Retirement Plans and Postretirement Medical Benefits

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Retirement Plans and Postretirement Medical Benefits

Retirement Plans and Postretirement Medical Benefits

Retirement Plans

We provide retirement benefits to eligible employees in the U.S. and outside the U.S. under various defined benefit retirement plans. Benefit accruals under most of our significant defined benefit plans have been frozen. The benefit obligations and funded status of defined benefit pension plans are as follows:

	United States				Foreign
	2021		2020		2021		2020
Accumulated benefit obligation	$	1,609,125	$	1,729,515	$	762,558	$	829,413
Projected benefit obligation
Benefit obligation - beginning of year	$	1,729,959	$	1,613,054	$	830,674	$	746,942
Service cost	102		86		1,528		1,650
Interest cost	42,434		52,103		11,811		13,379
Actuarial (gain) loss	(53,133)		185,306		(37,197)		76,006
Foreign currency changes	—		—		(10,747)		29,128
Settlements and curtailments	(1,429)		(3,854)		—		(15,171)
Benefits paid	(108,425)		(116,736)		(25,601)		(21,260)
Benefit obligation - end of year	$	1,609,508	$	1,729,959	$	770,468	$	830,674

Fair value of plan assets
Fair value of plan assets - beginning of year	$	1,601,786	$	1,487,018	$	742,639	$	668,308
Actual return on plan assets	51,828		225,812		17,929		78,120
Company contributions	5,397		9,546		9,686		9,674
Settlements and curtailments	(1,429)		(3,854)		—		(15,171)
Foreign currency changes	—		—		(7,210)		22,968
Benefits paid	(108,425)		(116,736)		(25,601)		(21,260)
Fair value of plan assets - end of year	$	1,549,157	$	1,601,786	$	737,443	$	742,639

Amounts recognized in the Consolidated Balance Sheets
Noncurrent asset	$	—	$	465	$	29,309	$	26,053
Current liability	(5,883)		(5,843)		(1,345)		(1,444)
Noncurrent liability	(54,468)		(122,795)		(60,989)		(112,644)
Funded status	$	(60,351)	$	(128,173)	$	(33,025)	$	(88,035)

Information provided in the table below is only for pension plans with an accumulated benefit obligation in excess of plan assets:

	United States				Foreign
	2021		2020		2021		2020
Projected benefit obligation	$	1,609,508	$	1,729,638	$	59,859	$	691,909
Accumulated benefit obligation	$	1,609,125	$	1,729,194	$	59,352	$	690,887
Fair value of plan assets	$	1,549,157	$	1,601,000	$	—	$	577,821

Pretax amounts recognized in AOCI consist of:
	United States				Foreign
	2021		2020		2021		2020
Net actuarial loss	$	716,585	$	783,211	$	301,913	$	334,520
Prior service (credit) cost	(149)		(209)		7,804		8,072
Transition asset	—		—		(7)		(7)
Total	$	716,436	$	783,002	$	309,710	$	342,585

The components of net periodic benefit cost (income) for defined benefit pension plans were as follows:

	United States						Foreign
	2021		2020		2019		2021		2020		2019
Service cost	$	102	$	86	$	83	$	1,528	$	1,650	$	1,543
Interest cost	42,434		52,103		63,171		11,811		13,379		17,853
Expected return on plan assets	(77,119)		(84,719)		(92,726)		(31,869)		(34,391)		(34,363)
Amortization of net transition asset	—		—		—		—		(4)		(6)
Amortization of prior service (credit) cost	(60)		(60)		(60)		268		245		243
Amortization of net actuarial loss	38,233		32,490		26,146		9,350		7,842		6,337
Settlements and curtailments	551		1,364		2,381		—		5,060		397
Net periodic benefit cost (income)	$	4,141	$	1,264	$	(1,005)	$	(8,912)	$	(6,219)	$	(7,996)

Other changes in plan assets and benefit obligations for defined benefit pension plans recognized in other comprehensive income were as follows:

	United States				Foreign
	2021		2020		2021		2020
Net actuarial (gain) loss	$	(27,842)	$	44,216	$	(23,257)	$	32,103
Amortization of net actuarial loss	(38,233)		(32,490)		(9,350)		(7,842)
Amortization of prior service credit (cost)	60		60		(268)		(245)
Net transition asset	—		—		—		4
Settlements and curtailments	(551)		(1,364)		—		(5,060)
Total recognized in other comprehensive income	$	(66,566)	$	10,422	$	(32,875)	$	18,960

