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Benefit Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Benefit Plans Benefit Plans
Subsidiaries of Altria sponsor noncontributory defined benefit pension plans covering certain employees of Altria and its subsidiaries. Employees hired on or after a date specific to their employee group, except for certain employees of UST’s subsidiaries and Middleton, are not eligible to participate in these noncontributory defined benefit pension plans but are instead eligible to participate in a defined contribution plan with enhanced benefits. Altria and its subsidiaries also provide postretirement health care and other benefits to certain retired employees.
The plan assets and benefit obligations of Altria’s pension plans and postretirement plans are measured at December 31 of each year.
The discount rates for Altria’s plans were based on a yield curve developed from a model portfolio of high-quality corporate bonds with durations that match the expected future cash flows of the pension and postretirement benefit obligations.
▪Obligations and Funded Status: The benefit obligations, plan assets and funded status of Altria’s pension and postretirement plans were as follows at December 31:
PensionPostretirement
(in millions)2021202020212020
Change in benefit obligation:
    Benefit obligation at beginning of year$9,465 $8,659 $2,229 $2,091 
   Service cost
68 74 20 16 
   Interest cost
184 251 38 59 
   Benefits paid
(465)(477)(104)(107)
   Actuarial (gains) losses(523)970 (150)169 
   Plan amendments8 (12)(345)1 
   Divestiture(193)(1)— — — 
Benefit obligation at end of year8,544 9,465 1,688 2,229 
Change in plan assets:
    Fair value of plan assets at beginning of year8,911 8,167 201 213 
   Actual return on plan assets
466 1,188 21 21 
   Employer contributions
26 33 — — 
   Benefits paid
(465)(477)(37)(33)
   Divestiture(145)(1)— — — 
Fair value of plan assets at end of year8,793 8,911 185 201 
    Funded status at December 31
$249 $(554)$(1,503)$(2,028)
Amounts recognized on Altria’s consolidated balance sheets were as follows:
    Other accrued liabilities
$(27)$(23)$(67)$(77)
    Accrued pension costs
(200)(551)— — 
    Other assets
476 20 — — 
    Accrued postretirement health care costs
— — (1,436)(1,951)
$249 $(554)$(1,503)$(2,028)
(1) Divestiture of benefit obligations and plan assets related to the Ste. Michelle Transaction. For further discussion, see Note 1. Background and Basis of Presentation.
The table above presents the projected benefit obligation for Altria’s pension plans. The accumulated benefit obligation, which represents benefits earned to date, for the pension plans was $8.2 billion and $9.1 billion at December 31, 2021 and 2020, respectively.
Actuarial (gains) losses for the years ended December 31, 2021 and 2020 for the pension and postretirement plans were due primarily to changes in the discount rate. Actuarial (gains) losses for the pension plans for the year ended December 31, 2021 were further impacted by changes to mortality rate assumptions.
Plan amendments for the postretirement plans for the year ended December 31, 2021 included several plan changes announced in June 2021 to Altria’s salaried retiree healthcare plans, primarily changing its post-age 65 coverage to a private medicare marketplace. These amendments triggered a plan remeasurement in June 2021, resulting in a reduction of $432 million (including discount rate impact and other changes) to the postretirement obligation in the second quarter of 2021 and a corresponding reduction to its accumulated other comprehensive losses.
For pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2021, the accumulated benefit obligation and fair value of plan assets were $176 million and $0 million, respectively. For pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2020, the accumulated benefit obligation and fair value of plan assets were $393 million and $149 million, respectively.
For pension plans with projected benefit obligations in excess of plan assets at December 31, 2021, the projected benefit obligation and fair value of plan assets were $227 million and $0 million, respectively. For pension plans with projected benefit obligations in excess of plan assets at December 31, 2020, the projected benefit obligation and fair value of plan assets were $9,324 million and $8,750 million, respectively.
At December 31, 2021 and 2020, the accumulated postretirement benefit obligations were in excess of plan assets for all postretirement plans.
