Retirement Benefits

12 Months Ended

Dec. 31, 2021

Defined Benefit Plan Disclosure [Line Items]

Retirement Benefits

Retirement Benefits

Benefit Plans: CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans. These plans include:

•non‑contributory, qualified DB Pension Plans (closed to new non‑union participants as of July 1, 2003 and closed to new union participants as of September 1, 2005)

•a non‑contributory, qualified DCCP for employees hired on or after July 1, 2003

•benefits to certain management employees under a non‑contributory, nonqualified DB SERP (closed to new participants as of March 31, 2006)

•a non‑contributory, nonqualified DC SERP for certain management employees hired or promoted on or after April 1, 2006

•a contributory, qualified defined contribution 401(k) plan

•health care and life insurance benefits under an OPEB Plan

DB Pension Plans: Participants in the pension plans include present and former employees of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries. Pension plan trust assets are not distinguishable by company. Effective December 31, 2017, CMS Energy’s and Consumers’ then-existing pension plan was amended to include only retired and former employees already covered; this amended plan is referred to as DB Pension Plan B. Also effective December 31, 2017, active employees were moved to a newly created pension plan, referred to as DB Pension Plan A, whose benefits mirror those provided under DB Pension Plan B. Maintaining separate plans for the two groups allows CMS Energy and Consumers to employ a more targeted investment strategy and provides additional opportunities to mitigate risk and volatility.

In November 2021, CMS Energy and Consumers determined that 2021 lump-sum payments to retired employees under DB Pension Plan A would exceed the plan’s service cost and interest cost components of net periodic cost for the year. These lump-sum payments constitute pension plan liability settlements; once such settlements meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy, including Consumers, performed a remeasurement of DB Pension Plan A as of October 31, 2021 and recognized a settlement loss of $18 million; $18 million of this amount was recognized by Consumers and deferred as a regulatory asset. At December 31, 2021, CMS Energy, including Consumers, recognized an additional settlement loss of $4 million for the period November 1, 2021 to December 31, 2021; $3 million of this amount was recognized by Consumers and deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over eight years.

DCCP: CMS Energy and Consumers provide an employer contribution to the DCCP 401(k) plan for employees hired on or after July 1, 2003. The contribution ranges from five percent to ten percent of base pay, depending on years of service and employee class. Employees are not required to contribute in order to receive the plan’s employer contribution. DCCP expense for CMS Energy, including Consumers, was $41 million for the year ended December 31, 2021, $31 million for the year ended December 31, 2020, and $29 million for the year ended December 31, 2019. DCCP expense for Consumers was $41 million for the year ended December 31, 2021, $31 million for the year ended December 31, 2020, and $28 million for the year ended December 31, 2019.

DB SERP: The DB SERP is a nonqualified plan as defined by the Internal Revenue Code. DB SERP benefits are paid from a rabbi trust established in 1988. The trust assets are not considered plan assets under ASC 715. DB SERP rabbi trust earnings are taxable. Presented in the following table are the fair values of trust assets, ABO, and contributions for CMS Energy’s and Consumers’ DB SERP:

In Millions
Years Ended December 31	2021			2020
CMS Energy, including Consumers
Trust assets		$	142		$	146
ABO		149			159
Contributions		—			8
Consumers
Trust assets		$	104		$	107
ABO		108			115
Contributions		—			5

DC SERP: On April 1, 2006, CMS Energy and Consumers implemented a DC SERP and froze further new participation in the DB SERP. The DC SERP provides participants benefits ranging from five percent to 15 percent of total compensation. The DC SERP requires a minimum of five years of participation before vesting. CMS Energy’s and Consumers’ contributions to the plan, if any, are placed in a grantor trust. For CMS Energy and Consumers, trust assets were $13 million at December 31, 2021 and $11 million at December 31, 2020. DC SERP assets are included in other non‑current assets on CMS Energy’s and Consumers’ consolidated balance sheets. CMS Energy’s and Consumers’ DC SERP expense was $2 million for the years ended December 31, 2021, 2020, and 2019.

401(k) Plan: The 401(k) plan employer match equals 100 percent of eligible contributions up to the first three percent of an employee’s wages and 50 percent of eligible contributions up to the next two percent of an employee’s wages. The total 401(k) plan cost for CMS Energy, including Consumers, was $31 million for the year ended December 31, 2021, $29 million for the year ended December 31, 2020, and $28 million for the year ended December 31, 2019. The total 401(k) plan cost for Consumers was $31 million for the year ended December 31, 2021, $29 million for the year ended December 31, 2020, and $27 million for the year ended December 31, 2019.

OPEB Plan: Participants in the OPEB Plan include all regular full-time employees covered by the employee health care plan on the day before retirement from either CMS Energy or Consumers at age 55 or older with at least ten full years of applicable continuous service. Regular full-time employees who qualify for disability retirement under the DB Pension Plans or are disabled and covered by the DCCP and who have 15 years of applicable continuous service may also participate in the OPEB Plan. Retiree health care costs were based on the assumption that costs would increase 6.25 percent in 2022 and 6.50 percent in 2021 for those under 65 and would increase 6.75 percent in 2022 and 7.00 percent in 2021 for those over 65. The rate of increase was assumed to decline to 4.75 percent by 2028 and thereafter for all retirees.

