Pension And Other Postretirement Benefits

12 Months Ended

Dec. 31, 2019

Pension And Other Postretirement Benefits [Abstract]

Pension And Other Postretirement Benefits

17. Pension and Other Postretirement Benefits

The benefit obligations and plan assets associated with the Corporation’s principal benefit plans are measured on December 31.

		Pension Benefits				Other Postretirement
		U.S.		Non-U.S.		Benefits
		2019	2018	2019	2018	2019	2018
		(percent)
Weighted-average assumptions used to determine
	benefit obligations at December 31
	Discount rate	3.50	4.40	2.30	3.00	3.50	4.40
	Long-term rate of compensation increase	5.75	5.75	4.80	4.30	5.75	5.75
		(millions of dollars)
Change in benefit obligation
	Benefit obligation at January 1	18,174	19,310	25,378	27,963	7,471	8,100
	Service cost	757	819	551	608	139	152
	Interest cost	766	721	763	754	315	301
	Actuarial loss/(gain)	2,562	(957)	3,703	(1,034)	556	(630)
	Benefits paid (1) (2)	(1,300)	(1,715)	(1,196)	(1,284)	(517)	(528)
	Foreign exchange rate changes	-	-	391	(1,664)	25	(49)
	Amendments, divestments and other	-	(4)	328	35	124	125
Benefit obligation at December 31		20,959	18,174	29,918	25,378	8,113	7,471
Accumulated benefit obligation at December 31		16,387	14,683	27,236	23,350	-	-

(1)Benefit payments for funded and unfunded plans.

(2)For 2019 and 2018, other postretirement benefits paid are net of $20 million and $13 million of Medicare subsidy receipts, respectively.

For selection of the discount rate for U.S. plans, several sources of information are considered, including interest rate market indicators and the effective discount rate determined by use of a yield curve based on high-quality, noncallable bonds applied to the estimated cash outflows for benefit payments. For major non-U.S. plans, the discount rate is determined by using a spot yield curve of high-quality, local-currency-denominated bonds at an average maturity approximating that of the liabilities.

The measurement of the accumulated postretirement benefit obligation assumes a health care cost trend rate of 4.5 percent in 2021 and subsequent years. A one-percentage-point increase in the health care cost trend rate would increase service and interest cost by $85 million and the postretirement benefit obligation by $921 million. A one-percentage-point decrease in the health care cost trend rate would decrease service and interest cost by $63 million and the postretirement benefit obligation by $726 million.

		Pension Benefits				Other Postretirement
		U.S.		Non-U.S.		Benefits
		2019	2018	2019	2018	2019	2018
		(millions of dollars)
Change in plan assets
	Fair value at January 1	11,134	12,782	19,486	21,461	386	427
	Actual return on plan assets	2,521	(710)	3,210	(15)	54	(13)
	Foreign exchange rate changes	-	-	513	(1,320)	-	-
	Company contribution	1,022	491	602	438	41	30
	Benefits paid (1)	(1,041)	(1,429)	(883)	(903)	(56)	(58)
	Other	-	-	(12)	(175)	-	-
Fair value at December 31		13,636	11,134	22,916	19,486	425	386

(1)Benefit payments for funded plans.The funding levels of all qualified pension plans are in compliance with standards set by applicable law or regulation. As shown in the table below, certain smaller U.S. pension plans and a number of non-U.S. pension plans are not funded because local applicable tax rules and regulatory practices do not encourage funding of these plans. All defined benefit pension obligations, regardless of the funding status of the underlying plans, are fully supported by the financial strength of the Corporation or the respective sponsoring affiliate.

		Pension Benefits
		U.S.		Non-U.S.
		2019	2018	2019	2018
		(millions of dollars)
Assets in excess of/(less than) benefit obligation
	Balance at December 31
	Funded plans	(4,656)	(4,604)	(1,728)	439
	Unfunded plans	(2,667)	(2,436)	(5,274)	(6,331)
Total		(7,323)	(7,040)	(7,002)	(5,892)

The authoritative guidance for defined benefit pension and other postretirement plans requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through other comprehensive income.

