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RETIREMENT BENEFITS PLANS | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
RETIREMENT BENEFITS PLANS | RETIREMENT BENEFITS PLANS Eaton has defined benefits pension plans and other postretirement benefits plans. Obligations and Funded Status
| United States pension liabilities |  | Non-United States pension liabilities |  | Other postretirement liabilities
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Funded status |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets | $ | 2,635 |  |  | $ | 3,672 |  |  | $ | 1,486 |  |  | $ | 2,247 |  |  | $ | 16 |  |  | $ | 19 |
Benefit obligations | (2,807) |  |  | (3,760) |  |  | (1,813) |  |  | (2,837) |  |  | (209) |  |  | (304) |
Funded status | $ | (172) |  |  | $ | (88) |  |  | $ | (327) |  |  | $ | (590) |  |  | $ | (194) |  |  | $ | (285) |
Amounts recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |  |  |
Other assets | $ | — |  |  | $ | 59 |  |  | $ | 199 |  |  | $ | 179 |  |  | $ | — |  |  | $ | — |
Other current liabilities | (19) |  |  | (16) |  |  | (30) |  |  | (28) |  |  | (17) |  |  | (22) |
Pension liabilities and Other postretirement benefits liabilities | (153) |  |  | (131) |  |  | (496) |  |  | (741) |  |  | (177) |  |  | (263) |
Total | $ | (172) |  |  | $ | (88) |  |  | $ | (327) |  |  | $ | (590) |  |  | $ | (194) |  |  | $ | (285) |
Amounts recognized in Accumulated other comprehensive loss (pre-tax) |  |  |  |  |  |  |  |  |  |  |
Net actuarial (gain) loss | $ | 807 |  |  | $ | 708 |  |  | $ | 491 |  |  | $ | 745 |  |  | $ | (119) |  |  | $ | (55) |
Prior service cost (credit) | 5 |  |  | 5 |  |  | 14 |  |  | 18 |  |  | (2) |  |  | — |
Total | $ | 811 |  |  | $ | 713 |  |  | $ | 505 |  |  | $ | 763 |  |  | $ | (120) |  |  | $ | (55) |
Change in Benefit Obligations
| United States pension liabilities |  | Non-United States pension liabilities |  | Other postretirement liabilities
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Balance at January 1 | $ | 3,760 |  |  | $ | 4,121 |  |  | $ | 2,837 |  |  | $ | 3,036 |  |  | $ | 304 |  |  | $ | 375 |
Service cost | 27 |  |  | 37 |  |  | 59 |  |  | 72 |  |  | 1 |  |  | 1 |
Interest cost | 117 |  |  | 70 |  |  | 47 |  |  | 40 |  |  | 7 |  |  | 6 |
Actuarial (gain) loss | (713) |  |  | (82) |  |  | (817) |  |  | (143) |  |  | (73) |  |  | (59) |
Gross benefits paid | (386) |  |  | (435) |  |  | (99) |  |  | (107) |  |  | (38) |  |  | (36) |
Currency translation | — |  |  | — |  |  | (218) |  |  | (79) |  |  | (3) |  |  | — |
Plan amendments | 1 |  |  | 1 |  |  | 1 |  |  | — |  |  | (2) |  |  | — |
Acquisitions and divestitures | — |  |  | 48 |  |  | — |  |  | 14 |  |  | — |  |  | 2 |
Other | — |  |  | — |  |  | 3 |  |  | 4 |  |  | 13 |  |  | 15 |
Balance at December 31 | $ | 2,807 |  |  | $ | 3,760 |  |  | $ | 1,813 |  |  | $ | 2,837 |  |  | $ | 209 |  |  | $ | 304 |
Accumulated benefit obligation | $ | 2,784 |  |  | $ | 3,707 |  |  | $ | 1,737 |  |  | $ | 2,709 |  |  |  |  |
During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and is effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula. Actuarial gains related to changes in the United States and Non-United States benefit obligations in 2022 of $713 million and $817 million, respectively, were primarily due to increases in the discount rates used to measure the obligations. Actuarial gains related to changes in the United States and Non-United States benefit obligations in 2021 of $82 million and $143 million, respectively, were primarily due to increases in the discount rates used to measure the obligations. Change in Plan Assets
| United States pension liabilities |  | Non-United States pension liabilities |  | Other postretirement liabilities
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Balance at January 1 | $ | 3,672 |  |  | $ | 3,463 |  |  | $ | 2,247 |  |  | $ | 2,137 |  |  | $ | 19 |  |  | $ | 20 |
Actual return on plan assets | (682) |  |  | 380 |  |  | (554) |  |  | 127 |  |  | (2) |  |  | — |
Employer contributions | 30 |  |  | 237 |  |  | 85 |  |  | 106 |  |  | 24 |  |  | 20 |
