Pension and Retiree Medical Benefits (Notes)

8 Months Ended

Sep. 04, 2021

Pension and Retiree Medical Benefits [Abstract]

Retirement Benefits [Text Block]

Pension and Retiree Medical Benefits

In 2020, we adopted an amendment, effective December 31, 2025, to the U.S. defined benefit pension plans to freeze benefit accruals for salaried participants, which will decrease pre-tax pension benefits expense by approximately $70 million in 2021, primarily impacting corporate unallocated expenses. In 2020, we also approved an amendment, effective January 1, 2021, to reorganize the U.S. qualified defined benefit pension plans that resulted in the transfer of certain participants from the PepsiCo Employees Retirement Plan A to the PepsiCo Employees Retirement Plan I and to a newly created plan, PepsiCo Employees Retirement Plan H (Plan H), with no material impact to pre-tax pension benefits expense. In addition, in 2020, we adopted an amendment, effective January 1, 2021, to enhance the pay credits of certain participants in Plan H, which will increase pre-tax pension benefits expense by approximately $45 million in 2021, primarily impacting service cost expense. For further information on plan changes, refer to Note 7 to our consolidated financial statements in our 2020 Form 10-K.

The components of net periodic benefit cost/(income) for pension and retiree medical plans are as follows:

	12 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	9/4/2021		9/5/2020		9/4/2021		9/5/2020		9/4/2021		9/5/2020
Service cost	$	119	$	100	$	25	$	22	$	8	$	6
Other pension and retiree medical benefits income:
Interest cost	75		100		17		21		3		6
Expected return on plan assets	(223)		(214)		(55)		(52)		(3)		(3)
Amortization of prior service (credits)/cost	(8)		3		—		—		(2)		(3)
Amortization of net losses/(gains)	52		45		19		16		(4)		(6)
Settlement/curtailment losses	5		—		5		—		—		—
Special termination benefits	1		1		—		—		—		—
Total other pension and retiree medical benefits income	(98)		(65)		(14)		(15)		(6)		(6)
Total	$	21	$	35	$	11	$	7	$	2	$	—

	36 Weeks Ended
	Pension								Retiree Medical
	U.S.				International
	9/4/2021		9/5/2020		9/4/2021		9/5/2020		9/4/2021		9/5/2020
Service cost	$	359	$	300	$	69	$	59	$	23	$	17
Other pension and retiree medical benefits income:
Interest cost	224		300		49		58		10		17
Expected return on plan assets	(671)		(643)		(153)		(138)		(10)		(11)
Amortization of prior service (credits)/cost	(22)		8		(1)		—		(7)		(8)
Amortization of net losses/(gains)	155		136		51		42		(10)		(16)
Settlement/curtailment losses	5		—		10		—		—		—
Special termination benefits	6		8		—		—		—		—
Total other pension and retiree medical benefits income	(303)		(191)		(44)		(38)		(17)		(18)
Total	$	56	$	109	$	25	$	21	$	6	$	(1)

We continue to monitor the impact of the COVID-19 pandemic and related global economic conditions and uncertainty on the net unfunded status of our pension and retiree medical plans. We also regularly evaluate opportunities to reduce risk and volatility associated with our pension and retiree medical plans. In addition, lump sum payments may result in further settlement charges in future periods. During the 36 weeks ended September 4, 2021, we made discretionary contributions of $500 million to our U.S. defined benefit qualified plans and $25 million to our international defined benefit plans. During the 36 weeks ended September 5, 2020, we made discretionary contributions of $325 million to our U.S. defined benefit qualified plans and $14 million to our international defined benefit plans.