Annual report pursuant to Section 13 and 15(d)

Employee Benefit Plans (Tables)

v3.20.4
Employee Benefit Plans (Tables)
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Schedule of Defined Benefit Plans Disclosures The Pension and Postretirement Plans table summarizes the changes in the fair value of plan assets, changes in the projected benefit obligation (PBO), the funded status of both the accumulated benefit obligation (ABO) and the PBO, and the weighted-average assumptions used to determine benefit obligations for the pension plans and postretirement plans at December 31, 2020 and 2019. The estimate of the Corporation’s PBO associated with these plans considers various actuarial assumptions, including assumptions for mortality rates and discount rates. The discount rate assumptions are derived from a cash flow matching technique that utilizes rates that are based on Aa-rated corporate bonds with cash flows that match estimated benefit payments of each of the plans. The decreases in the weighted-average discount rates in 2020 and 2019 resulted in increases to the PBO of approximately $1.9 billion and $2.2 billion at December 31, 2020 and 2019. Significant gains and losses related to changes in the PBO for 2020 and 2019 primarily resulted from changes in the discount rate.
Pension and Postretirement Plans (1)
Qualified
Pension Plan		 Non-U.S.
Pension Plans		 Nonqualified and Other
Pension Plans		 Postretirement
Health and Life Plans
(Dollars in millions) 2020 2019 2020 2019 2020 2019 2020 2019
Fair value, January 1 $ 20,275  $ 18,178  $ 2,696  $ 2,461  $ 2,666  $ 2,584  $ 199  $ 252 
Actual return on plan assets 2,468  3,187  379  273  285  228  1  5 
Company contributions —  —  23  20  86  91  6  24 
Plan participant contributions —  —  1  1  —  —  110  103 
Settlements and curtailments —  —  (61) (42) —  —  —  — 
Benefits paid (967) (1,090) (57) (108) (248) (237) (174) (185)
Federal subsidy on benefits paid  n/a n/a  n/a n/a  n/a n/a 1  — 
Foreign currency exchange rate changes  n/a n/a 97  91   n/a n/a  n/a n/a
Fair value, December 31 $ 21,776  $ 20,275  $ 3,078  $ 2,696  $ 2,789  $ 2,666  $ 143  $ 199 
Change in projected benefit obligation                
Projected benefit obligation, January 1 $ 15,361  $ 14,144  $ 2,887  $ 2,589  $ 2,919  $ 2,779  $ 989  $ 928 
Service cost —  —  20  17  1  1  5  5 
Interest cost 500  593  49  65  90  113  32  38 
Plan participant contributions —  —  1  1  —  —  110  103 
Plan amendments —  —  3  2  —  —  —  — 
Settlements and curtailments —  —  (61) (42) —  —  —  — 
Actuarial loss 1,533  1,714  396  288  243  263  43  99 
Benefits paid (967) (1,090) (57) (108) (248) (237) (173) (185)
Federal subsidy on benefits paid  n/a n/a  n/a n/a  n/a n/a 1  — 
Foreign currency exchange rate changes  n/a n/a 102  75   n/a n/a —  1 
Projected benefit obligation, December 31 $ 16,427  $ 15,361  $ 3,340  $ 2,887  $ 3,005  $ 2,919  $ 1,007  $ 989 
Amounts recognized on Consolidated Balance Sheet
Other assets $ 5,349  $ 4,914  $ 428  $ 364  $ 812  $ 733  $ —  $ — 
Accrued expenses and other liabilities —  —  (690) (555) (1,028) (986) (864) (790)
Net amount recognized, December 31 $ 5,349  $ 4,914  $ (262) $ (191) $ (216) $ (253) $ (864) $ (790)
Funded status, December 31                
Accumulated benefit obligation $ 16,427  $ 15,361  $ 3,253  $ 2,841  $ 3,005  $ 2,919   n/a n/a
Overfunded (unfunded) status of ABO 5,349  4,914  (175) (145) (216) (253)  n/a n/a
Provision for future salaries —  —  87  46  —  —   n/a n/a
Projected benefit obligation 16,427  15,361  3,340  2,887  3,005  2,919  $ 1,007  $ 989 
Weighted-average assumptions, December 31                
Discount rate 2.57 % 3.32  % 1.37 % 1.81  % 2.33 % 3.20  % 2.48 % 3.27  %
Rate of compensation increase n/a n/a 4.11  4.10  4.00  4.00   n/a n/a
Interest-crediting rate 5.02  % 5.06  % 1.58  1.53  4.49  4.52   n/a n/a
(1)The measurement date for all of the above plans was December 31 of each year reported.
