v3.25.4
Pension and Other Postretirement Benefit Plans
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefit Plans Pension and Other Postretirement Benefit Plans
The Company has defined benefit pension plans covering eligible employees in the U.S. and in certain of its international subsidiaries. In addition, the Company provides medical benefits, principally to its eligible U.S. retirees and their dependents, through its other postretirement benefit plans. The Company uses December 31 as the year-end measurement date for all of its pension plans and other postretirement benefit plans.
Net Periodic Benefit Cost
The net periodic benefit cost (credit) for pension and other postretirement benefit plans consisted of the following components:
Pension Benefits
U.S.InternationalOther Postretirement Benefits
Years Ended December 31202520242023202520242023202520242023
Service cost$378 $373 $326 $228 $243 $196 $37 $30 $32 
Interest cost569 537 526 303 294 299 61 56 63 
Expected return on plan assets(840)(826)(735)(613)(554)(517)(50)(80)(64)
Amortization of unrecognized prior service (credit) cost
— — (1)(28)(13)2 (40)(43)(49)
Net loss (gain) amortization58 43 — 11 5 (3)(45)(51)(42)
Termination benefits2 5 3 — 1 — — 4 — 
Curtailments9 — 8 (15)— (1)(3)— (1)
Settlements— — 28 — (1)(5)— — — 
Net periodic benefit cost (credit)$176 $132 $155 $(114)$(25)$(29)$(40)$(84)$(61)
In connection with restructuring actions (see Note 5), termination charges were recorded in 2025, 2024 and 2023 on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring activities, curtailments and settlements were recorded on certain pension plans. Lump sum payments to U.S. pension plan participants also contributed to the settlements recorded during 2023.
The components of net periodic benefit cost (credit) other than the service cost component are included in Other (income) expense, net (see Note 14), with the exception of certain amounts for termination benefits,
curtailments and settlements, which are recorded in Restructuring costs if the event giving rise to the termination benefits, curtailment or settlement is related to restructuring actions.
Obligations and Funded Status
Summarized information about the changes in plan assets and benefit obligations, the funded status and the amounts recorded at December 31 is as follows:
Pension BenefitsOther
Postretirement
Benefits
U.S.International
202520242025202420252024
Fair value of plan assets January 1$9,717 $9,804 $9,647 $9,562 $1,040 $1,045 
Actual return on plan assets1,435 266 318 637 86 35 
Company contributions267 262 195 198 71 46 
Effects of exchange rate changes— — 1,010 (522)— — 
Benefits paid(689)(615)(268)(250)(90)(89)
Settlements— — (38)(14)— — 
Other— — 42 36 — 3 
Fair value of plan assets December 31$10,730 $9,717 $10,906 $9,647 $1,107 $1,040 
Benefit obligation January 1$10,151 $10,446 $8,274 $9,042 $1,136 $1,104 
Service cost378 373 228 243 37 30 
Interest cost569 537 303 294 61 56 
Actuarial losses (gains) (1)
178 (595)(962)(549)34 32 
Benefits paid(689)(615)(268)(250)(90)(89)
Effects of exchange rate changes— — 879 (473)3 (4)
Plan amendments— — (5)(56)— — 
Curtailments9 — (4)— (2)— 
Termination benefits2 5 — 1 — 4 
Settlements— — (38)(14)— — 
Other— — 45 36 — 3 
Benefit obligation December 31$10,598 $10,151 $8,452 $8,274 $1,179 $1,136 
Funded status December 31$132 $(434)$2,454 $1,373 $(72)$(96)
Recognized as:
Other Assets$602 $26 $2,770 $1,785 $66 $51 
Accrued and other current liabilities(58)(55)(20)(18)(7)(7)
Other Noncurrent Liabilities(412)(405)(296)(394)(131)(140)
(1)    Actuarial losses (gains) primarily reflect changes in discount rates.
At December 31, 2025 and 2024, the accumulated benefit obligation was $18.7 billion and $18.1 billion, respectively, for all pension plans, of which $10.4 billion and $10.0 billion, respectively, related to U.S. pension plans.
Information related to the funded status of select pension plans at December 31 is as follows:
U.S.International
2025202420252024
Pension plans with a projected benefit obligation in excess of plan assets
Projected benefit obligation
$469 $9,517 $1,405 $1,847 
Fair value of plan assets— 9,057 1,089 1,435 
Pension plans with an accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation$449 $442 $1,332 $1,768 
Fair value of plan assets— — 1,038 1,385 
Plan Assets
Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs used to measure fair value with Level 1 having the highest priority and Level 3 having the lowest:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity. The Level 3 assets are those whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques with significant unobservable inputs, as well as instruments for which the determination of fair value requires significant judgment or estimation. At December 31, 2025 and 2024, $737 million and $700 million, respectively, or 3% and 4%, respectively, of the Company’s pension investments were categorized as Level 3 assets.
