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Retirement Benefits (Notes)
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
RETIREMENT BENEFITS RETIREMENT BENEFITS
Defined benefit pension and OPEB plan obligations are remeasured at least annually as of December 31 based on the present value of projected future benefit payments for all participants for services rendered to date. The measurement of projected future benefits is dependent on the provisions of each specific plan, demographics of the group covered by the plan, and other key measurement assumptions. For plans that provide benefits dependent on salary assumptions, we include a projection of salary growth in our measurements. No assumption is made regarding any potential future changes to benefit provisions beyond those to which we are presently committed (e.g., in existing labor contracts).

Net periodic benefit costs, including service cost, interest cost, and expected return on assets, are determined using assumptions regarding the benefit obligation and the fair value of plan assets (where applicable) as of the beginning of each year. We have elected to use a fair value of plan assets to calculate the expected return on assets in net periodic benefit cost. The funded status of the benefit plans, which represents the difference between the benefit obligation and fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of the end of each year. Actuarial gains and losses resulting from plan remeasurement are recognized in net periodic benefit cost in the period of the remeasurement. The impact of a retroactive plan amendment is recorded in Accumulated other comprehensive income/(loss), and is amortized as a component of net periodic cost, generally over the remaining service period of the active employees. The service cost component is included in Cost of sales and Selling, administrative and other expenses. Other components of net periodic benefit cost/(income) are included in Other income/(loss), net on our consolidated income statements.

A curtailment results from an event that significantly reduces the expected years of future service or eliminates the accrual of defined benefits for the future services of a significant number of employees. A curtailment gain is recorded when the employees who are entitled to a benefit terminate their employment, or when a plan suspension or amendment that results in a curtailment gain is adopted. A curtailment loss is recorded when it becomes probable a curtailment loss will occur. We recognize settlement expense when the costs associated with all settlements during the year exceed the interest component of net periodic cost for the affected plan. Expense from curtailments and settlements is recorded in Other income/(loss), net.

Defined Benefit Pension Plans.  We have defined benefit pension plans covering hourly and salaried employees in the United States, Canada, United Kingdom, Germany, and other locations. The largest portion of our worldwide obligation is associated with our U.S. plans. Virtually all of our worldwide defined benefit plans are closed to new participants.

In general, our defined benefit pension plans are funded (i.e., have restricted assets from which benefits are paid). Our unfunded defined benefit pension plans are treated on a “pay as you go” basis with benefit payments from general Company cash. These unfunded plans primarily include certain plans in Germany and the U.S. defined benefit plans for senior management.

OPEB.  We have defined benefit OPEB plans, primarily certain health care and life insurance benefits, covering hourly and salaried employees in the United States, Canada, and other locations. The largest portion of our worldwide obligation is associated with our U.S. plans. Our OPEB plans are unfunded and the benefits are paid from general Company cash.

Defined Contribution and Savings Plans. We also have defined contribution and savings plans for hourly and salaried employees in the United States and other locations. Company contributions to these plans, if any, are made from general Company cash and are expensed as incurred. The expense for our worldwide defined contribution and savings plans was $398 million, $432 million, and $478 million for the years ended December 31, 2020, 2021, and 2022, respectively. This includes the expense for Company-matching contributions to our primary employee savings plan in the United States of $146 million, $152 million, and $152 million for the years ended December 31, 2020, 2021, and 2022, respectively.
NOTE 17.  RETIREMENT BENEFITS (Continued)

Defined Benefit Plans – Expense and Status

The assumptions used to determine benefit obligation and net periodic benefit cost/(income) were as follows:
 Pension Benefits  
 U.S. PlansNon-U.S. PlansWorldwide OPEB
 202120222021202220212022
Weighted Average Assumptions at December 31
      
Discount rate2.91 %5.51 %1.75 %4.42 %2.97 %5.48 %
Average rate of increase in compensation3.50 3.70 3.19 3.42 3.46 3.65 
Weighted Average Assumptions Used to Determine Net Benefit Cost for the Year Ended December 31
  