n/a = not applicable
Schedule of Amounts Recognized in Balance Sheet The Pension and Postretirement Plans table summarizes the changes in the fair value of plan assets, changes in the projected benefit obligation (PBO), the funded status of both the accumulated benefit obligation (ABO) and the PBO, and the weighted-average assumptions used to determine benefit obligations for the pension plans and postretirement plans at December 31, 2020 and 2019. The estimate of the Corporation’s PBO associated with these plans considers various actuarial assumptions, including assumptions for mortality rates and discount rates. The discount rate assumptions are derived from a cash flow matching technique that utilizes rates that are based on Aa-rated corporate bonds with cash flows that match estimated benefit payments of each of the plans. The decreases in the weighted-average discount rates in 2020 and 2019 resulted in increases to the PBO of approximately $1.9 billion and $2.2 billion at December 31, 2020 and 2019. Significant gains and losses related to changes in the PBO for 2020 and 2019 primarily resulted from changes in the discount rate.
Pension and Postretirement Plans (1)
Qualified
Pension Plan		 Non-U.S.
Pension Plans		 Nonqualified and Other
Pension Plans		 Postretirement
Health and Life Plans
(Dollars in millions) 2020 2019 2020 2019 2020 2019 2020 2019
Fair value, January 1 $ 20,275  $ 18,178  $ 2,696  $ 2,461  $ 2,666  $ 2,584  $ 199  $ 252 
Actual return on plan assets 2,468  3,187  379  273  285  228  1  5 
Company contributions —  —  23  20  86  91  6  24 
Plan participant contributions —  —  1  1  —  —  110  103 
Settlements and curtailments —  —  (61) (42) —  —  —  — 
Benefits paid (967) (1,090) (57) (108) (248) (237) (174) (185)
Federal subsidy on benefits paid  n/a n/a  n/a n/a  n/a n/a 1  — 
Foreign currency exchange rate changes  n/a n/a 97  91   n/a n/a  n/a n/a
Fair value, December 31 $ 21,776  $ 20,275  $ 3,078  $ 2,696  $ 2,789  $ 2,666  $ 143  $ 199 
Change in projected benefit obligation                
Projected benefit obligation, January 1 $ 15,361  $ 14,144  $ 2,887  $ 2,589  $ 2,919  $ 2,779  $ 989  $ 928 
Service cost —  —  20  17  1  1  5  5 
Interest cost 500  593  49  65  90  113  32  38 
Plan participant contributions —  —  1  1  —  —  110  103 
Plan amendments —  —  3  2  —  —  —  — 
Settlements and curtailments —  —  (61) (42) —  —  —  — 
Actuarial loss 1,533  1,714  396  288  243  263  43  99 
Benefits paid (967) (1,090) (57) (108) (248) (237) (173) (185)
Federal subsidy on benefits paid  n/a n/a  n/a n/a  n/a n/a 1  — 
Foreign currency exchange rate changes  n/a n/a 102  75   n/a n/a —  1 
Projected benefit obligation, December 31 $ 16,427  $ 15,361  $ 3,340  $ 2,887  $ 3,005  $ 2,919  $ 1,007  $ 989 
Amounts recognized on Consolidated Balance Sheet
Other assets $ 5,349  $ 4,914  $ 428  $ 364  $ 812  $ 733  $ —  $ — 
Accrued expenses and other liabilities —  —  (690) (555) (1,028) (986) (864) (790)
Net amount recognized, December 31 $ 5,349  $ 4,914  $ (262) $ (191) $ (216) $ (253) $ (864) $ (790)
Funded status, December 31                
Accumulated benefit obligation $ 16,427  $ 15,361  $ 3,253  $ 2,841  $ 3,005  $ 2,919   n/a n/a
Overfunded (unfunded) status of ABO 5,349  4,914  (175) (145) (216) (253)  n/a n/a
Provision for future salaries —  —  87  46  —  —   n/a n/a
Projected benefit obligation 16,427  15,361  3,340  2,887  3,005  2,919  $ 1,007  $ 989 
Weighted-average assumptions, December 31                
Discount rate 2.57 % 3.32  % 1.37 % 1.81  % 2.33 % 3.20  % 2.48 % 3.27  %
Rate of compensation increase n/a n/a 4.11  4.10  4.00  4.00   n/a n/a
Interest-crediting rate 5.02  % 5.06  % 1.58  1.53  4.49  4.52   n/a n/a
(1)The measurement date for all of the above plans was December 31 of each year reported.
