Retirement-Related Benefits (Tables)
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12 Months Ended |
Dec. 31, 2019 |
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| Retirement-Related Benefits |
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| Summary of total retirement-related benefits net periodic (income)/cost in the Consolidated Income Statement |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | U.S. Plans | | Non-U.S. Plans | | Total | For the year ended December 31: | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | Defined benefit pension plans | | $ | (153) | | $ | 542 | | $ | 237 | | $ | 955 | | $ | 1,284 | | $ | 1,315 | | $ | 803 | | $ | 1,827 | | $ | 1,552 | Retention Plan | | | 11 | | | 17 | | | 16 | | | — | | | — | | | — | | | 11 | | | 17 | | | 16 | Total defined benefit pension plans (income)/cost | | $ | (142) | | $ | 559 | | $ | 253 | | $ | 955 | | $ | 1,284 | | $ | 1,315 | | $ | 813 | | $ | 1,843 | | $ | 1,568 | IBM 401(k) Plus Plan and non-U.S. plans | | $ | 588 | | $ | 588 | | $ | 616 | | $ | 427 | | $ | 412 | | $ | 404 | | $ | 1,015 | | $ | 1,000 | | $ | 1,020 | Excess 401(k) | | | 26 | | | 24 | | | 26 | | | — | | | — | | | — | | | 26 | | | 24 | | | 26 | Total defined contribution plans cost | | $ | 613 | | $ | 612 | | $ | 643 | | $ | 427 | | $ | 412 | | $ | 404 | | $ | 1,040 | | $ | 1,024 | | $ | 1,046 | Nonpension postretirement benefit plans cost | | $ | 154 | | $ | 147 | | $ | 180 | | $ | 65 | | $ | 51 | | $ | 62 | | $ | 219 | | $ | 198 | | $ | 242 | Total retirement-related benefits net periodic cost | | $ | 624 | | $ | 1,319 | | $ | 1,076 | | $ | 1,448 | | $ | 1,747 | | $ | 1,781 | | $ | 2,072 | | $ | 3,066 | | $ | 2,857 |
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| Summary of the total PBO for defined benefit plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and associated funded status |
| | | | | | | | | | | | | | | | | | | ($ in millions) | | Benefit Obligations | | Fair Value of Plan Assets | | Funded Status* | At December 31: | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | U.S. Plans | | | | | | | | | | | | | | | | | | | Overfunded plans | | | | | | | | | | | | | | | | | | | Qualified PPP | | $ | 48,471 | | $ | 46,145 | | $ | 51,784 | | $ | 48,213 | | $ | 3,313 | | $ | 2,069 | Underfunded plans | | | | | | | | | | | | | | | | | | | Excess PPP | | $ | 1,473 | | $ | 1,395 | | $ | — | | $ | — | | $ | (1,473) | | $ | (1,395) | Retention Plan | | | 288 | | | 273 | | | — | | | — | | | (288) | | | (273) | Nonpension postretirement benefit plan | | | 3,857 | | | 3,912 | | | 3 | | | 29 | | | (3,854) | | | (3,882) | Total underfunded U.S. plans | | $ | 5,618 | | $ | 5,579 | | $ | 3 | | $ | 29 | | $ | (5,615) | | $ | (5,550) | Non-U.S. Plans | | | | | | | | | | | | | | | | | | | Overfunded plans | | | | | | | | | | | | | | | | | | | Qualified defined benefit pension plans** | | $ | 18,371 | | $ | 17,379 | | $ | 21,921 | | $ | 19,975 | | $ | 3,550 | | $ | 2,597 | Nonpension postretirement benefit plans | | | 19 | | | 0 | | | 21 | | | 0 | | | 2 | | | 0 | Total overfunded non-U.S. plans | | $ | 18,390 | | $ | 17,379 | | $ | 21,942 | | $ | 19,975 | | $ | 3,552 | | $ | 2,597 | Underfunded plans | | | | | | | | | | | | | | | | | | | Qualified defined benefit pension plans** | | $ | 23,222 | | $ | 22,139 | | $ | 18,398 | | $ | 16,783 | | $ | (4,824) | | $ | (5,356) | Nonqualified defined benefit pension plans | | | 6,731 | | | 6,252 | | | — | | | — | | | (6,731) | | | (6,252) | Nonpension postretirement benefit plans | | | 828 | | | 704 | | | 44 | | | 65 | | | (785) | | | (640) | Total underfunded non-U.S. plans | | $ | 30,782 | | $ | 29,095 | | $ | 18,442 | | $ | 16,848 | | $ | (12,340) | | $ | (12,248) | Total overfunded plans | | $ | 66,861 | | $ | 63,524 | | $ | 73,726 | | $ | 68,190 | | $ | 6,865 | | $ | 4,666 | Total underfunded plans | | $ | 36,399 | | $ | 34,675 | | $ | 18,445 | | $ | 16,877 | | $ | (17,955) | | $ | (17,798) |
* Funded status is recognized in the Consolidated Balance Statement as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability). ** Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded.
