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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Employee Benefit Plans
Employee Benefit Plans
The company has defined benefit pension plans for many employees. The company typically prefunds defined benefit plans as required by local regulations or in certain situations where prefunding provides economic advantages. In the United States, all qualified plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. The company does not typically fund U.S. nonqualified pension plans that are not subject to funding requirements under laws and regulations because contributions to these pension plans may be less economic and investment returns may be less attractive than the company’s other investment alternatives.
The company also sponsors other postretirement benefit (OPEB) plans that provide medical and dental benefits, as well as life insurance for some active and qualifying retired employees. The plans are unfunded, and the company and retirees share the costs. For the company’s main U.S. medical plan, the increase to the pre-Medicare company contribution for retiree medical coverage is limited to no more than 4 percent each year. Certain life insurance benefits are paid by the company.
The company recognizes the overfunded or underfunded status of each of its defined benefit pension and OPEB plans as an asset or liability on the Consolidated Balance Sheet.
The funded status of the company’s pension and OPEB plans for 2020 and 2019 follows:
Pension Benefits
20202019Other Benefits
U.S.Int’l.U.S.Int’l.20202019
Change in Benefit Obligation
Benefit obligation at January 1$14,465 $5,680 $11,726 $4,820 $2,520 $2,430 
Service cost497 130 406 139 38 36 
Interest cost353 175 397 199 71 96 
Plan participants’ contributions— 3 — 4 59 72 
Plan amendments— — — 29 — — 
Actuarial (gain) loss1,782 550 2,922 673 191 125 
Foreign currency exchange rate changes— 158 — 121 (1)2 
Benefits paid(2,045)(368)(1,035)(302)(214)(240)
Divestitures/Acquisitions22 — 49 — — (1)
Curtailment92 (21)— (3)(14)— 
Benefit obligation at December 3115,166 6,307 14,465 5,680 2,650 2,520 
Change in Plan Assets
Fair value of plan assets at January 110,177 4,791 8,532 4,142 — — 
Actual return on plan assets848 500 1,548 566 — — 
Foreign currency exchange rate changes— 174 — 115 — — 
Employer contributions950 263 1,096 266 155 168 
Plan participants’ contributions— 3 — 4 59 72 
Benefits paid(2,045)(368)(1,035)(302)(214)(240)
Divestitures/Acquisitions— — 36 — — — 
Fair value of plan assets at December 319,930 5,363 10,177 4,791 — — 
Funded status at December 31$(5,236)$(944)$(4,288)$(889)$(2,650)$(2,520)
Amounts recognized on the Consolidated Balance Sheet for the company’s pension and OPEB plans at December 31, 2020 and 2019, include:
Pension Benefits
20202019Other Benefits
U.S.Int’l.U.S.Int’l.20202019
Deferred charges and other assets$24 $547 $23 $413 $— $— 
Accrued liabilities(258)(76)(239)(71)(153)(174)
Noncurrent employee benefit plans(5,002)(1,415)(4,072)(1,231)(2,497)(2,346)
Net amount recognized at December 31$(5,236)$(944)$(4,288)$(889)$(2,650)$(2,520)
For the years ended December 31, 2020 and December 31, 2019, the increase in benefit obligations was primarily due to actuarial losses caused by lower discount rates used to value the obligations.
Amounts recognized on a before-tax basis in “Accumulated other comprehensive loss” for the company’s pension and OPEB plans were $7,278 and $6,357 at the end of 2020 and 2019, respectively. These amounts consisted of:
Pension Benefits
20202019Other Benefits
U.S.Int’l.U.S.Int’l.20202019
Net actuarial loss$5,714 $1,401 $5,135 $1,269 $260 $74 
Prior service (credit) costs3 86 5 102 (186)(228)
Total recognized at December 31$5,717 $1,487 $5,140 $1,371 $74 $(154)
The accumulated benefit obligations for all U.S. and international pension plans were $13,608 and $5,758, respectively, at December 31, 2020, and $12,781 and $5,203, respectively, at December 31, 2019.
Information for U.S. and international pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2020 and 2019, was:
Pension Benefits
20202019
U.S.Int’l.U.S.Int’l.