The following assumptions were used to determine Altria’s pension and postretirement benefit obligations at December 31:
PensionPostretirement
2021202020212020
Discount rate3.0 %2.7 %2.9 %2.6 %
Rate of compensation increase - long-term4.0 4.0 — — 
Health care cost trend rate assumed for next year— — 6.5 6.5 
    Ultimate trend rate— — 5.0 5.0 
 Year that the rate reaches the ultimate trend rate— — 20272027
▪Components of Net Periodic Benefit Cost (Income): Net periodic benefit cost (income) consisted of the following for the years ended December 31:
PensionPostretirement
(in millions)202120202019202120202019
Service cost$68 $74 $70 $20 $16 $16 
Interest cost184 251 306 38 59 76 
Expected return on plan assets(522)(502)(576)(14)(14)(15)
Amortization:
Net loss131 134 159 22 10 5 
Prior service cost (credit)5 5 6 (46)(30)(30)
Settlement and curtailment — 10 27 — — 5 
Net periodic benefit cost (income)$(134)$(28)$(8)$20 $41 $57 
Settlement and curtailment shown in the table above for 2019 primarily relates to the cost reduction program discussed in Note 5. Asset Impairment, Exit and Implementation Costs.
The amounts included in settlement and curtailment in the table above were comprised of the following changes:
PensionPostretirement
(in millions)202020192019
Benefit obligation$— $6 $10 
Other comprehensive earnings/losses:
Net loss 10 20 — 
Prior service cost (credit)
— 1 (5)
$10 $27 $5 
The following assumptions were used to determine Altria’s net periodic benefit cost for the years ended December 31:
PensionPostretirement
202120202019202120202019
Discount rates:
     Service cost
3.1 %3.7 %4.6 %3.1 %3.6 %4.5 %
     Interest cost
2.0 3.0 4.0 2.0 3.0 4.0 
Expected rate of return on plan assets
6.6 6.6 7.8 7.7 7.7 7.8 
Rate of compensation increase - long-term4.0 4.0 4.0 — — — 
Health care cost trend rate
— — — 6.5 6.5 6.5 
▪Defined Contribution Plans: Altria sponsors deferred profit-sharing plans covering certain salaried, non-union and union employees. Contributions and costs are determined generally as a percentage of earnings, as defined by the plans. Amounts charged to expense for these defined contribution plans totaled $90 million, $88 million and $78 million in 2021, 2020 and 2019, respectively.
▪Pension and Postretirement Plan Assets: In managing its pension assets, Altria implements a liability-driven investment framework that aligns plan assets with liabilities. In the fourth quarter of 2021, Altria adjusted its target asset allocation for the majority
of its pension plan assets from an equity/fixed income allocation of 30%/70% to a target allocation of 20%/80%. The objective of this change is to further reduce the overall exposure to equity volatility and more closely align the values of plan assets with the liabilities. The target allocation between fixed income and growth assets balances pension liability hedging and asset growth in order to maintain the plan’s funded status and cover incremental service accruals and interest cost. Liability hedging is achieved through investing in rate-sensitive fixed income securities, primarily corporate bonds and U.S. Treasuries, while growth assets are comprised of publicly traded equity securities.
Altria’s investment strategy for its postretirement plan assets is aimed at maximizing the total asset return based on expectation that equity securities will outperform debt securities over the long term and reflects the maturity structure of the benefit obligation. The equity/fixed income target allocation for postretirement plan assets remains unchanged at 55%/45%.
Altria believes that it implements these investment strategies in a prudent and risk-controlled manner, consistent with the fiduciary requirements of the Employee Retirement Income Security Act of 1974, by investing retirement plan assets in a well-diversified mix of equities, fixed income and other securities.
The actual composition of Altria’s plan assets at December 31, 2021 was broadly characterized with the following allocation:
PensionPostretirement
Equity securities31 %56 %
Corporate bonds
53 %35 %
U.S. Treasury and foreign government securities
16 %9 %
Altria’s pension and postretirement plan asset performance is monitored on an ongoing basis to adjust the mix as necessary to achieve the target allocation.
Substantially all pension and all postretirement assets can be used to make monthly benefit payments.
Altria’s investment objective for its pension and postretirement plan assets is accomplished by investing in long-duration fixed income securities that primarily include U.S. corporate bonds of companies from diversified industries and U.S. Treasury securities that mirror Altria’s pension obligation benchmark, as well as U.S. and international equity index strategies that are intended to mirror broad market indices, including, the Standard & Poor’s 500 Index and Morgan Stanley Capital International (“MSCI”) Europe, Australasia, and the Far East (“EAFE”) Index. Altria’s pension and postretirement plans also invest in actively managed international equity securities of mid and small cap companies located in developed and emerging markets. For pension plan assets, the allocation to below investment grade securities represented approximately 16% of the fixed income holdings or approximately 11% of the total plan assets at December 31, 2021. The allocation to emerging markets represented less than 1% of total plan assets at December 31, 2021. For postretirement plan assets, the allocation to below investment grade securities represented approximately 8% of the fixed income holdings or approximately 3% of the total plan assets at December 31, 2021. There were no postretirement plan assets invested in emerging markets at December 31, 2021.
