Retirement-Related Benefits (Tables)
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12 Months Ended |
Dec. 31, 2023 |
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| Retirement Benefits [Abstract] |
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| Description of plans |
IBM sponsors the following retirement-related plans/benefits: | | | | | | | | | | | | | | | | | | | Plan | Eligibility | Funding | Benefit Calculation | Other | | U.S. Defined Benefit (DB) Pension Plans | Qualified Personal Pension Plan (Qualified PPP)(1) | U.S. regular, full-time and part-time employees hired prior to January 1, 2005 | Company contributes to irrevocable trust fund, held for sole benefit of participants and beneficiaries | Vary based on the participant:
five-year, final pay formula based on salary, years of service, mortality and other participant-specific factors
Cash balance formula based on percentage of employees’ annual salary, as well as an interest crediting rate | Benefit accruals ceased December 31, 2007(1).
Certain defined benefit pension obligations and related plan assets were transferred in 2022, as described below | | Excess Personal Pension Plan (Excess PPP) | Unfunded, provides benefits in excess of IRS limitations for qualified plans | | Supplemental Executive Retention Plan (Retention Plan) | Eligible U.S. executives | Unfunded | Based on average earnings, years of service and age at termination of employment | U.S. Defined Contribution (DC) Plans | 401(k) Plus (1) | U.S. regular, full-time and part-time employees | All contributions are made in cash and invested in accordance with participants’ investment elections | Dollar-for-dollar match, generally 5 or 6 percent of eligible compensation and automatic contribution of 1, 2 or 4 percent of eligible compensation, depending on date of hire | Employees generally receive contributions after one year of service | Excess 401(k) Plus (2) | U.S. employees whose eligible compensation is expected to exceed IRS compensation limit for qualified plans | Unfunded, non-qualified amounts deferred are record-keeping (notional) accounts and are not held in trust for the participants, but may be invested in accordance with participants’ investment elections (under the 401(k) Plus Plan options) | Company match and automatic contributions (at the same rate under 401(k) Plus Plan) on eligible compensation deferred and on compensation earned in excess of the IRC pay limit. The percentage varies depending on eligibility and years of service | Employees generally receive contributions after one year of service. Amounts deferred into the Plan, including company contributions, are recorded as liabilities | | U.S. Nonpension Postretirement Benefit Plan | Nonpension Postretirement Plan | Medical and dental benefits for eligible U.S. retirees and eligible dependents, as well as life insurance for eligible U.S. retirees | Company contributes to irrevocable trust fund, held for the sole benefit of participants and beneficiaries | Varies based on plan design formulas and eligibility requirements | Since January 1, 2004, new hires are not eligible for these benefits | | Non-U.S. Plans | DB or DC | Eligible regular employees in certain non-U.S. subsidiaries or branches | Company deposits funds under various fiduciary-type arrangements, purchases annuities under group contracts or provides reserves for these plans | Based either on years of service and the employee’s compensation (generally during a fixed number of years immediately before retirement) or on annual credits | In certain countries, benefit accruals have ceased and/or have been closed to new hires as of various dates | | Nonpension Postretirement Plan | Medical and dental benefits for eligible non-U.S. retirees and eligible dependents, as well as life insurance for certain eligible non-U.S. retirees | Primarily unfunded except for a few select countries where the company contributes to irrevocable trust funds held for the sole benefit of participants and beneficiaries | Varies based on plan design formulas and eligibility requirements by country | Most non-U.S. retirees are covered by local government sponsored and administered programs |
(1)Beginning January 1, 2024, the company changed how it will provide retirement benefits to certain U.S. eligible employees. Refer to IBM U.S. Retirement Plan Changes section below for additional information. (2)Beginning January 1, 2024, the company's match contribution on eligible compensation deferred and earned will be 5 percent for all eligible employees.
