Postemployment benefit plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Postemployment benefit plans

Postemployment benefit plans

We provide defined benefit pension plans, defined contribution plans and/or other postretirement benefit plans (retirement health care and life insurance) to employees in many of our locations throughout the world. Our defined benefit pension plans provide a benefit based on years of service and/or the employee’s average earnings near retirement. Our defined contribution plans allow employees to contribute a portion of their salary to help save for retirement, and in most cases, we provide a matching contribution. The benefit obligation related to our non-U.S. defined benefit pension plans are for employees located primarily in Europe, Japan and Brazil. For other postretirement benefits (OPEB), substantially all of our benefit obligation is for employees located in the United States.

A. Obligations, assets and funded status

	U.S. Pension Benefits				Non-U.S.  Pension Benefits				Other Postretirement  Benefits
(Millions of dollars)	2023		2022		2023		2022		2023		2022
Accumulated benefit obligation, end of year	$	13,137	$	13,069	$	3,151	$	2,859
Change in benefit obligation:
Benefit obligation, beginning of year	$	13,069	$	17,895	$	2,956	$	4,436	$	2,866	$	3,736
Service cost 1	—		—		40		50		67		99
Interest cost	656		401		124		69		144		80
Plan amendments	—		—		—		—		—		(29)
Actuarial loss (gain)	394		(4,231)		169		(1,084)		(115)		(779)
Foreign currency exchange rates	—		—		178		(333)		14		—
Participant contributions	—		—		5		5		43		43
Benefits paid - gross	(982)		(995)		(196)		(179)		(285)		(292)
Less: federal subsidy on benefits paid	—		—		—		—		7		8
Curtailments, settlements and termination benefits	—		(1)		(2)		(8)		—		—
Acquisitions, divestitures and other	—		—		(9)		—		—		—
Benefit obligation, end of year	$	13,137	$	13,069	$	3,265	$	2,956	$	2,741	$	2,866
Change in plan assets:
Fair value of plan assets, beginning of year	$	12,456	$	17,227	$	3,244	$	4,552	$	102	$	130
Actual return on plan assets	1,220		(3,821)		160		(852)		33		(25)
Foreign currency exchange rates	—		—		190		(328)		—		—
Company contributions	44		46		66		54		251		246
Participant contributions	—		—		5		5		43		43
Benefits paid	(982)		(995)		(196)		(179)		(285)		(292)
Settlements and termination benefits	—		(1)		(2)		(8)		—		—
Fair value of plan assets, end of year	$	12,738	$	12,456	$	3,467	$	3,244	$	144	$	102
Over (under) funded status	$	(399)	$	(613)	$	202	$	288	$	(2,597)	$	(2,764)
Amounts recognized in Statement 3:
Other assets (non-current asset)	$	354	$	256	$	563	$	615	$	—	$	—
Accrued wages, salaries and employee benefits (current liability)	(52)		(48)		(20)		(18)		(162)		(224)
Liability for postemployment benefits (non-current liability) 2	(701)		(821)		(341)		(309)		(2,435)		(2,540)
Net (liability) asset recognized	$	(399)	$	(613)	$	202	$	288	$	(2,597)	$	(2,764)

Amounts recognized in AOCI (pre-tax):
Prior service cost (credit)	$	—		$	—		$	21		$	20		$	(19)		$	(29)
Weighted-average assumptions used to determine benefit obligation, end of year:
Discount rate	5.0		%	5.4		%	3.9		%	4.3		%	5.1		%	5.4		%
Rate of compensation increase 1	—		%	—		%	2.3		%	2.3		%	4.0		%	4.0		%

1 All U.S. pension benefits are frozen, and accordingly there is no longer any service cost and certain assumptions are no longer applicable.

2 The Liability for postemployment benefits reported in Statement 3 includes liabilities for other postemployment benefits and non-qualified deferred compensation plans. For 2023, these liabilities were $56 million and $565 million, respectively. For 2022, these liabilities were $58 million and $475 million, respectively.

For 2023, Actuarial loss (gain) impacting the benefit obligation was primarily due to lower discount rates at the end of 2023 compared to the end of 2022. For 2022, Actuarial loss (gain) impacting the benefit obligation was primarily due to higher discount rates at the end of 2022 compared to the end of 2021.