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| Components of net periodic (income)/cost of the company's retirement-related benefit plans |
| | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | ($ in millions) | | U.S. Plans | | Non-U.S. Plans | For the year ended December 31: | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | Service cost | | $ | — | | $ | — | | $ | — | | $ | 370 | | $ | 413 | | $ | 410 | Interest cost (1) | | | 1,882 | | | 1,719 | | | 1,913 | | | 847 | | | 830 | | | 837 | Expected return on plan assets (1) | | | (2,599) | | | (2,701) | | | (3,014) | | | (1,588) | | | (1,342) | | | (1,325) | Amortization of transition assets (1) | | | — | | | — | | | — | | | 0 | | | 0 | | | 0 | Amortization of prior service costs/(credits) (1) | | | 16 | | | 16 | | | 16 | | | (23) | | | (83) | | | (97) | Recognized actuarial losses (1) | | | 559 | | | 1,525 | | | 1,337 | | | 1,249 | | | 1,401 | | | 1,507 | Curtailments and settlements (1) | | | — | | | — | | | — | | | 41 | | | 11 | | | 19 | Multi-employer plans | | | — | | | — | | | — | | | 32 | | | 38 | | | 40 | Other costs/(credits) (2) | | | — | | | — | | | — | | | 28 | | | 16 | | | (76) | Total net periodic (income)/cost | | $ | (142) | | $ | 559 | | $ | 253 | | $ | 955 | | $ | 1,284 | | $ | 1,315 |
| | | | | | | | | | | | | | | | | | | | | Nonpension Postretirement Benefit Plans | ($ in millions) | | U.S. Plan | | Non-U.S. Plans | For the year ended December 31: | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | Service cost | | $ | 10 | | $ | 13 | | $ | 14 | | $ | 5 | | $ | 5 | | $ | 6 | Interest cost (1) | | | 145 | | | 132 | | | 154 | | | 55 | | | 45 | | | 57 | Expected return on plan assets (1) | | | — | | | 0 | | | 0 | | | (5) | | | (6) | | | (7) | Amortization of transition assets (1) | | | — | | | — | | | — | | | — | | | 0 | | | 0 | Amortization of prior service costs/(credits) (1) | | | (2) | | | (7) | | | (7) | | | 0 | | | 0 | | | 0 | Recognized actuarial losses (1) | | | 1 | | | 10 | | | 20 | | | 10 | | | 6 | | | 7 | Curtailments and settlements (1) | | | — | | | — | | | — | | | 0 | | | 0 | | | 0 | Total net periodic cost | | $ | 154 | | $ | 147 | | $ | 180 | | $ | 65 | | $ | 51 | | $ | 62 |
| (1) | These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement. |
| (2) | The non-U.S. defined benefit pension plans amount in 2017 includes a gain of $91 million related to IBM UK pension litigation. |
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| Changes in benefit obligations |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | ($ in millions) | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | Change in benefit obligation | | | | | | | | | | | | | | | | | | | | | | | | | Benefit obligation at January 1 | | $ | 47,812 | | $ | 52,444 | | $ | 45,770 | | $ | 49,111 | | $ | 3,912 | | $ | 4,184 | | $ | 705 | | $ | 732 | Service cost | | | — | | | — | | | 370 | | | 413 | | | 10 | | | 13 | | | 5 | | | 5 | Interest cost | | | 1,882 | | | 1,719 | | | 847 | | | 830 | | | 145 | | | 132 | | | 55 | | | 45 | Plan participants’ contributions | | | — | | | — | | | 23 | | | 25 | | | 57 | | | 59 | | | — | | | — | Acquisitions/divestitures, net | | | — | | | — | | | (32) | | | (27) | | | — | | | 0 | | | 0 | | | 0 | Actuarial losses/(gains) | | | 4,040 | | | (2,743) | | | 3,467 | | | (240) | | | 148 | | | (71) | | | 141 | | | 43 | Benefits paid from trust | | | (3,378) | | | (3,484) | | | (1,902) | | | (1,976) | | | (389) | | | (383) | | | (6) | | | (7) | Direct benefit payments | | | (124) | | | (124) | | | (403) | | | (390) | | | (6) | | | (22) | | | (27) | | | (31) | Foreign exchange impact | | | — | | | — | | | 134 | | | (2,012) | | | — | | | — | | | (1) | | | (86) | Amendments/curtailments/settlements/other | | | — | | | — | | | 50 | | | 34 | | | (21) | | | — | | | (23) | | | 3 | Benefit obligation at December 31 | | $ | 50,232 | | $ | 47,812 | | $ | 48,324 | | $ | 45,770 | | $ | 3,857 | | $ | 3,912 | | $ | 848 | | $ | 705 | Change in plan assets | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of plan assets at January 1 | | $ | 48,213 | | $ | 52,694 | | $ | 36,758 | | $ | 40,798 | | $ | 29 | | $ | 18 | | $ | 65 | | $ | 70 | Actual return