Discount rate - Service cost3.02 %3.12 %1.44 %1.78 %3.14 %3.27 %
Effective interest rate on benefit obligation2.00 2.40 1.06 1.54 1.96 2.49 
Expected long-term rate of return on assets6.00 5.75 3.42 3.29 — — 
Average rate of increase in compensation3.50 3.50 3.34 3.19 3.44 3.46 

The pre-tax net periodic benefit cost/(income) for our defined benefit pension and OPEB plans for the years ended December 31 was as follows (in millions):
 Pension Benefits  
 U.S. PlansNon-U.S. PlansWorldwide OPEB
 202020212022202020212022202020212022
Service cost$520 $526 $500 $529 $557 $416 $47 $49 $42 
Interest cost1,291 928 1,054 514 420 504 169 127 146 
Expected return on assets(2,795)(2,728)(2,569)(1,067)(1,130)(1,006)— — — 
Amortization of prior service costs/(credits)
4 2 2 32 24 22 (16)(12)(3)
Net remeasurement (gain)/loss377 (254)1,720 499 (3,241)(436)556 (376)(1,314)
Separation programs/other35 19 46 226 156 63 — — — 
Settlements and curtailments
5 70 438 103 (2)(2)(2)— (1)
Net periodic benefit cost/(income)$(563)$(1,437)$1,191 $836 $(3,216)$(439)$754 $(212)$(1,130)

In 2020, we recognized an expense of $367 million related to separation programs, settlements, and curtailments, which included a $61 million settlement loss related to a non-U.S. pension plan and $268 million related to ongoing redesign programs.

In 2021, we recognized an expense of $244 million related to separation programs, settlements, and curtailments, which included $70 million of settlement losses related to a U.S. pension plan and separation expenses of $156 million for non-U.S. pension plans related to ongoing redesign programs.

In 2022, we recognized an expense of $544 million related to separation programs, settlements, and curtailments, which included $438 million of settlement losses related to a U.S. pension plan and separation and curtailment expenses of $57 million for non-U.S. pension plans related to ongoing redesign programs. Until our Global Redesign programs are completed, we anticipate further adjustments to our plans in subsequent periods.
NOTE 17.  RETIREMENT BENEFITS (Continued)

The year-end status of these plans was as follows (in millions):
 Pension Benefits  
 U.S. PlansNon-U.S. PlansWorldwide OPEB
 202120222021202220212022
Change in Benefit Obligation      
Benefit obligation at January 1$49,020 $44,888 $39,835 $34,432 $6,575 $6,040 
Service cost526 500 557 416 49 42 
Interest cost928 1,054 420 504 127 146 
Amendments— — 4 — — — 
Separation programs/other(25)4 185 56 — — 
Curtailments— — (4)(2)— — 
Settlements (a)(1,297)(1,172)— (674)— — 
Plan participant contributions20 18 13 12 21 1 
Benefits paid(2,522)(2,466)(1,565)(1,302)(356)(363)
Foreign exchange translation— — (1,432)(2,877)— (92)
Actuarial (gain)/loss(1,762)(9,959)(3,581)(8,960)(376)(1,315)
Benefit obligation at December 3144,888 32,867 34,432 21,605 6,040 4,459 
Change in Plan Assets   
Fair value of plan assets at January 148,355 45,909 33,820 33,085 — — 
Actual return on plan assets1,150 (9,548)788 (7,516)— — 
Company contributions247 223 912 722 — — 
Plan participant contributions20 18 13 12 — — 
Benefits paid(2,522)(2,466)(1,565)(1,302)— — 
Settlements (a)(1,297)(1,172)— (674)— — 
Foreign exchange translation— — (855)(2,973)— — 
Other(44)(42)(28)(10)— — 
Fair value of plan assets at December 3145,909 32,922 33,085 21,344 — — 
Funded status at December 31$1,021 $55 $(1,347)$(261)$(6,040)$(4,459)
Amounts Recognized on the Balance Sheets      
Prepaid assets$3,130 $2,064 $5,404 $3,599 $— $— 
Other liabilities(2,109)(2,009)(6,751)(3,860)(6,040)(4,459)
Total$1,021 $55 $(1,347)$(261)$(6,040)$(4,459)
Amounts Recognized in Accumulated Other Comprehensive Loss (pre-tax)
   