	U.S. Pension Benefits				Non-U.S.  Pension Benefits
(Millions of dollars)	2023		2022		2023		2022
Pension plans with projected benefit obligation in excess of plan assets:
Projected benefit obligation	$	10,557	$	10,413	$	623	$	606
Fair value of plan assets	$	9,805	$	9,544	$	262	$	280
Pension plans with accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation	$	10,557	$	10,413	$	534	$	482
Fair value of plan assets	$	9,805	$	9,544	$	224	$	202

The accumulated postretirement benefit obligation exceeds plan assets for all of our other postretirement benefit plans for all years presented.

B. Net periodic benefit cost

	U.S. Pension Benefits									Non-U.S. Pension Benefits									Other Postretirement Benefits
(Millions of dollars)	2023			2022			2021			2023			2022			2021			2023			2022			2021
Net periodic benefit cost:
Service cost 1	$	—		$	—		$	—		$	40		$	50		$	57		$	67		$	99		$	100
Interest cost	656			401			330			124			69			53			144			80			64
Expected return on plan assets	(689)			(669)			(718)			(163)			(130)			(128)			(11)			(12)			(6)
Curtailments, settlements and termination benefits	—			—			—			1			1			(1)			—			—			—
Amortization of prior service cost (credit)	—			—			—			—			—			—			(12)			(6)			(40)
Actuarial loss (gain) 2	(138)			259			(487)			172			(132)			(115)			(131)			(733)			(231)
Net Periodic benefit cost (benefit) 3	$	(171)		$	(9)		$	(875)		$	174		$	(142)		$	(134)		$	57		$	(572)		$	(113)
Amounts recognized in other comprehensive income (pre-tax):
Current year prior service cost (credit)	$	—		$	—		$	—		$	1		$	(3)		$	—		$	(2)		$	(30)		$	—
Amortization of prior service (cost) credit	—			—			—			—			—			—			12			6			40
Total recognized in other comprehensive income	—			—			—			1			(3)			—			10			(24)			40
Total recognized in net periodic cost and other comprehensive income	$	(171)		$	(9)		$	(875)		$	175		$	(145)		$	(134)		$	67		$	(596)		$	(73)
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate used to measure service cost 1	—		%	—		%	—		%	3.8		%	1.7		%	1.4		%	5.4		%	2.8		%	2.5		%
Discount rate used to measure interest cost	5.2		%	2.3		%	1.8		%	4.2		%	1.7		%	1.2		%	5.3		%	2.2		%	1.6		%
Expected rate of return on plan assets	5.8		%	4.0		%	4.2		%	5.2		%	3.1		%	2.9		%	7.4		%	6.9		%	6.5		%
Rate of compensation increase 1	—		%	—		%	—		%	2.3		%	2.0		%	2.0		%	4.0		%	4.0		%	4.0		%

1 All U.S. pension benefits are frozen, and accordingly there is no longer any service cost and certain assumptions are no longer applicable.

2 Actuarial loss (gain) represents the effects of actual results differing from our assumptions and the effects of changing assumptions. We recognize actuarial loss (gain) immediately through earnings upon the annual remeasurement in the fourth quarter, or on an interim basis as triggering events warrant remeasurement.

3 The service cost component is included in Operating costs and all other components are included in Other income (expense) in Statement 1.

Our expected long-term rate of return on U.S. plan assets is based on our estimate of long-term returns for equities and fixed income securities weighted by the fair value of plan asset allocations as of December 31. We use a similar process to determine this rate for our non-U.S. plans.

The assumed health care trend rate represents the rate at which health care costs are assumed to increase. We assumed a weighted-average increase of 6.5 percent in our calculation of 2023 benefit expense.  We expect a weighted-average increase of 6.2 percent during 2024.  The 2024 rates are assumed to decrease gradually to the ultimate health care trend rate of 4.7 percent in 2030.

