Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT BENEFITS

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PENSION AND OTHER POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Disclosure
NOTE 10. 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.
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 2024 2023 2024 2023
Change in benefit obligation        
Benefit obligation at the beginning of the year $ 3,381  $ 3,171  $ 1,525  $ 1,398 
Service cost 142  117  18  17 
Interest cost 167  168  71  70 
Actuarial (gain) loss (163) 172  (133) 47 
Benefits paid from fund (328) (223) (108) (87)
Benefits paid directly by employer (32) (25) —  — 
Plan amendment —  1  —  — 
Foreign currency translation adjustments —  —  (23) 80 
Benefit obligation at end of year $ 3,167  $ 3,381  $ 1,350  $ 1,525 
Change in plan assets        
Fair value of plan assets at beginning of year $ 3,826  $ 3,828  $ 1,720  $ 1,670 
Actual return on plan assets 178  221  (128) (51)
Employer contributions 30  —  9  90 
Benefits paid from fund (328) (223) (108) (87)
Foreign currency translation adjustments —  —  (25) 98 
Fair value of plan assets at end of year $ 3,706  $ 3,826  $ 1,468  $ 1,720 
Funded status (including unfunded plans) at end of year $ 539  $ 445  $ 118  $ 195 
Amounts recognized in consolidated balance sheets        
Pension assets $ 1,071  $ 1,002  $ 118  $ 195 
Accrued compensation, benefits and retirement costs (29) (27) —  — 
Other liabilities (503) (530) —  — 
Net amount recognized $ 539  $ 445  $ 118  $ 195 
Amounts recognized in accumulated other comprehensive loss        
Net actuarial loss $ 429  $ 493  $ 691  $ 606 
Prior service cost 6  8  7  8 
Net amount recognized $ 435  $ 501  $ 698  $ 614 
In addition to the pension plans in the above table, we also maintain less significant defined benefit pension plans in 15 other countries outside of the U.S. and the U.K. that comprise approximately 5 percent and 6 percent of our pension plan assets and benefit obligations, respectively, at December 31, 2024. These plans are reflected in other liabilities on our Consolidated Balance Sheets. In 2024 and 2023, we made $21 million and $16 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 2024 2023 2024 2023
Total ABO $ 3,132  $ 3,334  $ 1,334  $ 1,504 
Plans with ABO in excess of plan assets
ABO 1,007  1,067  —  — 
Plans with PBO in excess of plan assets
PBO 1,042  1,116  —  — 
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 2024 2023 2022 2024 2023 2022
Service cost $ 142  $ 117  $ 137  $ 18  $ 17  $ 30 
Interest cost 167  168  101  71  70  39 
Expected return on plan assets (290) (277) (229) (102) (105) (87)
Amortization of prior service cost 2  2  1  1  1  1 
Recognized net actuarial loss 13  8  23  12  —  3 
Net periodic pension cost (income) $ 34  $ 18  $ 33  $ —  $ (17) $ (14)
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 2024 2023 2022
Amortization of prior service cost $ (3) $ (3) $ (2)
Recognized net actuarial loss (25) (8) (26)
Incurred prior service cost —  1  3 
Incurred actuarial loss 46  432  173 
Total recognized in other comprehensive loss $ 18  $ 422  $ 148 
Total recognized in net periodic pension cost and other comprehensive loss $ 52  $ 423  $ 167 
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
  2024 2023 2024 2023
Discount rate 5.69  % 5.15  % 5.62  % 4.72  %
Cash balance crediting rate 4.51  % 4.55  % —  — 
Compensation increase rate 5.32  % 5.34  % 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
  2024 2023 2022 2024 2023 2022
Discount rate 5.15  % 5.55  % 3.31  % 4.72  % 4.99  % 2.26  %
Expected return on plan assets 7.25  % 7.00  % 6.50  % 5.00  % 5.00  % 4.01  %
Compensation increase rate 5.34  % 5.35  % 2.71  % 3.75  % 3.75  % 3.75  %
Plan Assets
Our investment policies 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.
U.S. Plan Assets
For the U.S. qualified pension plans, 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 2025.