Projected benefit obligations$15,103 $2,084 $14,401 $1,554 
Accumulated benefit obligations13,545 1,622 12,718 1,268 
Fair value of plan assets9,842 600 10,091 278 
The components of net periodic benefit cost and amounts recognized in the Consolidated Statement of Comprehensive Income for 2020, 2019 and 2018 are shown in the table below:
Pension Benefits
202020192018Other Benefits
U.S.Int’l.U.S.Int’l.U.S.Int’l.202020192018
Net Periodic Benefit Cost
Service cost$497 $130 $406 $139 $480 $141 $38 $36 $42 
Interest cost353 175 397 199 370 206 71 96 94 
Expected return on plan assets(650)(209)(565)(231)(636)(253)— — — 
Amortization of prior service costs (credits)2 10 2 11 2 10 (28)(28)(28)
Recognized actuarial losses385 45 239 21 304 29 3 (3)15 
Settlement losses620 37 259 3 411 33 — — — 
Curtailment losses (gains)92 2 — 16 — 3 (27)— — 
Total net periodic benefit cost1,299 190 738 158 931 169 57 101 123 
Changes Recognized in Comprehensive Income
Net actuarial (gain) loss during period1,584 230 1,939 338 151 12 190 128 (248)
Amortization of actuarial loss(1,005)(98)(498)(24)(715)(62)(4)3 (15)
Prior service (credits) costs during period— — — 29 — 23 — (1)3 
Amortization of prior service (costs) credits(2)(17)(2)(30)(2)(13)42 28 28 
Total changes recognized in other
comprehensive income
577 115 1,439 313 (566)(40)228 158 (232)
Recognized in Net Periodic Benefit Cost and Other Comprehensive Income
$1,876 $305 $2,177 $471 $365 $129 $285 $259 $(109)
Assumptions The following weighted-average assumptions were used to determine benefit obligations and net periodic benefit costs for years ended December 31:
Pension Benefits
202020192018Other Benefits
U.S.Int’l.U.S.Int’l.U.S.Int’l.202020192018
Assumptions used to determine benefit obligations:
Discount rate2.4 %2.4 %3.1 %3.2 %4.2 %4.4 %2.6 %3.2 %4.4 %
Rate of compensation increase4.5 %4.0 %4.5 %4.0 %4.5 %4.0 %N/AN/AN/A
Assumptions used to determine net periodic benefit cost:
Discount rate for service cost3.3 %3.2 %4.4 %4.4 %3.7 %3.9 %3.5 %4.6 %3.9 %
Discount rate for interest cost2.6 %3.2 %3.7 %4.4 %3.0 %3.9 %3.0 %4.2 %3.5 %
Expected return on plan assets6.5 %4.5 %6.8 %5.6 %6.8 %5.5 %N/AN/AN/A
Rate of compensation increase4.5 %4.0 %4.5 %4.0 %4.5 %4.0 %N/AN/AN/A
Expected Return on Plan Assets The company’s estimated long-term rates of return on pension assets are driven primarily by actual historical asset-class returns, an assessment of expected future performance, advice from external actuarial firms and the incorporation of specific asset-class risk factors. Asset allocations are periodically updated using pension plan asset/liability studies, and the company’s estimated long-term rates of return are consistent with these studies.
For 2020, the company used an expected long-term rate of return of 6.50 percent for U.S. pension plan assets, which account for 65 percent of the company’s pension plan assets. In both 2019 and 2018, the company used a long-term rate of return of 6.75 percent for these plans.
The market-related value of assets of the main U.S. pension plan used in the determination of pension expense was based on the market values in the three months preceding the year-end measurement date. Management considers the three-month time period long enough to minimize the effects of distortions from day-to-day market volatility and still be contemporaneous to the end of the year. For other plans, market value of assets as of year-end is used in calculating the pension expense.
Discount Rate The discount rate assumptions used to determine the U.S. and international pension and OPEB plan obligations and expense reflect the rate at which benefits could be effectively settled, and are equal to the equivalent single rate resulting from yield curve analysis. This analysis considered the projected benefit payments specific to the company’s plans and the yields on high-quality bonds. The projected cash flows were discounted to the valuation date using the yield curve for the main U.S. pension and OPEB plans. The effective discount rates derived from this analysis at the end of 2020 were 2.4 for the main U.S. pension plan and 2.4 for the main U.S. OPEB plan. The discount rates for these plans at the end of 2019 were 3.1 and 3.1 percent, respectively, while in 2018 they were 4.2 and 4.3 percent for these plans, respectively.
