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Postretirement Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Postretirement Benefit Plans Postretirement Benefit Plans
Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans
Many of our employees are covered by qualified defined benefit pension plans and we provide certain health care and life insurance benefits to eligible retirees (collectively, postretirement benefit plans). We also sponsor nonqualified defined benefit pension plans to provide for benefits in excess of qualified plan limits. Non-union employees hired after December 31, 2005 do not participate in our qualified defined benefit pension plans, but are eligible to participate in a qualified defined contribution plan in addition to our other retirement savings plans. They also have the ability to participate in our retiree medical plans, but we do not subsidize the cost of their participation in those plans as we do with employees hired before January 1, 2006. Over the last few years, we have negotiated similar changes with various labor organizations such that new union represented employees do not participate in our defined benefit pension plans. We completed the final step of the previously announced
planned freeze of our qualified and nonqualified defined benefit pension plans for salaried employees effective January 1, 2020. The freeze took effect in two stages. Effective January 1, 2016, the pay-based component of the formula used to determine retirement benefits was frozen. Effective January 1, 2020, the service-based component of the formula was frozen. As a result of these changes, the qualified defined benefit pension plans for salaried employees are fully frozen effective January 1, 2020. With the freeze complete, the majority of our salaried employees participate in an enhanced defined contribution retirement savings plan.
The rules related to accounting for postretirement benefit plans under GAAP require us to recognize on a plan-by-plan basis the funded status of our postretirement benefit plans as either an asset or a liability on our consolidated balance sheets. The funded status is measured as the difference between the fair value of the plan’s assets and the benefit obligation of the plan. We use December 31 as the measurement date. Benefit obligations as of the end of each year reflect assumptions in effect as of those dates. Net periodic benefit cost is based on assumptions in effect at the end of the respective preceding year.
The net periodic benefit cost (income) recognized for our qualified defined benefit pension plans and our retiree medical and life insurance plans each year included the following (in millions):
 
Qualified Defined
Benefit Pension Plans (a)
Retiree Medical and
Life Insurance Plans
202020192018202020192018
Service cost$101 $516 $630 $13 $14 $19 
Interest cost1,538 1,806 1,740 70 97 91 
Expected return on plan assets(2,264)(2,300)(2,395)(127)(110)(135)
Recognized net actuarial losses (gains)849 1,404 1,777 (4)2 5 
Amortization of net prior service (credit) cost (342)(333)(321)39 42 15 
Total net periodic benefit cost (income)$(118)$1,093 $1,431 $(9)$45 $(5)
(a)Total net periodic benefit cost (income) associated with our qualified defined benefit plans represents pension expense calculated in accordance with GAAP (FAS pension expense). We are required to calculate pension expense in accordance with both GAAP and CAS rules, each of which results in a different calculated amount of pension expense. The CAS pension cost is recovered through the pricing of our products and services on U.S. Government contracts and, therefore, is recognized in net sales and cost of sales for products and services. We include the difference between FAS pension service cost and CAS pension cost, referred to as the FAS/CAS operating adjustment, as a component of other unallocated, net on our consolidated statements of earnings (see Note 5 – Information on Business Segments).