		Pension Benefits				Other Postretirement
		U.S.		Non-U.S.		Benefits
		2019	2018	2019	2018	2019	2018
		(millions of dollars)
Assets in excess of/(less than) benefit obligation
	Balance at December 31 (1)	(7,323)	(7,040)	(7,002)	(5,892)	(7,688)	(7,085)
Amounts recorded in the consolidated balance
	sheet consist of:
	Other assets	-	-	1,151	1,174	-	-
	Current liabilities	(242)	(243)	(267)	(314)	(351)	(362)
	Postretirement benefits reserves	(7,081)	(6,797)	(7,886)	(6,752)	(7,337)	(6,723)
Total recorded		(7,323)	(7,040)	(7,002)	(5,892)	(7,688)	(7,085)
Amounts recorded in accumulated other
	comprehensive income consist of:
	Net actuarial loss/(gain)	3,971	3,831	5,662	4,713	1,339	877
	Prior service cost	1	6	360	(93)	(315)	(357)
Total recorded in accumulated other
	comprehensive income	3,972	3,837	6,022	4,620	1,024	520

(1) Fair value of assets less benefit obligation shown on the preceding page.The long-term expected rate of return on funded assets shown below is established for each benefit plan by developing a forward-looking, long-term return assumption for each asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation percentages and the long-term return assumption for each asset class.

									Other
			Pension Benefits						Postretirement
			U.S.			Non-U.S.			Benefits
			2019	2018	2017	2019	2018	2017	2019	2018	2017
Weighted-average assumptions used to
	determine net periodic benefit cost for
	years ended December 31	(percent)
	Discount rate		4.40	3.80	4.25	3.00	2.80	3.00	4.40	3.80	4.25
	Long-term rate of return on funded assets		5.30	6.00	6.50	4.10	4.70	5.20	4.60	6.00	6.50
	Long-term rate of compensation increase		5.75	5.75	5.75	4.30	4.30	4.00	5.75	5.75	5.75
Components of net periodic benefit cost			(millions of dollars)
	Service cost		757	819	784	551	608	596	139	152	129
	Interest cost		766	721	798	763	754	772	315	301	317
	Expected return on plan assets		(568)	(727)	(775)	(777)	(951)	(1,000)	(15)	(23)	(24)
	Amortization of actuarial loss/(gain)		305	362	438	306	409	476	55	116	96
	Amortization of prior service cost		5	5	5	56	46	47	(42)	(40)	(33)
	Net pension enhancement and
	curtailment/settlement cost		164	268	609	(98)	44	19	-	-	-
Net periodic benefit cost			1,429	1,448	1,859	801	910	910	452	506	485
Changes in amounts recorded in accumulated
	other comprehensive income:
	Net actuarial loss/(gain)		609	479	(324)	1,268	(66)	(191)	517	(594)	215
	Amortization of actuarial (loss)/gain		(469)	(630)	(1,047)	(208)	(453)	(495)	(55)	(116)	(96)
	Prior service cost/(credit)		-	-	-	379	98	111	-	-	-
	Amortization of prior service (cost)/credit		(5)	(5)	(5)	(56)	(46)	(47)	42	40	33
	Foreign exchange rate changes		-	-	-	19	(356)	559	-	(8)	8
Total recorded in other comprehensive income			135	(156)	(1,376)	1,402	(823)	(63)	504	(678)	160
Total recorded in net periodic benefit cost and
	other comprehensive income, before tax		1,564	1,292	483	2,203	87	847	956	(172)	645

Costs for defined contribution plans were $422 million, $391 million and $384 million in 2019, 2018 and 2017, respectively.A summary of the change in accumulated other comprehensive income is shown in the table below:

		Total Pension and
		Other Postretirement Benefits
		2019	2018	2017
		(millions of dollars)
(Charge)/credit to other comprehensive income, before tax
	U.S. pension	(135)	156	1,376
	Non-U.S. pension	(1,402)	823	63
	Other postretirement benefits	(504)	678	(160)
Total (charge)/credit to other comprehensive income, before tax		(2,041)	1,657	1,279
(Charge)/credit to income tax (see Note 4)		550	(470)	(290)
(Charge)/credit to investment in equity companies		(19)	24	(43)
(Charge)/credit to other comprehensive income including noncontrolling
	interests, after tax	(1,510)	1,211	946
Charge/(credit) to equity of noncontrolling interests		146	(114)	12
(Charge)/credit to other comprehensive income attributable to ExxonMobil		(1,364)	1,097	958

The Corporation’s investment strategy for benefit plan assets reflects a long-term view, a careful assessment of the risks inherent in plan assets and liabilities and broad diversification to reduce the risk of the portfolio. The benefit plan assets are primarily invested in passive global equity and local currency fixed income index funds to diversify risk while minimizing costs. The equity funds hold ExxonMobil stock only to the extent necessary to replicate the relevant equity index. The fixed income funds are largely invested in investment grade corporate and government debt securities.

Studies are periodically conducted to establish the preferred target asset allocation percentages. The target asset allocation for the U.S. benefit plans and the major non-U.S. plans is 30 percent equity securities and 70 percent debt securities. The equity targets for the U.S. and certain non-U.S. plans include a small allocation to private equity partnerships that primarily focus on early-stage venture capital of 4 percent and 3 percent, respectively.

The fair value measurement levels are accounting terms that refer to different methods of valuing assets. The terms do not represent the relative risk or credit quality of an investment.

The 2019 fair value of the benefit plan assets, including the level within the fair value hierarchy, is shown in the tables below:

			U.S. Pension						Non-U.S. Pension
			Fair Value Measurement						Fair Value Measurement
			at December 31, 2019, Using:						at December 31, 2019, Using:
							Net							Net
							Asset							Asset
			Level 1	Level 2		Level 3	Value (1)	Total	Level 1		Level 2		Level 3	Value (1)	Total
			(millions of dollars)
Asset category:
	Equity securities
		U.S.	-	-		-	1,960	1,960	-		-		-	3,436	3,436
		Non-U.S.	-	-		-	1,656	1,656	70	(2)	-		-	3,015	3,085
	Private equity		-	-		-	499	499	-		-		-	489	489
	Debt securities
		Corporate	-	4,932	(3)	-	1	4,933	-		129	(3)	-	4,486	4,615
		Government	-	4,470	(3)	-	2	4,472	280	(4)	139	(3)	-	10,511	10,930
		Asset-backed	-	-		-	1	1	-		21	(3)	-	212	233
	Cash		-	-		-	107	107	33		12	(5)	-	61	106
Total at fair value			-	9,402		-	4,226	13,628	383		301		-	22,210	22,894
	Insurance contracts
		at contract value						8							22
Total plan assets								13,636							22,916

(1)Per ASU 2015-07, certain instruments that are measured at fair value using the Net Asset Value (NAV) per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

(2)For non-U.S. equity securities held in separate accounts, fair value is based on observable quoted prices on active exchanges.

(3)For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions.

(4)For government debt securities that are traded on active exchanges, fair value is based on observable quoted prices.

(5)For cash balances that are subject to withdrawal penalties or other adjustments, the fair value is treated as a Level 2 input.

			Other Postretirement
			Fair Value Measurement
			at December 31, 2019, Using:
								Net
								Asset
				Level 1	Level 2		Level 3	Value (1)	Total
				(millions of dollars)
Asset category:
	Equity securities
		U.S.		-	-		-	81	81
		Non-U.S.		-	-		-	49	49
	Debt securities
		Corporate		-	92	(2)	-	-	92
		Government		-	200	(2)	-	-	200
		Asset-backed		-	-		-	-	-
	Cash			-	-		-	3	3
Total at fair value				-	292		-	133	425

(1) Per ASU 2015-07, certain instruments that are measured at fair value using the Net Asset Value (NAV) per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

(2) For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions.