Assumptions: Presented in the following table are the weighted-average assumptions used in CMS Energy’s and Consumers’ retirement benefit plans to determine benefit obligations and net periodic benefit cost:

December 31	2021		2020		2019
CMS Energy, including Consumers
Weighted average for benefit obligations1
Discount rate2
DB Pension Plan A	3.02	%	2.73	%	3.37	%
DB Pension Plan B	2.79		2.41		3.17
DB SERP	2.78		2.40		3.15
OPEB Plan	2.99		2.69		3.32
Rate of compensation increase
DB Pension Plan A	3.60		3.70		3.50
DB SERP	5.50		5.50		5.50
Weighted average for net periodic benefit cost1
Service cost discount rate2,3
DB Pension Plan A	2.83	%	3.44	%	4.55	%
DB SERP	2.84		3.46		4.58
OPEB Plan	3.03		3.57		4.63
Interest cost discount rate2,3
DB Pension Plan A	1.97		2.92		4.08
DB Pension Plan B	1.70		2.74		3.93
DB SERP	1.72		2.74		3.94
OPEB Plan	1.99		2.88		4.03
Expected long-term rate of return on plan assets4
DB Pension Plans	6.75		6.75		7.00
OPEB Plan	6.75		6.75		7.00
Rate of compensation increase
DB Pension Plan A	3.70		3.50		3.50
DB SERP	5.50		5.50		5.50

1The mortality assumption for benefit obligations was based on the Pri-2012 Mortality Table, with improvement scales MP-2021 for 2021, MP-2020 for 2020, and MP-2019 for 2019. The mortality assumption for net periodic benefit cost was based on the Pri-2012 Mortality Table for 2021 and 2020 and the RP-2014 Mortality Table for 2019, with improvement scales MP-2020 for 2021, MP-2019 for 2020, and MP-2018 for 2019.

2The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on high-quality corporate bonds rated Aa or better.

3CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service cost and interest cost; this approach applies individual spot rates along the yield curve to future projected benefit payments based on the time of payment.

4CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the

expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The goal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to construct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on the assets of the DB Pension Plans was 6.75 percent in 2021. The actual return on the assets of the DB Pension Plans was 12.0 percent in 2021, 13.6 percent in 2020, and 21.0 percent in 2019.

Costs: Presented in the following table are the costs (credits) and other changes in plan assets and benefit obligations incurred in CMS Energy’s and Consumers’ retirement benefit plans:

In Millions
	DB Pension Plans and DB SERP									OPEB Plan
Years Ended December 31	2021			2020			2019			2021			2020			2019
CMS Energy, including Consumers
Net periodic cost (credit)
Service cost		$	53		$	50		$	41		$	18		$	16		$	14
Interest cost		63			83			103			23			33			41
Settlement loss		1			1			—			—			—			—
Expected return on plan assets		(208)			(191)			(162)			(109)			(100)			(88)
Amortization of:
Net loss		100			95			50			8			15			26
Prior service cost (credit)		4			1			1			(53)			(56)			(62)
Settlement loss		6			2			—			—			—			—
Net periodic cost (credit)		$	19		$	41		$	33		$	(113)		$	(92)		$	(69)
Consumers
Net periodic cost (credit)
Service cost		$	51		$	49		$	40		$	17		$	15		$	13
Interest cost		59			78			97			23			31			40
Expected return on plan assets		(197)			(181)			(153)			(102)			(93)			(82)
Amortization of:
Net loss		96			90			47			8			15			26
Prior service cost (credit)		4			1			1			(51)			(54)			(61)
Settlement loss		6			2			—			—			—			—
Net periodic cost (credit)		$	19		$	39		$	32		$	(105)		$	(86)		$	(64)

CMS Energy and Consumers amortize net gains and losses in excess of ten percent of the greater of the PBO or the MRV over the average remaining service period for DB Pension Plan A and the OPEB Plan and over the average remaining life expectancy of participants for DB Pension Plan B. For DB Pension Plan A, the estimated period of amortization of gains and losses was eight years for the years ended December 31, 2021 and 2020, and nine years for the year ended December 31, 2019. For DB Pension Plan B, the estimated period of amortization of gains and losses was 18 years for the year ended December 31, 2021, 19 years for the year ended December 31, 2020, and 20 years for the year ended December 31, 2019. For the OPEB Plan, the estimated amortization period was nine years for the years ended December 31, 2021 and 2020, and ten years for the year ended December 31, 2019.

Prior service cost (credit) amortization is established in the year in which the prior service cost (credit) first occurred, and is based on the same amortization period for all future years until the prior service cost

(credit) is fully amortized. CMS Energy and Consumers had new prior service costs for DB Pension Plan A in 2020. The estimated period of amortization of these new prior service costs is eight years.

CMS Energy and Consumers determine the MRV for the assets of the DB Pension Plans as the fair value of plan assets on the measurement date, adjusted by the gains or losses that will not be admitted into the MRV until future years. CMS Energy and Consumers reflect each year’s gain or loss in the MRV in equal amounts over a five-year period beginning on the date the original amount was determined. CMS Energy and Consumers determine the MRV for OPEB Plan assets as the fair value of assets on the measurement date.