The following table provides a reconciliation of benefit obligations, plan assets and unfunded status related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):
 Qualified Defined 
Benefit Pension Plans		Retiree Medical and
Life Insurance Plans
2020201920202019
Change in benefit obligation
Beginning balance$48,674 $43,305 $2,226 $2,348 
Service cost101 516 13 14 
Interest cost1,538 1,806 70 97 
Benefits paid(2,188)(2,294)(220)(229)
Settlements(1,392)(1,933)— — 
Actuarial losses (gains)5,036 6,403 135 (1)
Changes in longevity assumptions (426)860 (18)(70)
Plan amendments and curtailments9 11 (8)(6)
Medicare Part D subsidy— — 3 2 
Participants’ contributions— — 70 71 
Ending balance$51,352 $48,674 $2,271 $2,226 
Change in plan assets
Beginning balance at fair value$35,442 $32,002 $1,889 $1,644 
Actual return on plan assets5,594 6,667 298 342 
Benefits paid(2,188)(2,294)(220)(229)
Settlements(1,392)(1,933)— — 
Company contributions1,025 1,000 45 59 
Medicare Part D subsidy— — 3 2 
Participants’ contributions— — 70 71 
Ending balance at fair value$38,481 $35,442 $2,085 $1,889 
Unfunded status of the plans$(12,871)$(13,232)$(186)$(337)
During December 2020, Lockheed Martin, through its master retirement trust, purchased an irrevocable group annuity contract from an insurance company (referred to as a buy-out contract) for $1.4 billion to transfer the related, outstanding defined benefit pension obligations. As a result of this transaction, we were relieved of all responsibility for these pension obligations and the insurance company is now required to pay and administer the retirement benefits owed to approximately 13,500 U.S. retirees and beneficiaries, with no change to the amount, timing or form of monthly retirement benefit payments. Although the transaction was treated as a settlement for accounting purposes, we did not recognize a loss on the settlement in earnings associated with the transaction because total settlements during 2020 for the affected pension plans were less than the plans’ service and interest cost in 2020.
A second contract was also purchased from an insurance company for $793 million that will reimburse the plan for all future benefit payments related to approximately 2,500 U.S. retirees and beneficiaries (referred to as a buy-in contract). The covered retirees and beneficiaries and buy-in contract were spun-off to the plan established in December 2018 for the contract purchased at that time similarly structured as a buy-in; the buy-in contracts are the sole assets of that plan. Under the arrangement, the plan remains responsible for paying the benefits for the covered retirees and beneficiaries and the insurance company will reimburse the plan as those benefits are paid. As a result, there is no net ongoing cash flow to the plan for the covered retirees and beneficiaries as the cost of providing the benefits is funded by the buy-in contract; effectively locking in the cost of the benefits and eliminating future volatility of the benefit obligation, while also providing the option to convert to a buy-out. The buy-in contract was purchased using assets from the pension trust and is accounted for at fair value as an investment of the trust. These transactions had no impact on our 2020 FAS pension expense or CAS pension cost. Also, during December 2019, Lockheed Martin, through its master retirement trust, purchased a buy-out contract for $1.9 billion related to our outstanding defined benefit pension obligations for approximately 20,000 U.S. retirees and beneficiaries.
The following table provides amounts recognized on our consolidated balance sheets related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):
 Qualified Defined 
Benefit Pension Plans		Retiree Medical and
Life Insurance Plans
2020201920202019
Prepaid pension asset$3 $2 $— $— 
Accrued postretirement benefit liabilities(12,874)(13,234)(186)(337)
Accumulated other comprehensive loss (pre-tax) related to:
Net actuarial losses
21,040 20,609 (119)(69)
Prior service (credit) cost
(1,235)(1,586)73 120 
Total (a)
$19,805 $19,023 $(46)$51 
(a)Accumulated other comprehensive loss related to postretirement benefit plans, after-tax, of $16.2 billion and $15.5 billion at December 31, 2020 and 2019 (see “Note 13 – Stockholders’ Equity”) includes $19.8 billion ($15.6 billion, net of tax) and $19.0 billion ($15.0 billion, net of tax) for qualified defined benefit pension plans, $(46) million ($(37) million, net of tax) and $51 million ($39 million, net of tax) for retiree medical and life insurance plans and $782 million ($617 million, net of tax) and $667 million ($527 million, net of tax) for other plans.
The accumulated benefit obligation (ABO) for all qualified defined benefit pension plans was $51.3 billion and $48.6 billion at December 31, 2020 and 2019. The ABO represents benefits accrued without assuming future compensation increases to plan participants and is approximately equal to our projected benefit obligation. Plans where ABO was less than plan assets represent prepaid pension assets, which are included on our consolidated balance sheets in other noncurrent assets. Plans where ABO was in excess of plan assets represent accrued pension liabilities, which are included on our consolidated balance sheets.
