Retirement Plans and Profit Sharing Arrangements

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Retirement Plans and Profit Sharing Arrangements

Retirement Plans and Profit Sharing Arrangements

Defined Benefit Plans

Pension Plans and Other Postretirement Benefits

The Company’s U.S. non-advisor employees who were hired prior to April of 2019 are generally eligible for the Ameriprise Financial Retirement Plan (the “Retirement Plan”), a noncontributory defined benefit plan which is a qualified plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). However, effective April 2020, the Company no longer enrolls new employees in the Retirement Plan. Funding of costs for the Retirement Plan complies with the applicable minimum funding requirements specified by ERISA and is held in a trust. The Retirement Plan is a cash balance plan by which the employees’ accrued benefits are based on notional account balances, which are maintained for each individual. Each pay period these balances are credited with an amount equal to a percentage of eligible compensation as defined by the Retirement Plan (which includes, but is not limited to, base pay, performance based incentive pay, commissions, shift differential and overtime). The percentage ranges from 2.5% to 10% depending on several factors including years of service as of April 2020 and will no longer increase with more years of service. Employees’ balances are also credited with a fixed rate of interest that is updated each January 1 and is based on the average of the daily five-year U.S. Treasury Note yields for the previous October 1 through November 30, with a minimum crediting rate of 5% and maximum crediting rate of 10%. Employees are fully vested after 3 years of service or upon retirement at or after age 65, disability or death while employed. Employees have the option to receive annuity payments or a lump sum payout of vested balance after termination or retirement.

In addition, the Company sponsors the Ameriprise Financial Supplemental Retirement Plan (the “SRP”), an unfunded non-qualified deferred compensation plan subject to Section 409A of the Internal Revenue Code. This plan is for certain highly compensated

employees to replace the benefit that cannot be provided by the Retirement Plan due to IRS limits. The SRP generally parallels the Retirement Plan but offers different payment options.

The Company also sponsors unfunded defined benefit postretirement plans that provide health care and life insurance to retired U.S. employees. On December 31, 2016, the access to retiree health care coverage was closed to all active employees who had previously met the qualification requirements. Instead, only existing retirees, as of January 1, 2017, qualifying for the plan and electing coverage will be provided a fixed amount to subsidize health care insurance purchased through other providers. Net periodic postretirement benefit costs were not material for the years ended December 31, 2023, 2022 and 2021.

Most employees outside the U.S. are covered by local retirement plans, some of which are funded, while other employees receive payments at the time of retirement or termination under applicable labor laws or agreements. All plans are closed to new participants. The plans provide benefits calculated using salary data of the participants. The plans are based on final salary payments and benefits are adjusted in line with plan rules (e.g. in line with price inflation in the U.K.) once in payment during retirement. The level of benefits provided depends on the member’s length of service and pensionable salary at retirement date or date of termination if earlier.

All components of the net periodic benefit cost are recorded in General and administrative expense and were as follows:

	Years Ended December 31,
	2023		2022		2021
	(in millions)
Service cost	$	29	$	43	$	45
Interest cost	65		39		21
Expected return on plan assets	(76)		(70)		(57)
Amortization of prior service credits	(1)		(1)		(2)
Amortization of net loss	—		18		23
Other	3		3		5
Net periodic benefit cost	$	20	$	32	$	35

The prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of assets are amortized on a straight-line basis over the expected average remaining service period of active participants.

The following table provides a reconciliation of changes in the benefit obligation:

	Pension Plans				Other Postretirement Plans
	2023		2022		2023		2022
	(in millions)
Benefit obligation at January 1	$	1,256	$	1,815	$	11	$	13
Service cost	29		43		—		—
Interest cost	65		39		1		—
Benefits paid	(23)		(21)		(1)		(1)
Actuarial (gain) loss	52		(520)		—		(1)
Settlements	(45)		(27)		—		—
Foreign currency rate changes	21		(73)		—		—
Benefit obligation at December 31	$	1,355	$	1,256	$	11	$	11

The actuarial (gain) loss for pension plans were primarily due to changes in the discount rate assumption as of December 31, 2023 and 2022, respectively.