If the inputs used to measure the financial assets fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The fair values of the Company’s pension plan assets at December 31 by asset category are as follows:
 Fair Value Measurements UsingFair Value Measurements Using
Level 1Level 2Level 3
NAV (1)
TotalLevel 1Level 2Level 3
NAV (1)
Total
20252024
U.S. Pension Plans
Cash and cash equivalents$200 $— $— $142 $342 $43 $— $— $121 $164 
Investment funds
Developed markets equities196 — — 3,278 3,474 170 — — 2,385 2,555 
Emerging markets equities— — — 905 905 — — — 1,265 1,265 
Real estate— — — 298 298 — — — 174 174 
Equity securities
Developed markets2,109 — — — 2,109 2,171 — — — 2,171 
Fixed income securities
Government and agency obligations— 2,206 — — 2,206 — 2,101 — — 2,101 
Corporate obligations— 1,397 — — 1,397 — 1,293 — — 1,293 
Mortgage and asset-backed securities— 18 — — 18 — 21 — — 21 
Other investments (liabilities)
Derivatives(21)— — — (21)(29)— — — (29)
Other— — 2 — 2 — — 2 — 2 
Plan assets at fair value$2,484 $3,621 $2 $4,623 $10,730 $2,355 $3,415 $2 $3,945 $9,717 
International Pension Plans
Cash and cash equivalents$90 $5 $— $11 $106 $112 $— $— $11 $123 
Investment funds
Developed markets equities815 4,024 — 135 4,974 599 3,537 — 96 4,232 
Government and agency obligations323 3,306 — 157 3,786 262 2,974 — 149 3,385 
Corporate obligations25 10 — 156 191 23 8 — 149 180 
Emerging markets equities71 — — 90 161 54 — — 91 145 
Other fixed income obligations27 5 — 4 36 8 7 — 4 19 
Real estate— — — 17 17 — — — 12 12 
Equity securities
Developed markets289 — — — 289 287 — — — 287 
Fixed income securities
Government and agency obligations— 413 — — 413 — 368 — — 368 
Corporate obligations— 147 — — 147 — 141 — — 141 
Mortgage and asset-backed securities— 51 — — 51 — 54 — — 54 
Other investments
Insurance contracts (2)
— — 735 — 735 — 1 698 2 701 
Plan assets at fair value$1,640 $7,961 $735 $570 $10,906 $1,345 $7,090 $698 $514 $9,647 
(1)    Certain investments that were measured at net asset value (NAV) per share or its equivalent have not been classified in the fair value hierarchy. The NAV amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets at December 31, 2025 and 2024.
(2)    The plans’ Level 3 investments in insurance contracts are generally valued using a crediting rate that approximates market returns and invest in underlying securities whose market values are unobservable and determined using pricing models, discounted cash flow methodologies, or similar techniques.
The table below provides a summary of the changes in fair value, including transfers in and/or out, of all financial assets measured at fair value using significant unobservable inputs (Level 3) for the Company’s pension plan assets:
 20252024
Insurance
Contracts		OtherTotalInsurance
Contracts		OtherTotal
U.S. Pension Plans
Balance January 1$— $2 $2 $— $3 $3 
Actual return on plan assets:
Relating to assets still held at December 31— — — — (2)(2)
Relating to assets sold during the year— — — — 2 2 
Purchases and sales, net— — — — (1)(1)
Balance December 31$— $2 $2 $— $2 $2 
International Pension Plans
Balance January 1$698 $— $698 $785 $— $785 
Actual return on plan assets:
Relating to assets still held at December 31117 — 117 (26)— (26)
Purchases and sales, net(85)— (85)(61)— (61)
Transfers into Level 3
5 — 5 — — — 
Balance December 31$735 $— $735 $698 $— $698 
The fair values of the Company’s other postretirement benefit plan assets at December 31 by asset category are as follows:
 Fair Value Measurements UsingFair Value Measurements Using
Level 1Level 2Level 3
NAV (1)
TotalLevel 1Level 2Level 3
NAV (1)
Total
20252024
Cash and cash equivalents$14 $— $— $4 $18 $— $— $— $5 $5 
Investment funds
Developed markets equities3 — — 58 61 3 — — 46 49 
Emerging markets equities— — — 16 16 — — — 24 24 
Real estate— — — 5 5 — — — 3 3 
Equity securities
Developed markets38 — — — 38 41 — — — 41 
Fixed income securities
Corporate obligations— 645 — — 645 — 598 — — 598 
Government and agency obligations— 261 — — 261 — 266 — — 266 
Mortgage and asset-backed securities— 63 — — 63 — 54 — — 54 
Plan assets at fair value$55 $969 $— $83 $1,107 $44 $918 $— $78 $1,040 
(1)    Certain investments that were measured at net asset value (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 fair value of plan assets at December 31, 2025 and 2024.