Reconciliations: Presented in the following table are reconciliations of the funded status of CMS Energy’s and Consumers’ retirement benefit plans with their retirement benefit plans’ liabilities:

In Millions
	DB Pension Plans							DB SERP						OPEB Plan
Years Ended December 31	2021			2020				2021			2020			2021			2020
CMS Energy, including Consumers
Benefit obligation at beginning of period		$	3,266		$	2,973			$	160		$	150		$	1,205		$	1,165
Service cost		53			50				—			—			18			16
Interest cost		60			79				3			4			23			33
Plan amendments		—			24				—			—			5			—
Actuarial loss (gain)		(108)		1	355		1		(4)			16			(32)		1	39		1
Benefits paid		(201)			(215)				(10)			(10)			(53)			(48)
Benefit obligation at end of period		$	3,070		$	3,266			$	149		$	160		$	1,166		$	1,205
Plan assets at fair value at beginning of period		$	3,402		$	2,546			$	—		$	—		$	1,645		$	1,509
Actual return on plan assets		398			371				—			—			194			182
Company contribution		—			700				10			10			—			1
Actual benefits paid		(201)			(215)				(10)			(10)			(52)			(47)
Plan assets at fair value at end of period		$	3,599		$	3,402			$	—		$	—		$	1,787		$	1,645
Funded status		$	529	2	$	136	2		$	(149)		$	(160)		$	621		$	440
Consumers
Benefit obligation at beginning of period									$	117		$	109		$	1,158		$	1,120
Service cost									—			—			17			15
Interest cost									2			3			23			31
Plan amendments									—			—			5			—
Actuarial loss (gain)									(3)			12			(30)		1	37		1
Benefits paid									(7)			(7)			(51)			(45)
Benefit obligation at end of period									$	109		$	117		$	1,122		$	1,158
Plan assets at fair value at beginning of period									$	—		$	—		$	1,535		$	1,410
Actual return on plan assets									—			—			182			169
Company contribution									7			7			—			1
Actual benefits paid									(7)			(7)			(49)			(45)
Plan assets at fair value at end of period									$	—		$	—		$	1,668		$	1,535
Funded status									$	(109)		$	(117)		$	546		$	377

1The actuarial gains for 2021 for the DB Pension Plans and OPEB Plan were primarily the result of higher discount rates. The actuarial loss for 2020 for the DB Pension Plans was primarily the result of lower discount rates and lower interest rates used to calculate the value of lump-sum payments. The actuarial loss for 2020 for the OPEB Plan was primarily the result of lower discount rates.

2The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of expenses, was $510 million at December 31, 2021 and $138 million at December 31, 2020.

Presented in the following table is the classification of CMS Energy’s and Consumers’ retirement benefit plans’ assets and liabilities:

In Millions
December 31	2021			2020
CMS Energy, including Consumers
Non-current assets
DB Pension Plans		$	529		$	136
OPEB Plan		621			440
Current liabilities
DB SERP		10			10
Non-current liabilities
DB SERP		139			150
Consumers
Non-current assets
DB Pension Plans		$	510		$	138
OPEB Plan		546			377
Current liabilities
DB SERP		7			7
Non-current liabilities
DB SERP		102			110

The ABO for the DB Pension Plans was $2.7 billion at December 31, 2021 and $2.9 billion at December 31, 2020. At December 31, 2021 and 2020, the PBO and ABO did not exceed plan assets for any of the defined benefit pension plans.

Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: Presented in the following table are the amounts recognized in regulatory assets, regulatory liabilities, and AOCI that have not been recognized as components of net periodic benefit cost. For additional details on regulatory assets and regulatory liabilities, see Note 2, Regulatory Matters.

In Millions
	DB Pension Plans and DB SERP						OPEB Plan
December 31	2021			2020			2021			2020
CMS Energy, including Consumers
Regulatory assets (liabilities)
Net loss		$	812		$	1,194		$	136		$	254
Prior service cost (credit)		25			29			(190)			(246)
Regulatory assets (liabilities)		$	837		$	1,223		$	(54)		$	8
AOCI
Net loss (gain)		94			120			(17)			(10)
Prior service cost (credit)		—			1			(5)			(6)
Total amounts recognized in regulatory assets (liabilities) and AOCI		$	931		$	1,344		$	(76)		$	(8)
Consumers
Regulatory assets (liabilities)
Net loss		$	812		$	1,194		$	136		$	254
Prior service cost (credit)		25			29			(190)			(246)
Regulatory assets (liabilities)		$	837		$	1,223		$	(54)		$	8
AOCI
Net loss		41			47			—			—
Total amounts recognized in regulatory assets (liabilities) and AOCI		$	878		$	1,270		$	(54)		$	8

Plan Assets: Presented in the following tables are the fair values of the assets of CMS Energy’s DB Pension Plans and OPEB Plan, by asset category and by level within the fair value hierarchy. For additional details regarding the fair value hierarchy, see Note 5, Fair Value Measurements.

In Millions
	DB Pension Plans
	December 31, 2021									December 31, 2020
	Total			Level 1			Level 2			Total			Level 1			Level 2
CMS Energy, including Consumers
Cash and short-term investments		$	30		$	30		$	—		$	115		$	115		$	—
U.S. government and agencies securities		209			—			209			150			—			150
Corporate debt		595			—			595			540			—			540
State and municipal bonds		13			—			13			11			—			11
Foreign corporate bonds		66			—			66			41			—			41
Mutual funds		785			785			—			971			971			—
		$	1,698		$	815		$	883		$	1,828		$	1,086		$	742
Pooled funds		1,901									1,574
Total		$	3,599								$	3,402

In Millions
	OPEB Plan
	December 31, 2021									December 31, 2020
	Total			Level 1			Level 2			Total			Level 1			Level 2
CMS Energy, including Consumers
Cash and short-term investments		$	21		$	21		$	—		$	33		$	33		$	—
U.S. government and agencies securities		25			—			25			18			—			18
Corporate debt		73			—			73			64			—			64
State and municipal bonds		2			—			2			2			—			2
Foreign corporate bonds		8			—			8			5			—			5
Common stocks		85			85			—			66			66			—
Mutual funds		941			941			—			807			807			—
		$	1,155		$	1,047		$	108		$	995		$	906		$	89
Pooled funds		632									650
Total		$	1,787								$	1,645

Cash and Short-Term Investments: Cash and short-term investments consist of money market funds with daily liquidity.