Other Benefit Assumptions For the measurement of accumulated postretirement benefit obligation at December 31, 2020, for the main U.S. OPEB plan, the assumed health care cost-trend rates start with 6.1 percent in 2021 and gradually decline to 4.5 percent for 2027 and beyond. For this measurement at December 31, 2019, the assumed health care cost-trend rates started with 6.8 percent in 2020 and gradually declined to 4.5 percent for 2025 and beyond.
Plan Assets and Investment Strategy
The fair value measurements of the company’s pension plans for 2020 and 2019 are as follows:
U.S.Int’l.
TotalLevel 1Level 2Level 3NAVTotal Level 1Level 2Level 3NAV
At December 31, 2019
Equities
U.S.1
$1,769 $1,769 $— $— $— $471 $471 $— $— $— 
International1,958 1,958 — — — 422 421 — 1 — 
Collective Trusts/Mutual Funds2
1,079 52 — — 1,027 184 6 — — 178 
Fixed Income
Government523 — 523 — — 265 144 121 — — 
Corporate1,444 — 1,444 — — 493 — 490 3 — 
Bank Loans120 — 113 7 — — — — — — 
Mortgage/Asset Backed1 — 1 — — 4 — 4 — — 
Collective Trusts/Mutual Funds2
963 — — — 963 2,230 5 — — 2,225 
Mixed Funds3
— — — — — 84 7 77 — — 
Real Estate4
1,089 — — — 1,089 277 — — 55 222 
Alternative Investments924 — — — 924 — — — — — 
Cash and Cash Equivalents235 228 7 — — 338 334 2 — 2 
Other5
72 (5)29 44 4 23 — 21 2 — 
Total at December 31, 2019$10,177 $4,002 $2,117 $51 $4,007 $4,791 $1,388 $715 $61 $2,627 
At December 31, 2020
Equities
U.S.1
$2,286 $2,286 $— $— $— $443 $443 $— $— $— 
International2,211 2,210 — 1 — 373 373 — — — 
Collective Trusts/Mutual Funds2
1,107 48 — — 1,059 192 7 — — 185 
Fixed Income
Government231 — 231 — — 240 125 115 — — 
Corporate778 — 778 — — 578 10 568 — — 
Bank Loans129 — 127 2 — — — — — — 
Mortgage/Asset Backed1 — 1 — — 4 — 4 — — 
Collective Trusts/Mutual Funds2
1,901 13 — — 1,888 2,520 4 — — 2,516 
Mixed Funds3
— — — — — 127 38 89 — — 
Real Estate4
1,018 — — — 1,018 448 — — 45 403 
Alternative Investments— — — — — — — — — — 
Cash and Cash Equivalents221 209 12 — — 417 408 3 — 6 
Other5
47 (19)22 41 3 21 (2)19 4 — 
Total at December 31, 2020$9,930 $4,747 $1,171 $44 $3,968 $5,363 $1,406 $798 $49 $3,110 
1U.S. equities include investments in the company’s common stock in the amount of $4 at December 31, 2020, and $6 at December 31, 2019.
2Collective Trusts/Mutual Funds for U.S. plans are entirely index funds; for International plans, they are mostly unit trust and index funds.
3Mixed funds are composed of funds that invest in both equity and fixed-income instruments in order to diversify and lower risk.
4The year-end valuations of the U.S. real estate assets are based on third-party appraisals that occur at least once a year for each property in the portfolio.
5The “Other” asset class includes net payables for securities purchased but not yet settled (Level 1); dividends and interest- and tax-related receivables (Level 2); insurance contracts (Level 3); and investments in private-equity limited partnerships (NAV).