We also sponsor nonqualified defined benefit plans to provide benefits in excess of qualified plan limits. The aggregate liabilities for these plans at both December 31, 2020 and 2019 were $1.4 billion, which also represent the plans’ unfunded status. We have set aside certain assets totaling $877 million and $657 million as of December 31, 2020 and 2019 in a separate trust which we expect to be used to pay obligations under our nonqualified defined benefit plans. In accordance with GAAP, those assets may not be used to offset the amount of the benefit obligation similar to the postretirement benefit plans in the table above. The unrecognized net actuarial losses at December 31, 2020 and 2019 were $718 million and $641 million. The unrecognized prior service credit at December 31, 2020 and 2019 were $21 million and $34 million. The expense associated with these plans totaled $59 million in 2020, $108 million in 2019 and $123 million in 2018. We also sponsor a small number of other postemployment plans and foreign benefit plans. The aggregate liability for the other postemployment plans was $42 million as of December 31, 2020 and 2019. The expense for the other postemployment plans, as well as the liability and expense associated with the foreign benefit plans, was not material to our results of operations, financial position or cash flows. The actuarial assumptions used to determine the benefit obligations and expense associated with our nonqualified defined benefit plans and postemployment plans are similar to those assumptions used to determine the benefit obligations and expense related to our qualified defined benefit pension plans and retiree medical and life insurance plans as described below.
The following table provides the amounts recognized in other comprehensive income (loss) related to postretirement benefit plans, net of tax, for the years ended December 31, 2020, 2019 and 2018 (in millions):
 Incurred but Not Yet
Recognized in Net
Periodic Benefit Cost		Recognition of
Previously
Deferred Amounts
202020192018202020192018
 Gains (losses)(Gains) losses
Actuarial gains and losses
Qualified defined benefit pension plans$(1,005)$(2,283)$(570)$668 $1,104 $1,396 
Retiree medical and life insurance plans43 238 71 (3)2 4 
Other plans(104)(133)83 24 42 55 
 (1,066)(2,178)(416)689 1,148 1,455 
 Credit (cost)(Credit) cost
Net prior service credit and cost
Qualified defined benefit pension plans(7)(8)(6)(269)(263)(255)
Retiree medical and life insurance plans6 4 (79)30 33 12 
Other plans— — — (10)(10)(10)
 (1)(4)(85)(249)(240)(253)
 $(1,067)$(2,182)$(501)$440 $908 $1,202 

Actuarial Assumptions
The actuarial assumptions used to determine the benefit obligations at December 31 of each year and to determine the net periodic benefit cost for each subsequent year, were as follows:
 Qualified Defined Benefit
Pension Plans		Retiree Medical and
Life Insurance Plans
202020192018202020192018
Weighted average discount rate2.500 %3.250 %4.250 %2.375 %3.250 %4.250 %
Expected long-term rate of return on assets7.00 %7.00 %7.00 %7.00 %7.00 %7.00 %
Health care trend rate assumed for next year7.75 %8.00 %8.25 %
Ultimate health care trend rate4.50 %4.50 %5.00 %
Year that the ultimate health care trend rate is reached
   203420342032
The decrease in the discount rate from December 31, 2019 to December 31, 2020 resulted in an increase in the projected benefit obligations of our qualified defined benefit pension plans of approximately $4.9 billion at December 31, 2020. The decrease in the discount rate from December 31, 2018 to December 31, 2019 resulted in an increase in the projected benefit obligations of our qualified defined benefit pension plans of approximately $5.8 billion at December 31, 2019.
In October 2020, the Society of Actuaries published revised longevity assumptions that refined its prior studies. We used the revised assumptions in our December 31, 2020 re-measurement of benefit obligation resulting in an approximate $426 million decrease in the projected benefit obligations of our qualified defined benefit pension plans.