Weighted-average actuarial assumptions used to determine year end benefit obligations and net periodic benefit cost for defined benefit pension plans include:

	2021				2020				2019
United States
Used to determine benefit obligations
Discount rate	2.85%				2.54%				3.34%
Rate of compensation increase	N/A				N/A				N/A
Used to determine net periodic benefit cost
Discount rate	2.54%				3.34%				4.34%
Expected return on plan assets	5.60%				6.25%				6.75%
Rate of compensation increase	N/A				N/A				N/A
Foreign
Used to determine benefit obligations
Discount rate	0.85	%	-	2.85%	0.70	%	-	2.40%	0.65	%	-	2.95%
Rate of compensation increase	1.50	%	-	3.65%	1.50	%	-	2.50%	1.50	%	-	2.50%
Used to determine net periodic benefit cost
Discount rate	0.70	%	-	2.40%	0.65	%	-	2.95%	0.75	%	-	3.55%
Expected return on plan assets	3.50	%	-	5.75%	4.25	%	-	6.00%	4.25	%	-	6.25%
Rate of compensation increase	1.50	%	-	2.50%	1.50	%	-	2.50%	1.50	%	-	2.50%

A discount rate is used to determine the present value of our future benefit obligations. The discount rate for our U.S. pension and postretirement medical benefit plans is determined by matching the expected cash flows associated with our benefit obligations to a pool of corporate long-term, high-quality fixed income debt instruments available as of the measurement date. The discount rate for our largest foreign plan, the U.K. Qualified Pension Plan (the U.K. Plan), is determined using a model that discounts each year's estimated benefit payments by an applicable spot rate derived from a yield curve created from a large number of high quality corporate bonds. For our other smaller foreign pension plans, the discount rate is selected based on high-quality fixed income indices available in the country in which the plan is domiciled.

The expected return on plan assets is based on the target asset allocation for the applicable pension plan and expected rates of return for various asset classes in the investment portfolio after analyzing historical experience and future expectations of returns and volatility of the asset classes.

Investment Strategy and Asset Allocation

The investment strategy for our pension plans is to maximize returns within reasonable and prudent risk levels, achieve and maintain full funding of the accumulated benefit obligation and the actuarial liabilities and earn the expected rate of return while adhering to local regulations and restrictions.

Pension plan assets are invested in accordance with our strategic asset allocation policy. Pension plan assets are exposed to various risks, including interest rate risks, market risks and credit risks. Investments are diversified across asset classes and within each class to reduce the risk of large losses and are periodically rebalanced. Derivatives, such as swaps, options, forwards and futures contracts may be used for market exposure, to alter risk/return characteristics and to manage foreign currency exposure. We do not have any significant concentrations of credit risk within the plan assets.

U.S. Pension Plans

Investment objectives and investment managers are reviewed periodically. Target and actual asset allocations for the U.S. pension plans were as follows:

	Target allocation		Percent of Plan Assets at December 31,
	2022		2021		2020
Asset category
Equities	20	%	18	%	33	%
Multi-asset credit	3	%	3	%	—	%
Fixed income	70	%	73	%	62	%
Real estate	6	%	5	%	4	%
Private equity	1	%	1	%	1	%
Total	100	%	100	%	100	%

Foreign Pension Plans

Our foreign pension plan assets are managed by outside investment managers and monitored regularly by local trustees and our corporate personnel. Target and actual asset allocations for the U.K. Plan, which comprises 79% of the total foreign pension plan assets, were as follows:

	Target Allocation		Percent of Plan Assets at December 31,
	2022		2021		2020
Asset category
Global equities	10	%	12	%	22	%
Fixed income	70	%	69	%	60	%
Real estate	10	%	9	%	8	%
Diversified growth	10	%	9	%	9	%
Cash	—	%	1	%	1	%
Total	100	%	100	%	100	%

Fair Value Measurements of Plan Assets

The following tables show the U.S. and foreign pension plans' assets, by level within the fair value hierarchy. The plan asset categories presented in the following tables are subsets of the broader asset allocation categories.

