Employee Benefits

Chevron has defined benefit pension plans for many employees. The company typically prefunds defined benefit plans as required by local regulations or in certain situations where prefunding provides economic advantages. In the United States, all qualified plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. The company does not typically fund U.S. nonqualified pension plans that are not subject to funding requirements under laws and regulations because contributions to these pension plans may be less economic and investment returns may be less attractive than the company’s other investment alternatives.

The company also sponsors other postretirement employee benefit (OPEB) plans that provide medical and dental benefits, as well as life insurance for some active and qualifying retired employees. The plans are unfunded, and the company and the retirees share the costs. Medical coverage for Medicare-eligible retirees in the company’s main U.S. medical plan is secondary to Medicare (including Part D) and the increase to the company contribution for retiree medical coverage is limited to no more than 4 percent each year. Certain life insurance benefits are paid by the company.

The components of net periodic benefit costs for 2013 and 2012 are as follows:



	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
	(Millions of dollars)
Pension Benefits
United States
Service cost	$	124		$	113		$	371		$	339
Interest cost	117			109			353			327
Expected return on plan assets	(175		)	(158		)	(525		)	(475		)
Amortization of prior service costs (credits)	—			(2		)	1			(6		)
Amortization of actuarial losses	121			117			364			352
Settlement losses	57			65			171			204
Total United States	244			244			735			741
International
Service cost	48			45			145			135
Interest cost	77			79			236			241
Expected return on plan assets	(68		)	(67		)	(204		)	(201		)
Amortization of prior service costs	6			5			16			14
Amortization of actuarial losses	35			32			110			102
Total International	98			94			303			291
Net Periodic Pension Benefit Costs	$	342		$	338		$	1,038		$	1,032
Other Benefits*
Service cost	$	13		$	16		$	49		$	46
Interest cost	32			37			112			114
Amortization of prior service credits	(12		)	(18		)	(37		)	(54		)
Amortization of actuarial losses	13			13			40			42
Settlement gains	—			—			—			(26		)
Net Periodic Other Benefit Costs	$	46		$	48		$	164		$	122

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* Includes costs for U.S. and international OPEB plans. Obligations for plans outside the United States are not significant relative to the company’s total OPEB obligation.

At the end of 2012, the company estimated it would contribute $1.0 billion to employee pension plans during 2013 (composed of $650 million for the U.S. plans and $350 million for the international plans). Through September 30, 2013, a total of $961 million was contributed (including $809 million to the U.S. plans). Total contributions for the full year are currently estimated to be $1.2 billion ($850 million for the U.S. plans and $350 million for the international plans). Actual contribution amounts are dependent upon plan investment returns, changes in pension obligations, regulatory requirements and other economic factors. Additional funding may ultimately be required if investment returns are insufficient to offset increases in plan obligations.

During the first nine months of 2013, the company contributed $151 million to its OPEB plans. The company anticipates contributing approximately $77 million during the remainder of 2013.