The effects of fair value measurements using significant unobservable inputs on changes in Level 3 plan assets are outlined below:
EquityFixed Income
InternationalCorporateBank LoansReal EstateOtherTotal
Total at December 31, 2018$1 $21 $5 $56 $46 $129 
Actual Return on Plan Assets:
Assets held at the reporting date(1)1 — — (1)(1)
Assets sold during the period— — — — — — 
Purchases, Sales and Settlements— (19)— (1)1 (19)
Transfers in and/or out of Level 31 — 2 — — 3 
Total at December 31, 2019$1 $3 $7 $55 $46 $112 
Actual Return on Plan Assets:
Assets held at the reporting date— — — — 1 1 
Assets sold during the period— — — (10)— (10)
Purchases, Sales and Settlements— (3)(5)— (2)(10)
Transfers in and/or out of Level 3— — — — — — 
Total at December 31, 2020$1 $— $2 $45 $45 $93 
The primary investment objectives of the pension plans are to achieve the highest rate of total return within prudent levels of risk and liquidity, to diversify and mitigate potential downside risk associated with the investments, and to provide adequate liquidity for benefit payments and portfolio management.
The company’s U.S. and U.K. pension plans comprise 91 percent of the total pension assets. Both the U.S. and U.K. plans have an Investment Committee that regularly meets during the year to review the asset holdings and their returns. To assess the plans’ investment performance, long-term asset allocation policy benchmarks have been established.
For the primary U.S. pension plan, the company’s Investment Committee has established the following approved asset allocation ranges: Equities 40–65 percent, Fixed Income 20–40 percent, Real Estate 0–15 percent, Alternative Investments 0–5 percent and Cash 0–25 percent. For the U.K. pension plan, the U.K. Board of Trustees has established the following asset allocation guidelines: Equities 10–30 percent, Fixed Income 55–85 percent, Real Estate 5–15 percent, and Cash 0–5 percent. The other significant international pension plans also have established maximum and minimum asset allocation ranges that vary by plan. Actual asset allocation within approved ranges is based on a variety of factors, including market conditions and illiquidity constraints. To mitigate concentration and other risks, assets are invested across multiple asset classes with active investment managers and passive index funds.
The company does not prefund its OPEB obligations.
Cash Contributions and Benefit Payments In 2020, the company contributed $950 and $263 to its U.S. and international pension plans, respectively. In 2021, the company expects contributions to be approximately $1,050 to its U.S. plans and $200 to its international pension plans. Actual contribution amounts are dependent upon investment returns, changes in pension obligations, regulatory environments, tax law changes and other economic factors. Additional funding may ultimately be required if investment returns are insufficient to offset increases in plan obligations.
The company anticipates paying OPEB benefits of approximately $153 in 2021; $155 was paid in 2020.
The following benefit payments, which include estimated future service, are expected to be paid by the company in the next 10 years:
Pension BenefitsOther
U.S.Int’l.Benefits
2021$1,779 $658 $153 
2022919 220 162 
20231,069 225 158 
20241,097 243 154 
20251,068 250 151 
2026-20304,856 1,400 706 
Employee Savings Investment Plan Eligible employees of Chevron and certain of its subsidiaries participate in the Chevron Employee Savings Investment Plan (ESIP). Compensation expense for the ESIP totaled $281, $284 and $270 in 2020, 2019 and 2018, respectively.
Benefit Plan Trusts Prior to its acquisition by Chevron, Texaco established a benefit plan trust for funding obligations under some of its benefit plans. At year-end 2020, the trust contained 14.2 million shares of Chevron treasury stock. The trust will sell the shares or use the dividends from the shares to pay benefits only to the extent that the company does not pay such benefits. The company intends to continue to pay its obligations under the benefit plans. The trustee will vote the shares held in the trust as instructed by the trust’s beneficiaries. The shares held in the trust are not considered outstanding for earnings-per-share purposes until distributed or sold by the trust in payment of benefit obligations.
Prior to its acquisition by Chevron, Unocal established various grantor trusts to fund obligations under some of its benefit plans, including the deferred compensation and supplemental retirement plans. At December 31, 2020 and 2019, trust assets of $36 and $35, respectively, were invested primarily in interest-earning accounts.
Employee Incentive Plans The Chevron Incentive Plan is an annual cash bonus plan for eligible employees that links awards to corporate, business unit and individual performance in the prior year. Charges to expense for cash bonuses were $462, $826 and $1,048 in 2020, 2019 and 2018, respectively. Chevron also has the LTIP for officers and other regular salaried employees of the company and its subsidiaries who hold positions of significant responsibility. Awards under the LTIP consist of stock options and other share-based compensation that are described in Note 20, beginning on page 86.