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| Pre-tax cost for all retirement-related plans |
The following table presents a summary of the total retirement-related benefits net periodic (income)/cost recorded in the Consolidated Income Statement. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | | | U.S. Plans | | Non-U.S. Plans | | Total | | For the year ended December 31: | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total defined benefit pension plans (income)/cost (1) | | $ | (329) | | | $ | 5,857 | | | $ | 319 | | | $ | 359 | | | $ | 836 | | | $ | 1,119 | | | $ | 30 | | | $ | 6,693 | | | $ | 1,438 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total defined contribution plans cost | | $ | 615 | | | $ | 555 | | | $ | 582 | | | $ | 376 | | | $ | 369 | | | $ | 409 | | | $ | 991 | | | $ | 924 | | | $ | 992 | | | Nonpension postretirement benefit plans cost | | $ | 92 | | | $ | 85 | | | $ | 127 | | | $ | 36 | | | $ | 30 | | | $ | 44 | | | $ | 128 | | | $ | 115 | | | $ | 172 | | Total retirement-related benefits net periodic cost (1) | | $ | 378 | | | $ | 6,497 | | | $ | 1,029 | | | $ | 771 | | | $ | 1,235 | | | $ | 1,573 | | | $ | 1,149 | | | $ | 7,732 | | | $ | 2,601 | |
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| Summary of the total PBO for defined benefit plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and associated funded status |
The following table presents a summary of the total PBO for defined benefit pension plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and the associated funded status recorded in the Consolidated Balance Sheet. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | | | Benefit Obligations | | Fair Value of Plan Assets | | Funded Status (1) | | At December 31: | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | U.S. Plans | | | | | | | | | | | | | | Overfunded plans | | | | | | | | | | | | | | Qualified PPP | | $ | 19,854 | | | $ | 20,091 | | | $ | 24,437 | | | $ | 25,094 | | | $ | 4,584 | | | $ | 5,002 | | | Underfunded plans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nonqualified defined benefit pension plans (2) | | 1,382 | | | 1,402 | | | — | | | — | | | (1,382) | | | (1,402) | | | Nonpension postretirement benefit plan | | 2,233 | | | 2,369 | | | 10 | | | 10 | | | (2,224) | | | (2,359) | | | Total underfunded U.S. plans | | $ | 3,615 | | | $ | 3,771 | | | $ | 10 | | | $ | 10 | | | $ | (3,605) | | | $ | (3,761) | | | Non-U.S. Plans | | | | | | | | | | | | | | Overfunded plans | | | | | | | | | | | | | Qualified defined benefit pension plans (3) | | $ | 16,515 | | | $ | 15,443 | | | $ | 19,438 | | | $ | 18,677 | | | $ | 2,923 | | | $ | 3,234 | | | Nonpension postretirement benefit plans | | — | | | 7 | | | — | | | 7 | | | — | | | 0 | | | Total overfunded non-U.S. plans | | $ | 16,515 | | | $ | 15,450 | | | $ | 19,438 | | | $ | 18,684 | | | $ | 2,923 | | | $ | 3,234 | | | Underfunded plans | | | | | | | | | | | | | Qualified defined benefit pension plans (3) | | $ | 11,946 | | | $ | 11,361 | | | $ | 9,621 | | | $ | 9,694 | | | $ | (2,325) | | | $ | (1,667) | | Nonqualified defined benefit pension plans (3) | | 5,018 | | | 4,457 | | | — | | | — | | | (5,018) | | | (4,457) | | | Nonpension postretirement benefit plans | | 586 | | | 524 | | | 23 | | | 22 | | | (564) | | | (502) | | | Total underfunded non-U.S. plans | | $ | 17,550 | | | $ | 16,342 | | | $ | 9,643 | | | $ | 9,716 | | | $ | (7,907) | | | $ | (6,626) | | | Total overfunded plans | | $ | 36,369 | | | $ | 35,541 | | | $ | 43,875 | | | $ | 43,778 | | | $ | 7,506 | | | $ | 8,236 | | | Total underfunded plans | | $ | 21,165 | | | $ | 20,113 | | | $ | 9,653 | | | $ | 9,726 | | | $ | (11,512) | | | $ | (10,387) | |
(1)Funded status is recognized in the Consolidated Balance Sheet as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). (2)Excess PPP and Retention Plan. (3)Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded.
