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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2024
Employee Benefit and Share-Based Payment Arrangement, Noncash Expense [Abstract]  
Employee Benefit Plans
NOTE 10: EMPLOYEE BENEFIT PLANS
We sponsor various domestic and foreign employee benefit plans, which are discussed below.
Employee Savings Plans. We sponsor various employee savings plans. Our contributions to employer sponsored defined contribution plans were $1.4 billion, $1.3 billion, and $1.0 billion for 2024, 2023, and 2022, respectively.
Our domestic employee savings plan uses an Employee Stock Ownership Plan (ESOP) for certain employer matching contributions. Prior to the third quarter of 2024, the ESOP held stock that was purchased using external borrowings. As ESOP debt service payments were made, common stock was released from an unallocated ESOP account. ESOP debt was either prepaid or re-amortized to either increase or decrease the number of shares released so that the value of released shares equaled the value of plan benefit. It was also the Company’s option to contribute additional common stock or cash to the ESOP. Shares of common stock were allocated to participants’ ESOP accounts at fair value on the date earned. Cash dividends on unallocated common stock held by the ESOP were used for debt service payments. Cash dividends on allocated shares are either reinvested or paid directly in cash to the participant, according to the participant’s election. Participants chose to have their ESOP dividends reinvested or distributed to their accounts in cash. Common stock allocated to ESOP participants was included in the average number of common shares outstanding for both basic and diluted EPS. At December 31, 2024, all 23 million common shares related to this leveraged ESOP have been allocated to employees.
During the third quarter of 2024, remaining unallocated ESOP shares were fully allocated to participant accounts through matching contributions, and we began funding the ESOP match in shares on a non-leveraged basis. Under the new non-leveraged basis, treasury shares are utilized to fund the matching contributions, and participants receive units from the ESOP in the amount of their matching contribution at fair value on the date earned. Once shares are contributed to the participants’ ESOP accounts, they have a right to dividend payments and are included in the average number of common shares outstanding for both basic and diluted EPS. In the fourth quarter of 2024, we expanded the funding of our matching contributions in shares under the ESOP to additional participants who previously received matching contributions in cash.
In 2024, we used the ESOP to make matching contributions of $353 million, which was equivalent to 3 million shares.
Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined benefit pension plans that cover a large number of our employees. Our largest plans are generally closed to new participants. We also sponsor both funded and unfunded PRB plans that provide health care and life insurance benefits to eligible retirees. Our plans use a December 31 measurement date consistent with our fiscal year.
In December 2020, we approved a change to the Raytheon Company domestic defined benefit pension plans for non-union participants to cease future benefit accruals based on an employee’s years of service and compensation under the historical formula effective December 31, 2022. The plan change does not impact participants’ historical benefit accruals. Benefits for service after December 31, 2022 are based on a cash balance formula. This plan change resulted in lower pension service cost beginning January 1, 2023. At December 31, 2023, we merged our remaining Raytheon Company domestic defined benefit pension plans into the RTX Consolidated Pension Plan. This plan merger does not impact participants’ benefit formulas.
We made the following contributions to our pension and PRB plans’ trusts during the years ended December 31:
(dollars in millions)202420232022
U.S. qualified defined benefit plans (1)
$— $69 $— 
International defined benefit plans31 60 69 
PRB plans30 28 25 
(1)     2023 includes $50 million of RTX common stock contributions.
Pension
(dollars in millions)20242023
Change in Benefit Obligation:
Beginning balance$49,592 $49,028 
Service cost attributable to continuing operations189 222 
Interest cost2,385 2,507 
Actuarial (gain) loss(2,013)1,909 
Total benefits paid (1)
(3,633)(4,258)
Net settlement, curtailment, and special termination benefits9 5 
Plan amendments36 19 
Business combinations and divestitures(23)— 
Other (2)
(220)160 
Ending balance$46,322 $49,592 
Change in Plan Assets:
Beginning balance$48,945 $47,960 
Actual return on plan assets1,092 4,730 
Employer contributions (1)
235 363 
Total benefits paid (1)
(3,633)(4,258)
Settlements(3)(2)
Business combinations and divestitures— — 
Other (2)
(222)152 
Ending balance$46,414 $48,945 
(1)    Includes benefit payments paid directly by the company.
