Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT BENEFITS

v3.22.4
PENSION AND OTHER POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Disclosure
NOTE 11. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
Pension Plans
We sponsor several pension plans covering substantially all employees. Generally, pension benefits for salaried employees are determined as a function of employee’s compensation. Pension benefits for most hourly employees are determined similarly and as a function of employee’s compensation, with the exception of a small group of hourly employees whose pension benefits were grandfathered in accordance with agreements with their union representation and are based on their years of service and compensation during active employment. The level of benefits and terms of vesting may vary among plans and are offered in accordance with applicable laws. Pension plan assets are administered by trustees and are principally invested in fixed income securities and equity securities. It is our policy to make contributions to our various qualified plans in accordance with statutory and contractual funding requirements, and any additional contributions we determine are appropriate.
Prior to the acquisition, Meritor provided a range of benefits to certain employees and retirees, including pension benefits and postretirement healthcare benefits (OPEB). The Meritor U.S. and U.K. defined benefit plans are frozen. As part of the acquisition, we assumed the assets and liabilities associated with these plans, which are included in the tables below.
Obligations, Assets and Funded Status
Benefit obligation balances presented below reflect the projected benefit obligation (PBO) for our pension plans. The changes in the benefit obligations, the various plan assets, the funded status of the plans and the amounts recognized in our Consolidated Balance Sheets for our significant pension plans at December 31 were as follows:
  Qualified and Non-Qualified Pension Plans
  U.S. Plans U.K. Plans
In millions 2022 2021 2022 2021
Change in benefit obligation        
Benefit obligation at the beginning of the year $ 3,012  $ 3,122  $ 1,887  $ 2,050 
Service cost 137  139  30  33 
Interest cost 101  79  39  30 
Actuarial gain (643) (132) (702) (136)
Benefits paid from fund (200) (178) (70) (63)
Benefits paid directly by employer (25) (18) —  — 
Plan amendment 3  —  —  — 
Assumption of Meritor's benefit obligation 786  —  418  — 
Foreign currency translation adjustments —  —  (204) (27)
Benefit obligation at end of year $ 3,171  $ 3,012  $ 1,398  $ 1,887 
Change in plan assets        
Fair value of plan assets at beginning of year $ 3,548  $ 3,429  $ 2,390  $ 2,337 
Actual return on plan assets (244) 267  (960) 118 
Employer contributions 25  30  3  30 
Benefits paid from fund (200) (178) (70) (63)
Assumption of Meritor's plan assets 699  —  565  — 
Foreign currency translation adjustments —  —  (258) (32)
Fair value of plan assets at end of year $ 3,828  $ 3,548  $ 1,670  $ 2,390 
Funded status (including unfunded plans) at end of year $ 657  $ 536  $ 272  $ 503 
Amounts recognized in consolidated balance sheets        
Pension assets $ 1,126  $ 985  $ 272  $ 503 
Accrued compensation, benefits and retirement costs (24) (18) —  — 
Other liabilities (445) (431) —  — 
Net amount recognized $ 657  $ 536  $ 272  $ 503 
Amounts recognized in accumulated other comprehensive loss        
Net actuarial loss $ 273  $ 467  $ 402  $ 61 
Prior service cost 8  6  10  11 
Net amount recognized $ 281  $ 473  $ 412  $ 72 
In addition to the pension plans in the above table, we also maintain less significant defined benefit pension plans in 14 other countries outside of the U.S. and the U.K. that comprise approximately 4 percent and 5 percent of our pension plan assets and obligations, respectively, at December 31, 2022. These plans are reflected in other liabilities on our Consolidated Balance Sheets. In 2022 and 2021, we made $12 million and $13 million of contributions to these plans, respectively.