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| Components of net periodic (income)/cost of the company's retirement-related benefit plans |
The following tables present the components of net periodic (income)/cost of the retirement-related benefit plans recognized in the Consolidated Income Statement, excluding defined contribution plans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | Defined Benefit Pension Plans | | | U.S. Plans | | Non-U.S. Plans | | For the year ended December 31: | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | Service cost | | $ | — | | | $ | — | | | $ | — | | | $ | 177 | | | $ | 237 | | | $ | 300 | | Interest cost (1) | | 1,090 | | | 1,129 | | | 1,109 | | | 1,170 | | | 493 | | | 424 | | Expected return on plan assets (1) | | (1,529) | | | (1,729) | | | (1,802) | | | (1,440) | | | (1,016) | | | (1,115) | | | | | | | | | | | | | | | Amortization of prior service costs/(credits) (1) | | 0 | | | 8 | | | 16 | | | 20 | | | 14 | | | (12) | | Recognized actuarial losses (1) | | 109 | | | 527 | | | 996 | | | 400 | | | 1,031 | | | 1,392 | | Curtailments and settlements (1) (2) | | — | | | 5,923 | | | — | | | 7 | | | 47 | | | 94 | | | Multi-employer plans | | — | | | — | | | — | | | 13 | | | 15 | | | 17 | | Other costs/(credits) (1) | | — | | | — | | | — | | | 13 | | | 15 | | | 18 | | Total net periodic (income)/cost (2) | | $ | (329) | | | $ | 5,857 | | | $ | 319 | | | $ | 359 | | | $ | 836 | | | $ | 1,119 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | Nonpension Postretirement Benefit Plans | | | U.S. Plan | | Non-U.S. Plans | | For the year ended December 31: | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | Service cost | | $ | 4 | | | $ | 5 | | | $ | 7 | | | $ | 2 | | | $ | 3 | | | $ | 4 | | Interest cost (1) | | 117 | | | 85 | | | 65 | | | 39 | | | 24 | | | 27 | | Expected return on plan assets (1) | | — | | | — | | | — | | | (2) | | | (2) | | | (3) | | | | | | | | | | | | | | | Amortization of prior service costs/(credits) (1) | | (29) | | | (10) | | | 4 | | | 0 | | | 0 | | | 0 | | Recognized actuarial losses (1) | | — | | | 5 | | | 52 | | | (1) | | | 4 | | | 15 | | Curtailments and settlements (1) | | — | | | — | | | — | | | (2) | | | 0 | | | 0 | | Other costs/(credits) (1) | | — | | | — | | | — | | | 0 | | | 0 | | | 0 | | | Total net periodic cost | | $ | 92 | | | $ | 85 | | | $ | 127 | | | $ | 36 | | | $ | 30 | | | $ | 44 | |
(1) These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement. (2) 2022 includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described below.
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| Changes in plan assets |
The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans, excluding DC plans.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | Change in benefit obligation | | | | | | | | | | | | | | | | | | Benefit obligation at January 1 | | $ | 21,493 | | | $ | 48,182 | | | $ | 31,261 | | | $ | 45,097 | | | $ | 2,369 | | | $ | 3,404 | | | $ | 531 | | | $ | 638 | | | Service cost | | — | | | — | | | 177 | | | 237 | | | 4 | | | 5 | | | 2 | | | 3 | | | Interest cost | | 1,090 | | | 1,129 | | | 1,170 | | | 493 | | | 117 | | | 85 | | | 39 | | | 24 | | | Plan participants' contributions | | — | | | — | | | 17 | | | 14 | | | 38 | | | 43 | | | — | | | — | | | Acquisitions/divestitures, net | | — | | | — | | | (20) | | | (45) | | | — | | | — | | | — | | | — | | | Actuarial losses/(gains) | | 486 | | | (7,849) | | | 2,077 | | | (8,819) | | | (19) | | | (780) | | | 35 | | | (87) | | | Benefits paid from trust | | (1,424) | | | (3,133) | | | (1,629) | | | (1,572) | | | (274) | | | (385) | | | (7) | | | (6) | | | Direct benefit payments | | (122) | | | (123) | | | (396) | | | (418) | | | (3) | | | (2) | | | (31) | | | (32) | | | Foreign exchange impact | | — | | | — | | | 1,021 | | | (3,463) | | | — | | | — | | | 22 | | | (10) | | Amendments/curtailments/ settlements/other (1) | | (288) | | | (16,712) | | | (198) | | | (262) | | | — | | | 0 | | | (4) | | | (1) | | | Benefit obligation at December 31 | | $ | 21,235 | | | $ | 21,493 | | | $ | 33,479 | | | $ | 31,261 | | | $ | 2,233 | | | $ | 2,369 | | | $ | 586 | | | $ | 531 | | | Change in plan assets | | | | | | | | | | | | | | | | | | Fair value of plan assets at January 1 | | $ | 25,094 | | | $ | 51,852 | | | $ | 28,371 | | | $ | 39,979 | | | $ | 10 | | | $ | 8 | | | $ | 29 | | | $ | 31 | | | Actual return on plan assets | | 1,055 | | | (6,914) | | | 1,391 | | | (6,737) | | | — | | | — | | | 3 | | | 3 | | | Employer contributions | | — | | | — | | | 57 | | | 103 | | | 233 | | | 344 | | | — | | | — | | | Acquisitions/divestitures, net | | — | | | — | | | (24) | | | (20) | | | — | | | — | | | — | | | — | | | Plan participants' contributions | | — | | | — | | | 17 | | | 14 | | | 38 | | | 43 | | | — | | | — | | | Benefits paid from trust | | (1,424) | | | (3,133) | | | (1,629) | | | (1,572) | | | (274) | | | (385) | | | (7) | | | (6) | | | Foreign exchange impact | | — | | | — | | | 1,058 | | | (3,154) | | | — | | | — | | | 3 | | | 2 | | Amendments/curtailments/ settlements/other (1) | | (288) | | | (16,712) | | | (181) | | | (243) | | | 2 | | | 0 | | | (6) | | | 0 | | | Fair value of plan assets at December 31 | | $ | 24,437 | | | $ | 25,094 | | | $ | 29,059 | | | $ | 28,371 | | | $ | 10 | | | $ | 10 | | | $ | 23 | | | $ | 29 | | | Funded status at December 31 | | $ | 3,202 | | | $ | 3,600 | | | $ | (4,420) | | | $ | (2,891) | | | $ | (2,224) | | | $ | (2,359) | | | $ | (564) | | | $ | (501) | | Accumulated benefit obligation(2) | | $ | 21,235 | | | $ | 21,493 | | | $ | 33,128 | | | $ | 30,961 | | | N/A | | N/A | | N/A | | N/A |
(1) 2022 amount related to U.S. Defined Benefit Pension Plans primarily represents the transfer of Qualified PPP pension obligations and related plan assets to the Insurers pursuant to group annuity contracts. (2) Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable
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| Net funded status |
The following table presents the net funded status recognized in the Consolidated Balance Sheet. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | | At December 31: | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | Prepaid pension assets | | $ | 4,584 | | | $ | 5,002 | | | $ | 2,923 | | | $ | 3,234 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | Current liabilities—compensation and benefits | | (119) | | | (121) | | | (366) | | | (347) | | | (202) | | | (307) | | | (17) | | | (16) | | | Noncurrent liabilities—retirement and nonpension postretirement benefit obligations | | (1,262) | | | (1,281) | | | (6,977) | | | (5,777) | | | (2,022) | | | (2,052) | | | (547) | | | (486) | | | Funded status—net | | $ | 3,202 | | | $ | 3,600 | | | $ | (4,420) | | | $ | (2,891) | | | $ | (2,224) | | | $ | (2,359) | | | $ | (564) | | | $ | (501) | |
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| Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI |
The following table presents the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and the changes in the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI for the retirement-related benefit plans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | Net loss at January 1 | | $ | 8,617 | | | $ | 14,273 | | | $ | 11,219 | | | $ | 13,412 | | | $ | 94 | | | $ | 464 | | | $ | 86 | | | $ | 183 | | | Current period loss/(gain) | | 959 | | | 794 | | | 2,125 | | | (1,115) | | | (20) | | | (365) | | | 34 | | | (93) | | Curtailments and settlements (1) | | — | | | (5,923) | | | (7) | | | (47) | | | — | | | — | | | 2 | | | 0 | | | Amortization of net loss included in net periodic (income)/cost | | (109) | | | (527) | | | (400) | | | (1,031) | | | — | | | (5) | | | 1 | | | (4) | | | Net loss at December 31 | | $ | 9,467 | | | $ | 8,617 | | | $ | 12,937 | | | $ | 11,219 | | | $ | 73 | | | $ | 94 | | | $ | 123 | | | $ | 86 | | | Prior service costs/(credits) at January 1 | | $ | 0 | | | $ | 8 | | | $ | 330 | | | $ | 397 | | | $ | (379) | | | $ | 26 | | | $ | 0 | | | $ | (4) | | | Current period prior service costs/(credits) | | — | | | — | | | (1) | | | (53) | | | — | | | (415) | | | (1) | | | 5 | | | Curtailments, settlements and other | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Amortization of prior service (costs)/credits included in net periodic (income)/cost | | 0 | | | (8) | | | (20) | | | (14) | | | 29 | | | 10 | | | 0 | | | 0 | | | Prior service costs/(credits) at December 31 | | $ | 0 | | | $ | 0 | | | $ | 309 | | | $ | 330 | | | $ | (350) | | | $ | (379) | | | $ | (1) | | | $ | 0 | | | Transition (assets)/liabilities at January 1 | | $ | — | | | $ | — | | | $ | 0 | | | $ | 0 | | | $ | — | | | $ | — | | | $ | 0 | | | $ | 0 | | | | | | | | | | | | | | | | | | | | Transition (assets)/liabilities at December 31 | | $ | — | | | $ | — | | | $ | 0 | | | $ | 0 | | | $ | — | | | $ | — | | | $ | 0 | | | $ | 0 | | Total loss recognized in accumulated other comprehensive income/(loss) (2) | | $ | 9,467 | | | $ | 8,617 | | | $ | 13,245 | | | $ | 11,549 | | | $ | (276) | | | $ | (285) | | | $ | 122 | | | $ | 86 | |
(1)2022 amount related to U.S. Defined Benefit Pension Plans includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described above. (2)Refer to note S, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans.
