v3.20.4
Pension and Postretirement Benefit Plans and Defined Contribution Plans (Tables)
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Schedule of Net Periodic Benefit Costs
The following provides the annual (credit)/cost (including costs reported as part of discontinued operations) and changes in Other comprehensive income/(loss) for our benefit plans:
Pension Plans 
U.S.
Qualified		U.S.
Supplemental
(Non-Qualified)		InternationalPostretirement
Plans
Year Ended December 31,
(MILLIONS OF DOLLARS)202020192018202020192018202020192018202020192018
Service cost$— $— $— $— $— $— $146 $125 $136 $38 $37 $39 
Interest cost499 629 598 34 47 55 164 215 212 49 75 72 
Expected return on plan assets
(1,015)(890)(1,040)— — — (306)(317)(360)(36)(33)(37)
Amortization of:
Actuarial losses136 147 120 15 11 13 125 80 101 — 3 7 
Prior service cost/(credit)
(3)(3)2 (1)(1)(1)(3)(4)(4)(170)(173)(178)
Curtailments
— — 12 — — 1 — (1)(4)— (47)(17)
Settlements
223 230 113 49 27 26 6 16 4 — (10)— 
Special termination benefits
(1)4 6 2 17 10 — — — — 2 2 
Net periodic benefit cost/(credit) reported in income(161)116 (189)99 100 103 132 115 84 (118)(146)(111)
(Credit)/cost reported in Other comprehensive income/(loss)
640 (246)361 95 115 (189)202 570 84 (50)38 105 
(Credit)/cost recognized in Comprehensive income
$479 $(129)$171 $194 $215 $(86)$333 $685 $168 $(168)$(107)$(6)
Schedule of Assumptions Used
The following provides the weighted-average actuarial assumptions of our benefit plans:
Year Ended December 31,
(PERCENTAGES)202020192018
Weighted-average assumptions used to determine benefit obligations
Discount rate:
U.S. qualified pension plans2.6 %3.3 %4.4 %
U.S. non-qualified pension plans2.4 %3.2 %4.3 %
International pension plans1.5 %1.7 %2.5 %
Postretirement plans2.5 %3.2 %4.3 %
Rate of compensation increase(a):
International pension plans2.9 %1.4 %1.4 %
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate:
U.S. qualified pension plans3.3 %4.4 %3.8 %
U.S. non-qualified pension plans3.2 %4.3 %3.7 %
International pension plans interest cost1.5 %2.2 %2.0 %
International pension plans service cost1.6 %2.4 %2.3 %
Postretirement plans3.2 %4.3 %3.7 %
Expected return on plan assets:
U.S. qualified pension plans7.0 %7.2 %7.5 %
International pension plans3.6 %3.9 %4.4 %
Postretirement plans7.0 %7.3 %7.5 %
Rate of compensation increase:
U.S. qualified pension plans(a)
— — 2.8 %
U.S. non-qualified pension plans(a)
— — 2.8 %
International pension plans2.9 %1.4 %2.5 %
(a)Effective January 1, 2018, we froze the defined benefit plans to future benefit accruals in the U.S. and members’ accrued benefits to that date no longer increase in line with future compensation increases. The rate of compensation increase is therefore no longer an assumption used to determine the benefit obligation and net periodic benefit cost for the U.S. qualified and non-qualified pension plans.
