Pension and Other Benefit Plans

12 Months Ended

Dec. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Pension and Other Benefit Plans

17.  Pension and Other Benefit Plans

Pension Plans

Schlumberger sponsors several defined benefit pension plans that cover substantially all US employees hired prior to October 1, 2004. The benefits are based on years of service and compensation, on a career-average pay basis.

In addition to the US defined benefit pension plans, Schlumberger sponsors several other international defined benefit pension plans. The most significant of these international plans are the International Staff Pension Plan and the UK pension plan (collectively, the “International plans”). The International Staff Pension Plan covers certain international employees hired prior to July 1, 2014 and is based on years of service and compensation on a career-average pay basis. The UK plan covers employees hired prior to April 1, 1999, and is based on years of service and compensation, on a final salary basis.

The weighted-average assumed discount rate, compensation increases and expected long-term rate of return on plan assets used to determine the net pension cost for the US and International plans were as follows:

	US									International
	2020			2019			2018			2020			2019			2018
Discount rate		3.30	%		4.30	%		3.70	%		3.27	%		4.00	%		3.55	%
Compensation increases		4.00	%		4.00	%		4.00	%		4.82	%		4.83	%		4.81	%
Return on plan assets		6.60	%		6.60	%		7.25	%		6.71	%		7.22	%		7.40	%

Net pension cost (credit) for 2020, 2019 and 2018 included the following components:

(Stated in millions)
	US									International
	2020			2019			2018			2020			2019			2018
Service cost - benefits earned during the period	$	55		$	49		$	59		$	140		$	112		$	138
Interest cost on projected benefit obligation		148			180			167			301			333			304
Expected return on plan assets		(233	)		(232	)		(248	)		(591	)		(592	)		(584	)
Amortization of prior service cost		8			10			13			-			7			10
Amortization of net loss		41			29			47			159			70			140
Settlement charge		-			37			-			-			-			-
	$	19		$	73		$	38		$	9		$	(70	)	$	8

Certain of Schlumberger’s deferred benefit pension plans offered former Schlumberger employees, who had not yet commenced receiving their pension benefits, an opportunity to receive a lump sum payout of their vested pension benefit.  Schlumberger’s pension plans paid $257 million from pension plan assets to those who accepted this offer, thereby reducing its pension benefit obligations.  These transactions resulted in a non-cash pension settlement charge of $37 million, representing the immediate recognition of the related deferred actuarial losses in Accumulated Other Comprehensive Loss, in the fourth quarter of 2019.  See Note 3 – Charges and Credits.

The weighted-average assumed discount rate and compensation increases used to determine the projected benefit obligations for the US and International plans were as follows:

	US						International
	2020			2019			2020			2019
Discount rate		2.60	%		3.30	%		2.38	%		3.27	%
Compensation increases		4.00	%		4.00	%		4.82	%		4.83	%

The changes in the projected benefit obligation, plan assets and funded status of the plans were as follows:

(Stated in millions)
	US						International
	2020			2019			2020			2019
Change in Projected Benefit Obligations
Projected benefit obligation at beginning of year	$	4,593		$	4,278		$	9,647		$	8,111
Service cost		55			49			140			112
Interest cost		148			180			301			333
Contribution by plan participants		-			-			94			63
Actuarial losses		370			535			1,233			1,304
Currency effect		-			-			68			50
Settlement		-			(240	)		(5	)		(17	)
Benefits paid		(226	)		(209	)		(338	)		(309	)
Projected benefit obligation at end of year	$	4,940		$	4,593		$	11,140		$	9,647
Change in Plan Assets
Plan assets at fair value at beginning of year	$	4,236		$	3,748		$	9,363		$	7,872
Actual return on plan assets		760			931			1,282			1,676
Currency effect		-			-			72			59
Company contributions		6			6			20			19
Contributions by plan participants		-			-			94			63
Settlement		-			(240	)		-			(17	)
Benefits paid		(226	)		(209	)		(338	)		(309	)
Plan assets at fair value at end of year	$	4,776		$	4,236		$	10,493		$	9,363
Unfunded Liability	$	(164	)	$	(357	)	$	(647	)	$	(284	)
Amounts Recognized in Balance Sheet
Postretirement Benefits	$	(199	)	$	(357	)	$	(849	)	$	(602	)
Other Assets		35			-			202			318
	$	(164	)	$	(357	)	$	(647	)	$	(284	)
Amounts Recognized in Accumulated Other Comprehensive Loss
Actuarial losses	$	423		$	622		$	1,981		$	1,638
Prior service cost		1			9			-			-
	$	424		$	631		$	1,981		$	1,638
Accumulated benefit obligation	$	4,739		$	4,345		$	10,844		$	9,376

The unfunded liability represents the difference between the plan assets and the projected benefit obligation (“PBO”). The PBO represents the actuarial present value of benefits based on employee service and compensation and includes an assumption about future compensation levels. The accumulated benefit obligation (“ABO”) represents the actuarial present value of benefits based on employee service and compensation but does not include an assumption about future compensation levels.