on plan assets | | | 6,949 | | | (997) | | | 4,896 | | | (610) | | | 1 | | | 1 | | | 7 | | | 12 | Employer contributions | | | — | | | — | | | 243 | | | 325 | | | 304 | | | 335 | | | — | | | 0 | Acquisitions/divestitures, net | | | — | | | — | | | (25) | | | (22) | | | — | | | 0 | | | — | | | 0 | Plan participants’ contributions | | | — | | | — | | | 23 | | | 25 | | | 57 | | | 59 | | | — | | | 0 | Benefits paid from trust | | | (3,378) | | | (3,484) | | | (1,902) | | | (1,976) | | | (389) | | | (383) | | | (6) | | | (7) | Foreign exchange impact | | | — | | | — | | | 333 | | | (1,754) | | | — | | | — | | | (1) | | | (10) | Amendments/curtailments/settlements/other | | | — | | | — | | | (7) | | | (28) | | | — | | | 0 | | | 0 | | | 0 | Fair value of plan assets at December 31 | | $ | 51,784 | | $ | 48,213 | | $ | 40,319 | | $ | 36,758 | | $ | 3 | | $ | 29 | | $ | 65 | | $ | 65 | Funded status at December 31 | | $ | 1,551 | | $ | 401 | | $ | (8,005) | | $ | (9,012) | | $ | (3,854) | | $ | (3,882) | | $ | (783) | | $ | (640) | Accumulated benefit obligation* | | $ | 50,232 | | $ | 47,812 | | $ | 47,645 | | $ | 45,161 | | | N/A | | | N/A | | | N/A | | | N/A |
* Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable
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| Changes in plan assets |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | ($ in millions) | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | Change in benefit obligation | | | | | | | | | | | | | | | | | | | | | | | | | Benefit obligation at January 1 | | $ | 47,812 | | $ | 52,444 | | $ | 45,770 | | $ | 49,111 | | $ | 3,912 | | $ | 4,184 | | $ | 705 | | $ | 732 | Service cost | | | — | | | — | | | 370 | | | 413 | | | 10 | | | 13 | | | 5 | | | 5 | Interest cost | | | 1,882 | | | 1,719 | | | 847 | | | 830 | | | 145 | | | 132 | | | 55 | | | 45 | Plan participants’ contributions | | | — | | | — | | | 23 | | | 25 | | | 57 | | | 59 | | | — | | | — | Acquisitions/divestitures, net | | | — | | | — | | | (32) | | | (27) | | | — | | | 0 | | | 0 | | | 0 | Actuarial losses/(gains) | | | 4,040 | | | (2,743) | | | 3,467 | | | (240) | | | 148 | | | (71) | | | 141 | | | 43 | Benefits paid from trust | | | (3,378) | | | (3,484) | | | (1,902) | | | (1,976) | | | (389) | | | (383) | | | (6) | | | (7) | Direct benefit payments | | | (124) | | | (124) | | | (403) | | | (390) | | | (6) | | | (22) | | | (27) | | | (31) | Foreign exchange impact | | | — | | | — | | | 134 | | | (2,012) | | | — | | | — | | | (1) | | | (86) | Amendments/curtailments/settlements/other | | | — | | | — | | | 50 | | | 34 | | | (21) | | | — | | | (23) | | | 3 | Benefit obligation at December 31 | | $ | 50,232 | | $ | 47,812 | | $ | 48,324 | | $ | 45,770 | | $ | 3,857 | | $ | 3,912 | | $ | 848 | | $ | 705 | Change in plan assets | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of plan assets at January 1 | | $ | 48,213 | | $ | 52,694 | | $ | 36,758 | | $ | 40,798 | | $ | 29 | | $ | 18 | | $ | 65 | | $ | 70 | Actual return on plan assets | | | 6,949 | | | (997) | | | 4,896 | | | (610) | | | 1 | | | 1 | | | 7 | | | 12 | Employer contributions | | | — | | | — | | | 243 | | | 325 | | | 304 | | | 335 | | | — | | | 0 | Acquisitions/divestitures, net | | | — | | | — | | | (25) | | | (22) | | | — | | | 0 | | | — | | | 0 | Plan participants’ contributions | | | — | | | — | | | 23 | | | 25 | | | 57 | | | 59 | | | — | | | 0 | Benefits paid from trust | | | (3,378) | | | (3,484) | | | (1,902) | | | (1,976) | | | (389) | | | (383) | | | (6) | | | (7) | Foreign exchange impact | | | — | | | — | | | 333 | | | (1,754) | | | — | | | — | | | (1) | | | (10) | Amendments/curtailments/settlements/other | | | — | | | — | | | (7) | | | (28) | | | — | | | 0 | | | 0 | | | 0 | Fair value of plan assets at December 31 | | $ | 51,784 | | $ | 48,213 | | $ | 40,319 | | $ | 36,758 | | $ | 3 | | $ | 29 | | $ | 65 | | $ | 65 | Funded status at December 31 | | $ | 1,551 | | $ | 401 | | $ | (8,005) | | $ | (9,012) | | $ | (3,854) | | $ | (3,882) | | $ | (783) | | $ | (640) | Accumulated benefit obligation* | | $ | 50,232 | | $ | 47,812 | | $ | 47,645 | | $ | 45,161 | | | N/A | | | N/A | | | N/A | | | N/A |
* Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable
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| Accumulated benefit obligation |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | ($ in millions) | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | Change in benefit obligation | | | | | | | | | | | | | | | | | | | | | | | | | Benefit obligation at January 1 | | $ | 47,812 | | $ | 52,444 | | $ | 45,770 | | $ | 49,111 | | $ | 3,912 | | $ | 4,184 | | $ | 705 | | $ | 732 | Service cost | | | — | | | — | | | 370 | | | 413 | | | 10 | | | 13 | | | 5 | | | 5 | Interest cost | | | 1,882 | | | 1,719 | | | 847 | | | 830 | | | 145 | | | 132 | | | 55 | | | 45 | Plan participants’ contributions | | | — | | | — | | | 23 | | | 25 | | | 57 | | | 59 | | | — | | | — | Acquisitions/divestitures, net | | | — | | | — | | | (32) | | | (27) | | | — | | | 0 | | | 0 | | | 0 | Actuarial losses/(gains) | | | 4,040 | | | (2,743) | | | 3,467 | | | (240) | | | 148 | | | (71) | | | 141 | | | 43 | Benefits paid from trust | | | (3,378) | | | (3,484) | | | (1,902) | | | (1,976) | | | (389) | | | (383) | | | (6) | | | (7) | Direct benefit payments | | | (124) | | | (124) | | | (403) | | | (390) | | | (6) | | | (22) | | | (27) | | | (31) | Foreign exchange impact | | | — | | | — | | | 134 | | | (2,012) | | | — | | | — | | | (1) | | | (86) | Amendments/curtailments/settlements/other | | | — | | | — | | | 50 | | | 34 | | | (21) | | | — | | | (23) | | | 3 | Benefit obligation at December 31 | | $ | 50,232 | | $ | 47,812 | | $ | 48,324 | | $ | 45,770 | | $ | 3,857 | | $ | 3,912 | | $ | 848 | | $ | 705 | Change in plan assets | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of plan assets at January 1 | | $ | 48,213 | | $ | 52,694 | | $ | 36,758 | | $ | 40,798 | | $ | 29 | | $ | 18 | | $ | 65 | | $ | 70 | Actual return on plan assets | | | 6,949 | | | (997) | | | 4,896 | | | (610) | | | 1 | | | 1 | | | 7 | | | 12 | Employer contributions | | | — | | | — | | | 243 | | | 325 | | | 304 | | | 335 | | | — | | | 0 | Acquisitions/divestitures, net | | | — | | | — | | | (25) | | | (22) | | | — | | | 0 | | | — | | | 0 | Plan participants’ contributions | | | — | | | — | | | 23 | | | 25 | | | 57 | | | 59 | | | — | | | 0 | Benefits paid from trust | | | (3,378) | | | (3,484) | | | (1,902) | | | (1,976) | | | (389) | | | (383) | | | (6) | | | (7) | Foreign exchange impact | | | — | | | — | | | 333 | | | (1,754) | | | — | | | — | | | (1) | | | (10) | Amendments/curtailments/settlements/other | | | — | | | — | | | (7) | | | (28) | | | — | | | 0 | | | 0 | | | 0 | Fair value of plan assets at December 31 | | $ | 51,784 | | $ | 48,213 | | $ | 40,319 | | $ | 36,758 | | $ | 3 | | $ | 29 | | $ | 65 | | $ | 65 | Funded status at December 31 | | $ | 1,551 | | $ | 401 | | $ | (8,005) | | $ | (9,012) | | $ | (3,854) | | $ | (3,882) | | $ | (783) | | $ | (640) | Accumulated benefit obligation* | | $ | 50,232 | | $ | 47,812 | | $ | 47,645 | | $ | 45,161 | | | N/A | | | N/A | | | N/A | | | N/A |
* Represents the benefit obligation assuming no future participant compensation increases. N/A–Not applicable
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| Net funded status |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | ($ in millions) | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | At December 31: | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | Prepaid pension assets | | $ | 3,313 | | $ | 2,069 | | $ | 3,550 | | $ | 2,597 | | $ | 0 | | $ | 0 | | $ | 2 | | $ | 0 | Current liabilities—compensation and benefits | | | (120) | | | (120) | | | (313) | | | (302) | | | (346) | | | (340) | | | (33) | | | (36) | Noncurrent liabilities—retirement and nonpension postretirement benefit obligations | | | (1,641) | | | (1,548) | | | (11,242) | | | (11,306) | | | (3,507) | | | (3,542) | | | (752) | | | (605) | Funded status—net | | $ | 1,551 | | $ | 401 | | $ | (8,005) | | $ | (9,012) | | $ | (3,854) | | $ | (3,882) | | $ | (783) | | $ | (640) |