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| Assumptions used to measure the net periodic (income)/cost and year-end benefit obligations |
The following tables present the assumptions used to measure the net periodic (income)/cost and the year-end benefit obligations for retirement-related benefit plans. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | U.S. Plans | | Non-U.S. Plans | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | | | | | | | | | | | | Discount rate (1) | 5.30 | % | | 3.30 | % | | 2.20 | % | | 3.80 | % | | 1.26 | % | | 0.87 | % | Expected long-term returns on plan assets (1) | 5.50 | % | | 4.33 | % | | 3.75 | % | | 4.44 | % | | 2.97 | % | | 2.85 | % | | Rate of compensation increase | N/A | | | N/A | | | N/A | | | 4.00 | % | | 3.02 | % | | 2.59 | % | Interest crediting rate (1) | 4.40 | % | | 2.07 | % | | 1.10 | % | | 0.34 | % | | 0.26 | % | | 0.26 | % | | Weighted-average assumptions used to measure benefit obligations at December 31 | | | | | | | | | | | | | Discount rate | 5.00 | % | | 5.30 | % | | 2.60 | % | | 3.36 | % | | 3.80 | % | | 1.26 | % | | Rate of compensation increase | 5.00 | % | | N/A | | | N/A | | | 4.18 | % | | 4.00 | % | | 3.02 | % | | Interest crediting rate | 3.80 | % | | 4.40 | % | | 1.10 | % | | 0.28 | % | | 0.34 | % | | 0.26 | % |
(1)The U.S. Plans Qualified PPP discount rate, expected long-term return on plan assets and interest crediting rate of 2.60 percent, 4.00 percent and 1.10 percent, respectively, for the period January 1, 2022 through August 31, 2022, changed to 4.70 percent, 5.00 percent and 4.00 percent, respectively, for the period September 1, 2022 through December 31, 2022 due to remeasurement of the plan as a result of the changes described on page 109. N/A–Not applicable | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nonpension Postretirement Benefit Plans | | U.S. Plan | | Non-U.S. Plans | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | Weighted-average assumptions used to measure net periodic cost for the year ended December 31 | | | | | | | | | | | | Discount rate (1) | 5.30 | % | | 3.05 | % | | 1.80 | % | | 7.25 | % | | 5.35 | % | | 4.55 | % | | Expected long-term returns on plan assets | N/A | | | N/A | | | N/A | | | 8.05 | % | | 6.64 | % | | 6.62 | % | Interest crediting rate (1) | 4.40 | % | | 2.16 | % | | 1.10 | % | | N/A | | | N/A | | | N/A | | | Weighted-average assumptions used to measure benefit obligations at December 31 | | | | | | | | | | | | | Discount rate | 5.00 | % | | 5.30 | % | | 2.30 | % | | 7.66 | % | | 7.25 | % | | 5.35 | % | | Interest crediting rate | 3.80 | % | | 4.40 | % | | 1.10 | % | | N/A | | | N/A | | | N/A | |
(1)The U.S. Nonpension Postretirement Plan discount rate and interest crediting rate of 2.30 percent and 1.10 percent, respectively, for the period January 1, 2022 through July 31, 2022, changed to 4.10 percent and 3.65 percent, respectively, for the period August 1, 2022 through December 31, 2022 due to remeasurement of the plan as a result of the changes described on page 109. N/A–Not applicable | | | | | | | Item | Description of Assumptions | | Discount Rate | Changes in discount rate assumptions impact net periodic (income)/cost and the PBO.
For the U.S. and certain non-U.S. countries, a portfolio of high-quality corporate bonds is used to construct a yield curve. Cash flows from the company’s expected benefit obligation payments are matched to the yield curve to derive the discount rates.
In other non-U.S. countries where the markets for high-quality long-term bonds are not as well developed, a portfolio of long-term government bonds is used as a base, and a credit spread is added to simulate corporate bond yields at these maturities in the jurisdiction of each plan. This is the benchmark for developing the respective discount rates. | | Expected Long-Term Returns on Plan Assets | Represents the expected long-term returns on plan assets based on the calculated market-related value of plan assets and considers long-term expectations for future returns and the investment policies and strategies discussed on pages 114 to 115. These rates of return are developed and tested for reasonableness against historical returns by the company.
The use of expected returns may result in pension income that is greater or less than the actual return of those plan assets in a given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns, and therefore result in a pattern of income or loss recognition that more closely matches the pattern of the services provided by the employees.
The difference between actual and expected returns is recognized as a component of net loss or gain in AOCI, which is amortized as a component of net periodic (income)/cost over the service lives or life expectancy of the plan participants, depending on the plan, provided such amounts exceed certain thresholds provided by accounting standards. The market-related value of plan assets recognizes changes in the fair value of plan assets systematically over a five-year period in the expected return on plan assets line in net periodic (income)/cost.
The projected long-term rate of return on plan assets for 2024 is 5.00 percent for U.S. and 4.90 percent for non-U.S. DB Plans. | | Rate of Compensation Increases and Mortality Assumptions | Compensation rate increases are determined based on the company’s long-term plans for such increases.