The following table summarizes the total accumulated benefit obligation (ABO), the ABO for defined benefit pension plans with ABO in excess of plan assets and the PBO for defined benefit pension plans with PBO in excess of plan assets:
  Qualified and Non-Qualified Pension Plans
  U.S. Plans U.K. Plans
In millions 2022 2021 2022 2021
Total ABO $ 3,138  $ 2,986  $ 1,376  $ 1,844 
Plans with ABO in excess of plan assets
ABO 1,044  424  —  — 
Plans with PBO in excess of plan assets
PBO 1,078  449  —  — 
Components of Net Periodic Pension Cost (Income)
The following table presents the net periodic pension cost (income) under our plans for the years ended December 31:
  Qualified and Non-Qualified Pension Plans
  U.S. Plans U.K. Plans
In millions 2022 2021 2020 2022 2021 2020
Service cost $ 137  $ 139  $ 133  $ 30  $ 33  $ 29 
Interest cost 101  79  95  39  30  36 
Expected return on plan assets (229) (199) (195) (87) (85) (74)
Amortization of prior service cost 1  1  1  1  2  2 
Recognized net actuarial loss 23  47  41  3  31  34 
Net periodic pension cost (income) $ 33  $ 67  $ 75  $ (14) $ 11  $ 27 
Other changes in benefit obligations and plan assets recognized in other comprehensive loss (income) for the years ended December 31 were as follows:
In millions 2022 2021 2020
Amortization of prior service cost $ (2) $ (3) $ (3)
Recognized net actuarial loss (26) (78) (75)
Incurred prior service cost 3  —  — 
Incurred actuarial loss (gain) 173  (368) 85 
Foreign currency translation adjustments —  5  19 
Total recognized in other comprehensive loss (income) $ 148  $ (444) $ 26 
Total recognized in net periodic pension cost and other comprehensive loss (income) $ 167  $ (366) $ 128 
Assumptions
The table below presents various assumptions used in determining the PBO for each year and reflects weighted-average percentages for the various plans as follows:
  Qualified and Non-Qualified Pension Plans
  U.S. Plans U.K. Plans
  2022 2021 2022 2021
Discount rate 5.55  % 3.01  % 4.99  % 1.95  %
Cash balance crediting rate 4.56  % 3.79  % —  — 
Compensation increase rate 5.35  % 2.71  % 3.75  % 3.75  %
The table below presents various assumptions used in determining the net periodic pension cost and reflects weighted-average percentages for the various plans as follows:
  Qualified and Non-Qualified Pension Plans
  U.S. Plans U.K. Plans
  2022 2021 2020 2022 2021 2020
Discount rate 3.31  % 2.62  % 3.36  % 2.26  % 1.50  % 2.00  %
Expected return on plan assets 6.50  % 6.25  % 6.25  % 4.01  % 4.00  % 4.00  %
Compensation increase rate 2.71  % 2.72  % 2.73  % 3.75  % 3.75  % 3.75  %
Plan Assets
Our investment policies, excluding Meritor, in the U.S. and U.K. provide for the rebalancing of assets to maintain our long-term strategic asset allocation. We are committed to this long-term strategy and do not attempt to time the market. Given empirical evidence that asset allocation is critical, rebalancing of the assets has and continues to occur, maintaining the proper weighting of assets to achieve the expected total portfolio returns. We believe that our portfolio is highly diversified and does not have any significant exposure to concentration risk. The plan assets for our defined benefit pension plans do not include any of our common stock or corporate bonds.
Meritor’s investment policies in the U.S. and U.K. have historically targeted a well-diversified asset allocation strategy to promote asset growth while maintaining an acceptable level of risk over the long-term with a goal of minimizing company contributions. We are actively reviewing the plan investments and will pursue adjustments to the allocation when appropriate and necessary to align the assets more closely with our management’s strategy and view of prudent and acceptable risk to the company, the plan and its funding goals.
U.S. Plan Assets
For the Cummins U.S. qualified pension plan, our assumption for the expected return is greatly influenced by our objective to match assets and liabilities and the increase in bond yields. Projected returns are based primarily on broad, publicly traded equity and fixed income indices and forward-looking estimates of active portfolio and investment management. We expect additional positive returns from this active investment management. Based on the historical returns and forward-looking return expectations, we elected an assumption of 7.00 percent in 2023.
For the Meritor U.S. qualified pension plan, our assumption for the expected return is based upon the primary investment objective to exceed, on a net-of-fees basis, the rate of return on a policy portfolio represented in the following table. We expect active management and the alternative investments to provide excess return over the long run. Based upon these objectives, historical returns, yield curve movements and forward-looking expectations, we elected an assumption of 7.00 percent in 2023.
