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Retirement Plans | 12 Months Ended
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Dec. 31, 2024
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.
| 2024 |  | 2023 |  | 2022
Plan expense | $ | 376 |  |  | $ | 327 |  |  | $ | 305 |
Expense funded with Stryker common stock | 62 |  |  | 57 |  |  | 41 |
Stryker common stock held by plan: |  |  |  |  |
Dollar amount | $ | 781 |  |  | $ | 649 |  |  | $ | 522 |
Shares (in millions) | 2.2 |  |  | 2.2 |  |  | 2.1 |
Value as a percentage of total plan assets | 10 | % |  | 10 | % |  | 10 | %
Defined Benefit Plans Certain of our subsidiaries have both funded and unfunded defined benefit pension plans covering some or all of their employees. The majority of our 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: | 2024 |  | 2023 |  | 2022
Service cost | $ | (39) |  |  | $ | (32) |  |  | $ | (56) |
Interest cost | (21) |  |  | (23) |  |  | (10) |
Expected return on plan assets | 19 |  |  | 18 |  |  | 15 |
Amortization of prior service credit | 1 |  |  | 1 |  |  | 1 |
Recognized actuarial gain (loss) | (1) |  |  | 4 |  |  | (9) |
Net periodic benefit cost | $ | (41) |  |  | $ | (32) |  |  | $ | (59) |
Changes in assets and benefit obligations recognized in OCI: |  |  |  |  |
Net actuarial gain (loss) | $ | 43 |  |  | $ | (67) |  |  | $ | 244 |
Recognized net actuarial (gain) loss | 1 |  |  | (4) |  |  | 9 |
Prior service credit and transition amount | (1) |  |  | (1) |  |  | (1) |
Total recognized in other comprehensive income (loss) | $ | 43 |  |  | $ | (72) |  |  | $ | 252 |
Total recognized in net periodic benefit cost and OCI | $ | 2 |  |  | $ | (104) |  |  | $ | 193 |
Weighted-average rates used to determine net periodic benefit cost: |  |  |  |  |
Discount rate | 2.8 | % |  | 3.3 | % |  | 1.1 | %
Expected return on plan assets | 4.3 | % |  | 4.2 | % |  | 3.1 | %
Rate of compensation increase | 3.0 | % |  | 3.0 | % |  | 2.6 | %
Weighted-average discount rate used to determine projected benefit obligations | 2.9 | % |  | 2.8 | % |  | 3.3 | %
The actuarial gain (loss) for all pension plans 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.
| 2024 |  | 2023
Fair value of plan assets | $ | 492 |  |  | $ | 485 |
Benefit obligations | (782) |  |  | (826) |
Funded status | $ | (290) |  |  | $ | (341) |
Reported as: |  |  |
Noncurrent assets—other assets | $ | 48 |  |  | $ | 21 |
Current liabilities—accrued compensation | (3) |  |  | (3) |
Noncurrent liabilities—other liabilities | (335) |  |  | (359) |
Pre-tax amounts recognized in AOCI: |  |  |
Unrecognized net actuarial gain (loss) | 6 |  |  | (39) |
Unrecognized prior service credit | 8 |  |  | 11 |
Total | $ | 14 |  |  | $ | (28) |
Change in Benefit Obligations |  |  |
| 2024 |  | 2023
Beginning projected benefit obligations | $ | 826 |  |  | $ | 673 |
Service cost | 39 |  |  | 32 |
Interest cost | 21 |  |  | 23 |
Foreign exchange impact | (52) |  |  | 32 |
Employee contributions | 7 |  |  | 7 |
Actuarial (gains) losses | (40) |  |  | 79 |
Benefits paid | (19) |  |  | (20) |
Ending projected benefit obligations | $ | 782 |  |  | $ | 826 |
Ending accumulated benefit obligations | $ | 748 |  |  | $ | 790 |
Change in Plan Assets |  |  |
| 2024 |  | 2023
Beginning fair value of plan assets | $ | 485 |  |  | $ | 420 |
Actual return | 22 |  |  | 29 |
Employer contributions | 23 |  |  | 23 |
Employee contributions | 7 |  |  | 7 |
Foreign exchange impact | (31) |  |  | 22 |
Benefits paid | (14) |  |  | (16) |
Ending fair value of plan assets | $ | 492 |  |  | $ | 485 |
Allocation of Plan Assets
| 2025 Target |  | 2024 Actual |  | 2023 Actual
Equity securities | 24 | % |  | 28 | % |  | 28 | %
Debt securities | 44 |  |  | 40 |  |  | 37 |
Other | 32 |  |  | 32 |  |  | 35 |
Total | 100 | % |  | 100 | % |  | 100 | %
Valuation of Plan Assets
2024 | Level 1 | Level 2 | Level 3 | Total
Cash and cash equivalents | $ | 17 |  | $ | — |  | $ | — |  | $ | 17 |
Equity securities | 8 |  | 125 |  | — |  | 133 |
Debt securities | 2 |  | 203 |  | — |  | 205 |
Other | 4 |  | 76 |  | 57 |  | 137 |
Total | $ | 31 |  | $ | 404 |  | $ | 57 |  | $ | 492 |
2023 | Level 1 | Level 2 | Level 3 | Total
Cash and cash equivalents | $ | 15 |  | $ | — |  | $ | — |  | $ | 15 |
Equity securities | 20 |  | 130 |  | — |  | 150 |
Debt securities | 2 |  | 185 |  | — |  | 187 |
Other | 5 |  | 63 |  | 65 |  | 133 |
Total | $ | 42 |  | $ | 378 |  | $ | 65 |  | $ | 485 |
Our Level 3 pension plan assets primarily include guaranteed investment contracts with insurance companies. The insurance contracts guarantee us principal repayment and a fixed rate of return. The $8 decrease in Level 3 pension plan assets is primarily driven by the change in the corresponding pension liability. We expect to contribute $21 to our defined benefit pension plans in 2025.
Estimated Future Benefit Payments
2025 | 2026 | 2027 | 2028 | 2029 | 2030-2034
$ | 24 |  | $ | 23 |  | $ | 25 |  | $ | 26 |  | $ | 27 |  | $ | 171 |

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