To achieve these objectives, we established the following targets:
Asset Class Plan Target
U.S. equities 7  %
Non-U.S. equities 3  %
Global equities 5  %
Total equities 15  %
Real assets 5  %
Private equity/venture capital 5  %
Opportunistic credit 4  %
Fixed income 71  %
Total 100  %
The fixed income component of the plans 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 plans' exposure to changes in its discount rate (AA corporate bond yields). In order to achieve a hedge on more than the targeted 71 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 plans' risk of changes in interest rates. However, all managers hired to manage assets for the trust are prohibited from using leverage unless approved by the BPC.
U.K. Plan Assets
The methodology used to determine the rate of return on the 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. To achieve these objectives, we established the following targets:
Asset Class Plan Target
Property/secure income assets 6  %
Credit/bank loans 8  %
Diversified strategies 1  %
Private equity 5  %
Fixed income/insurance annuity 78  %
Cash 2  %
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. plans, derivatives may be used to better match liability duration and are not used in a speculative way. The fixed income component of our portfolio hedges approximately 91 percent of the plans' exposure to interest rates and 92 percent of the plans' exposure to inflation. Based on the above discussion, we elected an assumption of 5.00 percent in 2025.
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, 2024
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. $ 168  $ —  $ —  $ 168 
Non-U.S. 31  —  —  31 
Fixed income
Government debt —  105  —  105 
Corporate debt
U.S. —  600  —  600 
Non-U.S. —  36  —  36 
Asset/mortgaged backed securities —  13  —  13 
Net cash equivalents (1)
388  —  —  388 
Private markets and real assets (2)
—  —  500  500 
Net plan assets subject to leveling $ 587  $ 754  $ 500  $ 1,841 
Pending trade/purchases/sales       (2)
Accruals (3)
      12 
Investments measured at net asset value 1,855 
Net plan assets       $ 3,706 
  Fair Value Measurements at December 31, 2023
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. $ 73  $ —  $ —  $ 73 
Non-U.S. 36  —  —  36 
Fixed income
Government debt —  157  —  157 
Corporate debt
U.S. —  603  —  603 
Non-U.S. —  49  —  49 
Asset/mortgaged backed securities —  8  —  8 
Net cash equivalents (1)
467  —  —  467 
Private markets and real assets (2)
—  —  604  604 
Net plan assets subject to leveling $ 576  $ 817  $ 604  $ 1,997 
Pending trade/purchases/sales       (16)
Accruals (3)
      10 
Investments measured at net asset value 1,835 
Net plan assets       $ 3,826 
(1) Cash equivalents included 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 ($912 million and $915 million at December 31, 2024 and 2023, respectively) - 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 ($327 million and $307 million at December 31, 2024 and 2023, 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.
•U.S. and Non-U.S. Equities ($260 million and $222 million at December 31, 2024 and 2023, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•Government Debt ($235 million and $257 million at December 31, 2024 and 2023, respectively) - These commingled funds have observable NAVs provided to investors and provide for liquidity either immediately or within a couple of days.
•Real Estate ($121 million and $134 million at December 31, 2024 and 2023, 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.