To achieve these objectives, we established the following targets:
Cummins Meritor
Asset Class Plan Target Plan Target
U.S. equities 5  % 11  %
Non-U.S. equities 1  % 9  %
Global equities 6  % —  %
Total equities 12  % 20  %
Real assets 6  % —  %
Private equity/venture capital 6  % —  %
Opportunistic credit 4  % —  %
Alternative investments —  % 39  %
Fixed income 72  % 41  %
Total 100  % 100  %
The fixed income component of the Cummins plan is structured to represent a custom bond benchmark that will closely hedge the change in the value of our liabilities. This component is structured in such a way that its benchmark covers approximately 100 percent of the plan's exposure to changes in its discount rate (AA corporate bond yields). In order to achieve a hedge on more than the targeted 72 percent of plan assets invested in fixed income securities, our Benefits Policy Committee (BPC) permits the fixed income managers, other managers or the custodian/trustee to utilize derivative securities, as part of a liability driven investment strategy to further reduce the plan's risk of declining interest rates. However, all managers hired to manage assets for the trust are prohibited from using leverage unless approved by the BPC.
Investment strategies for the Meritor plan assets reflect a balance of risk-reducing and return-seeking considerations. The objective of minimizing the volatility of assets relative to liabilities is addressed primarily through asset diversification. Assets are broadly diversified across several asset classes to achieve risk-adjusted returns that accomplish this objective. Meritor plan assets are also allocated to fixed income investments, which seek to minimize interest rate risk volatility relative to pension liabilities. The fixed income portfolio partially matches the long-dated nature of the pension liabilities reducing interest rate risk.
U.K. Plan Assets
The methodology used to determine the rate of return on the Cummins and Meritor pension plan assets in the U.K. was based on establishing an equity-risk premium over current long-term bond yields adjusted based on target asset allocations. Our strategy with respect to our investments in these assets is to be invested in a suitable mixture of return-seeking assets such as equities, real estate and liability matching assets such as group annuity insurance contracts and duration matched bonds. Therefore, the risk and return balance of our U.K. asset portfolio should reflect a long-term horizon. To achieve these objectives, we established the following targets:
Cummins Plan Target Meritor Plan Target Range
Asset Class Minimum Maximum
Equities 8  % 15  % 30  %
Private markets/secure income assets 19  % —  % —  %
Credit/bank loans 4  % —  % 15  %
Diversified strategies 4  % 25  % 50  %
Real estate —  % —  % 15  %
Fixed income/insurance annuity 64  % 25  % 45  %
Cash 1  % —  % —  %
Total 100  %
As part of our strategy in the U.K. we have not prohibited the use of any financial instrument, including derivatives. As in the U.S. plan, derivatives may be used to better match liability duration and are not used in a speculative way. The fixed income component of the Cummins portfolio, excluding the annuity contract, hedges approximately 15 percent of the plan’s exposure to interest rates and 30 percent of the plan’s exposure to inflation. The insurance annuity contract covers approximately another 21 percent of exposure to interest rates and 18 percent of inflation. The fixed income component of the Meritor portfolio, excluding the annuity contract, hedges approximately 100 percent of the plan's exposure to interest rates and 100 percent of the plan's exposure to inflation. The insurance annuity contract effectively hedges 100 percent of the insured liabilities exposure to interest rates and 100 percent of the insured liabilities to inflation. Based on the above discussion, we elected an assumption of 5.00 percent in 2023.
