities and non-U.S. equities. Investment in Williams’ securities or an entity in which Williams has a majority ownership is prohibited except where these securities may be owned in a commingled investment fund in which the plans’ trusts invest. No more than 5 percent of the total stock portfolio valued at market may be invested in the common stock of any one corporation.

Fixed income securities may consist of U.S. as well as international instruments, including emerging markets. The fixed income strategies may invest in U.S. and sovereign government, corporate, asset-backed securities, and mortgage-backed obligations. The weighted-average credit rating of the fixed income strategies must be at least “investment grade” including ratings by Moody’s and/or Standard & Poor’s. No more than 5 percent of the total fixed income portfolio may be invested in the fixed income securities of any one issuer with the exception of bond index funds and U.S. government guaranteed and agency securities.

The following securities and transactions are not authorized: unregistered securities, commodities or commodity contracts, short sales or margin transactions, or other leveraging strategies. Additionally, real estate equity, natural resource property, venture capital, leveraged buyouts, and other high-return, high-risk investments are generally restricted. Use of derivative securities in mutual funds and commingled investment funds held by the plans’ trusts is allowed. However, direct investment in derivative securities requires approval. Currently, investment managers are approved to enter into U.S. Treasury futures contracts on behalf of the plans to implement and manage duration and yield curve strategy in the fixed income portfolio.

There are no significant concentrations of risk within the plans’ investment securities because of the diversity of the types of investments, diversity of the various industries, and the diversity of the fund managers and investment strategies. Generally, the investments held in the plans are publicly traded, therefore, minimizing liquidity risk in the portfolio.

The fair values of our pension plan assets at December 31, 2020 and 2019 by asset class are as follows: 

	2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(Millions)
Pension assets:
Cash management fund	$	21	$	—	$	—	$	21
Equity securities	39		22		—		61
Fixed income securities (1):
U.S. Treasury securities	110		—		—		110
Government and municipal bonds	—		32		—		32
Mortgage and asset-backed securities	—		19		—		19
Corporate bonds	—		342		—		342
Other	—		4		—		4
	$	170	$	419	$	—	589
Commingled investment funds measured at net asset value practical expedient (2):
Equities — U.S. large cap							137
Equities — Global large and mid cap							121
Equities — International emerging markets							30
Fixed income — U.S. long and intermediate duration							346
Fixed income — Corporate bonds							134
Total assets at fair value at December 31, 2020							$	1,357

	2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(Millions)
Pension assets:
Cash management fund	$	11	$	—	$	—	$	11
Equity securities	41		22		—		63
Fixed income securities (1):
U.S. Treasury securities	62		—		—		62
Government and municipal bonds	—		35		—		35
Mortgage and asset-backed securities	—		11		—		11
Corporate bonds	—		360		—		360
Other	5		4		—		9
	$	119	$	432	$	—	551
Commingled investment funds measured at net asset value practical expedient (2):
Equities — U.S. large cap							133
Equities — Global large and mid cap							100
Equities — International emerging markets							26
Fixed income — U.S. long and intermediate duration							380
Fixed income — Corporate bonds							109
Total assets at fair value at December 31, 2019							$	1,299

The fair values of our other postretirement benefits plan assets at December 31, 2020 and 2019 by asset class are as follows:

	2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(Millions)
Other postretirement benefit assets:
Cash management funds	$	12	$	—	$	—	$	12
Equity securities	38		10		—		48
Fixed income securities (1):
U.S. Treasury securities	14		—		—		14
Government and municipal bonds	—		4		—		4
Mortgage and asset-backed securities	—		3		—		3
Corporate bonds	—		45		—		45
Mutual fund — Municipal bonds	52		—		—		52
	$	116	$	62	$	—	178
Commingled investment funds measured at net asset value practical expedient (2):
Equities — U.S. large cap							18
Equities — Global large and mid cap							16
Equities — International emerging markets							4
Fixed income — U.S. long and intermediate duration							45
Fixed income — Corporate bonds							17
Total assets at fair value at December 31, 2020							$	278

	2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(Millions)
Other postretirement benefit assets:
Cash management funds	$	11	$	—	$	—	$	11
Equity securities	35		9		—		44
Fixed income securities (1):
U.S. Treasury securities	8		—		—		8
Government and municipal bonds	—		4		—		4
Mortgage and asset-backed securities	—		1		—		1
Corporate bonds	—		43		—		43
Mutual fund — Municipal bonds	46		—		—		46
	$	100	$	57	$	—	157
Commingled investment funds measured at net asset value practical expedient (2):
Equities — U.S. large cap							16
Equities — Global large and mid cap							12
Equities — International emerging markets							3
Fixed income — U.S. long and intermediate duration							46
Fixed income — Corporate bonds							13
Total assets at fair value at December 31, 2019							$	247

____________

(1)The weighted-average credit quality rating of the fixed income security portfolio is investment grade with a weighted-average duration of approximately 16 years for 2020 and 14 years for 2019.

(2)    The stated intents of the funds vary based on each commingled fund’s investment objective. These objectives generally include strategies to replicate or outperform various market indices. Certain standard withdrawal restrictions generally apply, which may include redemption notification period restrictions ranging from 1 day to 30 days. Additionally, the fund managers retain the right to restrict withdrawals from and/or purchases into the funds so as not to disadvantage other investors in the funds. Generally, the funds also reserve the right to make all or a portion of the redemption in-kind rather than in cash or a combination of cash and in-kind.

The fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement of an asset.

Shares of the cash management and mutual funds are valued at fair value based on published market prices as of the close of business on the last business day of the year, which represents the net asset values of the shares held.

The fair values of equity securities traded on U.S. exchanges are derived from quoted market prices as of the close of business on the last business day of the year. The fair values of equity securities traded on foreign exchanges are also derived from quoted market prices as of the close of business on an active foreign exchange on the last business day of the year. However, the valuation requires translation of the foreign currency to U.S. dollars and this translation is considered an observable input to the valuation.

The fair values of all commingled investment funds are determined based on the net asset values per unit of each of the funds. The net asset values per unit represent the aggregate values of the funds’ assets at fair value less liabilities, divided by the number of units outstanding.

The fair values of fixed income securities, except U.S. Treasury securities, are determined using pricing models. These pricing models incorporate observable inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads for similar securities to determine fair value. The U.S. Treasury securities are valued at fair value based on closing prices on the last business day of the year reported in the active market in which the security is traded.

Plan Benefit Payments and Employer Contributions

Following are the expected benefits to be paid by the plans. These estimates are based on the same assumptions previously discussed and reflect future service as appropriate. The actuarial assumptions are based on long-term expectations and include, but are not limited to, assumptions as to average expected retirement age and form of benefit payment. Actual benefit payments could differ significantly from expected benefit payments if near-term participant behaviors differ significantly from the actuarial assumptions. 

	Pension Benefits		Other Postretirement Benefits
	(Millions)
2021	$	96	$	14
2022	91		14
2023	86		14
2024	82		13
2025	82		13
2026-2030	378		57

In 2021, we do not expect to contribute to our tax-qualified pension plans. We expect to contribute approximately $2 million to our nonqualified pension plans and approximately $6 million to our other postretirement benefit plan.