United States Pension Plans

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	3,725	$	—	$	3,725
Equity securities	—		195,037		—		195,037
Commingled fixed income securities	—		229,300		—		229,300
Government and related securities	202,416		26,582		—		228,998
Corporate debt securities	—		771,529		—		771,529
Mortgage-backed /asset-backed securities	—		12,486		—		12,486
Real estate	—		—		77,494		77,494
Securities lending collateral	—		145,855		—		145,855
Total plan assets at fair value	$	202,416	$	1,384,514	$	77,494	$	1,664,424
Securities lending payable							(145,855)
Investments valued at NAV							16,820
Cash							20,569
Other							(6,801)
Fair value of plan assets							$	1,549,157

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	14,442	$	—	$	14,442
Equity securities	—		323,311		—		323,311
Commingled fixed income securities	—		264,896		—		264,896
Government and related securities	322,851		22,549		—		345,400
Corporate debt securities	—		586,998		—		586,998
Mortgage-backed /asset-backed securities	—		45,861		—		45,861
Real estate	—		—		69,347		69,347
Securities lending collateral	—		151,049		—		151,049
Total plan assets at fair value	$	322,851	$	1,409,106	$	69,347	$	1,801,304
Securities lending payable							(151,049)
Investments valued at NAV							17,132
Cash							15,449
Other							(81,050)
Fair value of plan assets							$	1,601,786

Foreign Plans

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	8,577	$	—	$	8,577
Equity securities	—		96,596		—		96,596
Commingled fixed income securities	—		431,845		—		431,845
Government and related securities	—		46,522		—		46,522
Corporate debt securities	—		33,583		—		33,583
Real estate	—		7,168		52,491		59,659
Diversified growth funds	—		—		52,169		52,169
Total plan assets at fair value	$	—	$	624,291	$	104,660	$	728,951
Cash							7,966
Other							526
Fair value of plan assets							$	737,443

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Money market funds	$	—	$	10,072	$	—	$	10,072
Equity securities	—		166,683		—		166,683
Commingled fixed income securities	—		379,656		—		379,656
Government and related securities	—		46,268		—		46,268
Corporate debt securities	—		37,002		—		37,002
Real estate	—		—		45,275		45,275
Diversified growth funds	—		—		50,750		50,750
Total plan assets at fair value	$	—	$	639,681	$	96,025	$	735,706
Cash							6,448
Other							485
Fair value of plan assets							$	742,639

The following information relates to our classification of investments into the fair value hierarchy:

•Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.

•Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.

•Government and Related Securities: Debt securities are classified as Level 1 where active, high volume trades for identical securities exist. Valuation adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.

•Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.

•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or on external price/spread data. These securities are classified as Level 2.

•Real Estate: include units in open-ended commingled real estate funds. Funds that are valued and traded on a daily basis in an active market are classified as Level 2. Investments that are valued on an annual basis by certified appraisers are classified as Level 3. The valuation techniques used to value Level 3 investments include the cost approach, sales-comparison method and the income approach.

•Diversified Growth Funds: comprised of units in commingled diversified growth funds that comprise a mix of different asset classes. The underlying investments may not be listed on an exchange in an active market or traded on a daily basis and may fall into all three fair value categories. Accordingly, these securities are classified as Level 3.

•Securities Lending Fund: represents a commingled fund through our custodian's securities lending program. The U.S. pension plan lends securities that are held within the plan to other banks and/or brokers, and receives collateral, typically cash. This collateral is invested in a commingled fund that invests in short-term fixed income securities. This investment is classified as Level 2. This amount invested in the fund is offset by a corresponding liability reflected in the U.S. pension plan's net assets available for benefits.

Investments Valued at Net Asset Value (NAV)

Represents investments in private equity limited partnerships that are measured at fair value using the Net Asset Value (NAV) per share as a practical expedient and are not categorized in the fair value hierarchy. There is no active market for these investments and the pension plan receives a proportionate share of the gains, losses and expenses in accordance with the partnership agreements. There is a remaining unfunded commitment of $8 million at December 31, 2021. These investments comprise 1.1% of total U.S. Pension Fund assets at both December 31, 2021 and 2020.