U.S. Government and Agencies Securities: U.S. government and agencies securities consist of U.S. Treasury notes and other debt securities backed by the U.S. government and related agencies. These securities are valued based on quoted market prices.

Corporate Debt: Corporate debt investments consist of investment grade bonds of U.S. issuers from diverse industries. These securities are valued based on quoted market prices, when available, or yields available on comparable securities of issuers with similar credit ratings.

State and Municipal Bonds: State and municipal bonds are valued using a matrix-pricing model that incorporates Level 2 market-based information. The fair value of the bonds is derived from various observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and general information on market movements for investment grade state and municipal securities normally considered by market participants when pricing such debt securities.

Foreign Corporate Bonds: Foreign corporate debt securities are valued based on quoted market prices, when available, or on yields available on comparable securities of issuers with similar credit ratings.

Common Stocks: Common stocks in the OPEB Plan consist of equity securities that are actively managed and tracked to the S&P 500 Index. These securities are valued at their quoted closing prices.

Mutual Funds: Mutual funds represent shares in registered investment companies that are priced based on the daily quoted net asset values that are publicly available and are the basis for transactions to buy or sell shares in the funds.

Pooled Funds: Pooled funds include both common and collective trust funds as well as special funds that contain only employee benefit plan assets from two or more unrelated benefit plans. These funds primarily consist of U.S. and foreign equity securities, but also include U.S. and foreign fixed-income securities and multi-asset investments. Since these investments are valued at their net asset value as a practical expedient, they are not classified in the fair value hierarchy.

Asset Allocations: Presented in the following table are the investment components of the assets of CMS Energy’s DB Pension Plans and OPEB Plan as of December 31, 2021:

	DB Pension Plans			OPEB Plan
Equity securities		54.0	%		55.0	%
Fixed-income securities		28.0			28.0
Real asset investments		12.0			12.0
Multi-asset investments		5.0			4.0
Cash and Cash Equivalents		1.0			1.0
		100.0	%		100.0	%

CMS Energy’s target 2021 asset allocation for the assets of the DB Pension Plans was 54 percent equity, 29 percent fixed income, 12 percent real assets, and five percent multi-asset investments.

CMS Energy established union and non‑union VEBA trusts to fund future retiree health and life insurance benefits. These trusts are funded through the ratemaking process for Consumers and through direct contributions from the non‑utility subsidiaries. CMS Energy’s target 2021 asset allocation for the health trusts was 55 percent equity, 30 percent fixed income, 12 percent real assets, and three percent multi-asset investments. CMS Energy’s target asset allocation for the life trusts was 53 percent equity, 32 percent fixed income, and 15 percent multi-asset investments.

The goal of these target allocations was to maximize the long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plans. Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the S&P MidCap and SmallCap Indexes and Foreign Equity Funds. Fixed-income investments are diversified across investment grade instruments of government and corporate issuers, as well as high-yield and global bond funds. Real asset investments are diversified across real estate investment trusts, public infrastructure, and public resource equity. Multi-asset investments are global tactical asset allocations.

CMS Energy uses annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for adjustments to the portfolio allocations.

Contributions: Presented in the following table are the contributions to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan:

In Millions
Years Ended December 31	2021			2020
CMS Energy, including Consumers
DB Pension Plans		$	—		$	700
OPEB Plan		—			1
Consumers
DB Pension Plans		$	—		$	682
OPEB Plan		—			1

Contributions comprise required amounts and discretionary contributions. Neither CMS Energy nor Consumers plans to contribute to the DB Pension Plans or OPEB Plan in 2022. Actual future contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements.

Benefit Payments: Presented in the following table are the expected benefit payments for each of the next five years and the five-year period thereafter:

In Millions
	DB Pension Plans			DB SERP			OPEB Plan
CMS Energy, including Consumers
2022		$	185		$	10		$	52
2023		181			10			54
2024		178			10			56
2025		180			10			58
2026		178			9			59
2027-2031		876			45			308
Consumers
2022		$	175		$	7		$	49
2023		171			7			52
2024		169			7			54
2025		170			7			55
2026		169			6			56
2027-2031		830			31			294

Collective Bargaining Agreements: At December 31, 2021, unions represented 41 percent of CMS Energy’s employees and 42 percent of Consumers’ employees. The UWUA represents Consumers’ operating, maintenance, construction, and customer contact center employees. The USW represents Zeeland plant employees. The UWUA and USW agreements expired and new agreements were ratified in 2020. These union contracts expire in 2025.

Consumers Energy Company

Defined Benefit Plan Disclosure [Line Items]

Retirement Benefits

Retirement Benefits

Benefit Plans: CMS Energy and Consumers provide pension, OPEB, and other retirement benefits to employees under a number of different plans. These plans include:

•non‑contributory, qualified DB Pension Plans (closed to new non‑union participants as of July 1, 2003 and closed to new union participants as of September 1, 2005)

•a non‑contributory, qualified DCCP for employees hired on or after July 1, 2003

•benefits to certain management employees under a non‑contributory, nonqualified DB SERP (closed to new participants as of March 31, 2006)

•a non‑contributory, nonqualified DC SERP for certain management employees hired or promoted on or after April 1, 2006

•a contributory, qualified defined contribution 401(k) plan

•health care and life insurance benefits under an OPEB Plan

DB Pension Plans: Participants in the pension plans include present and former employees of CMS Energy and Consumers, including certain present and former affiliates and subsidiaries. Pension plan trust assets are not distinguishable by company. Effective December 31, 2017, CMS Energy’s and Consumers’ then-existing pension plan was amended to include only retired and former employees already covered; this amended plan is referred to as DB Pension Plan B. Also effective December 31, 2017, active employees were moved to a newly created pension plan, referred to as DB Pension Plan A, whose benefits mirror those provided under DB Pension Plan B. Maintaining separate plans for the two groups allows CMS Energy and Consumers to employ a more targeted investment strategy and provides additional opportunities to mitigate risk and volatility.

