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Postretirement Benefit Plans (Tables) | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
Schedule of Net Periodic Benefit Costs | The pretax FAS expense (income) related to our qualified defined benefit pension plans and retiree medical and life insurance plans each year included the following (in millions):
|  | Qualified Defined Benefit Pension Plans |  |  | Retiree Medical and Life Insurance Plans
|  | 2021 |  | 2020 |  | 2019 |  |  | 2021 |  | 2020 |  | 2019
Operating: |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 106 |  |  | $ | 101 |  |  | $ | 516 |  |  |  | $ | 13 |  |  | $ | 13 |  |  | $ | 14 |
Non-operating: |  |  |  |  |  |  |  |  |  |  |  |  |
Interest cost |  | 1,220 |  |  | 1,538 |  |  | 1,806 |  |  |  | 53 |  |  | 70 |  |  | 97 |
Expected return on plan assets |  | (2,146) |  |  | (2,264) |  |  | (2,300) |  |  |  | (141) |  |  | (127) |  |  | (110) |
Recognized net actuarial losses (gains) |  | 902 |  |  | 849 |  |  | 1,404 |  |  |  | — |  |  | (4) |  |  | 2 |
Amortization of net prior service (credits) costs |  | (349) |  |  | (342) |  |  | (333) |  |  |  | 37 |  |  | 39 |  |  | 42 |
Settlement charge |  | 1,665 |  |  | — |  |  | — |  |  |  | — |  |  | — |  |  | — |
Non-service FAS pension expense (income) |  | 1,292 |  |  | (219) |  |  | 577 |  |  |  | (51) |  |  | (22) |  |  | 31 |
Net periodic benefit expense (income) |  | $ | 1,398 |  |  | $ | (118) |  |  | $ | 1,093 |  |  |  | $ | (38) |  |  | $ | (9) |  |  | $ | 45 |
Reconciliation of Benefit Obligations, Plan Assets, and Unfunded or Funded Status | The following table provides a reconciliation of benefit obligations, plan assets and net (unfunded) funded status related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):
|  | Qualified Defined Benefit Pension Plans |  |  | Retiree Medical and Life Insurance Plans
|  | 2021 |  | 2020 |  |  | 2021 |  | 2020
Change in benefit obligation |  |  |  |  |  |  |  |  |
Beginning balance (a) |  | $ | 51,352 |  |  | $ | 48,674 |  |  |  | $ | 2,271 |  |  | $ | 2,226 |
Service cost |  | 106 |  |  | 101 |  |  |  | 13 |  |  | 13 |
Interest cost |  | 1,220 |  |  | 1,538 |  |  |  | 53 |  |  | 70 |
Actuarial (gains) losses (b) |  | (2,045) |  |  | 4,610 |  |  |  | (352) |  |  | 117 |
Settlements (c) |  | (4,885) |  |  | (1,392) |  |  |  | — |  |  | — |
Plan amendments and curtailments |  | 2 |  |  | 9 |  |  |  | — |  |  | (8) |
Benefits paid |  | (2,303) |  |  | (2,188) |  |  |  | (217) |  |  | (220) |
Medicare Part D subsidy |  | — |  |  | — |  |  |  | 4 |  |  | 3 |
Participants’ contributions |  | — |  |  | — |  |  |  | 67 |  |  | 70 |
Ending balance (a) |  | $ | 43,447 |  |  | $ | 51,352 |  |  |  | $ | 1,839 |  |  | $ | 2,271 |
Change in plan assets |  |  |  |  |  |  |  |  |
Beginning balance at fair value |  | $ | 38,481 |  |  | $ | 35,442 |  |  |  | $ | 2,085 |  |  | $ | 1,889 |
Actual return on plan assets (d) |  | 3,899 |  |  | 5,594 |  |  |  | 224 |  |  | 298 |
Settlements (c) |  | (4,885) |  |  | (1,392) |  |  |  | — |  |  | — |
Benefits paid |  | (2,303) |  |  | (2,188) |  |  |  | (217) |  |  | (220) |
Company contributions |  | — |  |  | 1,025 |  |  |  | 6 |  |  | 45 |
Medicare Part D subsidy |  | — |  |  | — |  |  |  | 4 |  |  | 3 |
Participants’ contributions |  | — |  |  | — |  |  |  | 67 |  |  | 70 |
Ending balance at fair value |  | $ | 35,192 |  |  | $ | 38,481 |  |  |  | $ | 2,169 |  |  | $ | 2,085 |
Unfunded status of the plans |  | $ | (8,255) |  |  | $ | (12,871) |  |  |  | $ | 330 |  |  | $ | (186) |