The following table provides a reconciliation of changes in the fair value of assets:

	Pension Plans
	2023		2022
	(in millions)
Fair value of plan assets, January 1	$	1,142	$	1,583
Actual return on plan assets	136		(365)
Employer contributions	56		56
Benefits paid	(23)		(21)
Settlements	(45)		(27)
Foreign currency rate changes	26		(84)
Fair value of plan assets, December 31	$	1,292	$	1,142

The Company complies with the minimum funding requirements in all countries. The following table provides the amounts recognized in the Consolidated Balance Sheets as of December 31, which equal the funded status of the plans:

	Pension Plans				Other Postretirement Plans
	2023		2022		2023		2022
	(in millions)
Benefit liability	$	(169)	$	(215)	$	(11)	$	(11)
Benefit asset	106		101		—		—
Net amount recognized	$	(63)	$	(114)	$	(11)	$	(11)

The accumulated benefit obligation for all pension plans as of December 31, 2023 and 2022 was $1.3 billion and $1.2 billion, respectively. The following table provides information for pension plans with benefit obligations in excess of plan assets:

	December 31,
	2023		2022
	(in millions)
Pension plans with accumulated benefit obligations in excess of plan assets
Accumulated benefit obligation	$	945	$	874
Fair value of plan assets	803		688
Pension plans with projected benefit obligations in excess of plan assets
Projected benefit obligation	$	972	$	903
Fair value of plan assets	803		688

The weighted average assumptions used to determine benefit obligations were as follows:

	Pension Plans				Other Postretirement Plans
	2023		2022		2023		2022
Discount rates	4.98	%	5.30	%	5.07	%	5.41	%
Rates of increase in compensation levels	3.64		3.72		N/A		N/A
Interest crediting rates for cash balance plans	5.00		5.00		N/A		N/A

N/A  Not Applicable

The weighted average assumptions used to determine net periodic benefit cost of pension plans were as follows:

	2023		2022		2021
Discount rates	5.30	%	2.46	%	2.33	%
Rates of increase in compensation levels	3.72		3.69		5.21
Expected long-term rates of return on assets	6.04		4.82		6.58
Interest crediting rates for cash balance plans	5.00		5.00		5.00

In developing the expected long-term rate of return on assets, management evaluated input from an external consulting firm, including their projection of asset class return expectations and long-term inflation assumptions. The Company also considered historical returns on the plans’ assets. Discount rates are based on yields available on high-quality corporate bonds that would generate cash flows necessary to pay the benefits when due.

The Company’s pension plans’ assets are invested in an aggregate diversified portfolio to minimize the impact of any adverse or unexpected results from a security class on the entire portfolio. Diversification is interpreted to include diversification by asset type, performance and risk characteristics and number of investments. When appropriate and consistent with the objectives of the plans, derivative instruments may be used to mitigate risk or provide further diversification, subject to the investment policies of the plans. Asset classes and ranges considered appropriate for investment of the plans’ assets are determined by each plan’s investment committee. The target allocations are 70% equity securities, 20% debt securities and 10% all other types of investments, except for the assets in pooled pension funds and certain collective funds described below, and additional voluntary contribution assets outside the U.S. which are allocated at the discretion of the individual and will be converted at retirement into the defined benefit pension plan. Actual allocations will generally be within 5% of these targets. In addition, assets in pooled pension funds and certain collective funds reflect allocations between growth and liability matching portfolios and may shift based on manager discretion. These funds invest primarily in debt securities, equity securities, and certain derivatives, either directly or through other collective funds. As of December 31, 2023 and 2022, there were no significant holdings of any single issuer and the exposure to derivative instruments was not significant.