Altria’s risk management practices for its pension and postretirement plans include (i) ongoing monitoring of asset allocation, investment performance and investment managers’ compliance with their investment guidelines, (ii) periodic rebalancing between equity and debt asset classes and (iii) annual actuarial re-measurement of plan liabilities.
Altria’s expected rate of return on pension and postretirement plan assets is determined by the plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class. The forward-looking estimates are consistent with the long-term historical averages exhibited by returns on equity and fixed income securities. As a result of the target asset allocation change described above, Altria has reduced its expected rate of return assumption for determining its pension net periodic benefit cost (income) from 6.6% in 2021 to 6.1% in 2022. For determining its postretirement net periodic benefit cost (income), Altria’s 2022 expected rate of return assumption remains unchanged from prior year at 7.7%.
The fair values of the pension plan assets by asset category were as follows at December 31:
20212020
(in millions)Level 1Level 2TotalLevel 1Level 2Total
U.S. and foreign government securities or their agencies:
U.S. government and agencies$— $1,147 $1,147 $— $950 $950 
U.S. municipal bonds
— 60 60 — 64 64 
Foreign government and agencies
— 88 88 — 90 90 
Corporate debt instruments:
Above investment grade
— 3,442 3,442 — 3,760 3,760 
Below investment grade and no rating
— 1,032 1,032 — 868 868 
Common stock:
International equities
373 — 373 316 — 316 
U.S. equities856 — 856 970 — 970 
Other, net52 237 289 21 356 377 
$1,281 $6,006 $7,287 $1,307 $6,088 $7,395 
Investments measured at NAV as a practical expedient for fair value:
Collective investment funds
U.S. large cap
$873 $924 
U.S. small cap 462 455 
International developed markets125 114 
Total investments measured at NAV$1,460 $1,493 
Other46 23 
Fair value of plan assets, net$8,793 $8,911 
Level 3 holdings and transactions were immaterial to total plan assets at December 31, 2021 and 2020.
The fair value of the postretirement plan assets were as follows at December 31:
2021
2020
(in millions)Level 1Level 2TotalLevel 1Level 2Total
U.S. and foreign government securities or their agencies:
U.S. government and agencies$— $5 $5 $— $6 $6 
Foreign government and agencies
— 3 3 — 4 4 
Corporate debt instruments:
Above investment grade
— 55 55 — 55 55 
Below investment grade and no rating
— 10 10 — 11 11 
Other, net— — — — 7 7 
$— $73 $73 $— $83 $83 
Investments measured at NAV as a practical expedient for fair value:
Collective investment funds:
U.S. large cap
$84 $97 
International developed markets25 25 
Total investments measured at NAV$109 $122 
Other
3 (4)
Fair value of plan assets, net$185 $201 
There were no Level 3 postretirement plan holdings or transactions during 2021 and 2020.
For a description of the fair value hierarchy and the three levels of inputs used to measure fair value, see Note 2. Summary of Significant Accounting Policies.
Following is a description of the valuation methodologies used for investments measured at fair value.
▪U.S. and Foreign Government Securities: U.S. and foreign government securities consist of investments in Treasury Nominal Bonds and Inflation Protected Securities and municipal securities. Government securities are valued at a price that is based on a compilation of primarily observable market information, such as broker quotes. Matrix pricing, yield curves and indices are used when broker quotes are not available.
▪Corporate Debt Instruments: Corporate debt instruments are valued at a price that is based on a compilation of primarily observable market information, such as broker quotes. Matrix pricing, yield curves and indices are used when broker quotes are not available.
▪Common Stock: Common stocks are valued based on the price of the security as listed on an open active exchange on last trade date.