(a)Benefit obligation balances represent the projected benefit obligation for our qualified defined benefit pension plans and the accumulated benefit obligation for our retiree medical and life insurance plans. (b)Actuarial gains for our qualified defined benefit pension plans in 2021 primarily reflect an increase in the discount rate from 2.50% at December 31, 2020 to 2.875% at December 31, 2021, which decreased benefit obligations by $2.3 billion, partially offset by an increase of approximately $250 million due to changes in longevity assumptions and participant data. Actuarial gains for our retiree medical and life insurance plans in 2021 reflect an increase in the discount rate from 2.375% at December 31, 2020 to 2.75% at December 31, 2021, which decreased benefit obligations by $70 million, and $282 million due to changes in plan participation assumptions and claims data. (c)Qualified defined benefit pension plan settlements in 2021 and 2020 represent the transfer of gross defined benefit pension obligations and related plan assets to insurance companies pursuant to the group annuity contracts purchased on August 3, 2021 and December 3, 2020, respectively, as described above. (d)Actual return on plan assets for our qualified defined benefit pension plans and retiree medical and life insurance plans was approximately 10.5% in 2021 and 16.5% in 2020.
Amounts Recognized on Balance Sheets Related to Qualified Defined Benefit Pension Plans and Retiree Medical and Life Insurance Plans | The following table provides amounts recognized on our consolidated balance sheets related to our qualified defined benefit pension plans and our retiree medical and life insurance plans (in millions):
|  | Qualified Defined Benefit Pension Plans |  |  | Retiree Medical and Life Insurance Plans
|  | 2021 |  | 2020 |  |  | 2021 |  | 2020
Other noncurrent assets |  | $ | 64 |  |  | $ | 3 |  |  |  | $ | 330 |  |  | $ | — |
Accrued pension liabilities |  | (8,319) |  |  | (12,874) |  |  |  | — |  |  | — |
Other noncurrent liabilities |  | — |  |  | — |  |  |  | — |  |  | (186) |
Net (unfunded) funded status of the plans |  | $ | (8,255) |  |  | $ | (12,871) |  |  |  | $ | 330 |  |  | $ | (186) |
Amounts Recognized in Other Comprehensive Income (Loss) Related to Postretirement Benefit Plans, Net of Tax | The following table provides the amount of actuarial gains or losses and prior service costs or credits recognized in accumulated other comprehensive loss related to qualified defined benefit pension plans and retiree medical and life insurance plans at December 31 (in millions):
|  | Qualified Defined Benefit Pension Plans |  |  | Retiree Medical and Life Insurance Plans
|  | 2021 |  | 2020 |  |  | 2021 |  | 2020
Accumulated other comprehensive loss (pre-tax) related to: |  |  |  |  |  |  |  |  |
Net actuarial losses |  | $ | 14,675 |  |  | $ | 21,040 |  |  |  | $ | (554) |  |  | $ | (119) |
Prior service (credit) cost |  | (884) |  |  | (1,235) |  |  |  | 36 |  |  | 73 |
Total |  | $ | 13,791 |  |  | $ | 19,805 |  |  |  | $ | (518) |  |  | $ | (46) |
Estimated tax |  | (2,947) |  |  | (4,230) |  |  |  | 110 |  |  | 9 |
Net amount recognized in accumulated other comprehensive loss |  | $ | 10,844 |  |  | $ | 15,575 |  |  |  | $ | (408) |  |  | $ | (37) |
The following table provides the changes recognized in accumulated other comprehensive loss, net of tax, for actuarial gains or losses and prior service costs or credits due to differences between the actual return and expected return on plan assets and changes in the fair value of the benefit obligation recognized in connection with our annual remeasurement and the amortization during the year for our qualified defined benefit pension plans, retiree medical and life insurance plans, and certain other plans (in millions):
