PENSION AND OTHER POSTRETIREMENT DEFINED BENEFIT PLANS We sponsor various qualified and non-qualified defined benefit pension plans for our eligible associates. We also maintain hourly and salaried benefit plans that provide postretirement medical, dental, vision and life insurance benefits (OPEB) to our eligible retirees and their dependents in the U.S.

Actuarial valuations of our benefit plans were made as of December 31, 2021 and 2020. The primary weighted-average assumptions used in the year-end valuation of our principal plans appear in the following table. The U.S. discount rates are based on an actuarial review of a hypothetical portfolio of long-term, high quality corporate bonds matched against the expected payment stream for each of our plans. The United Kingdom (U.K.) discount rates are based on hypothetical yield curves developed from corporate bond yield information within each regional market. The assumptions for expected return on plan assets are based on future capital market expectations for the asset classes represented within our portfolios and a review of long-term historical returns. The rates of increase in compensation and health care costs are based on current market conditions, inflationary expectations and historical information.


	Pension Benefits												OPEB
	2021				2020				2019				2021		2020		2019
	U.S.		U.K.		U.S.		U.K.		U.S.		U.K.
Discount rate	2.90	%	1.85	%	2.50	%	1.55	%	3.40	%	2.05	%	2.90	%	2.55	%	3.35	%
Expected return on plan assets	7.00	%	4.00	%	7.25	%	4.00	%	7.25	%	4.00	%	N/A		N/A		N/A

Rate of compensation increase	N/A		3.70	%	N/A		3.15	%	N/A		3.15	%	4.00	%	4.00	%	4.00	%

The accumulated benefit obligation for all defined benefit pension plans was $672.4 million and $796.6 million at December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, the accumulated benefit obligation for our underfunded defined benefit pension plans was $494.6 million, the projected benefit obligation was $494.6 million and the fair value of assets for these plans was $366.7 million.

Certain eligible retirees under our OPEB plans have past service with both AAM and GM. AAM and GM share proportionally in the cost of OPEB for these retirees based on the length of service an employee had with AAM and GM. We have included in our OPEB obligation the amounts expected to be received from GM pursuant to this agreement of $213.2 million and $250.0 million at December 31, 2021 and December 31, 2020, respectively. We have also recorded a corresponding asset for these amounts on our Consolidated Balance Sheets, $12.1 million that is classified as a current asset and $201.1 million that is classified as a noncurrent asset as of December 31, 2021.


	Pension Benefits				OPEB
	December 31,				December 31,
	2021		2020		2021		2020
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	798.9	$	740.2	$	586.5	$	549.1
Service cost	2.0		2.0		0.3		0.4
Interest cost	17.3		21.4		8.4		10.2

Actuarial loss (gain)	(6.5)		63.5		(34.6)		25.3
Change in GM portion of OPEB obligation	—		—		(36.8)		14.0
Participant contributions	0.2		0.2		—		—


Settlements	(99.0)		(3.3)		—		—
Benefit payments	(34.4)		(34.4)		(14.2)		(12.5)

Currency fluctuations	(4.4)		8.7		—		—
Other	—		0.6		—		—
Net change	(124.8)		58.7		(76.9)		37.4
Benefit obligation at end of year	$	674.1	$	798.9	$	509.6	$	586.5

Change in plan assets
Fair value of plan assets at beginning of year	$	669.9	$	636.6	$	—	$	—
Actual return on plan assets	31.6		55.7		—		—
Employer contributions	7.8		8.5		14.2		12.5
Participant contributions	0.2		0.2		—		—
Benefit payments	(34.4)		(34.4)		(14.2)		(12.5)
Settlements	(99.0)		(3.3)		—		—

Currency fluctuations	(2.3)		6.6		—		—
Net change	(96.1)		33.3		—		—
Fair value of plan assets at end of year	$	573.8	$	669.9	$	—	$	—