The long-term rate of return assumption represents the expected long-term rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations. That assumption is based on several factors including historical market index returns, the anticipated long-term allocation of plan assets, the historical return data for the trust funds, plan expenses and the potential to outperform market index returns. The actual investment return for our qualified defined benefit plans during 2020 of $5.6 billion based on an actual rate of approximately 16.5% improved plan assets more than the $2.3 billion expected return based on our 7.00% long-term rate of return assumption.
Plan Assets
Investment policies and strategies – Lockheed Martin Investment Management Company (LMIMCo), our wholly-owned subsidiary, has the fiduciary responsibility for making investment decisions related to the assets of our postretirement benefit plans. LMIMCo’s investment objectives for the assets of these plans are (1) to minimize the net present value of expected funding contributions; (2) to ensure there is a high probability that each plan meets or exceeds our actuarial long-term rate of return assumptions; and (3) to diversify assets to minimize the risk of large losses. The nature and duration of benefit obligations, along with assumptions concerning asset class returns and return correlations, are considered when determining an appropriate asset allocation to achieve the investment objectives. Investment policies and strategies governing the assets of the plans are designed to achieve investment objectives within prudent risk parameters. Risk management practices include the use of external investment managers; the maintenance of a portfolio diversified by asset class, investment approach and security holdings; and the maintenance of sufficient liquidity to meet benefit obligations as they come due.
LMIMCo’s investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges:
Asset ClassAsset Allocation
Ranges
Cash and cash equivalents
0-20%
Equity
15-65%
Fixed income
10-60%
Alternative investments:
Private equity funds
0-15%
Real estate funds
0-10%
Hedge funds
0-20%
Commodities
0-15%
Fair value measurements – The rules related to accounting for postretirement benefit plans under GAAP require certain fair value disclosures related to postretirement benefit plan assets, even though those assets are not separately presented on our consolidated balance sheets. The following table presents the fair value of the assets (in millions) of our qualified defined benefit pension plans and retiree medical and life insurance plans by asset category and their level within the fair value hierarchy, which has three levels based on the ability to observe inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets, Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. Certain other investments are measured at their Net Asset Value (NAV) per share and do not have readily determined values and are thus not subject to leveling in the fair value hierarchy. The NAV is the total value of the fund divided by the number of the fund’s shares outstanding. We recognize transfers between levels of the fair value hierarchy as of the date of the change in circumstances that causes the transfer.
 December 31, 2020December 31, 2019
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Investments measured at fair value
Cash and cash equivalents (a)
$1,109 $1,109 $— $— $1,961 $1,961 $— $— 
Equity (a):
U.S. equity securities7,535 7,467 8 60 7,189 7,182 — 7 
International equity securities6,844 6,836 — 8 7,244 7,217 23 4 
Commingled equity funds1,671 442 1,228 1 1,933 582 1,351 — 
Fixed income (a):
Corporate debt securities5,732 — 5,730 2 5,208 — 5,206 2 
U.S. Government securities2,506 — 2,506 — 2,260 — 2,260 — 
U.S. Government-sponsored enterprise securities
230 — 230 — 530 — 530 — 
Other fixed income investments (b)
5,873 37 4,063 1,773 3,134 35 2,135 964 
Total$31,500 $15,891 $13,765 $1,844 $29,459 $16,977 $11,505 $977 
Investments measured at NAV (c)
Commingled equity funds92 181 
Other fixed income investments541 32 
Private equity funds4,672 4,019 
Real estate funds2,650 2,493 
Hedge funds1,111    1,069    
Total investments measured at NAV
9,066    7,794    
Receivables, net—    78    
Total$40,566    $37,331    
(a)Cash and cash equivalents, equity securities and fixed income securities included derivative assets and liabilities whose fair values were not material as of December 31, 2020 and 2019. LMIMCo’s investment policies restrict the use of derivatives to either establish long or short exposures for purposes consistent with applicable investment mandate guidelines or to hedge risks to the extent of a plan’s current exposure to such risks. Most derivative transactions are settled on a daily basis.