The following tables present the Company’s pension plans assets measured at fair value on a recurring basis:

Asset Category	December 31, 2023
	Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities:
U.S. small cap stocks	$	90	$	7	$	—	$	97
Registered investment companies	90		—		—		90
Insurance contracts	—		—		23		23
Cash equivalents at NAV							3		(1)
Collective investment funds at NAV							859		(1)
Real estate investment trusts at NAV							28		(1)
Hedge funds at NAV							24		(1)
Pooled pension funds at NAV							168		(1)
Total	$	180	$	7	$	23	$	1,292

	December 31, 2022
Asset Category	Level 1		Level 2		Level 3		Total
	(in millions)
Equity securities:
U.S. small cap stocks	$	76	$	6	$	—	$	82
Registered investment companies	80		—		—		80
Insurance contracts	—		—		19		19
Cash equivalents at NAV							6		(1)
Collective investment funds at NAV							758		(1)
Real estate investment trusts at NAV							29		(1)
Hedge funds at NAV							16		(1)
Pooled pension funds at NAV							152		(1)
Total	$	156	$	6	$	19	$	1,142

(1) Amounts are comprised of certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient and have not been classified in the fair value hierarchy.

Equity securities are managed to track the performance of common market indices for both U.S. and non-U.S. securities, primarily across large cap, small cap and emerging market asset classes. Cash equivalents consist of holdings in a money market fund that seeks to equal the return of the three month U.S. Treasury bill. Collective investment funds include equity and debt securities. Real estate funds are managed to track the performance of a broad population of investment grade non-agricultural income producing properties. The Company’s investments in hedge funds include investments in a multi-strategy fund and an off-shore fund managed to track the performance of broad fund of fund indices. Pooled pension funds are managed to track a specific benchmark based on the investment objectives of the fund.

The fair value of equity securities classified as Level 1 use quoted prices in active markets and the fair value of equity securities classified as Level 2 is determined based on a market approach using observable inputs. The fair value of the registered investment companies’ mutual funds is determined by the NAV which represents the exit price. These funds are classified as Level 1 as they are

traded in active markets and quoted prices are available. Insurance contracts support certain non-U.S plans and are classified as Level 3.

The amounts recognized in AOCI, net of tax, as of December 31, 2023 but not recognized as components of net periodic benefit cost included an unrecognized actuarial loss of $63 million and an unrecognized prior service credit of $1 million related to the Company’s pension plans. The Company’s other postretirement plans included an unrecognized actuarial gain of $2 million and an unrecognized prior service credit of nil as of December 31, 2023. See Note 21 for a rollforward of AOCI related to the Company’s defined benefit plans.

The Company’s pension plans expect to make benefit payments to retirees as follows:

	Pension Plans		Other Postretirement Plans
	(in millions)
2024	$	74	$	1
2025	85		1
2026	82		1
2027	87		1
2028	92		1
2029-2033	500		4

The Company expects to contribute $39 million and nil to its pension plans and other postretirement plans, respectively, in 2024.

Defined Contribution Plans

The Company’s U.S. employees are generally eligible to participate in the Ameriprise Financial 401(k) Plan (the “401(k) Plan”). The 401(k) Plan allows eligible employees to make contributions through payroll deductions up to IRS limits and invest their contributions in one or more of the 401(k) Plan investment options, which include the Ameriprise Financial Stock Fund. The Company provides a dollar for dollar match up to the first 5% of eligible compensation an employee contributes on a pretax and/or Roth 401(k) basis for each annual period. Effective April 2020, employees not eligible to participate in the Retirement Plan will receive a 2% company contribution to their 401(k) Plan once they become eligible for contributions.

Under the 401(k) Plan, employees become eligible for contributions under the plan during the pay period they reach 60 days of service. Match contributions are fully vested after five years of service, vesting ratably over the first five years of service, or upon retirement at or after age 65, disability or death while employed. The Company’s defined contribution plan expense was $67 million, $67 million and $59 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Employees outside the U.S. who are not covered by the 401(k) may be covered by local defined contribution plans which are subject to applicable laws and rules of the country where the plan is administered. The Company’s expense related to defined contribution plans outside the U.S. was $16 million, $8 million and $8 million for the years ended December 31, 2023, 2022 and 2021, respectively.