Fair Value of U.S. Plan Assets
The fair values of U.S. pension plan assets by asset category were as follows:
  Fair Value Measurements at December 31, 2022
In millions Quoted prices in active
markets for identical assets
(Level 1)		 Significant other
observable inputs
(Level 2)		 Significant
unobservable inputs
(Level 3)		 Total
Equities        
U.S. $ 118  $ —  $ —  $ 118 
Non-U.S. 31  —  —  31 
Fixed income
Government debt 188  —  188 
Corporate debt
U.S. —  423  —  423 
Non-U.S. 12  41  —  53 
Asset/mortgaged backed securities 7  —  —  7 
Net cash equivalents (1)
499  9  —  508 
Diversified strategies 14  —  —  14 
Private markets and real assets (2)
—  —  641  641 
Net plan assets subject to leveling $ 681  $ 661  $ 641  $ 1,983 
Accruals (3)
      7 
Investments measured at net asset value 1,838 
Net plan assets       $ 3,828 
  Fair Value Measurements at December 31, 2021
In millions Quoted prices in active
markets for identical assets
(Level 1)		 Significant other
observable inputs
(Level 2)		 Significant
unobservable inputs
(Level 3)		 Total
Equities        
U.S. $ 115  $ —  $ —  $ 115 
Non-U.S. 38  —  —  38 
Fixed income
Government debt 37  30  —  67 
Corporate debt
U.S. —  489  —  489 
Non-U.S. —  19  —  19 
Net cash equivalents (1)
270  57  —  327 
Private markets and real assets (2)
—  —  551  551 
Net plan assets subject to leveling $ 460  $ 595  $ 551  $ 1,606 
Pending trade/purchases/sales       2 
Accruals (3)
      6 
Investments measured at net asset value 1,934 
Net plan assets       $ 3,548 
(1) Cash equivalents include commercial paper, short-term government/agency, mortgage and credit instruments.
(2) The instruments in private markets and real assets, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by audited financial statements of the funds. Private markets include equity, venture capital and private credit instruments and funds. Real assets include real estate and infrastructure.
(3) Accruals include interest or dividends that were not settled at December 31.
Certain of our assets are valued based on their respective net asset value (NAV) (or its equivalent), as an alternative to estimated fair value due to the absence of readily available market prices. The fair value of each such investment category was as follows:
•U.S. and Non-U.S. Corporate Debt ($938 million and $995 million at December 31, 2022 and 2021, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•U.S. and Non-U.S. Equities ($224 million and $145 million at December 31, 2022 and 2021, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•Government Debt ($227 million and $361 million at December 31, 2022 and 2021, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•Real Estate ($154 million and $171 million at December 31, 2022 and 2021, respectively) - This asset type represents different types of real estate including development property, industrial property, individual mortgages, office property, property investment companies and retail property. These funds are valued using NAVs and allow quarterly or more frequent redemptions.
•Asset/Mortgage Backed Securities ($277 million and $262 million at December 31, 2022 and 2021, respectively) - This asset type represents investments in fixed- and floating-rate loans. These funds are valued using NAVs and allow quarterly or more frequent redemptions.
•Diversified Strategies ($18 million at December 31, 2022) - These commingled funds invest in commodities, fixed income and equity securities. They have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
The reconciliation of Level 3 assets was as follows:
  Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)
In millions Private Markets Real Assets Total
Balance at December 31, 2020 $ 359  $ 72  $ 431 
Actual return on plan assets  
Unrealized gains on assets still held at the reporting date 144  11  155 
Purchases, sales and settlements, net (32) (3) (35)
Balance at December 31, 2021 471  80  551 
Actual return on plan assets      
Unrealized gains on assets still held at the reporting date 6  19  25 
Purchases, sales and settlements, net (12) (17) (29)
Assumption of Meritor's plan assets 94  —  94 
Balance at December 31, 2022 $ 559  $ 82  $ 641 
Fair Value of U.K. Plan Assets
The fair values of U.K. pension plan assets by asset category were as follows:
  Fair Value Measurements at December 31, 2022
In millions Quoted prices in active
markets for identical assets
(Level 1)		 Significant other
observable inputs
(Level 2)		 Significant
unobservable inputs
(Level 3)		 Total
Equities        
U.S. $ 13  $ —  $ —  $ 13 
Non-U.S. 9  —  —  9 
Fixed income  
Government debt —  222  —  222 
Corporate debt
U.S. —  24  —  24 
Non-U.S. —  80  —  80 
Net cash equivalents (1)
27  11  —  38 
Insurance annuity —  —  428  428 
Private markets and real assets (2)
—  —  390  390 
Net plan assets subject to leveling $ 49  $ 337  $ 818  $ 1,204 
Pending trade/purchases/sales       141 
Accruals (3)
      2 
Investments measured at net asset value 323 
Net plan assets       $ 1,670 
  Fair Value Measurements at December 31, 2021
In millions Quoted prices in active
markets for identical assets
(Level 1)		 Significant other
observable inputs
(Level 2)		 Significant
unobservable inputs
(Level 3)		 Total
Equities        
U.S. $ —  $ 79  $ —  $ 79 
Non-U.S. —  74  —  74 
Fixed income
Net cash equivalents (1)
35  —  —  35 
Insurance annuity —  —  514  514 
Private markets and real assets (2)
—  —  389  389 
Net plan assets subject to leveling $ 35  $ 153  $ 903  $ 1,091 
Investments measured at net asset value 1,299 
Net plan assets       $ 2,390 
(1) Cash equivalents include commercial paper, short-term government/agency, mortgage and credit instruments.