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| Pre-tax net loss and prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and changes in pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | Nonpension Postretirement Benefit Plans | | | U.S. Plans | | Non-U.S. Plans | | U.S. Plan | | Non-U.S. Plans | ($ in millions) | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | | 2019 | | 2018 | Net loss at January 1 | | $ | 17,476 | | $ | 18,045 | | $ | 18,452 | | $ | 18,275 | | $ | 405 | | $ | 486 | | $ | 172 | | $ | 145 | Current period loss/(gain) | | | (309) | | | 956 | | | 109 | | | 1,590 | | | 147 | | | (72) | | | 125 | | | 33 | Curtailments and settlements | | | — | | | — | | | (41) | | | (11) | | | — | | | — | | | 0 | | | 0 | Amortization of net loss included in net periodic (income)/cost | | | (559) | | | (1,525) | | | (1,249) | | | (1,401) | | | (1) | | | (10) | | | (10) | | | (6) | Net loss at December 31 | | $ | 16,608 | | $ | 17,476 | | $ | 17,272 | | $ | 18,452 | | $ | 551 | | $ | 405 | | $ | 287 | | $ | 172 | Prior service costs/(credits) at January 1 | | $ | 57 | | $ | 74 | | $ | 172 | | $ | (90) | | $ | 52 | | $ | 45 | | $ | 4 | | $ | 3 | Current period prior service costs/(credits) | | | — | | | — | | | 102 | | | 181 | | | (21) | | | — | | | (8) | | | 1 | Curtailments, settlements and other | | | — | | | — | | | — | | | 0 | | | — | | | — | | | — | | | 0 | Amortization of prior service (costs)/credits included in net periodic (income)/cost | | | (16) | | | (16) | | | 23 | | | 83 | | | 2 | | | 7 | | | 0 | | | 0 | Prior service costs/(credits) at December 31 | | $ | 41 | | $ | 57 | | $ | 297 | | $ | 172 | | $ | 34 | | $ | 52 | | $ | (4) | | $ | 4 | Transition (assets)/liabilities at January 1 | | $ | — | | $ | — | | $ | 0 | | $ | 0 | | $ | — | | $ | — | | $ | 0 | | $ | 0 | Amortization of transition assets/(liabilities) included in net periodic (income)/cost | | | — | | | — | | | 0 | | | — | | | — | | | — | | | — | | | 0 | Transition (assets)/liabilities at December 31 | | $ | — | | $ | — | | $ | 0 | | $ | 0 | | $ | — | | $ | — | | $ | 0 | | $ | 0 | Total loss recognized in accumulated other comprehensive income/(loss)* | | $ | 16,648 | | $ | 17,533 | | $ | 17,569 | | $ | 18,624 | | $ | 585 | | $ | 457 | | $ | 283 | | $ | 176 |
* Refer to note S, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans.
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| Assumptions used to measure the net periodic (income)/cost and year-end benefit obligations |
| | | | | | | | | | | | | | | | Defined Benefit Pension Plans | | | | U.S. Plans | | Non-U.S. Plans | | | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | | Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31 | | | | | | | | | | | | | | Discount rate | | 4.10 | % | 3.40 | % | 3.80 | % | 1.85 | % | 1.76 | % | 1.80 | % | Expected long-term returns on plan assets | | 5.25 | % | 5.25 | % | 5.75 | % | 4.38 | % | 3.62 | % | 3.77 | % | Rate of compensation increase | | N/A | | N/A | | N/A | | 2.18 | % | 2.41 | % | 2.45 | % | Interest crediting rate | | 3.60 | % | 2.30 | % | 1.60 | % | 0.30 | % | 0.30 | % | 0.59 | % | Weighted-average assumptions used to measure benefit obligations at December 31 | | | | | | | | | | | | | | Discount rate | | 3.10 | % | 4.10 | % | 3.40 | % | 1.19 | % | 1.85 | % | 1.76 | % | Rate of compensation increase | | N/A | | N/A | | N/A | | 2.60 | % | 2.18 | % | 2.41 | % | Interest crediting rate | | 2.70 | % | 3.60 | % | 2.30 | % | 0.28 | % | 0.30 | % | 0.30 | % |
| | | | | | | | | | | | | | | | Nonpension Postretirement Benefit Plans | | | | U.S. Plan | | Non-U.S. Plans | | | | 2019 | | 2018 | | 2017 | | 2019 | | 2018 | | 2017 | | Weighted-average assumptions used to measure net periodic cost for the year ended December 31 | | | | | | | | | | | | | | Discount rate | | 3.90 | % | 3.30 | % | 3.60 | % | 7.48 | % | 7.28 | % | 8.26 | % | Expected long-term returns on plan assets | | N/A | | N/A | | N/A | | 8.64 | % | 8.91 | % | 10.47 | % | Interest crediting rate | | 3.60 | % | 2.30 | % | 1.60 | % | N/A | | N/A | | N/A | | Weighted-average assumptions used to measure benefit obligations at December 31 | | | | | | | | | | | | | | Discount rate | | 2.80 | % | 3.90 | % | 3.30 | % | 4.98 | % | 7.48 | % | 7.28 | % | Interest crediting rate | | 2.70 | % | 3.60 | % | 2.30 | % | N/A | | N/A | | N/A | |
N/A–Not applicable
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| Changes in net periodic income and benefit obligations from changes in plan assumptions. |