▪Collective Investment Funds: Collective investment funds consist of funds that are intended to mirror indices such as Standard & Poor’s 500 Index and MSCI EAFE Index. They are valued on the basis of the relative interest of each participating investor in the fair value of the underlying assets of each of the respective collective investment funds. The underlying assets are valued based on the net asset value (“NAV”), which is provided by the investment account manager as a practical expedient to estimate fair value. These investments are not classified by level but are disclosed to permit reconciliation to the fair value of plan assets.
Cash Flows: Altria makes contributions to the pension plans to the extent that the contributions are tax deductible and pays benefits that relate to plans for salaried employees that cannot be funded under IRS regulations. Currently, Altria anticipates making employer contributions to its pension and postretirement plans of up to approximately $30 million for each in 2022. However, the foregoing estimates of 2022 contributions to the pension and postretirement plans are subject to change as a result of changes in tax and other benefit laws, changes in interest rates, as well as asset performance significantly above or below the assumed long-term rate of return for each respective plan.
Estimated future benefit payments at December 31, 2021 were as follows:
(in millions)PensionPostretirement
2022$499 $107 
2023477 103 
2024476 99 
2025479 96 
2026478 95 
2027-20312,387 472 
Comprehensive Earnings/Losses
The amounts recorded in accumulated other comprehensive losses at December 31, 2021 consisted of the following:
(in millions)PensionPost-
retirement		Post-
employment		Total
Net loss$(2,093)$(362)$(32)$(2,487)
Prior service (cost) credit
(30)340 (5)305 
Deferred income taxes
549 12 9 570 
Amounts recorded in accumulated other comprehensive losses
$(1,574)$(10)$(28)$(1,612)
The amounts recorded in accumulated other comprehensive losses at December 31, 2020 consisted of the following:
(in millions)PensionPost-
retirement		Post-
employment		Total
Net loss$(2,689)$(541)$(44)$(3,274)
Prior service (cost) credit
(27)41 (5)9 
Deferred income taxes
702 132 11 845 
Amounts recorded in accumulated other comprehensive losses
$(2,014)$(368)$(38)$(2,420)
The movements in other comprehensive earnings/losses during the year ended December 31, 2021 were as follows:
(in millions)PensionPost-
retirement		Post-
employment		Total
Amounts reclassified to net earnings (losses) as components of net periodic benefit cost:
Amortization:
Net loss$131 $22 $10 $163 
Prior service cost/credit5 (46)— (41)
Other expense (income):
Net loss— — — — 
Prior service cost/credit— — — — 
Deferred income taxes(35)7 (2)(30)
$101 $(17)$8 $92 
Other movements during the year:
Net loss$465 $157 $2 $624 
Prior service cost/credit(8)345 — 337 
Deferred income taxes(118)(127)— (245)
$339 $375 $2 $716 
Total movements in other comprehensive earnings/losses$440 $358 $10 $808 
The movements in other comprehensive earnings/losses during the year ended December 31, 2020 were as follows:
(in millions)PensionPost-retirementPost-employmentTotal
Amounts reclassified to net earnings (losses) as components of net periodic benefit cost:
Amortization:
Net loss$134 $10 $19 $163 
Prior service cost/credit5 (30)— (25)
Other expense (income):
Net loss10 — — 10 
Prior service cost/credit— — — — 
Deferred income taxes(37)5 (5)(37)
$112 $(15)$14 $111 
Other movements during the year:
Net loss$(268)$(162)$(18)$(448)
Prior service cost/credit(5)(1)— (6)
Deferred income taxes69 41 5 115 
$(204)$(122)$(13)$(339)
Total movements in other comprehensive earnings/losses$(92)$(137)$1 $(228)
The movements in other comprehensive earnings/losses during the year ended December 31, 2019 were as follows:
(in millions)PensionPost-
retirement		Post-
employment		Total
Amounts reclassified to net earnings (losses) as components of net periodic benefit cost:
Amortization:
Net loss$159 $5 $20 $184 
Prior service cost/credit6 (30)1 (23)
Other expense (income):
Net loss20 — (4)16 
Prior service cost/credit1 (5)— (4)
Deferred income taxes(47)7 (4)(44)
$139 $(23)$13 $129 
Other movements during the year:
Net loss(153)(67)17 (203)
Prior service cost/credit— (1)— (1)
Deferred income taxes38 18 (5)51 
$(115)$(50)$12 $(153)
Total movements in other comprehensive earnings/losses$24 $(73)$25 $(24)