(2)    The amount included in Other primarily reflects the impact of foreign exchange translation, primarily for plans in the United Kingdom and Canada, and participant contributions.
PensionPRB
(dollars in millions)2024202320242023
Funded Status:
Fair value of plan assets$46,414 $48,945 $314 $316 
Benefit obligations(46,322)(49,592)(898)(962)
Funded status of plan$92 $(647)$(584)$(646)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Non-current assets$1,819 $1,296 $— $— 
Current liability(195)(206)(61)(64)
Non-current liability(1,532)(1,737)(523)(582)
Net amount recognized$92 $(647)$(584)$(646)
Amounts Recognized in Accumulated Other Comprehensive Loss Consist of:
Net actuarial loss (gain)$4,926 $4,311 $(296)$(325)
Prior service credit(1,044)(1,246)(1)(3)
Net amount recognized$3,882 $3,065 $(297)$(328)
The majority of our pension obligations relate to our U.S. Internal Revenue Service (IRS) qualified pension plans, which comprise 86% of our pension PBO as of both December 31, 2024 and 2023. Our nonqualified domestic pension plans, which provide supplementary benefits to certain employees in excess of the IRS qualified plan limits, and our international plans comprise 3% and 11%, respectively, of our pension PBO as of both December 31, 2024 and 2023.
In addition to the pension and PRB non-current liabilities shown above, Future pension and postretirement benefit obligations on the Consolidated Balance Sheet includes other immaterial pension and PRB-related liabilities.
Information for pension plans with accumulated benefit obligations in excess of plan assets: 
(dollars in millions)20242023
Projected benefit obligation$3,260 $3,675 
Accumulated benefit obligation3,239 3,645 
Fair value of plan assets1,537 1,733 
The accumulated benefit obligation for all defined benefit pension plans was $46.1 billion and $49.4 billion at December 31, 2024 and 2023, respectively.
Information for pension plans with projected benefit obligations in excess of plan assets: 
(dollars in millions)20242023
Projected benefit obligation$3,298 $3,723 
Accumulated benefit obligation3,272 3,687 
Fair value of plan assets1,571 1,781 
The components of the net periodic pension income are as follows: 
(dollars in millions)202420232022
Operating expense
Service cost$189 $222 $470 
Non-operating expense
Interest cost2,385 2,507 1,520 
Expected return on plan assets(3,747)(3,753)(3,544)
Amortization of prior service credit(170)(158)(163)
Recognized actuarial net (gain) loss20 (378)305 
Net settlement, curtailment, and special termination benefits loss13 6 2 
Non-service pension income(1,499)(1,776)(1,880)
Total net periodic pension income$(1,310)$(1,554)$(1,410)
Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss in 2024 and 2023 are as follows:
(dollars in millions)20242023
Net actuarial loss (gain) arising during the period$642 $935 
Amortization of actuarial gain (loss)(20)378 
Current year prior service cost36 19 
Amortization of prior service credit170 158 
Net settlement and curtailment (12)(3)
Business combinations and divestitures 9 — 
Other (1)
(8)52 
Total recognized in other comprehensive income (loss)817 1,539 
Net recognized in net periodic income and other comprehensive loss$(493)$(15)
(1)    The amount included in Other primarily reflects the impact of foreign exchange translation, primarily for plans in the United Kingdom and Canada.
The Actuarial loss arising in 2024 was primarily due to actual asset returns less than our expected return on assets, partially offset by an increase in discount rates during 2024.
The Actuarial loss arising in 2023 was primarily due to a decrease in discount rates during 2023, partially offset by actual asset returns greater than our expected return on assets.
The table below reflects the total benefit payments expected to be paid from the pension plans or from corporate assets.