Gross benefits paid | (386) |  |  | (435) |  |  | (99) |  |  | (107) |  |  | (38) |  |  | (36) |
Currency translation | — |  |  | — |  |  | (197) |  |  | (23) |  |  | — |  |  | — |
Acquisitions and divestitures | — |  |  | 27 |  |  | — |  |  | 4 |  |  | — |  |  | — |
Other | — |  |  | — |  |  | 3 |  |  | 3 |  |  | 13 |  |  | 15 |
Balance at December 31 | $ | 2,635 |  |  | $ | 3,672 |  |  | $ | 1,486 |  |  | $ | 2,247 |  |  | $ | 16 |  |  | $ | 19 |
The components of pension plans with an accumulated benefit obligation in excess of plan assets at December 31 are as follows:
| United States pension liabilities |  | Non-United States pension liabilities
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Accumulated benefit obligation | $ | 2,784 |  |  | $ | 131 |  |  | $ | 654 |  |  | $ | 894 |
Fair value of plan assets | 2,635 |  |  | — |  |  | 173 |  |  | 207 |
The components of pension plans with a projected benefit obligation in excess of plan assets at December 31 are as follows:
| United States pension liabilities |  | Non-United States pension liabilities
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021
Projected benefit obligation | $ | 2,807 |  |  | $ | 147 |  |  | $ | 722 |  |  | $ | 1,290 |
Fair value of plan assets | 2,635 |  |  | — |  |  | 195 |  |  | 521 |
Other postretirement benefit plans with accumulated postretirement benefit obligations in excess of plan assets have been disclosed in the Obligations and Funded Status table. Changes in pension and other postretirement benefit liabilities recognized in Accumulated other comprehensive loss are as follows:
| United States pension liabilities |  | Non-United States pension liabilities |  | Other postretirement liabilities
(In millions) | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
Balance at January 1 | $ | 713 |  |  | $ | 1,051 |  |  | $ | 763 |  |  | $ | 1,026 |  |  | $ | (55) |  |  | $ | (2) |
Prior service cost arising during the year | 1 |  |  | 1 |  |  | 1 |  |  | — |  |  | (2) |  |  | — |
Net loss (gain) arising during the year | 173 |  |  | (238) |  |  | (149) |  |  | (151) |  |  | (69) |  |  | (59) |
Currency translation | — |  |  | — |  |  | (64) |  |  | (24) |  |  | (1) |  |  | — |
Other | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Less amounts included in expense during the year | (76) |  |  | (101) |  |  | (47) |  |  | (88) |  |  | 7 |  |  | 6 |
Net change for the year | 98 |  |  | (338) |  |  | (259) |  |  | (263) |  |  | (65) |  |  | (53) |
Balance at December 31 | $ | 811 |  |  | $ | 713 |  |  | $ | 505 |  |  | $ | 763 |  |  | $ | (120) |  |  | $ | (55) |
Benefits Expense
| United States pension benefit expense (income) |  | Non-United States pension benefit expense (income) |  | Other postretirement benefits expense (income)
(In millions) | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Service cost | $ | 27 |  |  | $ | 37 |  |  | $ | 97 |  |  | $ | 59 |  |  | $ | 72 |  |  | $ | 73 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 2 |
Interest cost | 117 |  |  | 70 |  |  | 103 |  |  | 47 |  |  | 40 |  |  | 45 |  |  | 7 |  |  | 6 |  |  | 9 |
Expected return on plan assets | (204) |  |  | (223) |  |  | (231) |  |  | (115) |  |  | (120) |  |  | (109) |  |  | (1) |  |  | — |  |  | — |
Amortization | 15 |  |  | 36 |  |  | 102 |  |  | 45 |  |  | 71 |  |  | 60 |  |  | (7) |  |  | (5) |  |  | (13) |
| (46) |  |  | (80) |  |  | 71 |  |  | 37 |  |  | 63 |  |  | 69 |  |  | — |  |  | 2 |  |  | (2) |
Settlements, curtailments and special termination benefits | 61 |  |  | 65 |  |  | 62 |  |  | 2 |  |  | 17 |  |  | 10 |  |  | — |  |  | (1) |  |  | — |
Total expense (income) | $ | 15 |  |  | $ | (15) |  |  | $ | 133 |  |  | $ | 39 |  |  | $ | 80 |  |  | $ | 79 |  |  | $ | — |  |  | $ | 1 |  |  | $ | (2) |