|  | Incurred but Not Yet Recognized in FAS Expense |  |  | Recognition of Previously Deferred Amounts
|  | 2021 |  | 2020 |  | 2019 |  |  | 2021 |  | 2020 |  | 2019
|  | gains (losses) |  |  | (gains) losses
Actuarial gains and losses |  |  |  |  |  |  |  |  |  |  |
Qualified defined benefit pension plans |  | $ | 2,987 |  |  | $ | (1,005) |  |  | $ | (2,283) |  |  |  | $ | 2,019 |  |  | $ | 668 |  |  | $ | 1,104 |
Retiree medical and life insurance plans |  | 342 |  |  | 43 |  |  | 238 |  |  |  | — |  |  | (3) |  |  | 2 |
Other plans |  | 76 |  |  | (104) |  |  | (133) |  |  |  | 24 |  |  | 24 |  |  | 42 |
|  | 3,405 |  |  | (1,066) |  |  | (2,178) |  |  |  | 2,043 |  |  | 689 |  |  | 1,148 |
|  | credit (cost) |  |  | (credit) cost
Net prior service credit and cost |  |  |  |  |  |  |  |  |  |  |
Qualified defined benefit pension plans |  | (1) |  |  | (7) |  |  | (8) |  |  |  | (274) |  |  | (269) |  |  | (263) |
Retiree medical and life insurance plans |  | — |  |  | 6 |  |  | 4 |  |  |  | 29 |  |  | 30 |  |  | 33 |
Other plans |  | — |  |  | — |  |  | — |  |  |  | (11) |  |  | (10) |  |  | (10) |
|  | (1) |  |  | (1) |  |  | (4) |  |  |  | (256) |  |  | (249) |  |  | (240) |
|  | $ | 3,404 |  |  | $ | (1,067) |  |  | $ | (2,182) |  |  |  | $ | 1,787 |  |  | $ | 440 |  |  | $ | 908 |
Actuarial Assumptions Used to Determine Net Periodic Benefit Cost |
|  | Qualified Defined Benefit Pension Plans |  |  | Retiree Medical and Life Insurance Plans
|  | 2021 |  | 2020 |  | 2019 |  |  | 2021 |  | 2020 |  | 2019
Weighted average discount rate |  | 2.875 | % |  | 2.500 | % |  | 3.250 | % |  |  | 2.750 | % |  | 2.375 | % |  | 3.250 | %
Expected long-term rate of return on assets |  | 6.50 | % |  | 7.00 | % |  | 7.00 | % |  |  | 6.50 | % |  | 7.00 | % |  | 7.00 | %
Health care trend rate assumed for next year |  |  |  |  |  |  |  |  | 7.50 | % |  | 7.75 | % |  | 8.00 | %
Ultimate health care trend rate |  |  |  |  |  |  |  |  | 4.50 | % |  | 4.50 | % |  | 4.50 | %
Year ultimate health care trend rate is reached |  |  |  |  |  |  |  |  | 2034 |  | 2034 |  | 2034
Schedule of Allocation of Plan Assets | LMIMCo’s investment policies require that asset allocations of postretirement benefit plans be maintained within the following approximate ranges:
Asset Class | Asset Allocation Ranges
Cash and cash equivalents | 0-20%
Equity | 15-65%
Fixed income | 10-60%
Alternative investments: |
Private equity funds | 0-15%
Real estate funds | 0-10%
Hedge funds | 0-20%
Commodities | 0-15%
The following table presents the fair value of the assets (in millions) of our qualified defined benefit pension plans and retiree medical and life insurance plans by asset category and their level within the fair value hierarchy (see “Note 1 – Organization and Significant Accounting Policies - Investments” for definition of these levels), which we are required to disclose even though these assets are not separately recorded on our consolidated balance sheet. Certain investments are measured at their Net Asset Value (NAV) per share because such investments do not have readily determinable fair values and, therefore, are not required to be categorized in the fair value hierarchy. Assets measured at NAV have been included in the table below to permit reconciliation of the fair value hierarchy to amounts presented in the funded status table above.