Unamortized prior service costs/(credits)$2 $— $170 $130 $22 $25 
Pension Plans in which Accumulated Benefit Obligation Exceeds Plan Assets at December 31
    
Accumulated benefit obligation$2,192 $15,055 $12,586 $8,346   
Fair value of plan assets140 13,576 6,835 5,068   
Accumulated Benefit Obligation at December 31$43,879 $32,336 $31,850 $20,304   
Pension Plans in which Projected Benefit Obligation Exceeds Plan Assets at December 31
Projected benefit obligation$2,249 $15,585 $13,651 $8,932 
Fair value of plan assets140 13,576 6,900 5,068 
Projected Benefit Obligation at December 31$44,888 $32,867 $34,432 $21,605 
__________
(a)    In the fourth quarter of 2022, we transferred a non-U.S. pension obligation and related plan assets to an insurance company. There were no gains or losses recognized upon settlement.
NOTE 17.  RETIREMENT BENEFITS (Continued)

The actuarial (gain)/loss for our pension benefit obligations in 2021 and 2022 was primarily related to changes in discount rates.

Pension Plan Contributions

Our policy for funded pension plans is to contribute annually, at a minimum, amounts required by applicable laws and regulations. We may make contributions beyond those legally required.

In 2022, we contributed $567 million to our global funded pension plans and made $379 million of benefit payments to participants in unfunded plans. During 2023, we expect to contribute between $500 million and $600 million of cash to our global funded pension plans. We also expect to make about $400 million of benefit payments to participants in unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. pension plans in 2023.

Expected Future Benefit Payments

The expected future benefit payments at December 31, 2022 were as follows (in millions):
 Benefit Payments
 Pension 
 U.S. PlansNon-U.S.
Plans		Worldwide
OPEB
2023$3,805 $1,300 $335 
20242,595 1,225 335 
20252,605 1,245 335 
20262,570 1,255 330 
20272,530 1,275 330 
2028-203212,445 6,485 1,595 

Pension Plan Asset Information

Investment Objectives and Strategies. Our investment objectives for the U.S. plans are to minimize the volatility of the value of our U.S. pension assets relative to U.S. pension obligations and to ensure assets are sufficient to pay plan benefits. Our largest non-U.S. plans (e.g., United Kingdom and Canada) have similar investment objectives to the U.S. plans.

Investment strategies and policies for the U.S. plans and the largest non-U.S. plans reflect a balance of risk-reducing and return-seeking considerations.  The objective of minimizing the volatility of assets relative to obligations is addressed primarily through asset-liability matching, asset diversification, and hedging.  The fixed income asset allocation matches the bond-like and long-dated nature of the pension obligations. Assets are broadly diversified within asset classes to achieve risk-adjusted returns that, in total, lower asset volatility relative to the obligations.  Strategies to address the goal of ensuring sufficient assets to pay benefits include target allocations to a broad array of asset classes, and strategies within asset classes that provide adequate returns, diversification, and liquidity.
NOTE 17.  RETIREMENT BENEFITS (Continued)

Derivatives are permitted for fixed income investment and public equity managers to use as efficient substitutes for traditional securities and to manage exposure to interest rate and foreign exchange risks.  Interest rate and foreign currency derivative instruments are used for the purpose of hedging changes in the fair value of assets that result from interest rate changes and currency fluctuations.  Interest rate derivatives are also used to adjust portfolio duration. Derivatives may not be used to leverage or to alter the economic exposure to an asset class outside the scope of the mandate an investment manager has been given.  Alternative investment managers are permitted to employ leverage (including through the use of derivatives or other tools) that may alter economic exposure.