Level 3 Gains and Losses

The following table summarizes the changes in the fair value of Level 3 assets:

	U.S. Plans		Foreign Plans
	Real estate		Real estate		Diversified Growth Funds
Balance at December 31, 2019	$	71,337	$	45,335	$	47,621
Realized gains	1,554		—		—
Unrealized losses	(3,360)		(2,134)		1,493
Net purchases, sales and settlements	(184)		1,221		56
Foreign currency and other	—		853		1,580
Balance at December 31, 2020	69,347		45,275		50,750
Realized gains	1,791		—		—
Unrealized gains	6,958		6,357		1,995
Net purchases, sales and settlements	(602)		1,663		—
Foreign currency and other	—		(804)		(576)
Balance at December 31, 2021	$	77,494	$	52,491	$	52,169

Postretirement Medical Benefits

We provide certain employer subsidized health care and employer provided life insurance benefits in the U.S. and Canada to eligible retirees and their dependents. The cost of these benefits is recognized over the period the employee provides credited service to the company. The benefit obligation and funded status for postretirement medical benefit plans are as follows:

	2021		2020
Benefit obligation
Benefit obligation - beginning of year	$	169,210	$	164,104
Service cost	909		885
Interest cost	3,755		4,993
Actuarial (gain) loss	(22,305)		11,496
Foreign currency changes	123		340
Benefits paid, net	(12,176)		(12,608)
Benefit obligation - end of year (1)	$	139,516	$	169,210

Fair value of plan assets
Fair value of plan assets - beginning of year	$	—	$	—
Company contribution	12,176		12,608
Benefits paid, net	(12,176)		(12,608)
Fair value of plan assets - end of year	$	—	$	—

Amounts recognized in the Consolidated Balance Sheets
Current liability	$	(12,841)	$	(15,372)
Non-current liability	(126,675)		(153,838)
Funded status	$	(139,516)	$	(169,210)

(1)    The benefit obligation for U.S. postretirement medical benefits plan was $126 million and $153 million at December 31, 2021 and 2020, respectively.

Pretax amounts recognized in AOCI consist of:

	2021		2020
Net actuarial loss	$	15,175	$	41,570
Prior service cost	—		129
Total	$	15,175	$	41,699

The components of net periodic benefit cost for postretirement medical benefit plans were as follows:

	2021		2020		2019
Service cost	$	909	$	885	$	967
Interest cost	3,755		4,993		6,584
Amortization of prior service cost	129		373		321
Amortization of net actuarial loss	4,090		3,198		2,026
Net periodic benefit cost	$	8,883	$	9,449	$	9,898

Other changes in benefit obligation for postretirement medical benefit plans recognized in other comprehensive income were as follows:

	2021		2020
Net actuarial (gain) loss	$	(22,305)	$	11,496
Amortization of net actuarial loss	(4,090)		(3,198)
Amortization of prior service cost	(129)		(373)
Total recognized in other comprehensive income	$	(26,524)	$	7,925

The weighted-average discount rates used to determine end of year benefit obligation and net periodic pension cost include:

	2021		2020		2019
Discount rate used to determine benefit obligation
U.S.	2.80	%	2.35	%	3.20	%
Canada	2.90	%	2.50	%	3.00	%
Discount rate used to determine net period benefit cost
U.S.	2.35	%	3.20	%	4.20	%
Canada	2.50	%	3.00	%	3.60	%

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the U.S. plan was 6.8% and 7.0% for 2021 and 2020, respectively. The assumed health care trend rate is 6.50% for 2022 and will gradually decline to 5.0% by the year 2028 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, are expected to be paid.

	Pension Benefits		Postretirement Medical Benefits
2022	$	130,497	$	12,854
2023	131,204		12,338
2024	124,812		11,819
2025	125,765		11,299
2026	123,679		10,778
Thereafter	601,374		45,383
	$	1,237,331	$	104,471

During 2022, we estimate making contributions of $6 million to our U.S. pension plans and $10 million to our foreign pension plans.

Savings Plans

We offer voluntary defined contribution plans to our U.S. employees designed to help them accumulate additional savings for retirement. We provide a core contribution to all employees, regardless if they participate in the plan, and match a portion of each participating employees' contribution, based on eligible pay. Total contributions to our defined contribution plans were $27 million in 2021 and $28 million in 2020.