	Pension Benefits				OPEB
	December 31,				December 31,
	2021		2020		2021		2020
	(in millions)
Noncurrent assets	$	27.6	$	20.2	$	—	$	—
Current liabilities	(6.6)		(8.0)		(28.4)		(29.8)
Noncurrent liabilities	(121.3)		(141.2)		(481.2)		(556.7)
Net liability	$	(100.3)	$	(129.0)	$	(509.6)	$	(586.5)

The decrease in net actuarial loss for pension benefits was primarily attributable to the accelerated recognition of certain deferred losses as a result of our Pension Annuity Purchase, as defined below, and as a result of amortization of actuarial losses throughout 2021. The change in net actuarial gain (loss) for OPEB was primarily attributable to an increase in the discount rates used in the valuation at December 31, 2021, as compared to prior year, and as a result of the impact of a change in prescription drug coverage for certain plan participants from a Medicare Part D subsidy to an Employer Group Waiver Plan effective January 1, 2022.


	Pension Benefits						OPEB
	2021		2020		2019		2021		2020		2019
	(in millions)
Service cost	$	2.0	$	2.0	$	1.5	$	0.3	$	0.4	$	0.3
Interest cost	17.3		21.4		28.0		8.4		10.2		12.8
Expected asset return	(39.0)		(38.4)		(41.1)		—		—		—
Amortized actuarial loss	10.8		8.6		6.4		1.7		1.0		0.1
Amortized prior service cost (credit)	0.1		0.1		—		(1.5)		(1.5)		(1.5)



Settlement charge	42.3		0.5		10.4		—		—		—
Net periodic benefit cost (credit)	$	33.5	$	(5.8)	$	5.2	$	8.9	$	10.1	$	11.7

Our postretirement cost sharing asset from GM is measured on the same basis as the portion of the obligation to which it relates. The actuarial gains and losses related to the GM portion of the OPEB obligation are recognized immediately in the Consolidated Statements of Operations as an offset against the gains and losses related to the change in the corresponding GM postretirement cost sharing asset. These items are presented net in the change in benefit obligation and net periodic benefit cost components disclosed above. Remaining actuarial gains and losses are deferred and amortized over the expected future service periods of the active participants or the remaining life expectancy of the inactive participants.

The expected future pension and other postretirement benefits to be paid, net of GM cost sharing, for each of the next five years and in the aggregate for the succeeding five years thereafter are as follows: $50.6 million in 2022; $47.5 million in 2023; $49.0 million in 2024; $49.7 million in 2025; $51.5 million in 2026 and $253.1 million for 2027 through 2031. These amounts were estimated using the same assumptions that were used to measure our 2021 year-end pension and OPEB obligations and include an estimate of future employee service.

Contributions We contributed $4.1 million to our pension trusts in 2021. Due to the availability of our pre-funded pension balances (previous contributions in excess of prior required pension contributions), we expect our regulatory pension funding requirements in 2022 to be less than $1.0 million. We expect our cash payments, net of GM cost sharing, for OPEB to be approximately $16.5 million in 2022.

U.S. pension annuity purchase In the fourth quarter of 2021, we purchased group annuity contracts from an insurance company to settle pension obligations for certain U.S. plan participants (Pension Annuity Purchase). The purchase of the group annuity contracts, which was paid from plan assets, irrevocably transferred the remaining future pension benefit obligations for these U.S. plan participants to the insurance company and reduced our liabilities and administrative costs going forward.

The Pension Annuity Purchase included approximately 3,400 of our U.S. pension plan participants. As a result of this settlement, we remeasured the assets and liabilities of our U.S. pension plans, which reduced our projected benefit obligation by $97.3 million and resulted in a non-cash pre-tax settlement charge of $42.3 million in the fourth quarter of 2021 related to the accelerated recognition of certain deferred losses.

Voluntary terminated vested lump sum payment In 2019, we offered a voluntary one-time lump sum payment option to certain eligible terminated vested participants in our U.S. pension plans that, if accepted, settled our pension obligations to them (AAM Voluntary Pension Payout). The lump sum settlements, which were paid from plan assets, reduced our liabilities and administrative costs going forward.