Total retirement benefits expense for 2021 of $66 million included $13 million of settlement and curtailment expense related to the sale of the Hydraulics business discussed in Note 2. The components of retirement benefits expense (income) other than service costs are included in Other expense (income) - net. Retirement Benefits Plans Assumptions In 2022, for purposes of determining liabilities related to the majority of its plans in the United States, the Company used the Pri-2012 mortality tables as well as mortality tables that are based on the Company's own experience and generational improvement scales that are based on MP-2021. In 2020 and 2021, the Company used mortality tables that are based on the Company's own experience and generational improvement scales that are based on MP-2020 and MP-2021, respectively. To estimate the service and interest cost components of net periodic benefit cost for the vast majority of its defined benefits pension and other postretirement benefits plans, the Company used a spot rate approach by applying the specific spot rates along the yield curve used to measure the benefit obligation at the beginning of the period to the relevant projected cash flows. Pension Plans
| United States pension plans |  | Non-United States pension plans
| 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Assumptions used to determine benefit obligation at year-end |  |  |  |  |  |  |  |  |  |  |
Discount rate | 5.47 | % |  | 2.81 | % |  | 2.48 | % |  | 4.83 | % |  | 2.01 | % |  | 1.59 | %
Rate of compensation increase | 3.33 | % |  | 3.12 | % |  | 3.12 | % |  | 3.12 | % |  | 3.01 | % |  | 3.02 | %
Interest rate used to credit cash balance plans | 3.67 | % |  | 1.99 | % |  | 2.02 | % |  | 2.32 | % |  | 0.56 | % |  | 0.53 | %
Assumptions used to determine expense |  |  |  |  |  |  |  |  |  |  |
Discount rate used to determine benefit obligation | 4.30 | % |  | 2.61 | % |  | 3.22 | % |  | 2.01 | % |  | 1.63 | % |  | 2.02 | %
Discount rate used to determine service cost | 4.41 | % |  | 2.92 | % |  | 3.34 | % |  | 2.98 | % |  | 2.52 | % |  | 2.78 | %
Discount rate used to determine interest cost | 3.94 | % |  | 1.83 | % |  | 2.75 | % |  | 1.84 | % |  | 1.36 | % |  | 1.82 | %
Expected long-term return on plan assets | 6.50 | % |  | 6.75 | % |  | 7.25 | % |  | 5.70 | % |  | 5.62 | % |  | 5.84 | %
Rate of compensation increase | 3.12 | % |  | 3.12 | % |  | 3.14 | % |  | 3.01 | % |  | 3.02 | % |  | 3.05 | %
Interest rate used to credit cash balance plans | 2.62 | % |  | 2.14 | % |  | 2.59 | % |  | 0.56 | % |  | 0.52 | % |  | 0.54 | %
The expected long-term rate of return on pension assets was determined for each country and reflects long-term historical data taking into account each plan's target asset allocation. The expected long-term rates of return on pension assets for United States pension plans and Non-United States pension plans for 2023 are 6.50% and 6.32%, respectively. The discount rates were determined using appropriate bond data for each country. Other Postretirement Benefits Plans Substantially all of the obligation for other postretirement benefits plans relates to United States plans. Assumptions used to determine other postretirement benefits obligations and expense are as follows:
| Other postretirement benefits plans
| 2022 |  | 2021 |  | 2020
Assumptions used to determine benefit obligation at year-end |  |  |  |  |
Discount rate | 5.46 | % |  | 2.79 | % |  | 2.37 | %
Health care cost trend rate assumed for next year | 7.10 | % |  | 7.45 | % |  | 7.05 | %
Ultimate health care cost trend rate | 4.75 | % |  | 4.75 | % |  | 4.75 | %
Year ultimate health care cost trend rate is achieved | 2031 |  | 2031 |  | 2030
Assumptions used to determine expense |  |  |  |  |
Discount rate used to determine benefit obligation | 2.79 | % |  | 2.44 | % |  | 3.13 | %
Discount rate used to determine service cost | 3.03 | % |  | 2.76 | % |  | 3.25 | %
Discount rate used to determine interest cost | 2.24 | % |  | 1.70 | % |  | 2.67 | %
Initial health care cost trend rate | 7.45 | % |  | 7.38 | % |  | 6.95 | %
Ultimate health care cost trend rate | 4.75 | % |  | 4.75 | % |  | 4.75 | %
Year ultimate health care cost trend rate is achieved | 2031 |  | 2030 |  | 2029
Employer Contributions to Retirement Benefits Plans Contributions to pension plans that Eaton expects to make in 2023, and made in 2022, 2021 and 2020, are as follows:
(In millions) | Expected in 2023 |  | 2022 |  | 2021 |  | 2020
United States plans | $ | 23 |  |  | $ | 30 |  |  | $ | 237 |  |  | $ | 18 |