(2) The instruments in private markets and real assets, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by audited financial statements of the funds. Private markets include equity, venture capital and private credit instruments and funds. Real assets include real estate and infrastructure.
(3) Accruals include interest or dividends that were not settled at December 31.
Certain of our assets are valued based on their respective NAV (or its equivalent), as an alternative to estimated fair value due to the absence of readily available market prices. The fair value of each such investment category was as follows:
•U.S. and Non-U.S. Corporate Debt ($77 million and $894 million at December 31, 2022 and 2021, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•U.S. and Non-U.S. Equities ($0 million and $194 million at December 31, 2022 and 2021, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•Government Debt ($64 million at December 31, 2022) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•Asset/Mortgage Backed Securities ($128 million and $99 million at December 31, 2022 and 2021, respectively) - This asset type represents investments in fixed- and floating-rate loans. These funds are valued using NAVs and allow quarterly or more frequent redemptions.
•Re-insurance ($54 million and $61 million at December 31, 2022 and 2021, respectively) - This commingled fund has a NAV that is determined on a monthly basis and the investment may be sold at that value.
•Diversified Strategies ($0 million and $51 million at December 31, 2022 and 2021, respectively) - These commingled funds invest in commodities, fixed income and equity securities. They have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
The reconciliation of Level 3 assets was as follows:
  Fair Value Measurements
Using Significant Unobservable Inputs (Level 3)
In millions Insurance Annuity Real Assets Private Markets Total
Balance at December 31, 2020 $ 556  $ 31  $ 251  $ 838 
Actual return on plan assets
Unrealized (losses) gains on assets still held at the reporting date (42) 2  114  74 
Purchases, sales and settlements, net —  —  (9) (9)
Balance at December 31, 2021 514  33  356  903 
Actual return on plan assets        
Unrealized (losses) gains on assets still held at the reporting date (178) (2) 39  (141)
Purchases, sales and settlements, net —  (23) (13) (36)
Assumption of Meritor's plan assets 92  —  —  92 
Balance at December 31, 2022 $ 428  $ 8  $ 382  $ 818 
Level 3 Assets
The investments in an insurance annuity contract, venture capital, private equity and real estate, for which quoted market prices are not available, are valued at their estimated fair value as determined by applicable investment managers or by quarterly financial statements of the funds. These financial statements are audited at least annually. In conjunction with our investment consultant and actuary, we monitor the fair value of the insurance contract as periodically reported by our insurer and their counterparty risk. The fair value of all real estate properties, held in the partnerships, are valued at least once per year by an independent professional real estate valuation firm. Fair value generally represents the fund's proportionate share of the net assets of the investment partnerships as reported by the general partners of the underlying partnerships. Some securities with no readily available market are initially valued at cost, utilizing independent professional valuation firms as well as market comparisons with subsequent adjustments to values which reflect either the basis of meaningful third-party transactions in the private market or the fair value deemed appropriate by the general partners of the underlying investment partnerships. In such instances, consideration is also given to the financial condition and operating results of the issuer, the amount that the investment partnerships can reasonably expect to realize upon the sale of the securities and any other factors deemed relevant. The estimated fair values are subject to uncertainty and therefore may differ from the values that would have been used had a ready market for such investments existed and such differences could be material.