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, 2022 $ 559  $ 82  $ 641 
Actual return on plan assets  
Unrealized gains (losses) on assets still held at the reporting date 6  (13) (7)
Purchases, sales and settlements, net (28) (2) (30)
Balance at December 31, 2023 537  67  604 
Actual return on plan assets      
Unrealized losses on assets still held at the reporting date (3) (6) (9)
Purchases, sales and settlements, net (93) (2) (95)
Balance at December 31, 2024 $ 441  $ 59  $ 500 
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, 2024
In millions Quoted prices in active
markets for identical assets
(Level 1)		 Significant other
observable inputs
(Level 2)		 Significant
unobservable inputs
(Level 3)		 Total
Fixed income  
Government debt $ —  $ 204  $ —  $ 204 
Corporate debt
U.S. —  32  —  32 
Non-U.S. —  93  —  93 
Net cash equivalents (1)
11  14  —  25 
Insurance annuity —  —  383  383 
Private markets and real assets (2)
—  —  102  102 
Net plan assets subject to leveling $ 11  $ 343  $ 485  $ 839 
Pending trade/purchases/sales       1 
Accruals (3)
      2 
Investments measured at net asset value 626 
Net plan assets       $ 1,468 
  Fair Value Measurements at December 31, 2023
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. $ 12  $ —  $ —  $ 12 
Non-U.S. 8  —  —  8 
Fixed income
Government debt —  232  —  232 
Corporate debt
U.S. —  30  —  30 
Non-U.S. —  95  —  95 
Net cash equivalents (1)
17  18  —  35 
Insurance annuity —  —  436  436 
Private markets and real assets (2)
—  —  103  103 
Net plan assets subject to leveling $ 37  $ 375  $ 539  $ 951 
Pending trade/purchases/sales       1 
Accruals (3)
      2 
Investments measured at net asset value 766 
Net plan assets       $ 1,720 
(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:
•Government Debt ($434 million and $572 million at December 31, 2024 and 2023, 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. Corporate Debt ($96 million and $71 million at December 31, 2024 and 2023, respectively) - 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 ($92 million and $117 million at December 31, 2024 and 2023, 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 ($4 million and $6 million at December 31, 2024 and 2023, respectively) - This commingled fund has a NAV that is determined on a monthly basis and the investment may be sold at that value.
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, 2022 $ 428  $ 8  $ 382  $ 818 
Actual return on plan assets
Unrealized gains (losses) on assets still held at the reporting date 8  —  (35) (27)
Purchases, sales and settlements, net —  (1) (251) (252)
Balance at December 31, 2023 436  7  96  539 
Actual return on plan assets        
Unrealized (losses) gains on assets still held at the reporting date (53) —  1  (52)
Purchases, sales and settlements, net —  (1) (1) (2)
Balance at December 31, 2024 $ 383  $ 6  $ 96  $ 485 
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 $52 million to our defined benefit pension plans in 2025. The table below presents expected future benefit payments under our pension plans:
  Qualified and Non-Qualified Pension Plans
In millions 2025 2026 2027 2028 2029 2030 - 2034
Expected benefit payments $ 392  $ 364  $ 368  $ 374  $ 382  $ 1,919 
Other Pension Plans
We also sponsor defined contribution plans for certain hourly and salaried employees. Our contributions to these plans were $126 million, $130 million and $110 million for the years ended December 31, 2024, 2023 and 2022.
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 2024 2023
Change in benefit obligation    
Benefit obligation at the beginning of the year $ 150  $ 162 
Interest cost 7  9 
Plan participants' contributions 8  18 
Actuarial gain (18) (2)
Benefits paid directly by employer (27) (37)
Benefit obligation at end of year $ 120  $ 150 
Funded status at end of year $ (120) $ (150)
Amounts recognized in consolidated balance sheets    
Accrued compensation, benefits and retirement costs $ (16) $ (19)
Other liabilities (104) (131)
Net amount recognized $ (120) $ (150)
Amounts recognized in accumulated other comprehensive loss    
Net actuarial gain $ (60) $ (44)
Prior service credit (3) (3)
Net amount recognized $ (63) $ (47)
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 17 percent and 16 percent of our OPEB obligations at December 31, 2024 and 2023, 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 2024 2023 2022
Interest cost $ 7  $ 9  $ 5 
Recognized net actuarial gain (3) (2) — 
Net periodic OPEB cost $ 4  $ 7  $ 5 
Other changes in benefit obligations recognized in other comprehensive loss (income) for the years ended December 31 were as follows:
Years ended December 31,
In millions 2024 2023 2022
Recognized net actuarial gain $ 3  $ 2  $ — 
Incurred actuarial gain (19) (2) (25)
Total recognized in other comprehensive (income) loss $ (16) $ —  $ (25)
Total recognized in net periodic OPEB cost and other comprehensive (income) loss $ (12) $ 7  $ (20)
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:
2024 2023
Discount rate 5.60  % 5.19  %
The table below presents assumptions used in determining the net periodic OPEB cost and reflects weighted-average percentages for the various plans as follows:
2024 2023 2022
Discount rate 5.19  % 5.59  % 2.93  %
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 2024. 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 2025 2026 2027 2028 2029 2030 - 2034
Expected benefit payments $ 16  $ 15  $ 14  $ 13  $ 12  $ 47