Actuarial losses arising during 2020 and 2019 were primarily attributable to decreases in the discount rate used to determine the PBO.  As of December 31, 2020, the PBO and fair value of plan assets for plans with PBOs in excess of plan assets were $9.4 billion and $8.3 billion, respectively.  The related ABO for these plans was $9.1 billion at December 31, 2020.   

The weighted-average allocation of plan assets and the target allocations by asset category are as follows:

	US									International
	Target			2020			2019			Target			2020			2019
Equity securities	11 - 20		%		15	%		22	%	40 - 54		%		43	%		50
Debt securities	70 - 83				76			70		28 - 43				36			31
Cash and cash equivalents	0 - 3				3			2		0 - 5				4			4
Alternative investments	5 - 10				6			6		15 - 22				17			15
		100	%		100	%		100	%		100	%		100	%		100

Asset performance is monitored frequently with an overall expectation that plan assets will meet or exceed the weighted index of its target asset allocation and component benchmark over rolling five-year periods.

The expected rate of return on assets assumptions reflect the long-term average rate of earnings expected on funds invested or to be invested. The assumptions have been determined based on expectations regarding future rates of return for the portfolio considering the asset allocation and related historical rates of return. The appropriateness of the assumptions is reviewed annually.

The fair value of Schlumberger’s pension plan assets at December 31, 2020 and 2019, by asset category, is presented below and was determined based on valuation techniques categorized as follows:

• Level One: The use of quoted prices in active markets for identical instruments.

• Level Two: The use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or other inputs that are observable in the market or can be corroborated by observable market data.

• Level Three: The use of significant unobservable inputs that typically require the use of management’s estimates of assumptions that market participants would use in pricing.

(Stated in millions)
	US Plan Assets
	2020								2019
			Level		Level		Level				Level		Level		Level
	Total		One		Two		Three		Total		One		Two		Three
Asset Category:
Cash and Cash Equivalents	$	140	$	127	$	13	$	-	$	73	$	59	$	14	$	-
Equity Securities:
US (a)		527		441		86		-		605		500		105		-
International (b)		186		182		4		-		320		315		5		-
Debt Securities
Corporate bonds (c)		1,945		-		1,945		-		1,687		-		1,687		-
Government and government-related debt securities (d)		1,658		180		1,478		-		1,256		74		1,182		-
Collateralized mortgage obligations and mortgage backed securities (e)		21		-		21		-		21		-		21		-
Alternative Investments:
Private equity (f)		204		-		-		204		181		-		-		181
Real estate (g)		95		-		-		95		93		-		-		93
Total	$	4,776	$	930	$	3,547	$	299	$	4,236	$	948	$	3,014	$	274

(Stated in millions)
	International Plan Assets
	2020								2019
			Level		Level		Level				Level		Level		Level
	Total		One		Two		Three		Total		One		Two		Three
Asset Category:
Cash and Cash Equivalents	$	457	$	215	$	242	$	-	$	351	$	166	$	185	$	-
Equity Securities:
US (a)		2,797		2,393		404		-		2,834		2,347		487		-
International (b)		1,711		1,615		96		-		1,871		1,723		148		-
Debt Securities
Corporate bonds (c)		1,260		-		1,260		-		1,105		-		1,105		-
Government and government-related debt securities (d)		2,405		213		2,192		-		1,602		5		1,597		-
Collateralized mortgage obligations and mortgage backed securities (e)		122		-		122		-		161		-		161		-
Alternative Investments:
Private equity (f)		851		-		-		851		623		-		-		623
Real estate (g)		200		-		-		200		183		-		-		183
Other		690		-		-		690		633		-		-		633
Total	$	10,493	$	4,436	$	4,316	$	1,741	$	9,363	$	4,241	$	3,683	$	1,439

^(a) US equities include companies that are well-diversified by industry sector and equity style (i.e., growth and value strategies). Active and passive management strategies are employed. Investments are primarily in large capitalization stocks and, to a lesser extent, mid- and small-cap stocks.

^(b) International equities are invested in companies that are traded on exchanges outside the US and are well-diversified by industry sector, country and equity style. Active and passive strategies are employed. The vast majority of the investments are made in companies in developed markets, with a small percentage in emerging markets.

^(c) Corporate bonds consist primarily of investment grade bonds from diversified industries.

^(d) Government and government-related debt securities are comprised primarily of inflation-protected US treasuries and, to a lesser extent, other government-related securities.