The following tables present the increase/(decrease) in net periodic income and benefit obligations as a result of changes in plan assumptions. | | | | | | | | | | ($ in millions) | | Net Periodic Income | For the year ended December 31: | | 2019 | | 2018 | | 2017 | Discount rate (U.S. DB pension plans) | | $ | 307 | | $ | (124) | | $ | (64) | Expected long-term return on plan assets (U.S. DB pension plans) | | | — | | | (256) | | | (656) | Interest crediting rate (PPP) | | | (59) | | | (25) | | | (14) |
| | | | | | | ($ in millions) | | Benefit Obligations | At December 31: | | 2019 | | 2018 | Discount rate impact | | | | | | | PBO (U.S. DB pension plans) | | $ | 4,385 | | $ | (3,239) | APBO (U.S. nonpension plans) | | | 252 | | | (153) | Benefit obligations (all plans) | | | 8,932 | | | (4,032) | Mortality assumptions impact | | | | | | | PBO (U.S. DB and nonpension plans) | | | (186) | | | 27 |
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| Defined benefit pension plans' asset classes and their associated fair value |
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2019. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Plan | | Non-U.S. Plans | ($ in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Equity | | | | | | | | | | | | | | | | | | | | | | | | | Equity securities (1) | | $ | 1,943 | | $ | — | | $ | — | | $ | 1,943 | | $ | 2,209 | | $ | 0 | | $ | — | | $ | 2,209 | Equity mutual funds (2) | | | 85 | | | — | | | — | | | 85 | | | — | | | — | | | — | | | — | Fixed income | | | | | | | | | | | | | | | | | | | | | | | | | Government and related (3) | | | — | | | 21,134 | | | — | | | 21,134 | | | — | | | 10,288 | | | 2 | | | 10,290 | Corporate bonds (4) | | | — | | | 16,666 | | | 518 | | | 17,185 | | | — | | | 2,124 | | | — | | | 2,124 | Mortgage and asset-backed securities | | | — | | | 630 | | | — | | | 630 | | | — | | | 19 | | | — | | | 19 | Fixed income mutual funds (5) | | | 386 | | | — | | | — | | | 386 | | | — | | | — | | | — | | | — | Insurance contracts | | | — | | | — | | | — | | | — | | | — | | | 1,862 | | | — | | | 1,862 | Cash and short-term investments (6) | | | 54 | | | 848 | | | — | | | 903 | | | 204 | | | 644 | | | — | | | 849 | Real estate | | | — | | | — | | | — | | | — | | | — | | | — | | | 328 | | | 328 | Derivatives (7) | | | 0 | | | 6 | | | — | | | 6 | | | 18 | | | 969 | | | — | | | 987 | Other mutual funds (8) | | | — | | | — | | | — | | | — | | | 25 | | | 0 | | | — | | | 25 | Subtotal | | | 2,469 | | | 39,284 | | | 518 | | | 42,271 | | | 2,456 | | | 15,907 | | | 330 | | | 18,693 | Investments measured at net asset value using the NAV practical expedient (9) | | | — | | | — | | | — | | | 9,519 | | | — | | | — | | | — | | | 21,653 | Other (10) | | | — | | | — | | | — | | | (6) | | | — | | | — | | | — | | | (26) | Fair value of plan assets | | $ | 2,469 | | $ | 39,284 | | $ | 518 | | $ | 51,784 | | $ | 2,456 | | $ | 15,907 | | $ | 330 | | $ | 40,319 |
| (1) | Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million, representing 0.004 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $10 million, representing 0.02 percent of the non-U.S. Plans assets. |
| (2) | Invests in predominantly equity securities. |
| (3) | Includes debt issued by national, state and local governments and agencies. |
| (4) | The U.S. Plan includes IBM corporate bonds of $37 million representing 0.07 percent of the U.S. Plan assets. Non-U.S. Plans include IBM corporate bonds of $8 million representing 0.02 percent of the non-U.S. Plans assets. |
| (5) | Invests predominantly in fixed income securities. |
| (6) | Includes cash, cash equivalents and short-term marketable securities. |
| (7) | Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives. |
| (8) | Invests in both equity and fixed-income securities. |
| (9) | Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. |
| (10) | Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. |