n/a = not applicable
Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets Pension Plans with ABO and PBO in excess of plan assets as of December 31, 2020 and 2019 are presented in the table below. For these plans, funding strategies vary due to legal requirements and local practices.
Plans with ABO and PBO in Excess of Plan Assets
Non-U.S.
Pension Plans		 Nonqualified
and Other
Pension Plans
(Dollars in millions) 2020 2019 2020 2019
PBO $ 900  $ 744  $ 1,028  $ 988 
ABO 841  720  1,028  988 
Fair value of plan assets 211  191  1  1 
Schedule of Benefit Obligations in Excess of Fair Value of Plan Assets Pension Plans with ABO and PBO in excess of plan assets as of December 31, 2020 and 2019 are presented in the table below. For these plans, funding strategies vary due to legal requirements and local practices.
Plans with ABO and PBO in Excess of Plan Assets
Non-U.S.
Pension Plans		 Nonqualified
and Other
Pension Plans
(Dollars in millions) 2020 2019 2020 2019
PBO $ 900  $ 744  $ 1,028  $ 988 
ABO 841  720  1,028  988 
Fair value of plan assets 211  191  1  1 
Schedule of Net Benefit Costs
Components of Net Periodic Benefit Cost
  Qualified Pension Plan Non-U.S. Pension Plans
(Dollars in millions) 2020 2019 2018 2020 2019 2018
Components of net periodic benefit cost (income)
Service cost $ —  $ —  $ —  $ 20  $ 17  $ 19 
Interest cost 500  593  563  49  65  65 
Expected return on plan assets (1,154) (1,088) (1,136) (66) (99) (126)
Amortization of net actuarial loss 173  135  147  9  6  10 
Other —  —  —  8  4  12 
Net periodic benefit cost (income) $ (481) $ (360) $ (426) $ 20  $ (7) $ (20)
Weighted-average assumptions used to determine net cost for years ended December 31
            
Discount rate 3.32 % 4.32  % 3.68  % 1.81 % 2.60  % 2.39  %
Expected return on plan assets 6.00  6.00  6.00  2.57  4.13  4.37 
Rate of compensation increase  n/a n/a n/a 4.10  4.49  4.31 
Nonqualified and
Other Pension Plans		 Postretirement Health
and Life Plans
(Dollars in millions) 2020 2019 2018 2020 2019 2018
Components of net periodic benefit cost (income)
Service cost $ 1  $ 1  $ 1  $ 5  $ 5  $ 6 
Interest cost 90  113  105  32  38  36 
Expected return on plan assets (71) (95) (84) (4) (5) (6)
Amortization of net actuarial loss (gain) 50  34  43  29  (24) (27)
Other —  —  —  (2) (2) (3)
Net periodic benefit cost (income) $ 70  $ 53  $ 65  $ 60  $ 12  $ 6 
Weighted-average assumptions used to determine net cost for years ended December 31
            
Discount rate 3.20 % 4.26  % 3.58  % 3.27 % 4.25  % 3.58  %
Expected return on plan assets 2.77  3.73  3.19  2.00  2.00  2.00 
Rate of compensation increase 4.00  4.00  4.00    n/a n/a n/a
n/a = not applicable
Schedule of Pretax Amounts Included in Accumulated OCI
Pretax Amounts included in Accumulated OCI and OCI
  Qualified
Pension Plan		 Non-U.S.