Schedule of Health Care Cost Trend Rates
The following provides the healthcare cost trend rate assumptions for our U.S. postretirement benefit plans:
As of December 31,
20202019
Healthcare cost trend rate assumed for next year (up to age 65)5.4 %5.6 %
Healthcare cost trend rate assumed for next year (age 65 and older)5.6 %6.0 %
Rate to which the cost trend rate is assumed to decline4.5 %4.5 %
Year that the rate reaches the ultimate trend rate2037 2037 
Schedule of Analysis of the Changes in the Benefit Obligations, Plan assets and Accounting Funded Status of Pension and Postretirement Benefit Plans
The following provides an analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans (including those reported as part of discontinued operations):
 U.S. QualifiedU.S. Supplemental
(Non-Qualified)		InternationalPostretirement
Plans
Year Ended December 31,
(MILLIONS OF DOLLARS)20202019202020192020201920202019
Change in benefit obligation(a)
Benefit obligation, beginning$16,535 $15,141 $1,351 $1,280 $11,059 $9,952 $1,667 $1,870 
Service cost— — — — 146 125 38 37 
Interest cost499 629 34 47 164 215 49 75 
Employee contributions— — — — 8 7 88 84 
Plan amendments2 — — — 2 18 (56)(56)
Changes in actuarial assumptions and other(b)
1,953 2,001 159 152 702 1,224 (132)(87)
Foreign exchange impact— — — — 646 (33)2 (1)
Upjohn spin-off(c)
(1,016)— — — (320)— (218)— 
Acquisitions/divestitures/other, net— (4)— (1)— (55)— (36)
Curtailments— — — — — (2)— — 
Settlements(650)(692)(117)(70)(34)(34)— — 
Special termination benefits(1)4 2 17 — — — 2 
Benefits paid(383)(544)(62)(74)(372)(360)(201)(221)
Benefit obligation, ending(a)
16,940 16,535 1,366 1,351 12,001 11,059 1,238 1,667 
Change in plan assets
Fair value of plan assets, beginning
14,586 13,051 — — 8,956 8,215 519 469 
Actual gain/(loss) on plan assets1,974 2,760 — — 868 873 69 50 
Company contributions1,253 11 179 144 197 230 113 137 
Employee contributions— — — — 8 7 88 84 
Foreign exchange impact— — — — 462 42 — — 
Upjohn spin-off(c)
(687)— — — (270)— — — 
Acquisitions/divestitures, net— — — — (6)(16)— — 
Settlements(650)(692)(117)(70)(34)(34)— — 
Benefits paid(383)(544)(62)(74)(372)(360)(201)(221)
Fair value of plan assets, ending16,094 14,586 — — 9,811 8,956 588 519 
Funded status—Plan assets less than benefit obligation
$(845)$(1,949)$(1,366)$(1,351)$(2,191)$(2,103)$(651)$(1,148)
(a)The PBO represents the present value of the benefit obligation earned through the end of the year and factors in future compensation increases. The ABO is similar to the PBO but does not factor in future compensation increases. For the U.S. qualified and supplemental (non-qualified) pension plans, the benefit obligation is the PBO, which is also equal to the ABO. For the international pension plans, the benefit obligation is the PBO. The ABO for our international pension plans was $11.5 billion in 2020 and $10.6 billion in 2019. For the postretirement plans, the benefit obligation is the ABO.
(b)Primarily includes actuarial losses resulting from decreases in discount rates in 2020 and 2019.
(c)For more information, see Note 2B.
Schedule of Amounts Recognized in Balance Sheet
The following provides information as to how the funded status is recognized in our consolidated balance sheets:
 Pension Plans  
 U.S. QualifiedU.S. Supplemental
(Non-Qualified)		InternationalPostretirement
Plans
As of December 31,
(MILLIONS OF DOLLARS)20202019202020192020201920202019
Noncurrent assets(a)
$— $— $— $— $522 $453 $— $— 
Current liabilities(b)
— — (127)(189)(31)(30)(6)(24)
Noncurrent liabilities(c)
(845)(1,949)(1,239)(1,162)(2,681)(2,526)(645)(1,124)
Funded status$(845)$(1,949)$(1,366)$(1,351)$(2,191)$(2,103)$(651)$(1,148)
(a)Included in Other noncurrent assets.
(b)Included in Accrued compensation and related items.
(c)Included in Pension benefit obligations, Postretirement benefit obligations, and Other noncurrent liabilities, as appropriate.