Non-United States plans | 86 |  |  | 85 |  |  | 106 |  |  | 104 |
Total contributions | $ | 108 |  |  | $ | 116 |  |  | $ | 343 |  |  | $ | 122 |
The following table provides the estimated pension and other postretirement benefit payments for each of the next five years, and the five years thereafter in the aggregate. For other postretirement benefits liabilities, the expected subsidy receipts related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 would reduce the gross payments listed below.
| Estimated United States pension payments |  | Estimated non-United States pension payments |  | Estimated other postretirement benefit payments
(In millions) |  |  | Gross |  | Medicare prescription drug subsidy
2023 | $ | 281 |  |  | $ | 101 |  |  | $ | 20 |  |  | $ | — |
2024 | 267 |  |  | 101 |  |  | 18 |  |  | — |
2025 | 261 |  |  | 101 |  |  | 17 |  |  | — |
2026 | 253 |  |  | 107 |  |  | 16 |  |  | — |
2027 | 242 |  |  | 110 |  |  | 19 |  |  | — |
2028 - 2032 | 1,100 |  |  | 595 |  |  | 84 |  |  | (1) |
Pension Plan Assets Investment policies and strategies are developed on a country and plan specific basis. The United States plan, representing 64% of worldwide pension assets, and the United Kingdom plans representing 25% of worldwide pension assets, are invested primarily in debt securities largely for liability hedging, as the majority of the assets are in plans that are well-funded. In general, the plans are primarily allocated to diversified high-quality publicly traded debt, primarily through separately managed accounts and commingled funds in the form of common collective and other trusts. The United States plan's target allocation is 19% United States equities, 13% non-United States equities, 3% public real estate (primarily equity of real estate investment trusts), 54% debt securities and 11% other, including private equity, private debt and cash equivalents. The United Kingdom plans' target asset allocations are 32% equities and the remainder in debt securities, cash equivalents and real estate investments. The equity risk for the plans is managed through broad diversification across industries, geographies, and levels of market capitalization. The majority of debt allocations for these plans are longer duration government and corporate debt. The United States, United Kingdom and Canada pension plans are authorized to use derivatives, including the use of futures, swaps and options, to achieve more economically desired market exposures. Fair Value Measurements Financial instruments included in pension and other postretirement benefits plan assets are categorized into a fair value hierarchy of three levels, based on the degree of subjectivity inherent in the valuation methodology are as follows: Level 1 -Quoted prices (unadjusted) for identical assets in active markets. Level 2 -Quoted prices for similar assets in active markets, and inputs that are observable for the asset, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 -Unobservable prices or inputs. Certain investments that are measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables to permit a reconciliation to total plan assets. Pension Plans A summary of the fair value of pension plan assets at December 31, 2022 and 2021, is as follows:
(In millions) | Total |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Unobservable inputs (Level 3)1
2022 |  |  |  |  |  |  |
Common collective trusts |  |  |  |  |  |  |
Non-United States equity and global equities | $ | 173 |  |  | $ | — |  |  | $ | 173 |  |  | $ | — |
United States equity | 54 |  |  | — |  |  | 54 |  |  | — |
Fixed income | 620 |  |  | — |  |  | 620 |  |  | — |
Fixed income securities | 744 |  |  | — |  |  | 744 |  |  | — |
United States treasuries | 660 |  |  | 660 |  |  | — |  |  | — |
Real estate | 295 |  |  | 76 |  |  | 20 |  |  | 199 |
Cash equivalents | 77 |  |  | 21 |  |  | 56 |  |  | — |
Exchange traded funds | 77 |  |  | 77 |  |  | — |  |  | — |
Other | 387 |  |  | — |  |  | 27 |  |  | 360 |
Common collective and other trusts measured at net asset value | 1,100 |  |  |  |  |  |  |
Money market funds measured at net asset value | 3 |  |  |  |  |  |  |