Mortality assumptions are based on life expectancy and death rates for different types of participants and are periodically updated based on actual experience. | | Interest Crediting Rate | Benefits for participants in Cash Balance Plans are calculated using a cash balance formula. An assumption underlying this formula is an interest crediting rate, which impacts both net periodic (income)/cost and the PBO. This provides the basis for projecting the expected interest rate that plan participants will earn on the benefits that they are expected to receive in the following year. | | Healthcare Cost Trend Rate | For nonpension postretirement benefit plans, the company determines healthcare cost trend rates based on medical cost inflation expectations in each market and IBM’s plan characteristics. The healthcare cost trend rate is an important consideration when setting future expectations for plan costs or benefit obligations, taking into account the terms of the plan which limit the company’s future obligations to the participants.
The company’s U.S. healthcare cost trend rate assumption for 2024 is 6.69 percent and is expected to decrease to 4.50 percent over approximately 14 years. |
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| Defined benefit pension plans' asset classes and their associated fair value |
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2023. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | U.S. Plan | | Non-U.S. Plans | | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Equity | | | | | | | | | | | | | | | | | Equity securities (1) | | $ | 631 | | | $ | — | | | $ | — | | | $ | 631 | | | $ | 243 | | | $ | — | | | $ | — | | | $ | 243 | | Equity mutual funds (2) | | 155 | | | — | | | — | | | 155 | | | 5 | | | — | | | — | | | 5 | | | Fixed income | | | | | | | | | | | | | | | | | Government and related (3) | | — | | | 9,861 | | | — | | | 9,861 | | | — | | | 7,700 | | | — | | | 7,700 | | Corporate bonds (4) | | — | | | 7,074 | | | 709 | | | 7,783 | | | — | | | 2,691 | | | — | | | 2,691 | | | Mortgage and asset-backed securities | | — | | | 178 | | | — | | | 178 | | | — | | | 9 | | | — | | | 9 | | Fixed income mutual funds (5) | | 251 | | | — | | | — | | | 251 | | | — | | | — | | | 75 | | | 75 | | Insurance contracts (6) | | — | | | — | | | — | | | — | | | — | | | 3,774 | | | — | | | 3,774 | | Cash and short-term investments (7) | | 495 | | | 119 | | | — | | | 614 | | | 264 | | | 315 | | | — | | | 579 | | | Private equity | | — | | | — | | | 13 | | | 13 | | | — | | | — | | | — | | | — | | | Real estate | | — | | | — | | | — | | | — | | | — | | | — | | | 4 | | | 4 | | Derivatives (8) | | — | | | — | | | — | | | — | | | 51 | | | 258 | | | — | | | 309 | | Other mutual funds(9) | | — | | | — | | | — | | | — | | | 20 | | | — | | | — | | | 20 | | | Subtotal | | 1,532 | | | 17,231 | | | 722 | | | 19,485 | | | 584 | | | 14,747 | | | 78 | | | 15,409 | | Investments measured at net asset value using the NAV practical expedient (10) | | — | | | — | | | — | | | 4,952 | | | — | | | — | | | — | | | 13,709 | | Other (11) | | — | | | — | | | — | | | 0 | | | — | | | — | | | — | | | (59) | | | Fair value of plan assets | | $ | 1,532 | | | $ | 17,231 | | | $ | 722 | | | $ | 24,437 | | | $ | 584 | | | $ | 14,747 | | | $ | 78 | | | $ | 29,059 | |
(1)Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $1 million. Non-U.S. Plans include IBM common stock of $2 million. (2)Invests in predominantly equity securities. (3)Includes debt issued by national, state and local governments and agencies. (4)The U.S. Plans include IBM corporate bonds of $16 million. Non-U.S. Plans include IBM corporate bonds of $5 million. (5)Invests predominantly in fixed-income securities. (6)Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans. (7)Includes cash, cash equivalents and short-term marketable securities. (8)Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives. (9)Invests in both equity and fixed-income securities. (10)Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. (11)Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. The U.S. nonpension postretirement benefit plan assets of $10 million were invested primarily in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $23 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2022. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | U.S. Plan | | Non-U.S. Plans | | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Equity | | | | | | | | | | | | | | | | | Equity securities (1) | | $ | 518 | | | $ | — | | | $ | — | | | $ | 518 | | | $ | 247 | | | $ | — | | | $ | — | | | $ | 247 | | Equity mutual funds (2) | | 114 | | | — | | | — | | | 114 | | | 0 | | | — | | | — | | | 0 | | | Fixed income | | | | | | | | | | | | | | | | | Government and related (3) | | — | | | 9,074 | | | — | | | 9,074 | | | — | | | 6,837 | | | — | | | 6,837 | | Corporate bonds (4) | | — | | | 6,885 | | | 721 | | | 7,606 | | | — | | | 2,546 | | | — | | | 2,546 | | | Mortgage and asset-backed securities | | — | | | 238 | | | — | | | 238 | | | — | | | 2 | | | — | | | 2 | | Fixed income mutual funds (5) | | 234 | | | — | | | — | | | 234 | | | — | | | — | | | 9 | | | 9 | | Insurance contracts (6) | | — | | | — | | | — | | | — | | | — | | | 3,654 | | | — | | | 3,654 | | Cash and short-term investments (7) | | 72 | | | 570 | | | — | | | 643 | | | 286 | | | 263 | | | — | | | 549 | | | Private equity | | — | | | — | | | 421 | | | 421 | | | — | | | — | | | — | | | — | | | Real estate | | — | | | 8 | | | — | | | 8 | | | — | | | — | | | 145 | | | 145 | | Derivatives (8) | | — | | | — | | | — | | | — | | | 32 | | | 262 | | | — | | | 294 | | Other mutual funds (9) | | — | | | — | | | — | | | — | | | 25 | | | — | | | — | | | 25 | | | Subtotal | | 937 | | | 16,776 | | | 1,142 | | | 18,855 | | | 590 | | | 13,563 | | | 155 | | | 14,308 | | Investments measured at net asset value using the NAV practical expedient (10) | | — | | | — | | | — | | | 6,242 | | | | | | | | | 14,141 | | Other (11) | | — | | | — | | | — | | | (4) | | | — | | | — | | | — | | | (78) | | | Fair value of plan assets | | $ | 937 | | | $ | 16,776 | | | $ | 1,142 | | | $ | 25,094 | | | $ | 590 | | | $ | 13,563 | | | $ | 155 | | | $ | 28,371 | |
(1)Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $1 million. Non-U.S. Plans include IBM common stock of $2 million. (2)Invests in predominantly equity securities. (3)Includes debt issued by national, state and local governments and agencies. (4)The U.S. Plans include IBM corporate bonds of $6 million. Non-U.S. Plans include IBM corporate bonds of $3 million. (5)Invests in predominantly fixed-income securities. (6)Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans. (7)Includes cash, cash equivalents and short-term marketable securities. (8)Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives. (9)Invests in both equity and fixed-income securities. (10)(Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. (11)Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.
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| Reconciliation of the beginning and ending balances of Level 3 assets |
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2023 and 2022 for the U.S. Plan. | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Corporate Bonds | | Private Equity | | Total | | Balance at January 1, 2023 | $ | 721 | | | $ | 421 | | | $ | 1,142 | | | Return on assets held at end of year | (18) | | | (5) | | | (23) | | | Return on assets sold during the year | 10 | | | 0 | | | 10 | | | Purchases, sales and settlements, net | (5) | | | (404) | | | (409) | | | Transfers, net | 2 | | | — | | | 2 | | | Balance at December 31, 2023 | $ | 709 | | | $ | 13 | | | $ | 722 | |
| | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Corporate Bonds | | Private Equity | | Total | | Balance at January 1, 2022 | $ | 598 | | | $ | — | | | $ | 598 | | | Return on assets held at end of year | (114) | | | — | | | (114) | | | Return on assets sold during the year | (2) | | | — | | | (2) | | | Purchases, sales and settlements, net | 206 | | | — | | | 206 | | | Transfers, net | 33 | | | 421 | | | 454 | | | Balance at December 31, 2022 | $ | 721 | | | $ | 421 | | | $ | 1,142 | |
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2023 and 2022 for the non-U.S. Plans. | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Fixed Income Mutual Funds | | Real Estate | | Total | | Balance at January 1, 2023 | $ | 9 | | | $ | 145 | | | $ | 155 | | | Return on assets held at end of year | 1 | | | (66) | | | (65) | | | Return on assets sold during the year | — | | | 56 | | | 56 | | | Purchases, sales and settlements, net | 63 | | | (137) | | | (74) | | | Transfers, net | — | | | 0 | | | 0 | | | Foreign exchange impact | 2 | | | 5 | | | 7 | | | Balance at December 31, 2023 | $ | 75 | | | $ | 4 | | | $ | 78 | |
| | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Fixed Income Mutual Funds | | Real Estate | | Total | | Balance at January 1, 2022 | $ | — | | | $ | 174 | | | $ | 174 | | | Return on assets held at end of year | 0 | | | 6 | | | 6 | | | Return on assets sold during the year | — | | | (1) | | | (1) | | | Purchases, sales and settlements, net | 10 | | | (16) | | | (7) | | | Transfers, net | — | | | 0 | | | 0 | | | Foreign exchange impact | 0 | | | (18) | | | (19) | | | Balance at December 31, 2022 | $ | 9 | | | $ | 145 | | | $ | 155 | |