(dollars in millions)Pension
2025$4,178 
20263,737 
20273,670 
20283,613 
20293,594 
2030-203417,158 
Major assumptions used in determining the pension benefit obligation and net periodic pension (income) expense are presented in the following table as weighted-averages: 
Benefit ObligationNet Periodic Benefit (Income) Expense
20242023202420232022
Discount rate
PBO5.6 %5.1 %5.1 %5.5 %2.8 %
Interest cost (1)
N/AN/A5.0 %5.3 %2.3 %
Service cost (1)
N/AN/A5.0 %5.4 %3.1 %
Salary scale4.4 %4.4 %4.4 %4.4 %4.4 %
Expected return on plan assetsN/AN/A7.1 %7.1 %6.5 %
Interest crediting rate5.0 %5.0 %5.0 %4.4 %4.0 %
(1)    The discount rates used to measure the service cost and interest cost applies to our significant plans. The PBO discount rate is used for the service cost and interest cost measurements for non-significant plans.
The weighted-average discount rates used to measure pension liabilities are generally based on yield curves developed using high-quality corporate bonds as well as plan specific expected cash flows. For our significant plans, we utilize a full yield curve approach in the estimation of the service cost and interest cost components of net periodic benefit expense by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant discounted projected cash flows.
In determining the EROA assumption, we consider the target asset allocation of plan assets, as well as economic and other indicators of future performance. We consult with and consider the opinions of financial and other professionals in determining the appropriate capital market assumptions. Return projections are validated using a simulation model that incorporates yield curves, credit spreads, and risk premiums to project long-term prospective returns.
Plan Assets. The plans’ investment management objectives include providing the liquidity and asset levels needed to meet current and future benefit payments, while maintaining a prudent degree of portfolio diversification considering interest rate risk and market volatility. Globally, on average, investment strategies generally target a mix of 26% to 46% of growth seeking assets and 54% to 74% of income generating and hedging assets using a wide set of diversified asset types, fund strategies, and investment managers. The growth seeking allocation consists of global public equities in developed and emerging countries, private equity, and real estate. Growth assets include an enhanced alpha strategy that invests in publicly traded equity and fixed income securities, derivatives, and foreign currency. Investments in private equity are primarily via limited partnership interests in buy-out strategies with smaller allocations to distressed debt funds. The real estate strategy is principally concentrated in directly held U.S. core investments with some smaller investments in international, value-added, and opportunistic strategies. Within the income generating assets, the fixed income portfolio consists of mainly government and broadly diversified high quality corporate bonds.
The plans have continued their pension risk management techniques designed to reduce their interest rate risk. Specifically, the plans have incorporated liability hedging programs that include the adoption of a risk reduction objective as part of the long-term investment strategy. Under this objective the interest rate hedge is intended to increase as funded status improves. The
hedging programs incorporate a range of assets and investment tools, each with varying interest rate sensitivities. The investment portfolios are currently hedging approximately 80% of the interest rate sensitivity of the pension plan liabilities, depending on the funded status of the plan.
The fair values of pension plan assets at December 31, 2024 and 2023 by asset category are as follows:
(dollars in millions)Quoted Prices in Active Markets For Identical Assets
(Level 1)		Significant Observable Inputs
(Level 2) 		Significant Unobservable Inputs
(Level 3)
Not Subject to Leveling (7)
Total
Asset Category:
Public Equities
Global Equities$6,195 $13 $— $— $6,208 
Global Equity Commingled Funds (1)
— 624 — — 624 
Other Public Equities— — — 2,431 2,431 
Private Equities (2)
— — — 4,985 4,985 
Fixed Income Securities
Governments4,462 801 — — 5,263 
Corporate Bonds1 11,343 — — 11,344 
Structured Products
— 27 — — 27 
Other Fixed Income— — — 11,259 11,259 
Real Estate (3)
— — 1,481 1,557 3,038 
Other (4)
— 513 — 113 626 
Cash & Cash Equivalents (5)
— 341 — 79 420 
Subtotal$10,658 $13,662 $1,481 $20,424 $46,225 
Other Assets & Liabilities (6)
   189 
Total at December 31, 2024
$46,414 
Public Equities
Global Equities$6,156 $4 $— $— $6,160 
Global Equity Commingled Funds (1)
— 1,012 — — 1,012 
Other Public Equities— — — 2,308 2,308 
Private Equities (2)
— — — 4,936 4,936 
Fixed Income Securities
Governments3,507 1,560 — — 5,067 
Corporate Bonds— 13,185 — — 13,185 
Structured Products
— 57 — — 57 
Other Fixed Income— — — 9,669 9,669 
Real Estate (3)
— — 1,467 1,632 3,099 
Other (4)
— 560 — 2,415 2,975 
Cash & Cash Equivalents (5)
— 383 — 128 511 
Subtotal$9,663 $16,761 $1,467 $21,088 $48,979 
Other Assets & Liabilities (6)
   (34)
Total at December 31, 2023
$48,945 
(1)    Represents commingled funds that invest primarily in common stocks.