Alternative investments execute diverse strategies that provide exposure to a broad range of hedge fund strategies, equity investments in private companies, and investments in private property funds.

Significant Concentrations of Risk.  Significant concentrations of risk in our plan assets relate to interest rates, growth assets, and operating risks.  In order to minimize asset volatility relative to the obligations, the majority of plan assets are allocated to fixed income investments which are exposed to interest rate risk.  Rate increases generally will result in a decline in the value of fixed income assets, while reducing the present value of the obligations. Conversely, rate decreases generally will increase the value of fixed income assets, offsetting the related increase in the obligations.

In order to ensure assets are sufficient to pay benefits, a portion of plan assets is allocated to growth assets (primarily hedge funds, real estate, private equity, and public equity) that are expected over time to earn higher returns with more volatility than fixed income investments, which more closely match pension obligations.  Within growth assets, risk is mitigated by constructing a portfolio that is broadly diversified by asset class, investment strategy, manager, style, and process.

Operating risks include the risks of inadequate diversification and weak controls.  To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives.  Policies and practices to address operating risks include ongoing manager oversight (e.g., style adherence, team strength, firm health, and internal risk controls), plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance reviews to ensure adherence.

At year-end 2022, Ford securities comprised less than 1% of our plan assets.

Expected Long-Term Rate of Return on Assets.  The long-term return assumption at year-end 2022, which will be used to determine the 2023 expected return on assets, is 6.25% for the U.S. plans, 3.75% for the U.K. plans, and 5.03% for the Canadian plans, and averages 4.13% for all non-U.S. plans. A generally consistent approach is used worldwide to develop this assumption. This approach considers primarily inputs from a range of advisors for long-term capital market returns, inflation, bond yields, and other variables, adjusted for specific aspects of our investment strategy by plan.  Historical returns also are considered where appropriate. The assumption is based on consideration of all inputs, with a focus on long-term trends to avoid short-term market influences.
NOTE 17.  RETIREMENT BENEFITS (Continued)

The fair value of our defined benefit pension plan assets (including dividends and interest receivables of $310 million and $96 million for U.S. and non-U.S. plans, respectively) by asset category at December 31 was as follows (in millions):
2021
U.S. PlansNon-U.S. Plans
 Level 1Level 2Level 3Assets measured at NAV (a)TotalLevel 1Level 2Level 3Assets measured at NAV (a)Total
Asset Category    
Equity    
U.S. companies
$1,396 $20 $— $— $1,416 $1,862 $48 $— $— $1,910 
International companies
740 8 8 — 756 1,254 59 — — 1,313 
Total equity
2,136 28 8 — 2,172 3,116 107 — — 3,223 
Fixed Income
U.S. government and agencies
9,660 1,687 — — 11,347 47 13 — — 60 
Non-U.S. government
— 1,230 12 — 1,242 — 20,338 123 — 20,461 
Corporate bonds
— 25,842 — — 25,842 — 2,901 70 — 2,971 
Mortgage/other asset-backed
— 464 — — 464 — 338 15 — 353 
Commingled funds
— 164 — — 164 — 185 — — 185 
Derivative financial instruments, net
1 (19)— — (18)(1)23 28 — 50 
Total fixed income
9,661 29,368 12 — 39,041 46 23,798 236 — 24,080 
Alternatives
Hedge funds
— — — 3,390 3,390 — — — 1,221 1,221 
Private equity
1 — — 1,976 1,977 — — — 756 756 
Real estate
— — — 1,323 1,323 — — — 386 386 
Total alternatives
1 — — 6,689 6,690 — — — 2,363 2,363 
Cash, cash equivalents, and repurchase agreements (b)
(1,220)— — — (1,220)(1,899)— — — (1,899)
Other (c)
(774)— — — (774)(466)— 5,784 — 5,318 
Total assets at fair value
$9,804 $29,396 $20 $6,689 $45,909 $797 $23,905 $6,020 $2,363 $33,085 
__________
(a)Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(b)Primarily short-term investment funds to provide liquidity to plan investment managers, cash held to pay benefits, and repurchase agreements valued at $2.9 billion in U.S. plans and $2.6 billion in non-U.S. plans.
(c)For U.S. plans, amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales). For non-U.S plans, $4.7 billion of insurance contracts, primarily Ford-Werke, and amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales).
NOTE 17.  RETIREMENT BENEFITS (Continued)