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| Schedule of contributions and direct benefit payments |
The following table presents the contributions made to the non-U.S. DB plans, nonpension postretirement benefit plans, multi-employer plans, DC plans and direct benefit payments for 2023 and 2022. The cash contributions to the multi-employer plans represent the annual cost included in the net periodic (income)/cost recognized in the Consolidated Income Statement. The company’s participation in multi-employer plans has no material impact on the company’s financial statements. | | | | | | | | | | | | | ($ in millions) | | | | | For the years ended December 31: | 2023 | | 2022 | | Non-U.S. DB plans | $ | 57 | | | $ | 103 | | | Nonpension postretirement benefit plans | 233 | | | 344 | | | Multi-employer plans | 13 | | | 15 | | | DC plans | 991 | | | 924 | | | Direct benefit payments | 552 | | | 576 | | | Total | $ | 1,847 | | | $ | 1,962 | |
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| Total expected benefit payments, pension benefit plans and nonpension postretirement plans |
The following table presents the total expected benefit payments to defined benefit pension plan participants subsequent to the U.S. retirement plan changes, as described above. These payments have been estimated based on the same assumptions used to measure the plans’ PBO at December 31, 2023 and include benefits attributable to estimated future compensation increases, where applicable. | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | | | Qualified
U.S. Plan
Payments | Nonqualified
U.S. Plans
Payments | Qualified
Non-U.S. Plans
Payments | Nonqualified
Non-U.S. Plans
Payments | Total Expected
Benefit
Payments | | 2024 | $ | 1,769 | | $ | 122 | | $ | 1,995 | | $ | 375 | | $ | 4,260 | | | 2025 | 1,830 | | 121 | | 1,977 | | 359 | | 4,286 | | | 2026 | 1,848 | | 119 | | 1,954 | | 362 | | 4,283 | | | 2027 | 1,822 | | 116 | | 1,933 | | 354 | | 4,225 | | | 2028 | 1,780 | | 113 | | 1,903 | | 349 | | 4,145 | | | 2029-2033 | 8,284 | | 522 | | 9,131 | | 1,654 | | 19,591 | |
The 2024 expected benefit payments to defined benefit pension plan participants not covered by the respective plan assets (underfunded plans) represent a component of compensation and benefits, within current liabilities, in the Consolidated Balance Sheet. Nonpension Postretirement Benefit Plan Expected Payments The following table presents the total expected benefit payments to nonpension postretirement benefit plan participants. These payments have been estimated based on the same assumptions used to measure the plans’ APBO at December 31, 2023.
| | | | | | | | | | | | | | | | ($ in millions) | | | | | | U.S. Plan
Payments | Qualified
Non-U.S. Plans
Payments | Nonqualified
Non-U.S. Plans
Payments | Total Expected
Benefit
Payments | | 2024 | $ | 217 | | $ | 20 | | $ | 24 | | $ | 261 | | | 2025 | 215 | | 21 | | 24 | | 260 | | | 2026 | 213 | | 22 | | 24 | | 259 | | | 2027 | 208 | | 23 | | 24 | | 255 | | | 2028 | 233 | | 24 | | 24 | | 281 | | | 2029-2033 | 1,085 | | 134 | | 129 | | 1,349 | |
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| Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets |
The following table presents information for defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets. For a more detailed presentation of the funded status of the company’s defined benefit pension plans, refer to the table on page 111. | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | 2023 | | 2022 | | At December 31: | Benefit
Obligation | Plan
Assets | | Benefit
Obligation | Plan
Assets | | Plans with PBO in excess of plan assets | $ | 18,345 | | $ | 9,621 | | | $ | 17,220 | | $ | 9,694 | | | Plans with ABO in excess of plan assets | 18,029 | | 9,604 | | | 16,979 | | 9,694 | | | Plans with plan assets in excess of PBO | 36,369 | | 43,875 | | | 35,534 | | 43,770 | |
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| Schedule of nonpension postretirement benefit plan with APBO in excess of plan assets |
The following table presents information for the nonpension postretirement benefit plan with APBO in excess of plan assets. For a more detailed presentation of the funded status of the company’s nonpension postretirement benefit plans, refer to the table on page 111. | | | | | | | | | | | | | | | | | | | ($ in millions) | | | | | 2023 | | 2022 | | At December 31: | Benefit
Obligation | Plan
Assets | | Benefit
Obligation | Plan
Assets | | Plans with APBO in excess of plan assets | $ | 2,820 | | $ | 32 | | | $ | 2,893 | | $ | 32 | | | Plans with plan assets in excess of APBO | — | | — | | | 7 | | 7 | |
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