Estimated Future Contributions and Benefit Payments
We plan to contribute approximately $106 million to our defined benefit pension plans in 2023. The table below presents expected future benefit payments under our pension plans:
  Qualified and Non-Qualified Pension Plans
In millions 2023 2024 2025 2026 2027 2028 - 2032
Expected benefit payments $ 367  $ 351  $ 357  $ 361  $ 363  $ 1,841 
Other Pension Plans
We also sponsor defined contribution plans for certain hourly and salaried employees. Our contributions to these plans were $110 million, $92 million and $85 million for the years ended December 31, 2022, 2021 and 2020.
Other Postretirement Benefits
Our OPEB plans provide various health care and life insurance benefits to eligible employees, who retire and satisfy certain age and service requirements, and their dependents. The plans are contributory and contain cost-sharing features such as caps, deductibles, coinsurance and spousal contributions. Employer contributions are limited by formulas in each plan. Retiree contributions for health care benefits are adjusted annually, and we reserve the right to change benefits covered under these plans. There were no plan assets for OPEB plans as our policy is to fund benefits and expenses for these plans as claims and premiums are incurred.
Obligations and Funded Status
Benefit obligation balances presented below reflect the accumulated postretirement benefit obligations for our OPEB plans. The changes in the benefit obligations, the funded status of the plans and the amounts recognized in our Consolidated Balance Sheets for our significant OPEB plans were as follows:
December 31,
In millions 2022 2021
Change in benefit obligation    
Benefit obligation at the beginning of the year $ 192  $ 219 
Interest cost 5  5 
Plan participants' contributions 4  14 
Actuarial gain (25) (8)
Benefits paid directly by employer (36) (38)
Assumption of Meritor's benefit obligation 22  — 
Benefit obligation at end of year $ 162  $ 192 
Funded status at end of year $ (162) $ (192)
Amounts recognized in consolidated balance sheets    
Accrued compensation, benefits and retirement costs $ (21) $ (19)
Other liabilities (141) (173)
Net amount recognized $ (162) $ (192)
Amounts recognized in accumulated other comprehensive loss    
Net actuarial gain $ (44) $ (18)
Prior service credit (3) (4)
Net amount recognized $ (47) $ (22)
In addition to the OPEB plans in the above table, we also maintain less significant OPEB plans in five other countries outside the U.S. that comprise approximately 14 percent and 8 percent of our OPEB obligations at December 31, 2022 and 2021, respectively. These plans are reflected in other liabilities in our Consolidated Balance Sheets.
Components of Net Periodic OPEB Cost
The following table presents the net periodic OPEB cost under our plans:
Years ended December 31,
In millions 2022 2021 2020
Interest cost $ 5  $ 5  $ 7 
Recognized net actuarial gain —  —  (1)
Net periodic OPEB cost $ 5  $ 5  $ 6 
Other changes in benefit obligations recognized in other comprehensive (income) loss for the years ended December 31 were as follows:
Years ended December 31,
In millions 2022 2021 2020
Recognized net actuarial gain $ —  $ —  $ 1 
Incurred actuarial (gain) loss (25) (8) 14 
Total recognized in other comprehensive (income) loss $ (25) $ (8) $ 15 
Total recognized in net periodic OPEB cost and other comprehensive (income) loss $ (20) $ (3) $ 21 
Assumptions
The table below presents assumptions used in determining the OPEB obligation for each year and reflects weighted-average percentages for our other OPEB plans as follows:
2022 2021
Discount rate 5.59  % 2.75  %
The table below presents assumptions used in determining the net periodic OPEB cost and reflects weighted-average percentages for the various plans as follows:
2022 2021 2020
Discount rate 2.93  % 2.30  % 3.15  %
Our consolidated OPEB obligation is determined by application of the terms of health care and life insurance plans, together with relevant actuarial assumptions and health care cost trend rates. For measurement purposes, a 6.75 percent annual rate of increase in the per capita cost of covered health care benefits was assumed in 2022. The rate is assumed to decrease on a linear basis to 5.0 percent through 2032 and remain at that level thereafter.
Estimated Benefit Payments
The table below presents expected benefit payments under our OPEB plans:
In millions 2023 2024 2025 2026 2027 2028 - 2032
Expected benefit payments $ 22  $ 20  $ 19  $ 17  $ 16  $ 64