 C. Expected contributions and Benefit payments

The following table presents information about expected contributions and benefit payments for pension and other postretirement benefit plans:

(Millions of dollars)	2024
Expected employer contributions:
U.S. Pension Benefits	$	52
Non-U.S. Pension Benefits	$	60
Other Postretirement Benefits	$	161
Expected benefit payments:	2024		2025		2026		2027		2028		2029- 2033		Total
U.S. Pension Benefits	$	1,010	$	1,000	$	995	$	990	$	985	$	4,750	$	9,730
Non-U.S. Pension Benefits	$	185	$	185	$	195	$	200	$	210	$	1,095	$	2,070
Other Postretirement Benefits	$	245	$	245	$	240	$	240	$	240	$	1,150	$	2,360
Expected Medicare Part D subsidy:	$	6	$	6	$	5	$	5	$	5	$	20	$	47

The above table reflects the total expected employer contributions and expected benefits to be paid from the plan or from company assets and does not include the participants’ share of the cost. The expected benefit payments for our other postretirement benefits include payments for prescription drug benefits. The above table also includes Medicare Part D subsidy amounts expected to be received by the company which will offset other postretirement benefit payments.

D. Plan assets

In general, our strategy for both the U.S. and non-U.S. pensions includes ongoing alignment of our investments to our liabilities, while reducing risk in our portfolio. The current U.S. pension target asset allocation is 85 percent fixed income and 15 percent equities. We will revise this target allocation periodically to ensure it reflects our overall objectives. The non-U.S. pension weighted-average target allocations are 59 percent fixed income, 19 percent insurance contracts, 12 percent equities, 6 percent real estate, and 4 percent other.  The target allocations for each plan vary based upon local statutory requirements, demographics of plan participants and funded status.  We primarily invest the non-U.S. plan assets in non-U.S. securities.

Our target allocation for the other postretirement benefit plans is 70 percent equities and 30 percent fixed income. 

We rebalance the U.S. plans to within the appropriate target asset allocation ranges on a monthly basis.  The frequency of rebalancing for the non-U.S. plans varies depending on the plan. As a result of our diversification strategies, there are no significant concentrations of risk within the portfolio of investments.

We permit the use of certain derivative instruments where appropriate and necessary for achieving overall investment policy objectives.  The plans do not use derivative contracts for speculative purposes.

The accounting guidance on fair value measurements specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques (Level 1, 2 and 3). Certain assets that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. See Note 18 for a discussion of the fair value hierarchy.

We determine fair values as follows:

•Equity securities are primarily based on valuations for identical instruments in active markets.

•Fixed income securities are primarily based upon models that take into consideration such market-based factors as recent sales, risk-free yield curves and prices of similarly rated bonds.

•Real estate is stated at the fund’s net asset value or at appraised value.

•Insurance contracts are valued on an insurer pricing basis updated for changes in insurance market pricing, market rates, and inflation.

•Cash, short-term instruments and other are based on the carrying amount, which approximates fair value, or the fund’s net asset value.

The fair value of the pension and other postretirement benefit plan assets by category is summarized below:

	December 31, 2023
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets at Fair Value
U.S. Pension
Equity securities:
U.S. equities	$	1,107	$	10	$	24	$	81	$	1,222
Non-U.S. equities	910		—		3		—		913
Fixed income securities:
U.S. corporate bonds	—		5,706		33		33		5,772
Non-U.S. corporate bonds	—		1,228		—		—		1,228
U.S. government bonds	—		2,988		—		—		2,988
U.S. governmental agency mortgage-backed securities	—		84		—		—		84
Non-U.S. government bonds	—		100		—		—		100
Real estate	—		—		3		—		3
Cash, short-term instruments and other	99		33		—		296		428
Total U.S. pension assets	$	2,116	$	10,149	$	63	$	410	$	12,738

	December 31, 2022
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets at Fair Value
U.S. Pension
Equity securities:
U.S. equities	$	1,098	$	20	$	26	$	99	$	1,243
Non-U.S. equities	948		—		2		—		950
Fixed income securities:
U.S. corporate bonds	—		5,460		40		37		5,537
Non-U.S. corporate bonds	—		1,244		—		—		1,244
U.S. government bonds	—		2,904		—		—		2,904
U.S. governmental agency mortgage-backed securities	—		19		—		—		19
Non-U.S. government bonds	—		118		—		—		118
Real estate	—		—		8		—		8
Cash, short-term instruments and other	108		14		2		309		433
Total U.S. pension assets	$	2,154	$	9,779	$	78	$	445	$	12,456