The U.S. nonpension postretirement benefit plan assets of $3 million were invested primarily in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $65 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy. The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2018. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S. Plan | | Non-U.S. Plans | ($ in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Equity | | | | | | | | | | | | | | | | | | | | | | | | | Equity securities (1) | | $ | 1,538 | | $ | — | | $ | — | | $ | 1,538 | | $ | 2,333 | | $ | — | | $ | 0 | | $ | 2,333 | Equity mutual funds (2) | | | 65 | | | — | | | — | | | 65 | | | 18 | | | 5 | | | — | | | 23 | Fixed income | | | | | | | | | | | | | | | | | | | | | | | | | Government and related (3) | | | — | | | 19,661 | | | — | | | 19,661 | | | 20 | | | 8,951 | | | 2 | | | 8,973 | Corporate bonds (4) | | | — | | | 15,849 | | | 359 | | | 16,208 | | | — | | | 1,865 | | | 0 | | | 1,865 | Mortgage and asset-backed securities | | | — | | | 635 | | | 4 | | | 640 | | | — | | | 6 | | | — | | | 6 | Fixed income mutual funds (5) | | | 421 | | | — | | | — | | | 421 | | | 11 | | | — | | | — | | | 11 | Insurance contracts | | | — | | | — | | | — | | | — | | | — | | | 1,308 | | | — | | | 1,308 | Cash and short-term investments (6) | | | 55 | | | 1,020 | | | — | | | 1,075 | | | 322 | | | 431 | | | — | | | 753 | Real estate | | | — | | | — | | | — | | | — | | | — | | | — | | | 339 | | | 339 | Derivatives (7) | | | 3 | | | (1) | | | — | | | 2 | | | 24 | | | 606 | | | — | | | 630 | Other mutual funds (8) | | | — | | | — | | | — | | | — | | | 24 | | | — | | | — | | | 24 | Subtotal | | | 2,081 | | | 37,164 | | | 363 | | | 39,608 | | | 2,753 | | | 13,172 | | | 341 | | | 16,266 | Investments measured at net asset value using the NAV practical expedient (9) | | | — | | | — | | | — | | | 8,835 | | | — | | | — | | | — | | | 20,525 | Other (10) | | | — | | | — | | | — | | | (230) | | | — | | | — | | | — | | | (32) | Fair value of plan assets | | $ | 2,081 | | $ | 37,164 | | $ | 363 | | $ | 48,213 | | $ | 2,753 | | $ | 13,172 | | $ | 341 | | $ | 36,758 |
| (1) | Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $2 million, representing 0.004 percent of the U.S. Plan assets. Non-U.S. Plans include IBM common stock of $10 million, representing 0.03 percent of the non-U.S. Plans assets. |
| (2) | Invests in predominantly equity securities. |
| (3) | Includes debt issued by national, state and local governments and agencies. |
| (4) | The U.S. Plan does not include any IBM corporate bonds. Non-U.S. Plans include IBM corporate bonds of $3 million representing 0.007 percent of the non-U.S. Plans assets. |
| (5) | Invests in predominantly fixed-income securities. |
| (6) | Includes cash and cash equivalents and short-term marketable securities. |
| (7) | Includes interest rate derivatives, forwards, exchange traded and other over-the-counter derivatives. |
| (8) | Invests in both equity and fixed-income securities. |
| (9) | Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships. |
| (10) | Represents net unsettled transactions, relating primarily to purchases and sales of plan assets. |
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| Reconciliation of the beginning and ending balances of Level 3 assets |
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2019 and 2018 for the U.S. Plan. | | | | | | | | | | | | | | | Mortgage | | | | | | | | | and Asset- | | | | | | Corporate | | Backed | | | | ($ in millions) | | Bonds | | Securities | | Total | Balance at January 1, 2019 | | $ | 359 | | $ | 4 | | $ | 363 | Return on assets held at end of year | | | 40 | | | — | | | 40 | Return on assets sold during the year | | | 1 | | | 0 | | | 1 | Purchases, sales and settlements, net | | | 105 | | | 0 | | | 105 | Transfers, net | | | 13 | | | (4) | | | 9 | Balance at December 31, 2019 | | $ | 518 | | $ | — | | $ | 518 |
| | | | | | | | | | | | | | | Mortgage | | | | | | | | | and Asset- | | | | | | Corporate | | Backed | | | | ($ in millions) | | Bonds | | Securities | | Total | Balance at January 1, 2018 | | $ | 372 | | $ | 4 | | $ | 376 | Return on assets held at end of year | | | (23) | | | 0 | | | (23) | Return on assets sold during the year | | | 0 | | | 0 | | | 0 | Purchases, sales and settlements, net | | | 10 | | | 0 | | | 10 | Transfers, net | | | — | | | 0 | | | 0 | Balance at December 31, 2018 | | $ | 359 | | $ | 4 | | $ | 363 |