| December 31, 2021 |  |  | December 31, 2020
| Total |  | Level 1 |  | Level 2 |  | Level 3 |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Investments measured at fair value |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents (a) | $ | 991 |  |  | $ | 991 |  |  | $ | — |  |  | $ | — |  |  |  | $ | 1,109 |  |  | $ | 1,109 |  |  | $ | — |  |  | $ | — |
Equity (a): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. equity securities | 6,479 |  |  | 6,444 |  |  | 5 |  |  | 30 |  |  |  | 7,535 |  |  | 7,467 |  |  | 8 |  |  | 60 |
International equity securities | 4,882 |  |  | 4,880 |  |  | — |  |  | 2 |  |  |  | 6,844 |  |  | 6,836 |  |  | — |  |  | 8 |
Commingled equity funds | 869 |  |  | 36 |  |  | 833 |  |  | — |  |  |  | 1,671 |  |  | 442 |  |  | 1,228 |  |  | 1 |
Fixed income (a): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities | 6,397 |  |  | — |  |  | 6,295 |  |  | 102 |  |  |  | 5,732 |  |  | — |  |  | 5,730 |  |  | 2 |
U.S. Government securities | 2,864 |  |  | — |  |  | 2,864 |  |  | — |  |  |  | 2,506 |  |  | — |  |  | 2,506 |  |  | — |
U.S. Government-sponsored enterprise securities | 228 |  |  | — |  |  | 228 |  |  | — |  |  |  | 230 |  |  | — |  |  | 230 |  |  | — |
Other fixed income investments (b) | 4,736 |  |  | 49 |  |  | 3,071 |  |  | 1,616 |  |  |  | 5,873 |  |  | 37 |  |  | 4,063 |  |  | 1,773 |
Total | $ | 27,446 |  |  | $ | 12,400 |  |  | $ | 13,296 |  |  | $ | 1,750 |  |  |  | $ | 31,500 |  |  | $ | 15,891 |  |  | $ | 13,765 |  |  | $ | 1,844 |
Investments measured at NAV |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commingled equity funds | 130 |  |  |  |  |  |  |  |  |  | 92 |  |  |  |  |  |  |
Other fixed income investments | 701 |  |  |  |  |  |  |  |  |  | 541 |  |  |  |  |  |  |
Private equity funds | 5,386 |  |  |  |  |  |  |  |  |  | 4,672 |  |  |  |  |  |  |
Real estate funds | 3,059 |  |  |  |  |  |  |  |  |  | 2,650 |  |  |  |  |  |  |
Hedge funds | 556 |  |  |  |  |  |  |  |  |  | 1,111 |  |  |  |  |  |  |
Total investments measured at NAV | 9,832 |  |  |  |  |  |  |  |  |  | 9,066 |  |  |  |  |  |  |
Receivables, net | 83 |  |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  |
Total | $ | 37,361 |  |  |  |  |  |  |  |  |  | $ | 40,566 |  |  |  |  |  |  |
(a)Cash and cash equivalents, equity securities and fixed income securities included derivative assets and liabilities whose fair values were not material as of December 31, 2021 and 2020. LMIMCo’s investment policies restrict the use of derivatives to either establish long or short exposures for purposes consistent with applicable investment mandate guidelines or to hedge risks to the extent of a plan’s current exposure to such risks. Most derivative transactions are settled on a daily basis. (b)Level 3 investments include $1.5 billion at December 31, 2021 and $1.7 billion at December 31, 2020 related to the buy-in contracts discussed above.
Estimated Future Benefit Payments | The following table presents estimated future benefit payments as of December 31, 2021 (in millions):
|  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 – 2031
Qualified defined benefit pension plans |  | $ | 1,980 |  |  | $ | 2,080 |  |  | $ | 2,160 |  |  | $ | 2,230 |  |  | $ | 2,290 |  |  | $ | 11,700 |
Retiree medical and life insurance plans |  | 140 |  |  | 140 |  |  | 140 |  |  | 130 |  |  | 130 |  |  | 570 |

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