v3.20.4
Post-Employment Benefits
 12 Months Ended
Dec. 31, 2020
Postemployment Benefits [Abstract]  
Post-Employment Benefits Post-Employment Benefits
AbbVie sponsors various pension and other post-employment benefit plans, including defined benefit, defined contribution and termination indemnity plans, which cover most employees worldwide. In addition, AbbVie provides medical benefits, primarily to eligible retirees in the United States and Puerto Rico, through other post-retirement benefit plans. Net obligations for these plans have been reflected on the consolidated balance sheets as of December 31, 2020 and 2019.
The following table summarizes benefit plan information for the global AbbVie-sponsored defined benefit and other post-employment plans:
Defined benefit plansOther post-employment plans
as of and for the years ended December 31 (in millions)2020201920202019
Projected benefit obligations
Beginning of period$8,646 $6,618 $1,050 $561 
Service cost370 269 42 25 
Interest cost264 259 34 29 
Employee contributions2 2 — — 
Amendments— — (397)— 
Actuarial loss1,105 1,703 40 451 
Benefits paid(249)(206)(17)(17)
Acquisition1,409 — 43 — 
Other, primarily foreign currency translation adjustments245 1 — 1 
End of period11,792 8,646 795 1,050 
Fair value of plan assets
Beginning of period7,116 5,637 — — 
Actual return on plan assets979 946 — — 
Company contributions367 727 17 17 
Employee contributions2 2 — — 
Benefits paid(249)(206)(17)(17)
Acquisition1,296 — — — 
Other, primarily foreign currency translation adjustments191 10 — — 
End of period9,702 7,116 — — 
Funded status, end of period$(2,090)$(1,530)$(795)$(1,050)
Amounts recognized on the consolidated balance sheets
Other assets$563 $395 $— $— 
Accounts payable and accrued liabilities(12)(8)(23)(18)
Other long-term liabilities(2,641)(1,917)(772)(1,032)
Net obligation$(2,090)$(1,530)$(795)$(1,050)
Actuarial loss, net$4,163 $3,633 $482 $469 
Prior service cost (credit)8 10 (408)(16)
Accumulated other comprehensive loss$4,171 $3,643 $74 $453 
The projected benefit obligations (PBO) in the table above included $3.5 billion at December 31, 2020 and $2.3 billion at December 31, 2019, related to international defined benefit plans.
For plans reflected in the table above, the accumulated benefit obligations (ABO) were $10.5 billion at December 31, 2020 and $7.6 billion at December 31, 2019.
Information For Pension Plans With An Accumulated Benefit Obligation In Excess Of Plan Assets
as of December 31 (in millions)20202019
Accumulated benefit obligation$7,527 $5,752 
Fair value of plan assets6,066 4,820 
Information For Pension Plans With A Projected Benefit Obligation In Excess Of Plan Assets
as of December 31 (in millions)20202019
Projected benefit obligation$8,719 $6,820 
Fair value of plan assets6,066 4,895 
The 2020 actuarial losses of $1.1 billion for qualified pension plans and $40 million for other post-employment plans were primarily driven by a decrease in the assumed discount rate from 2019. The 2019 actuarial losses of $1.7 billion for qualified pension plans and $451 million for other post-employment plans were primarily driven by a decrease in the assumed discount rate from 2018.
A change to AbbVie's U.S. retiree health benefit plan was approved in 2020 and communicated to employees and retirees in October 2020. Beginning in 2022, Medicare-eligible retirees and Medicare-eligible dependents will choose health care coverage from insurance providers through a private Medicare exchange. AbbVie will continue to provide financial support to Medicare-eligible retirees. This change decreased AbbVie's post-employment benefit obligation and increased AbbVie's unrecognized prior service credit as of December 31, 2020 by $397 million.
In connection with the Allergan acquisition, AbbVie assumed certain post-employment benefit obligations which were recorded at fair value. Upon acquisition in the second quarter of 2020, the excess of projected benefit obligations over the plan assets was recognized as a liability totaling $156 million.
Amounts Recognized in Other Comprehensive Income (Loss)
The following table summarizes the pre-tax losses (gains) included in other comprehensive income (loss):
years ended December 31 (in millions)202020192018
Defined benefit plans
Actuarial loss$701 $1,231 $209 
Amortization of prior service cost(2)— — 
Amortization of actuarial loss(227)(109)(140)
Foreign exchange loss (gain) and other56 (6)(13)
Total loss$528 $1,116 $56 
Other post-employment plans
Actuarial loss (gain)$40 $451 $(287)
Prior service cost (credit)(397)— — 
Amortization of prior service credit4 — — 
Amortization of actuarial loss(26)(1)(1)
Total loss (gain)$(379)$450 $(288)
Net Periodic Benefit Cost
years ended December 31 (in millions)202020192018
Defined benefit plans
Service cost$370 $269 $285 
Interest cost264 259 227 
Expected return on plan assets(575)(474)(439)
Amortization of prior service cost2 — — 
Amortization of actuarial loss227 109 140 
Net periodic benefit cost$288 $163 $213 
Other post-employment plans
Service cost$42 $25 $26 
Interest cost34 29 25 
Amortization of prior service credit(4)— — 
Amortization of actuarial loss26 1 1 
Net periodic benefit cost$98 $55 $52 
The components of net periodic benefit cost other than service cost are included in other expense, net in the consolidated statements of earnings.
Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date
as of December 3120202019
Defined benefit plans
Discount rate2.4 %3.0 %
Rate of compensation increases4.6 %4.6 %
Cash balance interest crediting rate2.8 %2.8 %
Other post-employment plans
Discount rate2.8 %3.6 %
The assumptions used in calculating the December 31, 2020 measurement date benefit obligations will be used in the calculation of net periodic benefit cost in 2021.
Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost
years ended December 31202020192018
Defined benefit plans
Discount rate for determining service cost3.1 %4.0 %3.4 %
Discount rate for determining interest cost3.0 %4.0 %3.1 %
Expected long-term rate of return on plan assets7.1 %7.6 %7.7 %
Expected rate of change in compensation4.6 %4.6 %4.4 %
Cash balance interest crediting rate2.8 %2.8 %2.8 %
Other post-employment plans
Discount rate for determining service cost3.7 %4.7 %4.0 %
Discount rate for determining interest cost3.2 %4.3 %3.7 %
For the December 31, 2020 post-retirement health care obligations remeasurement, the company assumed a 6.3% pre-65 (6.7% post-65) annual rate of increase in the per capita cost of covered health care benefits. The rate was assumed to decrease gradually to 4.5% in 2090 and remain at that level thereafter. For purposes of measuring the 2020 post-retirement health care costs, the company assumed a 6.4% pre-65 (7.0% post-65) annual rate of increase in the per capita cost of covered health care benefits. The rate was assumed to decrease gradually to 4.5% for 2050 and remain at that level thereafter.
Defined Benefit Pension Plan Assets
Basis of fair value measurement
as of December 31 (in millions)2020Quoted prices in active markets for identical assets
(Level 1)		Significant other observable inputs
(Level 2)		Significant unobservable inputs
(Level 3)
Equities
U.S. large cap(a)
$1,143 $1,143 $— $— 
U.S. mid cap(b)
164 164 — — 
International(c)
524 524 — — 
Fixed income securities
U.S. government securities(d)
132 18 114 — 
Corporate debt instruments(d)
854 178 676 — 
Non-U.S. government securities(d)
544 397 147 — 
Other(d)
297 294 3 — 
Absolute return funds(e)
310 4 306 — 
Real assets10 10 — — 
Other(f)
252 250 2 — 
Total$4,230 $2,982 $1,248 $— 
Total assets measured at NAV5,472 
Fair value of plan assets$9,702 

Basis of fair value measurement
as of December 31 (in millions)2019Quoted prices in active markets for identical assets
(Level 1)		Significant other observable inputs
(Level 2)		Significant unobservable inputs
(Level 3)
Equities
U.S. large cap(a)
$884 $884 $— $— 
U.S. mid cap(b)
138 138 — — 
International(c)
349 349 — — 
Fixed income securities
U.S. government securities(d)
149 21 128 — 
Corporate debt instruments(d)
372 112 260 — 
Non-U.S. government securities(d)
202 84 118 — 
Other(d)
320 318 2 — 
Absolute return funds(e)
296 4 292 — 
Real assets9 9 — — 
Other(f)
132 132 — — 
Total$2,851 $2,051 $800 $— 
Total assets measured at NAV4,265 
Fair value of plan assets$7,116 
(a)A mix of index funds and actively managed equity accounts that are benchmarked to various large cap indices.
(b)A mix of index funds and actively managed equity accounts that are benchmarked to various mid cap indices.
(c)A mix of index funds and actively managed equity accounts that are benchmarked to various non-U.S. equity indices in both developed and emerging markets.
(d)Securities held by actively managed accounts, index funds and mutual funds.
(e)Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide range of asset classes and strategies, including but not limited to equities, fixed income, commodities, financial futures, currencies and other securities, with objectives to outperform agreed upon benchmarks of specific return and volatility targets.
(f)Investments in cash and cash equivalents.
Equities and registered investment companies having quoted prices are valued at the published market prices. Fixed income securities that are valued using significant other observable inputs are quoted at prices obtained from independent financial service industry-recognized vendors. Investments held in pooled investment funds, common collective trusts or limited partnerships are valued at the net asset value (NAV) practical expedient to estimate fair value. The NAV is provided by the fund administrator and is based on the value of the underlying assets owned by the fund minus its liabilities.
The investment mix of equity securities, fixed income and other asset allocation strategies is based upon achieving a desired return, balancing higher return, more volatile equity securities and lower return, less volatile fixed income securities. Investment allocations are established for each plan and are generally made across a range of markets, industry sectors, capitalization sizes and in the case of fixed income securities, maturities and credit quality. The 2020 target investment allocation for the AbbVie Pension Plan was 50% in equity securities, 20% in fixed income securities and 30% in asset allocation strategies and other holdings. There are no known significant concentrations of risk in the plan assets of the AbbVie Pension Plan or of any other plans.
The expected return on plan assets assumption for each plan is based on management's expectations of long-term average rates of return to be achieved by the underlying investment portfolio. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, as well as current economic and capital market conditions.
Expected Benefit Payments
The following table summarizes total benefit payments expected to be paid to plan participants including payments funded from both plan and company assets:
years ending December 31 (in millions)Defined
benefit plans		Other
post-employment plans
2021$284 $23 
2022301 29 
2023319 31 
2024339 33 
2025362 36 
2026 to 20302,169 217 
Defined Contribution Plan
AbbVie's principal defined contribution plans are the AbbVie Savings Plan and the Allergan Savings Plan. AbbVie recorded expense of $191 million in 2020, $102 million in 2019 and $89 million in 2018 related to these plans. AbbVie provides certain other post-employment benefits, primarily salary continuation arrangements, to qualifying employees and accrues for the related cost over the service lives of the employees.