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2019 and 2018 for the non-U.S. Plans. | | | | | | | | | | | | Government | | Private | | | | ($ in millions) | | and Related | | Real Estate | | Total | Balance at January 1, 2019 | | $ | 2 | | $ | 339 | | $ | 341 | Return on assets held at end of year | | | 0 | | | (11) | | | (11) | Return on assets sold during the year | | | 0 | | | 4 | | | 4 | Purchases, sales and settlements, net | | | (1) | | | (17) | | | (18) | Transfers, net | | | — | | | — | | | — | Foreign exchange impact | | | 0 | | | 13 | | | 13 | Balance at December 31, 2019 | | $ | 2 | | $ | 328 | | $ | 330 |
| | | | | | | | | | | | Government | | Private | | | | ($ in millions) | | and Related | | Real Estate | | Total | Balance at January 1, 2018 | | $ | 8 | | $ | 356 | | $ | 365 | Return on assets held at end of year | | | 0 | | | 8 | | | 8 | Return on assets sold during the year | | | (1) | | | (2) | | | (2) | Purchases, sales and settlements, net | | | (3) | | | (3) | | | (6) | Transfers, net | | | (2) | | | — | | | (2) | Foreign exchange impact | | | 0 | | | (21) | | | (21) | Balance at December 31, 2018 | | $ | 2 | | $ | 339 | | $ | 341 |
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| Schedule of contributions and direct benefit payments |
| | | | | | | ($ in millions) | | | | | | | For the years ended December 31: | | 2019 | | 2018 | Non-U.S. DB plans | | $ | 243 | | $ | 325 | Nonpension postretirement benefit plans | | | 304 | | | 335 | Multi-employer plans | | | 32 | | | 38 | DC plans | | | 1,040 | | | 1,024 | Direct benefit payments | | | 559 | | | 567 | Total | | $ | 2,177 | | $ | 2,288 |
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| Total expected benefit payments |
Defined Benefit Pension Plan Expected Payments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | Qualified | | Nonqualified | | Qualified | | Nonqualified | | Expected | | | U.S. Plan | | U.S. Plans | | Non-U.S. Plans | | Non-U.S. Plans | | Benefit | ($ in millions) | | Payments | | Payments | | Payments | | Payments | | Payments | 2020 | | $ | 3,533 | | $ | 122 | | $ | 1,937 | | $ | 320 | | $ | 5,913 | 2021 | | | 3,523 | | | 122 | | | 1,951 | | | 317 | | | 5,912 | 2022 | | | 3,494 | | | 122 | | | 1,990 | | | 327 | | | 5,932 | 2023 | | | 3,441 | | | 120 | | | 2,012 | | | 336 | | | 5,909 | 2024 | | | 3,394 | | | 119 | | | 2,030 | | | 345 | | | 5,887 | 2025—2029 | | | 15,680 | | | 557 | | | 10,015 | | | 1,864 | | | 28,115 |
Nonpension Postretirement Benefit Plan Expected Payments | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | Qualified | | Nonqualified | | Expected | | | U.S. Plan | | Non-U.S. Plans | | Non-U.S. Plans | | Benefit | ($ in millions) | | Payments | | Payments | | Payments | | Payments | 2020 | | $ | 354 | | $ | 19 | | $ | 23 | | $ | 395 | 2021 | | | 381 | | | 20 | | | 23 | | | 424 | 2022 | | | 388 | | | 21 | | | 23 | | | 432 | 2023 | | | 379 | | | 23 | | | 23 | | | 425 | 2024 | | | 359 | | | 24 | | | 24 | | | 407 | 2025—2029 | | | 1,449 | | | 146 | | | 116 | | | 1,712 |
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| Defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets |
| | | | | | | | | | | | | | | 2019 | | 2018 | ($ in millions) | | Benefit | | Plan | | Benefit | | Plan | At December 31: | | Obligation | | Assets | | Obligation | | Assets | Plans with PBO in excess of plan assets | | $ | 31,714 | | $ | 18,398 | | $ | 30,059 | | $ | 16,783 | Plans with ABO in excess of plan assets | | | 30,882 | | | 18,127 | | | 29,312 | | | 16,522 | Plans with plan assets in excess of PBO | | | 66,842 | | | 73,705 | | | 63,524 | | | 68,190 |
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| Schedule of nonpension postretirement benefit plan with APBO in excess of plan assets |
| | | | | | | | | | | | | | | 2019 | | 2018 | ($ in millions) | | Benefit | | Plan | | Benefit | | Plan | At December 31: | | Obligation | | Assets | | Obligation | | Assets | Plans with APBO in excess of plan assets | | $ | 4,685 | | $ | 47 | | $ | 4,616 | | $ | 94 | Plans with plan assets in excess of APBO | | | 19 | | | 21 | | | — | | | — |
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