The 2018 fair value of the benefit plan assets, including the level within the fair value hierarchy, is shown in the tables below:

			U.S. Pension						Non-U.S. Pension
			Fair Value Measurement						Fair Value Measurement
			at December 31, 2018, Using:						at December 31, 2018, Using:
							Net							Net
							Asset							Asset
			Level 1	Level 2		Level 3	Value (1)	Total	Level 1		Level 2		Level 3	Value (1)	Total
			(millions of dollars)
Asset category:
	Equity securities
		U.S.	-	-		-	1,397	1,397	-		-		-	2,648	2,648
		Non-U.S.	-	-		-	1,218	1,218	57	(2)	-		-	2,436	2,493
	Private equity		-	-		-	516	516	-		-		-	513	513
	Debt securities
		Corporate	-	4,795	(3)	-	1	4,796	-		102	(3)	-	3,713	3,815
		Government	-	3,085	(3)	-	2	3,087	243	(4)	97	(3)	-	9,326	9,666
		Asset-backed	-	-		-	1	1	-		28	(3)	-	218	246
	Cash		-	-		-	111	111	27		3	(5)	-	54	84
Total at fair value			-	7,880		-	3,246	11,126	327		230		-	18,908	19,465
	Insurance contracts
		at contract value						8							21
Total plan assets								11,134							19,486

(1)Per ASU 2015-07, certain instruments that are measured at fair value using the Net Asset Value (NAV) per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

(2)For non-U.S. equity securities held in separate accounts, fair value is based on observable quoted prices on active exchanges.

(3)For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions.

(4)For government debt securities that are traded on active exchanges, fair value is based on observable quoted prices.

(5)For cash balances that are subject to withdrawal penalties or other adjustments, the fair value is treated as a Level 2 input.

			Other Postretirement
			Fair Value Measurement
			at December 31, 2018, Using:
								Net
								Asset
				Level 1	Level 2		Level 3	Value (1)	Total
			(millions of dollars)
Asset category:
	Equity securities
		U.S.		-	-		-	64	64
		Non-U.S.		-	-		-	41	41
	Debt securities
		Corporate		-	88	(2)	-	-	88
		Government		-	189	(2)	-	-	189
		Asset-backed		-	-		-	-	-
	Cash			-	-		-	4	4
Total at fair value				-	277		-	109	386

(1)Per ASU 2015-07, certain instruments that are measured at fair value using the Net Asset Value (NAV) per share practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total value of plan assets.

(2)For corporate, government and asset-backed debt securities, fair value is based on observable inputs of comparable market transactions.

A summary of pension plans with an accumulated benefit obligation in excess of plan assets is shown in the table below:

		Pension Benefits
		U.S.			Non-U.S.
			2019	2018		2019	2018
		(millions of dollars)
For funded pension plans with an accumulated benefit obligation
	in excess of plan assets:
	Projected benefit obligation		18,292	15,738		3,616	4,037
	Accumulated benefit obligation		14,940	13,208		3,026	3,671
	Fair value of plan assets		13,636	11,134		1,381	3,499
For unfunded pension plans:
	Projected benefit obligation		2,667	2,436		5,274	6,331
	Accumulated benefit obligation		1,447	1,475		4,629	5,670

					Other
			Pension Benefits		Postretirement
			U.S.	Non-U.S.	Benefits
		(millions of dollars)
Estimated 2020 amortization from accumulated other comprehensive income:
	Net actuarial loss/(gain) (1)		527	422		89
	Prior service cost (2)		5	70		(42)

(1)The Corporation amortizes the net balance of actuarial losses/(gains) as a component of net periodic benefit cost over the average remaining service period of active plan participants.

(2)The Corporation amortizes prior service cost on a straight-line basis as permitted under authoritative guidance for defined benefit pension and other postretirement benefit plans.

		Pension Benefits		Other Postretirement Benefits
					Medicare
		U.S.	Non-U.S.	Gross	Subsidy Receipt
		(millions of dollars)
Contributions expected in 2020		1,030	515	-		-
Benefit payments expected in:
	2020	1,440	1,171	444		20
	2021	1,339	1,162	445		21
	2022	1,330	1,177	443		22
	2023	1,328	1,199	440		23
	2024	1,327	1,221	438		24
	2025 - 2029	6,512	6,125	2,196		132