Pension Plans		 Nonqualified
and Other
Pension Plans		 Postretirement
Health and
Life Plans		 Total
(Dollars in millions) 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Net actuarial loss (gain) $ 3,912  $ 3,865  $ 628  $ 559  $ 987  $ 1,008  $ 66  $ 48  $ 5,593  $ 5,480 
Prior service cost (credits) —  —  18  18  —  —  (4) (6) 14  12 
Amounts recognized in accumulated OCI $ 3,912  $ 3,865  $ 646  $ 577  $ 987  $ 1,008  $ 62  $ 42  $ 5,607  $ 5,492 
Current year actuarial loss (gain) $ 219  $ (385) $ 79  $ 110  $ 29  $ 130  $ 47  $ 99  $ 374  $ (46)
Amortization of actuarial gain (loss) and
prior service cost
 (173) (135) (12) (7) (50) (34) (27) 26  (262) (150)
Current year prior service cost (credit) —  —  3  2  —  —  —  —  3  2 
Amounts recognized in OCI $ 46  $ (520) $ 70  $ 105  $ (21) $ 96  $ 20  $ 125  $ 115  $ (194)
Schedule of Pretax Amounts Recognized in OCI
Pretax Amounts included in Accumulated OCI and OCI
  Qualified
Pension Plan		 Non-U.S.
Pension Plans		 Nonqualified
and Other
Pension Plans		 Postretirement
Health and
Life Plans		 Total
(Dollars in millions) 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Net actuarial loss (gain) $ 3,912  $ 3,865  $ 628  $ 559  $ 987  $ 1,008  $ 66  $ 48  $ 5,593  $ 5,480 
Prior service cost (credits) —  —  18  18  —  —  (4) (6) 14  12 
Amounts recognized in accumulated OCI $ 3,912  $ 3,865  $ 646  $ 577  $ 987  $ 1,008  $ 62  $ 42  $ 5,607  $ 5,492 
Current year actuarial loss (gain) $ 219  $ (385) $ 79  $ 110  $ 29  $ 130  $ 47  $ 99  $ 374  $ (46)
Amortization of actuarial gain (loss) and
prior service cost
 (173) (135) (12) (7) (50) (34) (27) 26  (262) (150)
Current year prior service cost (credit) —  —  3  2  —  —  —  —  3  2 
Amounts recognized in OCI $ 46  $ (520) $ 70  $ 105  $ (21) $ 96  $ 20  $ 125  $ 115  $ (194)
Schedule of Allocation of Plan Assets The target allocations for 2021 by asset category for the Qualified Pension Plan, Non-U.S. Pension Plans, and Nonqualified and Other Pension Plans are presented in the following table. Equity securities for the Qualified Pension Plan include common stock of the Corporation in the amounts of $274 million (1.26 percent of total plan assets) and $315 million (1.55 percent of total plan assets) at December 31, 2020 and 2019.
2021 Target Allocation
Percentage
Asset Category Qualified
Pension Plan		 Non-U.S.
Pension Plans		 Nonqualified
and Other
Pension Plans
Equity securities
15 - 50%
0 - 25%
0 - 5%
Debt securities
45 - 80%
40 - 70%
95 - 100%
Real estate
0 - 10%
0 - 15%
0 - 5%
Other
0 - 5%
10 - 40%
0 - 5%
Schedule of Changes in Fair Value of Plan Assets Combined plan investment assets measured at fair value by level and in total at December 31, 2020 and 2019 are summarized in the Fair Value Measurements table.