The Company has established investment guidelines for its U.S. pension and other postretirement plans to create an asset allocation that is expected to deliver a rate of return sufficient to meet the long-term obligation of each plan, given an acceptable level of risk. The target investment portfolio of the Company’s U.S. pension and other postretirement benefit plans is allocated 25% to 40% in U.S. equities, 15% to 30% in international equities, 40% to 50% in fixed-income investments, and up to 8% in cash and other investments. The portfolio’s equity weighting is consistent with the long-term nature of the plans’ benefit obligations. The expected annual standard deviation of returns of the target portfolio, which approximates 11%, reflects both the equity allocation and the diversification benefits among the asset classes in which the portfolio invests. For international pension plans, the targeted investment portfolio varies based on the duration of pension liabilities and local government rules and regulations. Concentration risk is mitigated by utilizing diversified investment strategies within portfolios.
Expected Contributions
Contributions during 2026 are expected to be approximately $270 million for U.S. pension plans, approximately $190 million for international pension plans and approximately $70 million for other postretirement benefit plans.
Expected Benefit Payments
Expected benefit payments are as follows:
U.S. Pension BenefitsInternational Pension
Benefits		Other
Postretirement
Benefits
2026$834 $334 $88 
2027832 323 90 
2028833 336 94 
2029847 354 98 
2030866 362 102 
2031 — 20354,531 2,108 554 
Expected benefit payments are based on the same assumptions used to measure the benefit obligations and include estimated future employee service.
Amounts Recognized in Other Comprehensive Income (Loss)
Net gain/loss amounts reflect differences between expected and actual returns on plan assets as well as the effects of changes in actuarial assumptions. Net gain/loss amounts in excess of certain thresholds are amortized into net periodic benefit cost over the average remaining service life of employees. The following amounts were reflected as components of OCI:
 Pension PlansOther Postretirement
Benefit Plans
U.S.International
Years Ended December 31202520242023202520242023202520242023
Net gain (loss) arising during the period$408 $35 $(69)$686 $634 $(438)$2 $(78)$110 
Prior service credit (cost) arising during the period— — — 5 56 (16)— — — 
 $408 $35 $(69)$691 $690 $(454)$2 $(78)$110 
Net loss (gain) amortization included in benefit cost$58 $43 $— $11 $5 $(3)$(45)$(51)$(42)
Prior service (credit) cost amortization included in benefit cost— — (1)(28)(13)2 (40)(43)(49)
Settlements and curtailments9 — 36 (15)(1)(6)(3)— (1)
 $67 $43 $35 $(32)$(9)$(7)$(88)$(94)$(92)
Actuarial Assumptions
The Company reassesses its benefit plan assumptions on a regular basis. The weighted average assumptions used in determining U.S. pension and other postretirement benefit plan and international pension plan information are as follows:
 U.S. Pension and Other
Postretirement Benefit Plans		International Pension Plans
December 31202520242023202520242023
Net periodic benefit cost      
Discount rate5.70 %5.30 %5.50 %3.70 %3.40 %3.90 %
Expected rate of return on plan assets7.70 %7.75 %7.00 %5.40 %5.20 %5.00 %
Salary growth rate4.80 %4.60 %4.60 %3.10 %3.20 %3.20 %
Interest crediting rate5.40 %5.30 %5.30 %3.50 %3.40 %3.30 %
Benefit obligation      
Discount rate5.60 %5.70 %5.30 %4.20 %3.70 %3.40 %
Salary growth rate4.80 %4.80 %4.60 %3.10 %3.10 %3.20 %
Interest crediting rate5.40 %5.40 %5.30 %3.70 %3.50 %3.40 %
For both the pension and other postretirement benefit plans, the discount rate is evaluated on measurement dates and modified to reflect the prevailing market rate of a portfolio of high-quality fixed-income debt instruments that would provide the future cash flows needed to pay the benefits included in the benefit obligation as they come due. The expected rate of return for both the pension and other postretirement benefit plans represents the average rate of return to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid and is determined on a plan basis. The expected rate of return for each plan is developed considering long-term historical returns data, current market conditions, and actual returns on the plan assets. Using this reference information, the long-term return expectations for each asset category and a weighted-average expected return for each plan’s target portfolio is developed according to the allocation among those investment categories. The expected portfolio performance reflects the contribution of active management as appropriate. For 2026, the expected rate of return for the Company’s U.S. pension and other postretirement benefit plans will be 7.70%, which is the same as 2025.
The health care cost trend rate assumptions for other postretirement benefit plans are as follows:
December 3120252024
Health care cost trend rate assumed for next year8.50 %7.90 %
Rate to which the cost trend rate is assumed to decline4.50 %4.50 %
Year that the trend rate reaches the ultimate trend rate20412040

Savings Plans
The Company also maintains defined contribution savings plans in the U.S. The Company matches a percentage of each employee’s contributions consistent with the provisions of the plan for which the employee is eligible. Total employer contributions to these plans in 2025, 2024 and 2023 were $223 million, $215 million and $199 million, respectively.