Pending purchases and sales of plan assets, and interest receivable | (69) |  |  |  |  |  |  |
Total pension plan assets | $ | 4,121 |  |  | $ | 834 |  |  | $ | 1,694 |  |  | $ | 559 |
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $180 million at December 31, 2022, which will be satisfied by a reallocation of pension plan assets.
(In millions) | Total |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Unobservable inputs (Level 3)1
2021 |  |  |  |  |  |  |
Common collective trusts |  |  |  |  |  |  |
Non-United States equity and global equities | $ | 586 |  |  | $ | — |  |  | $ | 586 |  |  | $ | — |
United States equity | 240 |  |  | — |  |  | 240 |  |  | — |
Fixed income | 624 |  |  | — |  |  | 624 |  |  | — |
Fixed income securities | 1,074 |  |  | — |  |  | 1,074 |  |  | — |
United States treasuries | 417 |  |  | 417 |  |  | — |  |  | — |
Bank loans | 117 |  |  | — |  |  | 117 |  |  | — |
Real estate | 471 |  |  | 237 |  |  | 18 |  |  | 216 |
Equity securities | 2 |  |  | 2 |  |  | — |  |  | — |
Cash equivalents | 150 |  |  | 28 |  |  | 122 |  |  | — |
Exchange traded funds | 122 |  |  | 122 |  |  | — |  |  | — |
Other | 365 |  |  | — |  |  | 46 |  |  | 319 |
Common collective and other trusts measured at net asset value | 1,841 |  |  |  |  |  |  |
Money market funds measured at net asset value | 9 |  |  |  |  |  |  |
Pending purchases and sales of plan assets, and interest receivable | (99) |  |  |  |  |  |  |
Total pension plan assets | $ | 5,919 |  |  | $ | 806 |  |  | $ | 2,827 |  |  | $ | 535 |
1 These pension plan assets include private equity, private credit and private real estate funds that generally have redemption notice periods of six months or longer, and are often not eligible for redemption until the underlying assets are liquidated or distributed. The Company has unfunded commitments to these funds of approximately $192 million at December 31, 2021, which will be satisfied by a reallocation of pension plan assets. The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2021 and 2022 due to the following:
(In millions) | Real estate |  |  |  | Other |  | Total
Balance at January 1, 2021 | $ | 184 |  |  |  |  | $ | 174 |  |  | $ | 358 |
Actual return on plan assets: |  |  |  |  |  |  |
Gains (losses) relating to assets still held at year-end | 28 |  |  |  |  | 61 |  |  | 89 |
Purchases, sales, settlements - net | 4 |  |  |  |  | 79 |  |  | 83 |
Transfers into or out of Level 3 | — |  |  |  |  | 5 |  |  | 5 |
Balance at December 31, 2021 | 216 |  |  |  |  | 319 |  |  | 535 |
Actual return on plan assets: |  |  |  |  |  |  |
Gains (losses) relating to assets still held at year-end | 1 |  |  |  |  | (3) |  |  | (2) |
Purchases, sales, settlements - net | (18) |  |  |  |  | 44 |  |  | 26 |
Transfers into or out of Level 3 | — |  |  |  |  | — |  |  | — |
Balance at December 31, 2022 | $ | 199 |  |  |  |  | $ | 360 |  |  | $ | 559 |
Other Postretirement Benefits Plans A summary of the fair value of other postretirement benefits plan assets at December 31, 2022 and 2021, is as follows:
(In millions) | Total |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Unobservable inputs (Level 3)
2022 |  |  |  |  |  |  |
Cash equivalents | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Common collective and other trusts measured at net asset value | 13 |  |  |  |  |  |  |
Total other postretirement benefits plan assets | $ | 16 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
(In millions) | Total |  | Quoted prices in active markets for identical assets (Level 1) |  | Other observable inputs (Level 2) |  | Unobservable inputs (Level 3)
2021 |  |  |  |  |  |  |
Cash equivalents | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Common collective and other trusts measured at net asset value | 16 |  |  |  |  |  |  |