Schedule of Amounts Recognized in Accumulated Other Comprehensive Income (Loss)
The following provides the pre-tax components of cumulative amounts recognized in Accumulated other comprehensive loss:
Pension Plans  
U.S. QualifiedU.S. Supplemental
(Non-Qualified)		InternationalPostretirement
Plans
As of December 31,
(MILLIONS OF DOLLARS)20202019202020192020201920202019
Actuarial losses(a)
$(5,062)$(4,812)$(579)$(484)$(3,056)$(2,921)$58 $(76)
Prior service (costs)/credits(3)(2)(1)— (31)(21)688 830 
Total(b)
$(5,065)$(4,814)$(580)$(485)$(3,087)$(2,942)$746 $754 
(a)Primarily represent the impact of changes in discount rates and other assumptions that result in cumulative changes in our PBO, as well as the cumulative difference between the expected return and actual return on plan assets. These accumulated actuarial losses are recognized in Accumulated other comprehensive loss and are amortized into net periodic benefit costs primarily over the average remaining service period for active participants for plans that are not frozen or the average life expectancy of plan participants for frozen plans, primarily using the corridor approach.
(b)The change from December 31, 2019 includes the derecognition of $388 million of pre-tax actuarial losses, net of prior service credits associated with benefit plans distributed as a result of the spin-off and the combination of the Upjohn Business with Mylan on November 16, 2020.
Schedule of Benefit Obligations in Excess of Fair Value of Plan Assets
The following provides information related to the funded status of selected benefit plans (including those reported as part of liabilities of discontinued operations):
U.S. QualifiedU.S. Supplemental (Non-Qualified)International
As of December 31,
(MILLIONS OF DOLLARS)202020192020201920202019
Pension plans with an ABO in excess of plan assets:
Fair value of plan assets
$16,094 $14,586 $— $— $6,674 $5,843 
ABO
16,940 16,535 1,366 1,351 8,961 7,960 
Pension plans with a PBO in excess of plan assets:
Fair value of plan assets
16,094 14,586 — — 6,735 5,947 
PBO
16,940 16,535 1,366 1,351 9,447 8,503 
Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets
The following provides information related to the funded status of selected benefit plans (including those reported as part of liabilities of discontinued operations):
U.S. QualifiedU.S. Supplemental (Non-Qualified)International
As of December 31,
(MILLIONS OF DOLLARS)202020192020201920202019
Pension plans with an ABO in excess of plan assets:
Fair value of plan assets
$16,094 $14,586 $— $— $6,674 $5,843 
ABO
16,940 16,535 1,366 1,351 8,961 7,960 
Pension plans with a PBO in excess of plan assets:
Fair value of plan assets
16,094 14,586 — — 6,735 5,947 
PBO
16,940 16,535 1,366 1,351 9,447 8,503 
Schedule of Allocation of Plan Assets
The following provides the components of plan assets (including those reported as part of discontinued operations):
    Fair Value  Fair Value
(MILLIONS OF DOLLARS)As of December 31, 2020Level 1Level 2Level 3
Assets Measured at NAV(a)
As of December 31, 2019Level 1Level 2Level 3
Assets Measured at NAV(a)
U.S. qualified pension plans
Cash and cash equivalents$781 $70 $711 $— $— $363 $80 $284 $— $— 
Equity securities:
Global equity securities3,241 3,213 27 1 — 3,464 3,406 57 — — 
Equity commingled funds1,325 — 1,110 — 215 1,179 — 819 — 360 
Fixed income securities:
Corporate debt securities6,499 23 6,476 — — 5,292 10 5,281 1 — 
Government and agency obligations(b)
1,555 — 1,555 — — 1,799 — 1,799 — — 
