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Retirement Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Retirement Plans RETIREMENT PLANS
Defined Contribution Plans
We provide certain employees with defined contribution plans and other types of retirement plans. A portion of our retirement plan expense under the defined contribution plans is funded with Stryker common stock. The use of Stryker common stock represents a non-cash operating activity that is not reflected in our Consolidated Statements of Cash Flows.
202020192018
Plan expense$235 $205 $180 
Expense funded with Stryker common stock34 31 29 
Stryker common stock held by plan:
Dollar amount542 470 358 
Shares (in millions)2.2 2.2 2.3 
Value as a percentage of total plan assets11 %12 %12 %
Defined Benefit Plans
Certain of our subsidiaries have both funded and unfunded defined benefit pension plans covering some or all of their employees. Substantially all of the defined benefit pension plans have projected benefit obligations in excess of plan assets.
Discount Rate
The discount rates were selected using a hypothetical portfolio of high quality bonds on December 31 that would provide the necessary cash flows to match our projected benefit payments.
Expected Return on Plan Assets
The expected return on plan assets is determined by applying the target allocation in each asset category of plan investments to the anticipated return for each asset category based on historical and projected returns.
Components of Net Periodic Pension Cost
Net periodic benefit cost:202020192018
Service cost$(63)$(41)$(44)
Interest cost(8)(12)(11)
Expected return on plan assets13 12 12 
Amortization of prior service credit1 1 1 
Recognized actuarial loss(13)(9)(11)
Net periodic benefit cost$(70)$(49)$(53)
Changes in assets and benefit obligations recognized in OCI:202020192018
Net actuarial gain (loss)$(117)$(74)$11 
Recognized net actuarial loss13 9 10 
Prior service (credit) cost and transition amount(1)(1)(1)
Total recognized in other comprehensive income (loss)$(105)$(66)$20 
Total recognized in net periodic benefit cost and OCI$(175)$(115)$(33)
Weighted-average rates used to determine net periodic benefit cost:
Discount rate1.0 %1.9 %1.8 %
Expected return on plan assets2.9 %3.5 %3.3 %
Rate of compensation increase2.9 %2.9 %2.8 %
Weighted-average discount rate used to determine projected benefit obligations0.8 %1.0 %1.9 %
The actuarial gain (loss) for all pension plans in 2020 and 2019 was primarily related to a change in the discount rate used to measure the benefit obligations of those plans.
Investment Strategy
The investment strategy for our defined benefit pension plans is to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk tolerances.
20202019
Fair value of plan assets$522 $428 
Benefit obligations(1,118)(869)
Funded status$(596)$(441)
Reported as:
Current liabilities—accrued compensation$(2)$(2)
Noncurrent liabilities—other liabilities(594)(439)
Pre-tax amounts recognized in AOCI:
Unrecognized net actuarial loss(354)(250)
Unrecognized prior service credit8 9 
Total$(346)$(241)
Change in Benefit Obligations
20202019
Beginning projected benefit obligations$869 $735 
Service cost63 41 
Interest cost8 12 
Foreign exchange impact80 (12)
Employee contributions8 6 
Actuarial (gains) losses110 116 
Acquisition— — 
Benefits paid(20)(29)
Ending projected benefit obligations$1,118 $869 
Ending accumulated benefit obligations$1,056 $830 
Change in Plan Assets
20202019
Beginning fair value of plan assets$428 $376 
Actual return30 52 
Employer contributions33 25 
Employee contributions8 6 
Foreign exchange impact37 (5)
Acquisition— — 
Benefits paid(14)(26)
Ending fair value of plan assets$522 $428 
Allocation of Plan Assets
2021 Target2020 Actual2019 Actual
Equity securities20 %23 %22 %
Debt securities45 44 44 
Other35 33 34 
Total100 %100 %100 %
Valuation of Plan Assets
2020Level 1Level 2Level 3Total
Cash and cash equivalents$14 $— $— $14 
Equity securities23 108 — 131 
Corporate debt securities
2 201 — 203 
Other7 63 104 174 
Total$46 $372 $104 $522 
2019
Cash and cash equivalents$7 $— $— $7 
Equity securities23 86 — 109 
Corporate debt securities3 173 — 176 
Other4 52 80 136 
Total$37 $311 $80 $428 
Our Level 3 pension plan assets consist primarily of guaranteed investment contracts with insurance companies. The insurance contracts guarantee us principal repayment and a fixed rate of return. The $24 increase in Level 3 pension plan assets is primarily related to actual returns and acquired assets. We expect to contribute $30 to our defined benefit pension plans in 2021.
Estimated Future Benefit Payments
202120222023202420252026-2030
$22 $21 $21 $22 $24 $134