In November 2021, CMS Energy and Consumers determined that 2021 lump-sum payments to retired employees under DB Pension Plan A would exceed the plan’s service cost and interest cost components of net periodic cost for the year. These lump-sum payments constitute pension plan liability settlements; once such settlements meet the service and interest cost threshold, recognition in earnings is required. As a result, in accordance with GAAP, CMS Energy, including Consumers, performed a remeasurement of DB Pension Plan A as of October 31, 2021 and recognized a settlement loss of $18 million; $18 million of this amount was recognized by Consumers and deferred as a regulatory asset. At December 31, 2021, CMS Energy, including Consumers, recognized an additional settlement loss of $4 million for the period November 1, 2021 to December 31, 2021; $3 million of this amount was recognized by Consumers and deferred as a regulatory asset. CMS Energy and Consumers will amortize the regulatory asset over eight years.

DCCP: CMS Energy and Consumers provide an employer contribution to the DCCP 401(k) plan for employees hired on or after July 1, 2003. The contribution ranges from five percent to ten percent of base pay, depending on years of service and employee class. Employees are not required to contribute in order to receive the plan’s employer contribution. DCCP expense for CMS Energy, including Consumers, was $41 million for the year ended December 31, 2021, $31 million for the year ended December 31, 2020, and $29 million for the year ended December 31, 2019. DCCP expense for Consumers was $41 million for the year ended December 31, 2021, $31 million for the year ended December 31, 2020, and $28 million for the year ended December 31, 2019.

DB SERP: The DB SERP is a nonqualified plan as defined by the Internal Revenue Code. DB SERP benefits are paid from a rabbi trust established in 1988. The trust assets are not considered plan assets under ASC 715. DB SERP rabbi trust earnings are taxable. Presented in the following table are the fair values of trust assets, ABO, and contributions for CMS Energy’s and Consumers’ DB SERP:

In Millions
Years Ended December 31	2021			2020
CMS Energy, including Consumers
Trust assets		$	142		$	146
ABO		149			159
Contributions		—			8
Consumers
Trust assets		$	104		$	107
ABO		108			115
Contributions		—			5

DC SERP: On April 1, 2006, CMS Energy and Consumers implemented a DC SERP and froze further new participation in the DB SERP. The DC SERP provides participants benefits ranging from five percent to 15 percent of total compensation. The DC SERP requires a minimum of five years of participation before vesting. CMS Energy’s and Consumers’ contributions to the plan, if any, are placed in a grantor trust. For CMS Energy and Consumers, trust assets were $13 million at December 31, 2021 and $11 million at December 31, 2020. DC SERP assets are included in other non‑current assets on CMS Energy’s and Consumers’ consolidated balance sheets. CMS Energy’s and Consumers’ DC SERP expense was $2 million for the years ended December 31, 2021, 2020, and 2019.

401(k) Plan: The 401(k) plan employer match equals 100 percent of eligible contributions up to the first three percent of an employee’s wages and 50 percent of eligible contributions up to the next two percent of an employee’s wages. The total 401(k) plan cost for CMS Energy, including Consumers, was $31 million for the year ended December 31, 2021, $29 million for the year ended December 31, 2020, and $28 million for the year ended December 31, 2019. The total 401(k) plan cost for Consumers was $31 million for the year ended December 31, 2021, $29 million for the year ended December 31, 2020, and $27 million for the year ended December 31, 2019.

OPEB Plan: Participants in the OPEB Plan include all regular full-time employees covered by the employee health care plan on the day before retirement from either CMS Energy or Consumers at age 55 or older with at least ten full years of applicable continuous service. Regular full-time employees who qualify for disability retirement under the DB Pension Plans or are disabled and covered by the DCCP and who have 15 years of applicable continuous service may also participate in the OPEB Plan. Retiree health care costs were based on the assumption that costs would increase 6.25 percent in 2022 and 6.50 percent in 2021 for those under 65 and would increase 6.75 percent in 2022 and 7.00 percent in 2021 for those over 65. The rate of increase was assumed to decline to 4.75 percent by 2028 and thereafter for all retirees.

Assumptions: Presented in the following table are the weighted-average assumptions used in CMS Energy’s and Consumers’ retirement benefit plans to determine benefit obligations and net periodic benefit cost:

December 31	2021		2020		2019
CMS Energy, including Consumers
Weighted average for benefit obligations1
Discount rate2
DB Pension Plan A	3.02	%	2.73	%	3.37	%
DB Pension Plan B	2.79		2.41		3.17
DB SERP	2.78		2.40		3.15
OPEB Plan	2.99		2.69		3.32
Rate of compensation increase
DB Pension Plan A	3.60		3.70		3.50
DB SERP	5.50		5.50		5.50
Weighted average for net periodic benefit cost1
Service cost discount rate2,3
DB Pension Plan A	2.83	%	3.44	%	4.55	%
DB SERP	2.84		3.46		4.58
OPEB Plan	3.03		3.57		4.63
Interest cost discount rate2,3
DB Pension Plan A	1.97		2.92		4.08
DB Pension Plan B	1.70		2.74		3.93
DB SERP	1.72		2.74		3.94
OPEB Plan	1.99		2.88		4.03
Expected long-term rate of return on plan assets4
DB Pension Plans	6.75		6.75		7.00
OPEB Plan	6.75		6.75		7.00
Rate of compensation increase
DB Pension Plan A	3.70		3.50		3.50
DB SERP	5.50		5.50		5.50

