Employee Retirement Benefits

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Employee Retirement Benefits

Employee Retirement Benefits

Employee Pension Plan and Other Benefits Plans – NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries. NEE also has a supplemental executive retirement plan (SERP), which includes a non-qualified supplemental defined benefit pension component that provides benefits to a select group of management and highly compensated employees, and sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements. The total accrued benefit cost of the SERP and postretirement plans is approximately $300 million ($139 million for FPL) and $323 million ($156 million for FPL) at December 31, 2021 and 2020, respectively.

Pension Plan Assets, Benefit Obligations and Funded Status – The changes in assets, benefit obligations and the funded status of the pension plan are as follows:

	2021		2020
	(millions)
Change in pension plan assets:
Fair value of plan assets at January 1	$	5,314	$	4,800
Actual return on plan assets	627		723
Benefit payments	(253)		(209)
Fair value of plan assets at December 31	$	5,688	$	5,314
Change in pension benefit obligation:
Obligation at January 1	$	3,607	$	3,363
Service cost	90		85
Interest cost	64		92
Special termination benefit(a)	—		16
Plan amendments	—		1
Actuarial losses (gains) – net	(63)		259
Benefit payments	(253)		(209)
Obligation at December 31(b)	$	3,445	$	3,607
Funded status:
Prepaid pension benefit costs at NEE at December 31	$	2,243	$	1,707
Prepaid pension benefit costs at FPL at December 31(c)	$	1,657	$	1,550

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(a)Reflects enhanced early retirement benefit.

(b)NEE's accumulated pension benefit obligation, which includes no assumption about future salary levels, at December 31, 2021 and 2020 was approximately $3,352 million and $3,521 million, respectively.

(c)Reflects FPL's allocated benefits under NEE's pension plan.

NEE's unrecognized amounts included in accumulated other comprehensive income (loss) yet to be recognized as components of prepaid pension benefit costs are as follows:

	2021		2020
	(millions)
Unrecognized prior service benefit (net of $1 tax expense and $1 tax expense, respectively)	$	2	$	2
Unrecognized gains (losses) (net of $7 tax expense and $24 tax benefit, respectively)	41		(60)
Total	$	43	$	(58)

NEE's unrecognized amounts included in regulatory assets (liabilities) yet to be recognized as components of net prepaid pension benefit costs are as follows:

	2021		2020
	(millions)
Unrecognized prior service benefit	$	(1)	$	(1)
Unrecognized losses (gains)	(80)		163
Total	$	(81)	$	162

The following table provides the assumptions used to determine the benefit obligation for the pension plan. These rates are used in determining net periodic pension income in the following year.

	2021		2020
Discount rate(a)	2.87	%	2.53	%
Salary increase	4.90	%	4.40	%
Weighted-average interest crediting rate	3.79	%	3.82	%

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(a)The method of estimating the interest cost component of net periodic benefit costs uses a full yield curve approach by applying a specific spot rate along the yield curve.

NEE's investment policy for the pension plan recognizes the benefit of protecting the plan's funded status, thereby avoiding the necessity of future employer contributions. Its broad objectives are to achieve a high rate of total return with a prudent level of risk taking while maintaining sufficient liquidity and diversification to avoid large losses and preserve capital over the long term.

The NEE pension plan fund's current target asset allocation, which is expected to be reached over time, is 45% equity investments, 32% fixed income investments, 13% alternative investments and 10% convertible securities. The pension fund's investment strategy emphasizes traditional investments, broadly diversified across the global equity and fixed income markets, using a combination of different investment styles and vehicles. The pension fund's equity and fixed income holdings consist of both directly held securities as well as commingled investment arrangements such as common and collective trusts, pooled separate accounts, registered investment companies and limited partnerships. The pension fund's convertible security assets are principally direct holdings of convertible securities and include a convertible security oriented limited partnership. The pension fund's alternative investments consist primarily of private equity and real estate oriented investments in limited partnerships as well as absolute return oriented limited partnerships that use a broad range of investment strategies on a global basis.

The fair value measurements of NEE's pension plan assets by fair value hierarchy level are as follows:

	December 31, 2021(a)
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(millions)
Equity securities(b)	$	1,977	$	29	$	2	$	2,008
Equity commingled vehicles(c)	—		889		—		889
U.S. Government and municipal bonds	131		6		—		137
Corporate debt securities(d)	—		351		—		351
Asset-backed securities	—		386		—		386
Debt security commingled vehicles(e)	—		219		—		219
Convertible securities(f)	91		489		—		580
Total investments in the fair value hierarchy	$	2,199	$	2,369	$	2	4,570
Total investments measured at net asset value(g)							1,118
Total fair value of plan assets							$	5,688

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(a)See Notes 3 and 4 for discussion of fair value measurement techniques and inputs.