(2)    Represents limited partnership investments with general partners that primarily invest in equity and debt.
(3)    Represents investments in real estate including commingled funds and directly held properties.
(4)    Represents global balanced risk commingled funds that invest in multiple asset classes including equity, fixed income, and some commodities. “Other” also includes insurance contracts.
(5)    Represents short-term commercial paper, bonds, and other cash or cash-like instruments.
(6)    Represents receivables, payables, and certain individually immaterial international plan assets that are not leveled.
(7)    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 for the total pension benefits plan assets.
Derivatives in the plan are primarily used to manage risk and gain asset class exposure while still maintaining liquidity. Derivative instruments mainly consist of equity futures, interest rate futures, interest rate swaps, and currency forward contracts. The fair market value of the plans’ derivatives through direct or separate account investments was approximately ($120 million) and $345 million as of December 31, 2024 and 2023, respectively.
We review our assets at least quarterly to ensure we are within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations. We employ a broadly diversified investment manager structure that includes diversification by active and passive management, style, capitalization, country, sector, industry, and number of investment managers. No individual investment represented more than 5% of the plan assets as of December 31, 2024.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed due to the following:
(dollars in millions)
Balance, December 31, 2022
$1,650 
Realized losses(69)
Unrealized losses relating to instruments still held in the reporting period(134)
Purchases, sales, and settlements, net20 
Balance, December 31, 2023
1,467 
Realized losses (136)
Unrealized gains relating to instruments still held in the reporting period27 
Purchases, sales, and settlements, net123 
Balance, December 31, 2024
$1,481 
Quoted market prices are used to value investments when available. Investments in securities traded on exchanges, including listed futures and options, are valued at the last reported sale prices on the last business day of the year or, if not available, the last reported bid prices. Fixed income securities are primarily measured using a market approach pricing methodology, where observable prices are obtained by market transactions involving identical or comparable securities of issuers with similar credit ratings. Mortgages have been valued on the basis of their future principal and interest payments discounted at prevailing interest rates for similar investments. Investment contracts are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations. Real estate investments are valued on a quarterly basis using discounted cash flow models which consider long-term lease estimates, future rental receipts, and estimated residual values. Valuation estimates are supplemented by third-party appraisals on an annual basis.
The fair market value of assets related to our PRB benefits was $314 million and $316 million as of December 31, 2024 and 2023, respectively. These assets include $73 million and $93 million of which are invested in our domestic qualified pension plan trust at December 31, 2024 and 2023, respectively. The remaining PRB investments are held within Voluntary Employees’ Beneficiary Association (VEBA) trusts. The VEBA assets are generally invested in mutual funds and are valued primarily using quoted prices in active markets (Level 1). There were no Level 3 investments in the VEBA trusts as of December 31, 2024 or 2023.
We have set aside assets in separate trusts, which we expect to be used to pay for certain nonqualified defined benefit and defined contribution plan obligations in excess of qualified plan limits. These assets are included in Other assets in our Consolidated Balance Sheet. The fair value of marketable securities held in trusts as of December 31 was as follows:
(dollars in millions)20242023
Marketable securities held in trusts$786 $745