1The mortality assumption for benefit obligations was based on the Pri-2012 Mortality Table, with improvement scales MP-2021 for 2021, MP-2020 for 2020, and MP-2019 for 2019. The mortality assumption for net periodic benefit cost was based on the Pri-2012 Mortality Table for 2021 and 2020 and the RP-2014 Mortality Table for 2019, with improvement scales MP-2020 for 2021, MP-2019 for 2020, and MP-2018 for 2019.

2The discount rate reflects the rate at which benefits could be effectively settled and is equal to the equivalent single rate resulting from a yield-curve analysis. This analysis incorporated the projected benefit payments specific to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan and the yields on high-quality corporate bonds rated Aa or better.

3CMS Energy and Consumers have elected to use a full-yield-curve approach in the estimation of service cost and interest cost; this approach applies individual spot rates along the yield curve to future projected benefit payments based on the time of payment.

4CMS Energy and Consumers determined the long-term rate of return using historical market returns, the present and expected future economic environment, the capital market principles of risk and return, and the

expert opinions of individuals and firms with financial market knowledge. CMS Energy and Consumers considered the asset allocation of the portfolio in forecasting the future expected total return of the portfolio. The goal was to determine a long-term rate of return that could be incorporated into the planning of future cash flow requirements in conjunction with the change in the liability. Annually, CMS Energy and Consumers review for reasonableness and appropriateness the forecasted returns for various classes of assets used to construct an expected return model. CMS Energy’s and Consumers’ expected long-term rate of return on the assets of the DB Pension Plans was 6.75 percent in 2021. The actual return on the assets of the DB Pension Plans was 12.0 percent in 2021, 13.6 percent in 2020, and 21.0 percent in 2019.

Costs: Presented in the following table are the costs (credits) and other changes in plan assets and benefit obligations incurred in CMS Energy’s and Consumers’ retirement benefit plans:

In Millions
	DB Pension Plans and DB SERP									OPEB Plan
Years Ended December 31	2021			2020			2019			2021			2020			2019
CMS Energy, including Consumers
Net periodic cost (credit)
Service cost		$	53		$	50		$	41		$	18		$	16		$	14
Interest cost		63			83			103			23			33			41
Settlement loss		1			1			—			—			—			—
Expected return on plan assets		(208)			(191)			(162)			(109)			(100)			(88)
Amortization of:
Net loss		100			95			50			8			15			26
Prior service cost (credit)		4			1			1			(53)			(56)			(62)
Settlement loss		6			2			—			—			—			—
Net periodic cost (credit)		$	19		$	41		$	33		$	(113)		$	(92)		$	(69)
Consumers
Net periodic cost (credit)
Service cost		$	51		$	49		$	40		$	17		$	15		$	13
Interest cost		59			78			97			23			31			40
Expected return on plan assets		(197)			(181)			(153)			(102)			(93)			(82)
Amortization of:
Net loss		96			90			47			8			15			26
Prior service cost (credit)		4			1			1			(51)			(54)			(61)
Settlement loss		6			2			—			—			—			—
Net periodic cost (credit)		$	19		$	39		$	32		$	(105)		$	(86)		$	(64)

CMS Energy and Consumers amortize net gains and losses in excess of ten percent of the greater of the PBO or the MRV over the average remaining service period for DB Pension Plan A and the OPEB Plan and over the average remaining life expectancy of participants for DB Pension Plan B. For DB Pension Plan A, the estimated period of amortization of gains and losses was eight years for the years ended December 31, 2021 and 2020, and nine years for the year ended December 31, 2019. For DB Pension Plan B, the estimated period of amortization of gains and losses was 18 years for the year ended December 31, 2021, 19 years for the year ended December 31, 2020, and 20 years for the year ended December 31, 2019. For the OPEB Plan, the estimated amortization period was nine years for the years ended December 31, 2021 and 2020, and ten years for the year ended December 31, 2019.

Prior service cost (credit) amortization is established in the year in which the prior service cost (credit) first occurred, and is based on the same amortization period for all future years until the prior service cost

(credit) is fully amortized. CMS Energy and Consumers had new prior service costs for DB Pension Plan A in 2020. The estimated period of amortization of these new prior service costs is eight years.

CMS Energy and Consumers determine the MRV for the assets of the DB Pension Plans as the fair value of plan assets on the measurement date, adjusted by the gains or losses that will not be admitted into the MRV until future years. CMS Energy and Consumers reflect each year’s gain or loss in the MRV in equal amounts over a five-year period beginning on the date the original amount was determined. CMS Energy and Consumers determine the MRV for OPEB Plan assets as the fair value of assets on the measurement date.