(b)Level 3 investments include $1.7 billion at December 31, 2020 and $857 million at December 31, 2019 related to the buy-in contracts discussed above.
(c)Certain investments that are valued using the NAV per share (or its equivalent) as a practical expedient have not been classified in the fair value hierarchy and are included in the table to permit reconciliation of the fair value hierarchy to the aggregate postretirement benefit plan assets.
As of December 31, 2020 and 2019, the assets associated with our foreign defined benefit pension plans were not material and have not been included in the table above. Changes in the fair value of plan assets categorized as Level 3 during 2020 and 2019 were insignificant.
Valuation techniques – Cash equivalents are mostly comprised of short-term money-market instruments and are valued at cost, which approximates fair value.
U.S. equity securities and international equity securities categorized as Level 1 are traded on active national and international exchanges and are valued at their closing prices on the last trading day of the year. For U.S. equity securities and
international equity securities not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing vendor, broker or investment manager. These securities are categorized as Level 2 if the custodian obtains corroborated quotes from a pricing vendor or categorized as Level 3 if the custodian obtains uncorroborated quotes from a broker or investment manager.
Commingled equity funds categorized as Level 1 are traded on active national and international exchanges and are valued at their closing prices on the last trading day of the year. For commingled equity funds not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing vendor, broker or investment manager. These securities are categorized as Level 2 if the custodian obtains corroborated quotes from a pricing vendor.
Fixed income investments categorized as Level 1 are publicly exchange-traded. Fixed income investments categorized as Level 2 are valued by the trustee using pricing models that use verifiable observable market data (e.g., interest rates and yield curves observable at commonly quoted intervals and credit spreads), bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Fixed income investments are categorized as Level 3 when valuations using observable inputs are unavailable. The trustee typically obtains pricing based on indicative quotes or bid evaluations from vendors, brokers or the investment manager. In addition, certain other fixed income investments categorized as Level 3 are valued using a discounted cash flow approach. Significant inputs include projected annuity payments and the discount rate applied to those payments.

Certain commingled equity and fixed income funds, consisting of underlying equity and fixed income securities, respectively, are valued using the NAV practical expedient. The NAV valuations are based on the underlying investments and typically redeemable within 90 days.
Private equity funds consist of partnership and co-investment funds. The NAV is based on valuation models of the underlying securities, which includes unobservable inputs that cannot be corroborated using verifiable observable market data. These funds typically have redemption periods between eight and 12 years.
Real estate funds consist of partnerships, most of which are closed-end funds, for which the NAV is based on valuation models and periodic appraisals. These funds typically have redemption periods between eight and 10 years.
Hedge funds consist of direct hedge funds for which the NAV is generally based on the valuation of the underlying investments. Redemptions in hedge funds are based on the specific terms of each fund, and generally range from a minimum of one month to several months.
Contributions and Expected Benefit Payments
The required funding of our qualified defined benefit pension plans is determined in accordance with ERISA, as amended by the PPA, and in a manner consistent with CAS and Internal Revenue Code rules. We made contributions to our qualified defined benefit pension plans of $1.0 billion in 2020. We plan to make contributions of approximately $1.0 billion to our qualified defined benefit pension plans in 2021.
The following table presents estimated future benefit payments, which reflect expected future employee service, as of December 31, 2020 (in millions):
202120222023202420252026 – 2030
Qualified defined benefit pension plans$2,290 $2,350 $2,440 $2,510 $2,570 $13,190 
Retiree medical and life insurance plans160 150 150 150 150 660 
Defined Contribution Plans
We maintain a number of defined contribution plans, most with 401(k) features, that cover substantially all of our employees. Under the provisions of our plans, we match most employees’ eligible contributions at rates specified in the plan documents. Our contributions are comprised of (i) company match, the majority of which was funded using our common stock, and (ii) company contributions. Total contributions were $984 million in 2020, $741 million in 2019 and $658 million in 2018. Our defined contribution plans held approximately 30.5 million and 31.9 million shares of our common stock as of December 31, 2020 and 2019.