Fixed income commingled funds23 — 23 — — 6 — 6 — — 
Other investments:
Partnership investments(c)
1,431 — — — 1,431 1,212 — — — 1,212 
Insurance contracts190 — 190 — — 196 — 196 — — 
Other commingled funds(d)
1,049 — 11 — 1,038 1,075 — 9 — 1,066 
Total$16,094 $3,306 $10,103 $1 $2,684 $14,586 $3,496 $8,451 $1 $2,638 
International pension plans
Cash and cash equivalents$407 $61 $346 $— $— $221 $33 $187 $— $— 
Equity securities:
Equity commingled funds2,051 — 1,681 — 370 1,922 — 1,548 — 374 
Fixed income securities:
Corporate debt securities925 — 925 — — 796 — 796 — — 
Government and agency obligations(b)
1,334 — 1,334 — — 1,200 — 1,200 — — 
Fixed income commingled funds2,484 — 1,217 — 1,267 2,201 — 1,031 — 1,171 
Other investments:
Partnership investments(c)
69 — 3 — 66 66 — 3 — 63 
Insurance contracts1,027 — 57 969 1 1,027 — 82 944 1 
Other(d)
1,514 — 117 393 1,003 1,524 — 82 398 1,043 
Total$9,811 $61 $5,681 $1,362 $2,707 $8,956 $33 $4,929 $1,342 $2,652 
U.S. postretirement plans(e)
Insurance contracts$588 $— $588 $— $— $519 $— $519 $— $— 
(a)Certain investments that are measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The NAV amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefits plan assets.
(b)Government and agency obligations are inclusive of repurchase agreements.
(c)Mainly includes investments in private equity, private debt, public equity limited partnerships, and, to a lesser extent, real estate and venture capital.
(d)Mostly includes investments in hedge funds and real estate.
(e)Reflects postretirement plan assets, which support a portion of our U.S. retiree medical plans.
The following provides the long-term target asset allocations ranges and the percentage of the fair value of plan assets for benefit plans:
  Target
Allocation Percentage		Percentage of Plan Assets
As of December 31,
(PERCENTAGES)202020202019
U.S. qualified pension plans
Cash and cash equivalents
0-10%
4.9 %2.5 %
Equity securities
35-55%
28.4 %31.8 %
Fixed income securities
28-53%
50.2 %48.7 %
Other investments
5-20%
16.6 %17.0 %
Total100 %100 %100 %
International pension plans
Cash and cash equivalents
0-10%
4.2 %2.5 %
Equity securities
20-40%
20.9 %21.5 %
Fixed income securities
35-60%
48.4 %46.9 %
Other investments
10-35%
26.6 %29.2 %
Total100 %100 %100 %
U.S. postretirement plans
Cash and cash equivalents
0-5%
— — 
Other investments
95-100%
100 %100 %
Total100 %100 %100 %
Schedule of Effect of Significant Unobservable Inputs, Changes in Plan Assets
The following provides an analysis of the changes in our more significant investments valued using significant unobservable inputs (including those reported as part of discontinued operations):
International Pension Plans
Insurance contractsOther
Year Ended December 31,
(MILLIONS OF DOLLARS)2020201920202019
Fair value, beginning$944 $684 $398 $382 
Actual return on plan assets:
Assets held, ending32 50 (10)6 
Purchases, sales, and settlements, net
(38)(40)(10)6 
Transfer into/(out of) Level 3(11)247 (2)— 
Exchange rate changes42 2 16 4 
Fair value, ending$969 $944 $393 $398 
Schedule of Expected Future Cash Flow Information
The following provides the expected future cash flow information related to our benefit plans:
  Pension Plans
(MILLIONS OF DOLLARS)U.S. QualifiedU.S. Supplemental
(Non-Qualified)		InternationalPostretirement Plans
Expected employer contributions:
2021
$— $127 $282 $90 
Expected benefit payments:
2021$1,139 $127 $371 $97 
20221,036 121 375 94 
20231,032 116 375 92 
20241,030 106 385 89 
2025986 100 393 86 
2026–20304,625 424 2,086 430