Total other postretirement benefits plan assets | $ | 19 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Valuation Methodologies Following is a description of the valuation methodologies used for pension and other postretirement benefits plan assets measured at fair value. There have been no changes in the methodologies used at December 31, 2022 and 2021. Common collective and other trusts - Valued at the net unit value of units held by the trust at year end. The unit value is determined by the total value of fund assets divided by the total number of units of the fund owned. The equity investments in collective trusts are predominantly in index funds for which the underlying securities are actively traded in public markets based upon readily measurable prices. The investments in other trusts are predominantly in exchange traded funds for which the underlying securities are actively traded in public markets based upon readily measurable prices. Common collective and other trusts measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the total plan assets. Fixed income securities - These securities consist of publicly traded United States and non-United States fixed interest obligations (principally corporate and government bonds and debentures). The fair value of corporate and government debt securities is determined through third-party pricing models that consider various assumptions, including time value, yield curves, credit ratings, and current market prices. The Company verifies the results of trustees or custodians and evaluates the pricing classification of these securities by performing analyses using other third-party sources. Equity securities - These securities consist of comingled funds and direct investments consisting of the stock of publicly traded companies. Such investments are valued based on the closing price reported in an active market on which the individual securities are traded. United States treasuries - Valued at the closing price of each security. Bank loans - These securities consist of senior secured term loans of publicly traded and privately held United States and non-United States floating rate obligations (principally corporations of non-investment grade rating). The fair value is determined through third-party pricing models that primarily utilize dealer quoted current market prices. The Company verifies the results of trustees or custodians and evaluates the pricing classification of these securities by performing analyses using other third-party sources. Real estate - Consists of direct investments in the stock of publicly traded companies and investments in pooled funds that invest directly in real estate. The publicly traded companies are valued based on the closing price reported in an active market on which the individual securities are traded and as such are classified as Level 1. The pooled funds rely on appraisal-based valuations and as such are classified as Level 3. Cash equivalents - Primarily certificates of deposit, commercial paper, and repurchase agreements. Exchange traded funds - Valued at the closing price of the exchange traded fund's shares. Money market funds - Money market funds measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are being presented in the tables above to permit a reconciliation of the fair value hierarchy to the total plan assets. Other - These assets consist of private equity, private debt, insurance contracts primarily for international plans, futures contracts, and over-the-counter options. Investments in private equity and private debt are valued at net asset value or estimated fair value based on quarterly financial information received from the investment advisor, third party appraisal or general partner. These estimates incorporate factors such as contributions and distributions, market transactions, market comparables and performance multiples. Futures contracts and options are valued based on the closing prices of contracts or indices as available using third-party sources. For additional information regarding fair value measurements, see Note 14. Defined Contribution Plans The Company has various defined contribution benefit plans, primarily consisting of the plans in the United States. The total contributions related to these plans are charged to expense and are as follows:
(In millions) |
2022 | $ | 182 |
2021 | 171 |
2020 | 111 |

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