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Retirement Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Retirement Plans Retirement Plans Defined Benefit Pension Plans
The defined benefit pension plans impacting the Veoneer financial results include the following:
Existing Veoneer Plans which are comprised of plans in Japan, Canada, and France, Transferred Veoneer Plans which are comprised of plans in Germany, India, Japan, and South Korea, and Autoliv Sponsored Plans which are comprised of plans in Sweden and the U.S.
For the years ended December 31, 2021, 2020 and 2019, the Company's total pension expense was $4 million for each period.
Changes in Benefit Obligations and Plan Assets
As of December 31
(Dollars in millions)20212020
Benefit obligation at beginning of year$60 $54 
Service cost4 4 
Interest cost1 1 
Actuarial gain(5)(7)
Benefits paid(5)(3)
Net of Held for sales add back/Divestiture— 7 
Translation difference— 4 
Benefit obligation at end of year$55 $60 
Fair value of plan assets at beginning of year$40 $37 
Actual return on plan assets5 3 
Company contributions3 3 
Benefits paid(5)(3)
Net of Held for sales add back/Divestiture— (1)
Translation difference(1)1 
Fair value of plan assets at year end$42 $40 
Funded status recognized in the balance sheet$(13)$(20)
Balance sheet classification
Other non-current assets$3 $— 
Pension liabilities(16)(20)
Net amount recorded$(13)$(20)
Components of Net Periodic Benefit Cost Associated with the Defined Benefit Retirement Plan
Year Ended December 31
(Dollars in millions)202120202019
Service cost$4 $4 $4 
Interest cost1 1 1 
Expected return on plan assets(2)(2)(2)
Amortization of actuarial loss1 1 1 
Net periodic benefit cost$4 $4 $4 
The service cost and amortization of prior service cost components are reported among employee compensation costs in the Consolidated Statements of Operations. The remaining components (interest cost, expected return on plan assets and amortization of actuarial loss) are reported in Other non-operating items, net in the Consolidated Statements of Operations.
The estimated prior service cost and net actuarial loss that will be amortized from other comprehensive income into net benefit cost over the next fiscal year is immaterial. The estimated net periodic benefit cost for 2022 is $3 million.
Components of Accumulated other Comprehensive Income Before Tax
As of December 31
(Dollars in millions)20212020
Net actuarial loss$6 $15 
Prior service cost1 — 
Total accumulated other comprehensive loss recognized in the balance sheet$7 $15 
Changes in Accumulated Other Comprehensive Income Before Tax
As of December 31
(Dollars in millions)20212020
Total retirement benefit recognized in accumulated other comprehensive income at beginning of year$15 $13 
Held for sale— — 
Add back Held for sale— (2)
Effect of plan combinations— 11 
Net actuarial gain(7)(8)
Amortization of actuarial loss(1)(1)
Translation difference— 2 
Total retirement benefit recognized in accumulated other comprehensive income at end of year$7 $15 
The accumulated benefit obligation for the Veoneer defined benefit pension plans as of December 31, 2021 and 2020 was $12 million and $54 million, respectively.
Pension Plans for Which Accumulated Benefit Obligation (ABO) Exceeds the Fair Value of Plan Assets
As of December 31
(Dollars in millions)20212020
Projected Benefit Obligation (PBO)$16 $60 
Accumulated Benefit Obligation$12 $54 
Fair value of plan assets$— $40 
Veoneer, in consultation with its actuarial advisors, determines certain key assumptions to be used in calculating the projected benefit obligation and annual net periodic benefit cost.
 Assumptions Used to Determine the Benefit Obligation
As of December 31
20212020
Weighted average
Discount rate2.8 %2.32 %
Rate of increases in compensation level3.3 %3.3 %
 Assumptions Used to Determine the Net Periodic Benefit Cost for Years Ended December 31
Year Ended December 31
202120202019
Weighted average
Discount rate2.32 %1.86 %2.14 %
Rate of increases in compensation level3.28 %4.33 %4.39 %
Expected long-term rate of return on assets5.77 %3.76 %3.49 %
The discount rates for the Veoneer plans have been set based on the rates of return on high-quality fixed-income investments currently available at the measurement date and expected to be available during the period the benefits will be paid. The expected timing of cash flows from the plan have also been considered in selecting the discount rate. In particular, the yields on corporate bonds rated AA or better on the measurement date have been used to set the discount rate. The expected rate of
increase in compensation levels and long-term rate of return on plan assets are determined based on a number of factors and must take into account long-term expectations and reflect the financial environment in the respective local market. The expected return on assets for the Veoneer plans are based on the fair value of the assets as of December 31.
The investment objectives for the Veoneer plans is to provide an attractive risk-adjusted return that will ensure the payment of benefits while protecting against the risk of substantial investment losses. Correlations among the asset classes are used to identify an asset mix that Veoneer believes will provide the most attractive returns. Long-term return forecasts for each asset class using historical data and other qualitative considerations to adjust for projected economic forecasts are used to set the expected rate of return for the entire portfolio.
The Company made contributions to its pension plans of approximately $2 million and $2 million for the years ended December 31, 2021 and 2020, respectively. In addition, the Company expects to contribute $3 million to its pension plans in 2022.
Fair Value of Total Plan Assets
As of December 31
ASSETS CATEGORY IN % WEIGHTED AVERAGE20212020
Equity securities64 %65 %
Debt instruments21 %22 %
Other assets15 %13 %
Total100 %100 %
The following table summarizes the fair value of the defined benefit pension plan assets:
As of December 31
(Dollars in millions)20212020
Assets
Equity
U.S. Large Cap$7 $6 
Non-U.S. Equity20 20 
Non-U.S. Bonds
Corporate2 4 
Aggregate7 5 
Other Investments6 5 
Total$42 $40 
The fair value measurement level within the fair value hierarchy (see Note 9, Fair Value Measurements) is based on the lowest level of any input that is significant to the fair value measurement. Plan assets are classified as Level 1 with exception of the Insurance Contracts which are classified as Level 2 in the table above.
The estimated future benefit payments for the pension benefits reflect expected future service, as appropriate. The amount of benefit payments in a given year may vary from the projected amount, especially as certain plans include lump sum benefit payments, and the lump sum amounts may vary with market interest rates.
Pension Benefits Expected Payments (Dollars in millions)
Amount
2022$2 
2023$3 
2024$3 
2025$3 
2026$3 
Years 2027-2031$19 
Post-Retirement Benefits Other Than Pension
Veoneer currently provides post-retirement health care and life insurance benefits to eligible Canadian employees. The plan is an unfunded plan with a benefit obligation of $4 million and $4 million as of December 31, 2021 and 2020, respectively. The net periodic benefit cost and impact on accumulated other comprehensive income related to the plan are immaterial. 
Defined contribution plans
Veoneer recorded charges for contributions to the defined contribution plans of $4 million, $4 million and $5 million for December 31, 2021, 2020 and 2019, respectively.