Reconciliations: Presented in the following table are reconciliations of the funded status of CMS Energy’s and Consumers’ retirement benefit plans with their retirement benefit plans’ liabilities:

In Millions
	DB Pension Plans							DB SERP						OPEB Plan
Years Ended December 31	2021			2020				2021			2020			2021			2020
CMS Energy, including Consumers
Benefit obligation at beginning of period		$	3,266		$	2,973			$	160		$	150		$	1,205		$	1,165
Service cost		53			50				—			—			18			16
Interest cost		60			79				3			4			23			33
Plan amendments		—			24				—			—			5			—
Actuarial loss (gain)		(108)		1	355		1		(4)			16			(32)		1	39		1
Benefits paid		(201)			(215)				(10)			(10)			(53)			(48)
Benefit obligation at end of period		$	3,070		$	3,266			$	149		$	160		$	1,166		$	1,205
Plan assets at fair value at beginning of period		$	3,402		$	2,546			$	—		$	—		$	1,645		$	1,509
Actual return on plan assets		398			371				—			—			194			182
Company contribution		—			700				10			10			—			1
Actual benefits paid		(201)			(215)				(10)			(10)			(52)			(47)
Plan assets at fair value at end of period		$	3,599		$	3,402			$	—		$	—		$	1,787		$	1,645
Funded status		$	529	2	$	136	2		$	(149)		$	(160)		$	621		$	440
Consumers
Benefit obligation at beginning of period									$	117		$	109		$	1,158		$	1,120
Service cost									—			—			17			15
Interest cost									2			3			23			31
Plan amendments									—			—			5			—
Actuarial loss (gain)									(3)			12			(30)		1	37		1
Benefits paid									(7)			(7)			(51)			(45)
Benefit obligation at end of period									$	109		$	117		$	1,122		$	1,158
Plan assets at fair value at beginning of period									$	—		$	—		$	1,535		$	1,410
Actual return on plan assets									—			—			182			169
Company contribution									7			7			—			1
Actual benefits paid									(7)			(7)			(49)			(45)
Plan assets at fair value at end of period									$	—		$	—		$	1,668		$	1,535
Funded status									$	(109)		$	(117)		$	546		$	377

1The actuarial gains for 2021 for the DB Pension Plans and OPEB Plan were primarily the result of higher discount rates. The actuarial loss for 2020 for the DB Pension Plans was primarily the result of lower discount rates and lower interest rates used to calculate the value of lump-sum payments. The actuarial loss for 2020 for the OPEB Plan was primarily the result of lower discount rates.

2The total funded status of the DB Pension Plans attributable to Consumers, based on an allocation of expenses, was $510 million at December 31, 2021 and $138 million at December 31, 2020.

Presented in the following table is the classification of CMS Energy’s and Consumers’ retirement benefit plans’ assets and liabilities:

In Millions
December 31	2021			2020
CMS Energy, including Consumers
Non-current assets
DB Pension Plans		$	529		$	136
OPEB Plan		621			440
Current liabilities
DB SERP		10			10
Non-current liabilities
DB SERP		139			150
Consumers
Non-current assets
DB Pension Plans		$	510		$	138
OPEB Plan		546			377
Current liabilities
DB SERP		7			7
Non-current liabilities
DB SERP		102			110

The ABO for the DB Pension Plans was $2.7 billion at December 31, 2021 and $2.9 billion at December 31, 2020. At December 31, 2021 and 2020, the PBO and ABO did not exceed plan assets for any of the defined benefit pension plans.

Items Not Yet Recognized as a Component of Net Periodic Benefit Cost: Presented in the following table are the amounts recognized in regulatory assets, regulatory liabilities, and AOCI that have not been recognized as components of net periodic benefit cost. For additional details on regulatory assets and regulatory liabilities, see Note 2, Regulatory Matters.

In Millions
	DB Pension Plans and DB SERP						OPEB Plan
December 31	2021			2020			2021			2020
CMS Energy, including Consumers
Regulatory assets (liabilities)
Net loss		$	812		$	1,194		$	136		$	254
Prior service cost (credit)		25			29			(190)			(246)
Regulatory assets (liabilities)		$	837		$	1,223		$	(54)		$	8
AOCI
Net loss (gain)		94			120			(17)			(10)
Prior service cost (credit)		—			1			(5)			(6)
Total amounts recognized in regulatory assets (liabilities) and AOCI		$	931		$	1,344		$	(76)		$	(8)
Consumers
Regulatory assets (liabilities)
Net loss		$	812		$	1,194		$	136		$	254
Prior service cost (credit)		25			29			(190)			(246)
Regulatory assets (liabilities)		$	837		$	1,223		$	(54)		$	8
AOCI
Net loss		41			47			—			—
Total amounts recognized in regulatory assets (liabilities) and AOCI		$	878		$	1,270		$	(54)		$	8

Plan Assets: Presented in the following tables are the fair values of the assets of CMS Energy’s DB Pension Plans and OPEB Plan, by asset category and by level within the fair value hierarchy. For additional details regarding the fair value hierarchy, see Note 5, Fair Value Measurements.

In Millions
	DB Pension Plans
	December 31, 2021									December 31, 2020
	Total			Level 1			Level 2			Total			Level 1			Level 2
CMS Energy, including Consumers
Cash and short-term investments		$	30		$	30		$	—		$	115		$	115		$	—
U.S. government and agencies securities		209			—			209			150			—			150
Corporate debt		595			—			595			540			—			540
State and municipal bonds		13			—			13			11			—			11
Foreign corporate bonds		66			—			66			41			—			41
Mutual funds		785			785			—			971			971			—
		$	1,698		$	815		$	883		$	1,828		$	1,086		$	742
Pooled funds		1,901									1,574
Total		$	3,599								$	3,402

In Millions
	OPEB Plan
	December 31, 2021									December 31, 2020
	Total			Level 1			Level 2			Total			Level 1			Level 2
CMS Energy, including Consumers
Cash and short-term investments		$	21		$	21		$	—		$	33		$	33		$	—
U.S. government and agencies securities		25			—			25			18			—			18
Corporate debt		73			—			73			64			—			64
State and municipal bonds		2			—			2			2			—			2
Foreign corporate bonds		8			—			8			5			—			5
Common stocks		85			85			—			66			66			—
Mutual funds		941			941			—			807			807			—
		$	1,155		$	1,047		$	108		$	995		$	906		$	89
Pooled funds		632									650
Total		$	1,787								$	1,645

Cash and Short-Term Investments: Cash and short-term investments consist of money market funds with daily liquidity.