^(e) Collateralized mortgage obligations and mortgage backed-securities are debt obligations that represent claims to the cash flows from pools of mortgage loans, which are purchased from banks, mortgage companies, and other originators and then assembled into pools by governmental, quasi-governmental and private entities.

^(f) Private equity includes investments in several funds of funds.

^(g) Real estate primarily includes investments in real estate limited partnerships, concentrated in commercial real estate.

Schlumberger’s funding policy is to annually contribute amounts that are based upon a number of factors including the actuarial accrued liability, amounts that are deductible for income tax purposes, legal funding requirements and available cash flow. Schlumberger expects to contribute approximately $20 million to its postretirement benefit plans in 2021, subject to market and business conditions.

Postretirement Benefits Other Than Pensions

Schlumberger provides certain healthcare benefits to certain former US employees who have retired.  Effective April 1, 2015, Schlumberger changed the way it provides healthcare coverage to certain retirees who are age 65 and over.  Under the amended plan, these retirees transferred to individual coverage under the Medicare Exchange.  Schlumberger subsidizes the cost of the program by providing these retirees with a Health Reimbursement Account.  The annual subsidy may be increased based on medical cost inflation, but it will not be increased by more than 5% in any given year.  

The actuarial assumptions used to determine the accumulated postretirement benefit obligation and net periodic benefit cost for the US postretirement medical plan were as follows:

	Benefit Obligations						Net Periodic Benefit
	At December 31,						Cost for the Year
	2020			2019			2020			2019			2018
Discount rate		2.60	%		3.30	%		3.30	%		4.30	%		3.70	%
Return on plan assets	-			-				7.00	%		7.00	%		7.00	%
Current medical cost trend rate		7.25	%		7.50	%		7.25	%		7.50	%		7.00	%
Ultimate medical cost trend rate		4.50	%		4.50	%		4.50	%		4.50	%		5.00	%
Year that the rate reaches the ultimate trend rate	2031			2031			2031			2031			2026

The net periodic benefit credit for the US postretirement medical plan included the following components:

(Stated in millions)
	2020			2019			2018
Service cost	$	31		$	29		$	32
Interest cost		36			45			43
Expected return on plan assets		(70	)		(64	)		(63	)
Amortization of prior service credit		(25	)		(28	)		(28	)
Curtailment gain		(69	)		-			-
	$	(97	)	$	(18	)	$	(16	)

Due to the actions taken by Schlumberger to reduce its global workforce during 2020, Schlumberger experienced a significant reduction in the expected aggregate years of future service of its employees in its US postretirement medical plan. Accordingly, Schlumberger recorded a curtailment gain of $69 million during the second quarter of 2020 relating to this plan. The curtailment gain includes recognition of the decrease in the benefit obligation as well as a portion of the previously unrecognized prior service credit, reflecting the reduction in expected years of future service.  As a result of the curtailment, Schlumberger performed a remeasurement of the plan, which had an immaterial impact.  This gain was classified in Impairments & other in the Consolidated Statement of Loss.  See Note 3 – Charges and Credits.

The changes in the accumulated postretirement benefit obligation, plan assets and funded status were as follows:

(Stated in millions)
	2020			2019
Change in Projected Benefit Obligations
Benefit obligation at beginning of year	$	1,193		$	1,106
Service cost		31			29
Interest cost		36			45
Contribution by plan participants		8			8
Actuarial (gains) losses		64			65
Benefits paid		(58	)		(60	)
Curtailment		(40	)		-
Benefit obligation at end of year	$	1,234		$	1,193
Change in Plan Assets
Plan assets at fair value at beginning of year	$	1,185		$	997
Actual return on plan assets		221			240
Contributions by plan participants		8			8
Benefits paid		(58	)		(60	)
Plan assets at fair value at end of year	$	1,356		$	1,185
Asset (Unfunded Liability)	$	122		$	(8	)
Amounts Recognized in Accumulated Other Comprehensive Loss
Actuarial (gains) losses	$	(186	)	$	(98	)
Prior service credit		(104	)		(158	)
	$	(290	)	$	(256	)

The $122 million asset relating to this plan at December 31, 2020 was included in Other Assets while the $8 million unfunded liability at December 31, 2019 was included in Postretirement Benefits in the Consolidated Balance Sheet.

The assets of the US postretirement medical plan are invested 61% in equity securities and 39% in debt securities at December 31, 2020. The fair value of these assets was primarily determined based on Level Two valuation techniques.

Other Information

The expected benefits to be paid under the US and International pension plans as well as the postretirement medical plan are as follows:

(Stated in millions)
	Pension Benefits				Postretirement
	US		International		Medical Plan
2021	$	235	$	349	$	56
2022	$	235	$	359	$	56
2023	$	236	$	370	$	56
2024	$	237	$	381	$	56
2025	$	237	$	385	$	57
2026-2030	$	1,193	$	2,146	$	297