(b)Includes foreign investments of $927 million.

(c)Includes foreign investments of $169 million.

(d)Includes foreign investments of $109 million.

(e)Includes foreign investments of $5 million.

(f)Includes foreign investments of $41 million.

(g)Includes foreign investments of $220 million.

	December 31, 2020(a)
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(millions)
Equity securities(b)	$	2,017	$	10	$	3	$	2,030
Equity commingled vehicles(c)	—		668		—		668
U.S. Government and municipal bonds	169		8		—		177
Corporate debt securities(d)	—		340		—		340
Asset-backed securities	—		375		—		375
Debt security commingled vehicles(e)	—		201		—		201
Convertible securities(f)	64		453		—		517
Total investments in the fair value hierarchy	$	2,250	$	2,055	$	3	4,308
Total investments measured at net asset value(g)							1,006
Total fair value of plan assets							$	5,314

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(a)See Notes 3 and 4 for discussion of fair value measurement techniques and inputs.

(b)Includes foreign investments of $881 million.

(c)Includes foreign investments of $156 million.

(d)Includes foreign investments of $93 million.

(e)Includes foreign investments of $5 million.

(f)Includes foreign investments of $35 million.

(g)Includes foreign investments of $153 million.

Expected Cash Flows – The following table provides information about benefit payments expected to be paid by the pension plan for each of the following calendar years (in millions):

2022	$	204
2023	$	208
2024	$	209
2025	$	210
2026	$	214
2027 – 2031	$	1,033

Net Periodic Income – The components of net periodic income for the plans are as follows:

	Pension Benefits						Postretirement Benefits
	2021		2020		2019		2021		2020		2019
			(millions)
Service cost	$	90	$	85	$	80	$	2	$	1	$	1
Interest cost	64		92		114		4		8		9
Expected return on plan assets	(339)		(321)		(312)		—		—		—
Amortization of actuarial loss	24		18		—		5		3		—
Amortization of prior service benefit	(1)		(1)		(1)		(15)		(16)		(15)
Special termination benefits	—		16		19		—		—		—
Net periodic income at NEE	$	(162)	$	(111)	$	(100)	$	(4)	$	(4)	$	(5)
Net periodic income allocated to FPL	$	(108)	$	(84)	$	(61)	$	(4)	$	(4)	$	(4)

Other Comprehensive Income – The components of net periodic income recognized in OCI for the pension plan are as follows:

	2021		2020		2019
	(millions)
Net gains (losses) (net of $29 tax expense, $13 tax expense and $10 tax benefit, respectively)	$	95	$	42	$	(36)
Amortization of unrecognized losses (net of $2 tax expense and $1 tax expense, respectively)	6		5		—
Total	$	101	$	47	$	(36)

Regulatory Assets (Liabilities) – The components of net periodic income recognized during the year in regulatory assets (liabilities) for the pension plan are as follows:

	2021		2020
	(millions)
Prior service cost (benefit)	$	(1)	$	1
Unrecognized gains	(226)		(89)
Amortization of prior service benefit	—		1
Amortization of unrecognized losses	(16)		(12)
Total	$	(243)	$	(99)

The assumptions used to determine net periodic pension income for the pension plan are as follows:

	2021		2020		2019
Discount rate	2.53	%	3.22	%	4.26	%
Salary increase	4.40	%	4.40	%	4.40	%
Expected long-term rate of return, net of investment management fees(a)	7.35	%	7.35	%	7.35	%
Weighted-average interest crediting rate	3.82	%	3.83	%	3.88	%

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(a)In developing the expected long-term rate of return on assets assumption for its pension plan, NEE evaluated input, including other qualitative and quantitative factors, from its actuaries and consultants, as well as information available in the marketplace. NEE considered different models, capital market return assumptions and historical returns for a portfolio with an equity/bond asset mix similar to its pension fund. NEE also considered its pension fund's historical compounded returns.

Employee Contribution Plan – NEE offers an employee retirement savings plan which allows eligible participants to contribute a percentage of qualified compensation through payroll deductions. NEE makes matching contributions to participants' accounts. Defined contribution expense pursuant to this plan was approximately $66 million, $64 million and $58 million for NEE ($42 million, $40 million and $40 million for FPL) for the years ended December 31, 2021, 2020 and 2019, respectively.