Fair Value Measurements
  Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(Dollars in millions) December 31, 2020 December 31, 2019
Cash and short-term investments        
Money market and interest-bearing cash $ 1,380  $ —  $ —  $ 1,380  $ 1,426  $ —  $ —  $ 1,426 
Cash and cash equivalent commingled/mutual funds —  383  —  383  —  250  —  250 
Fixed income              
U.S. government and agency securities 4,590  1,238  7  5,835  4,403  890  8  5,301 
Corporate debt securities —  5,021  —  5,021  —  3,676  —  3,676 
Asset-backed securities —  1,967  —  1,967  —  2,684  —  2,684 
Non-U.S. debt securities 1,021  1,122  —  2,143  748  1,015  —  1,763 
Fixed income commingled/mutual funds 1,224  1,319  —  2,543  804  1,439  —  2,243 
Equity              
Common and preferred equity securities 4,438  —  —  4,438  4,655  —  —  4,655 
Equity commingled/mutual funds 134  1,542  —  1,676  147  1,355  —  1,502 
Public real estate investment trusts 73  —  —  73  91  —  —  91 
Real estate              
Real estate commingled/mutual funds —  20  943  963  —  18  927  945 
Limited partnerships —  184  83  267  —  173  90  263 
Other investments (1)
5  401  691  1,097  11  390  636  1,037 
Total plan investment assets, at fair value $ 12,865  $ 13,197  $ 1,724  $ 27,786  $ 12,285  $ 11,890  $ 1,661  $ 25,836 
(1)Other investments include commodity and balanced funds of $246 million and $233 million, insurance annuity contracts of $664 million and $614 million and other various investments of $187 million and $190 million at December 31, 2020 and 2019.
The Level 3 Fair Value Measurements table presents a reconciliation of all plan investment assets measured at fair value using significant unobservable inputs (Level 3) during 2020, 2019 and 2018.
Level 3 Fair Value Measurements
  Balance
January 1		 Actual Return on
Plan Assets Still
Held at the
Reporting Date		 Purchases, Sales and Settlements Balance
December 31
(Dollars in millions) 2020
Fixed income        
U.S. government and agency securities $ 8  $ —  $ (1) $ 7 
Real estate  
Real estate commingled/mutual funds 927  (4) 20  943 
Limited partnerships 90  2  (9) 83 
Other investments 636  6  49  691 
Total $ 1,661  $ 4  $ 59  $ 1,724 
  2019
Fixed income        
U.S. government and agency securities $ 9  $ —  $ (1) $ 8 
Real estate  
Private real estate 5  —  (5) — 
Real estate commingled/mutual funds 885  33  9  927 
Limited partnerships 82  —  8  90 
Other investments 588  6  42  636 
Total $ 1,569  $ 39  $ 53  $ 1,661 
2018
Fixed income
U.S. government and agency securities $ 9  $ —  $ —  $ 9 
Real estate    
Private real estate 93  (7) (81) 5 
Real estate commingled/mutual funds 831  52  2  885 
Limited partnerships 85  (12) 9  82 
Other investments 74  —  514  588 
Total $ 1,092  $ 33  $ 444  $ 1,569 
Schedule of Expected Benefit Payments Benefit payments projected to be made from the Qualified Pension Plan, Non-U.S. Pension Plans, Nonqualified and Other Pension Plans, and Postretirement Health and Life Plans are presented in the table below.
Projected Benefit Payments
(Dollars in millions)
Qualified
Pension Plan (1)
Non-U.S.
Pension Plans (2)
Nonqualified
and Other
Pension Plans (2)
Postretirement Health and Life Plans (3)
2021 $ 856  $ 127  $ 244  $ 79 
2022 943  134  245  76 
2023 939  143  229  74 
2024 943  135  224  70 
2025 934  140  221  67 
2026 - 2030 4,474  675  977  290 
(1)Benefit payments expected to be made from the plan’s assets.
(2)Benefit payments expected to be made from a combination of the plans’ and the Corporation’s assets.
(3)Benefit payments (net of retiree contributions) expected to be made from a combination of the plans’ and the Corporation’s assets.