The fair value of our defined benefit pension plan assets (including dividends and interest receivables of $268 million and $74 million for U.S. and non-U.S. plans, respectively) by asset category at December 31 was as follows (in millions):
2022
U.S. PlansNon-U.S. Plans
 Level 1Level 2Level 3Assets measured at NAV (a)TotalLevel 1Level 2Level 3Assets measured at NAV (a)Total
Asset Category    
Equity    
U.S. companies
$412 $2 $— $— $414 $1,426 $33 $— $— $1,459 
International companies
269 6 8 — 283 989 13 — — 1,002 
Total equity
681 8 8 — 697 2,415 46 — — 2,461 
Fixed Income
     
U.S. government and agencies
7,380 1,509 — — 8,889 36 35 — — 71 
Non-U.S. government
— 640 — — 640 — 12,256 231 — 12,487 
Corporate bonds
— 17,774 1 — 17,775 — 2,059 124 — 2,183 
Mortgage/other asset-backed
— 422 — — 422 — 265 10 — 275 
Commingled funds
— 104 — — 104 — 170 — — 170 
Derivative financial instruments, net
(2)19 — — 17 2 (74)77 — 5 
Total fixed income
7,378 20,468 1 — 27,847 38 14,711 442 — 15,191 
Alternatives
     
Hedge funds
— — — 3,342 3,342 — — — 1,009 1,009 
Private equity
— — — 1,411 1,411 — — — 584 584 
Real estate
— — — 1,553 1,553 — — — 405 405 
Total alternatives
— — — 6,306 6,306 — — — 1,998 1,998 
Cash, cash equivalents, and repurchase agreements (b)
(1,135)— — — (1,135)(1,363)— — — (1,363)
Other (c)
(793)— — — (793)(310)— 3,367 — 3,057 
Total assets at fair value
$6,131 $20,476 $9 $6,306 $32,922 $780 $14,757 $3,809 $1,998 $21,344 
__________
(a)Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(b)Primarily short-term investment funds to provide liquidity to plan investment managers, cash held to pay benefits, and repurchase agreements valued at $2.6 billion in U.S. plans and $2.1 billion in non-U.S. plans.
(c)For U.S. plans, amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales). For non-U.S plans, $2.5 billion of insurance contracts, primarily Ford-Werke, and amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales).
NOTE 17.  RETIREMENT BENEFITS (Continued)

The following table summarizes the changes in Level 3 defined benefit pension plan assets measured at fair value on a recurring basis for the years ended December 31 (in millions):
2021
 Return on plan assets  
Fair
Value
at
January 1		Attributable
to Assets
Held
at
December 31		Attributable
to
Assets
Sold		Net Purchases/
(Settlements)		Transfers Into/ (Out of) Level 3Fair
Value
at
December 31
U.S. Plans$16 $(2)$— $5 $1 $20 
Non-U.S. Plans (a)6,006 (943)153 687 117 6,020 
2022
 Return on plan assets  
Fair
Value
at
January 1		Attributable
to Assets
Held
at
December 31		Attributable
to
Assets
Sold		Net Purchases/
(Settlements)		Transfers Into/ (Out of) Level 3Fair
Value
at
December 31
U.S. Plans$20 $— $(4)$(8)$1 $9 
Non-U.S. Plans (a)6,020 (1,732)26 (722)217 3,809 
__________
(a)Includes insurance contracts, primarily the Ford-Werke plan, valued at $4.7 billion and $2.5 billion at year-end 2021 and 2022, respectively. In the fourth quarter of 2022, we transferred a non-U.S. pension obligation and related plan assets to an insurance company. There were no gains or losses recognized upon settlement.