U.S. Government and Agencies Securities: U.S. government and agencies securities consist of U.S. Treasury notes and other debt securities backed by the U.S. government and related agencies. These securities are valued based on quoted market prices.

Corporate Debt: Corporate debt investments consist of investment grade bonds of U.S. issuers from diverse industries. These securities are valued based on quoted market prices, when available, or yields available on comparable securities of issuers with similar credit ratings.

State and Municipal Bonds: State and municipal bonds are valued using a matrix-pricing model that incorporates Level 2 market-based information. The fair value of the bonds is derived from various observable inputs, including benchmark yields, reported securities trades, broker/dealer quotes, bond ratings, and general information on market movements for investment grade state and municipal securities normally considered by market participants when pricing such debt securities.

Foreign Corporate Bonds: Foreign corporate debt securities are valued based on quoted market prices, when available, or on yields available on comparable securities of issuers with similar credit ratings.

Common Stocks: Common stocks in the OPEB Plan consist of equity securities that are actively managed and tracked to the S&P 500 Index. These securities are valued at their quoted closing prices.

Mutual Funds: Mutual funds represent shares in registered investment companies that are priced based on the daily quoted net asset values that are publicly available and are the basis for transactions to buy or sell shares in the funds.

Pooled Funds: Pooled funds include both common and collective trust funds as well as special funds that contain only employee benefit plan assets from two or more unrelated benefit plans. These funds primarily consist of U.S. and foreign equity securities, but also include U.S. and foreign fixed-income securities and multi-asset investments. Since these investments are valued at their net asset value as a practical expedient, they are not classified in the fair value hierarchy.

Asset Allocations: Presented in the following table are the investment components of the assets of CMS Energy’s DB Pension Plans and OPEB Plan as of December 31, 2021:

	DB Pension Plans			OPEB Plan
Equity securities		54.0	%		55.0	%
Fixed-income securities		28.0			28.0
Real asset investments		12.0			12.0
Multi-asset investments		5.0			4.0
Cash and Cash Equivalents		1.0			1.0
		100.0	%		100.0	%

CMS Energy’s target 2021 asset allocation for the assets of the DB Pension Plans was 54 percent equity, 29 percent fixed income, 12 percent real assets, and five percent multi-asset investments.

CMS Energy established union and non‑union VEBA trusts to fund future retiree health and life insurance benefits. These trusts are funded through the ratemaking process for Consumers and through direct contributions from the non‑utility subsidiaries. CMS Energy’s target 2021 asset allocation for the health trusts was 55 percent equity, 30 percent fixed income, 12 percent real assets, and three percent multi-asset investments. CMS Energy’s target asset allocation for the life trusts was 53 percent equity, 32 percent fixed income, and 15 percent multi-asset investments.

The goal of these target allocations was to maximize the long-term return on plan assets, while maintaining a prudent level of risk. The level of acceptable risk is a function of the liabilities of the plans. Equity investments are diversified mostly across the S&P 500 Index, with lesser allocations to the S&P MidCap and SmallCap Indexes and Foreign Equity Funds. Fixed-income investments are diversified across investment grade instruments of government and corporate issuers, as well as high-yield and global bond funds. Real asset investments are diversified across real estate investment trusts, public infrastructure, and public resource equity. Multi-asset investments are global tactical asset allocations.

CMS Energy uses annual liability measurements, quarterly portfolio reviews, and periodic asset/liability studies to evaluate the need for adjustments to the portfolio allocations.

Contributions: Presented in the following table are the contributions to CMS Energy’s and Consumers’ DB Pension Plans and OPEB Plan:

In Millions
Years Ended December 31	2021			2020
CMS Energy, including Consumers
DB Pension Plans		$	—		$	700
OPEB Plan		—			1
Consumers
DB Pension Plans		$	—		$	682
OPEB Plan		—			1

Contributions comprise required amounts and discretionary contributions. Neither CMS Energy nor Consumers plans to contribute to the DB Pension Plans or OPEB Plan in 2022. Actual future contributions will depend on future investment performance, discount rates, and various factors related to the participants of the DB Pension Plans and OPEB Plan. CMS Energy and Consumers will, at a minimum, contribute to the plans as needed to comply with federal funding requirements.

Benefit Payments: Presented in the following table are the expected benefit payments for each of the next five years and the five-year period thereafter:

In Millions
	DB Pension Plans			DB SERP			OPEB Plan
CMS Energy, including Consumers
2022		$	185		$	10		$	52
2023		181			10			54
2024		178			10			56
2025		180			10			58
2026		178			9			59
2027-2031		876			45			308
Consumers
2022		$	175		$	7		$	49
2023		171			7			52
2024		169			7			54
2025		170			7			55
2026		169			6			56
2027-2031		830			31			294

Collective Bargaining Agreements: At December 31, 2021, unions represented 41 percent of CMS Energy’s employees and 42 percent of Consumers’ employees. The UWUA represents Consumers’ operating, maintenance, construction, and customer contact center employees. The USW represents Zeeland plant employees. The UWUA and USW agreements expired and new agreements were ratified in 2020. These union contracts expire in 2025.