The AAM Voluntary Pension Payout was offered to approximately 2,000 of our U.S. pension plan participants, of which 616 participants accepted the offer. We made a one-time lump sum payment from our pension trust of $28.4 million in 2019. As a result of this settlement, we remeasured the assets and liabilities of our U.S. pension plans, which reduced our projected benefit obligation by $32.5 million and resulted in a non-cash settlement charge of $9.8 million in the fourth quarter of 2019 related to the accelerated recognition of certain deferred losses.

Pension plan assets The weighted-average asset allocations of our pension plan assets at December 31, 2021 and 2020 appear in the following table. The asset allocation for our plans is developed in consideration of the demographics of the plan participants and expected payment stream of the benefit obligation.


	U.S.					U.K.
					Target					Target
	2021		2020		Allocation	2021		2020		Allocation
Equity securities	27.9	%	34.7	%	25% - 35%	21.6	%	21.8	%	15% - 30%
Fixed income securities	63.8		57.3		60% - 70%	66.0		65.9		70% - 80%
Alternative assets	7.5		7.3		0% - 10%	9.9		8.9		5% - 10%
Cash	0.8		0.7		0% - 5%	2.5		3.4		0% - 5%
Total	100.0	%	100.0	%		100.0	%	100.0	%

The primary objective of our pension plan assets is to provide a source of retirement income for participants and beneficiaries. Our primary financial objectives for the pension plan assets have been established in conjunction with a comprehensive review of our current and projected financial requirements. These objectives include having the ability to pay all future benefits and expenses when due, maintaining flexibility and minimizing volatility. These objectives are based on a long-term investment horizon.

Defined Benefit Pension Plan Assets Investments in our defined benefit plans are stated at fair value. Level 1 assets are valued using quoted market prices that represent the asset value of the shares held by the trusts. The level 2 assets are investments in pooled funds, which are valued using a model to reflect the valuation of their underlying assets that are publicly traded with observable values. The fair values of our pension plan assets are as follows:


December 31, 2021
Asset Categories	Level 1		Level 2		Level 3		Total
	(in millions)
Cash and Cash Equivalents	$	7.8	$	0.8	$	—	$	8.6
Equity
U.S. Large Cap	54.0		0.1		—		54.1
U.S. Small/Mid Cap	15.2		—		—		15.2
World Equity	66.9		10.7		—		77.6
Fixed Income Securities
Government & Agencies	80.2		52.7		—		132.9
Corporate Bonds - Investment Grade	189.9		1.3		—		191.2
Corporate Bonds - Non-investment Grade	15.7		0.5		—		16.2
Emerging Market Debt	12.5		—		—		12.5
Other	11.2		5.8		—		17.0
Other
Property Funds (a)	—		—		—		38.2
Liquid Alternatives Fund (a)	—		—		—		1.9
Structured Credit Fund (a)	—		—		—		8.4

Total Plan Assets	$	453.4	$	71.9	$	—	$	573.8

December 31, 2020
Asset Categories	Level 1		Level 2		Level 3		Total
	(in millions)
Cash and Cash Equivalents	$	7.4	$	2.9	$	—	$	10.3
Equity
U.S. Large Cap	88.1		2.7		—		90.8
U.S. Small/Mid Cap	20.5		—		—		20.5
World Equity	87.0		7.8		—		94.8
Fixed Income Securities
Government & Agencies	84.1		45.9		—		130.0
Corporate Bonds - Investment Grade	219.0		2.7		—		221.7
Corporate Bonds - Non-investment Grade	22.4		0.7		—		23.1
Emerging Market Debt	21.1		1.1		—		22.2
Other	3.6		0.3		—		3.9
Other
Property Funds (a)	—		—		—		44.2
Liquid Alternatives Fund (a)	—		—		—		1.8
Structured Credit Fund (a)	—		—		—		6.6

Total Plan Assets	$	553.2	$	64.1	$	—	$	669.9

(a) In accordance with ASC 820 - Fair Value Measurement certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.