	December 31, 2023
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets at Fair Value
Non-U.S. Pension
Equity securities:
U.S. equities	$	73	$	—	$	—	$	—	$	73
Non-U.S. equities	228		33		—		21		282
Global equities 1	28		—		—		20		48
Fixed income securities:
U.S. corporate bonds	—		91		—		—		91
Non-U.S. corporate bonds	—		466		—		—		466
U.S. government bonds	—		63		—		—		63
Non-U.S. government bonds	—		998		—		—		998
Global fixed income 1	—		91		—		216		307
Real estate	—		210		—		9		219
Insurance contracts	—		—		675		—		675
Cash, short-term instruments and other 2	54		191		—		—		245
Total non-U.S. pension assets	$	383	$	2,143	$	675	$	266	$	3,467

	December 31, 2022
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets at Fair Value
Non-U.S. Pension
Equity securities:
U.S. equities	$	61	$	—	$	—	$	—	$	61
Non-U.S. equities	208		28		—		21		257
Global equities 1	26		10		—		17		53
Fixed income securities:
U.S. corporate bonds	—		186		—		—		186
Non-U.S. corporate bonds	—		631		—		—		631
U.S. government bonds	—		66		—		—		66
Non-U.S. government bonds	—		1,273		—		—		1,273
Global fixed income 1	—		82		—		248		330
Real estate	—		198		—		—		198
Cash, short-term instruments and other 2	72		117		—		—		189
Total non-U.S. pension assets	$	367	$	2,591	$	—	$	286	$	3,244
1 Includes funds that invest in both U.S. and non-U.S. securities.
2 Includes funds that invest in multiple asset classes, hedge funds and other.

	December 31, 2023
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets at Fair Value
Other Postretirement Benefits
Equity securities:
U.S. equities	$	65	$	—	$	—	$	5	$	70
Non-U.S. equities	23		—		—		2		25
Fixed income securities:
U.S. corporate bonds	—		—		—		30		30
Cash, short-term instruments and other	1		—		—		18		19
Total other postretirement benefit assets	$	89	$	—	$	—	$	55	$	144

	December 31, 2022
(Millions of dollars)	Level 1		Level 2		Level 3		Measured at NAV		Total Assets at Fair Value
Other Postretirement Benefits
Equity securities:
U.S. equities	$	41	$	—	$	—	$	2	$	43
Non-U.S. equities	16		—		—		3		19
Cash, short-term instruments and other	3		—		—		37		40
Total other postretirement benefit assets	$	60	$	—	$	—	$	42	$	102

The activity attributable to U.S. pension assets measured at fair value using Level 3 inputs for the years ended December 31, 2023 and 2022 was insignificant. During 2023, activity in our non-U.S. pension Level 3 assets involved insurance contracts, including purchases of $633 million, settlements of $9 million and unrealized gains of $51 million. We valued these instruments using pricing models that, in management’s judgment, reflect the assumptions a market participant would use.

Defined contribution plans

We have both U.S. and non-U.S. employee defined contribution plans to help employees save for retirement. Our primary U.S. 401(k) plan allows eligible employees to contribute a portion of their cash compensation to the plan on a tax-deferred basis. Employees are eligible for matching contributions equal to 100 percent of employee contributions to the plan up to 6 percent of cash compensation and an annual employer contribution that ranges from 3 to 5 percent of cash compensation (depending on years of service and age).

These 401(k) plans include various investment funds, including a non-leveraged employee stock ownership plan (ESOP). As of December 31, 2023 and 2022, the ESOP held 11.3 million and 12.0 million shares, respectively. We allocate all of the shares held by the ESOP to participant accounts. Dividends paid to participants are automatically reinvested into company shares unless the participant elects to have all or a portion of the dividend paid to the participant. Various other U.S. and non-U.S. defined contribution plans generally allow eligible employees to contribute a portion of their cash compensation to the plans, and in most cases, we provide a matching contribution to the funds.

Total company costs related to U.S. and non-U.S. defined contribution plans were as follows:

(Millions of dollars)	2023		2022		2021
U.S. plans	$	567	$	392	$	440
Non-U.S. plans	114		114		114
	$	681	$	506	$	554

For our U.S. plans, changes in annual defined contribution costs are primarily due to fair value adjustments related to our non-qualified deferred compensation plans.