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Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Benefit Plans
Note 11. Benefit Plans

Pension Plans
Obligations and Funded Status:
The projected benefit obligations, plan assets and funded status of our pension plans were:
 U.S. PlansNon-U.S. Plans
 2020201920202019
 (in millions)
Projected benefit obligation at January 1$1,748 $1,511 $10,458 $9,578 
Service cost6 38 121 122 
Interest cost49 60 149 202 
Benefits paid(35)(40)(473)(424)
Settlements paid(95)(73)— (1)
Actuarial (gains)/losses213 251 679 761 
Currency— — 572 207 
Other (1)
1 1 152 13 
Projected benefit obligation at December 311,887 1,748 11,658 10,458 
Fair value of plan assets at January 11,739 1,510 9,758 8,465 
Actual return on plan assets337 334 865 1,211 
Contributions13 8 208 261 
Benefits paid(35)(40)(473)(424)
Settlements paid(95)(73)— (1)
Currency— — 489 246 
Other (1)
— — 125 — 
Fair value of plan assets at December 311,959 1,739 10,972 9,758 
Net pension (liabilities)/assets at December 31$72 $(9)$(686)$(700)

(1)In 2020 we reviewed the impact of market changes on design features of certain historical defined contribution plans. The review resulted in additional plans being accounted for as defined benefit pension plans, which resulted in increases of $133 million in the projected benefit obligation and $125 million in plan assets in 2020

The accumulated benefit obligation, which represents benefits earned to the measurement date, for U.S. pension plans was $1,882 million at December 31, 2020 and $1,741 million at December 31, 2019. The accumulated benefit obligation for non-U.S. pension plans was $11,404 million at December 31, 2020 and $10,236 million at December 31, 2019.
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.

Salaried and non-union hourly employees hired after January 1, 2009 in the U.S. and after January 1, 2011 in Canada (or earlier for certain legacy Cadbury employees) are no longer eligible to participate in the defined benefit pension plans. Benefit accruals for salaried and non-union hourly employee participants in the U.S. and Canada defined benefit pension plans ceased on December 31, 2019. These employees instead receive Company contributions to the employee defined contribution plans.

The combined U.S. and non-U.S. pension plans resulted in a net pension liability of $614 million at December 31, 2020 and $709 million at December 31, 2019. We recognized these amounts in our consolidated balance sheets as follows:
 As of December 31,
 20202019
 (in millions)
Prepaid pension assets$672 $516 
Other current liabilities(29)(35)
Accrued pension costs(1,257)(1,190)
$(614)$(709)

Certain of our U.S. and non-U.S. plans are underfunded with accumulated benefit obligations in excess of plan assets. For these plans, the projected benefit obligations, accumulated benefit obligations and the fair value of plan assets were:
 U.S. PlansNon-U.S. Plans
 As of December 31,As of December 31,
 2020201920202019
 (in millions)
Projected benefit obligation$51 $55 $4,059 $3,613 
Accumulated benefit obligation51 55 3,873 3,447 
Fair value of plan assets3 2 2,827 2,443 

We used the following weighted-average assumptions to determine our benefit obligations under the pension plans:
 U.S. PlansNon-U.S. Plans
 As of December 31,As of December 31,
 2020201920202019
Discount rate2.73 %3.44 %1.33 %1.74 %
Expected rate of return on plan assets4.50 %5.00 %3.90 %4.20 %
Rate of compensation increase4.00 %4.00 %3.16 %3.17 %

Year-end discount rates for our U.S., Canadian, Eurozone and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. We determine our expected rate of return on plan assets from the plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class.

For the periods presented, we measure service and interest costs by applying the specific spot rates along a yield curve used to measure plan obligations to the plans’ liability cash flows. We believe this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve.
Components of Net Periodic Pension Cost:
Net periodic pension cost consisted of the following:
 U.S. PlansNon-U.S. Plans
 For the Years Ended December 31,For the Years Ended December 31,
 202020192018202020192018
 (in millions)
Service cost$6 $38 $43 $121 $122 $146 
Interest cost49 60 61 149 202 199 
Expected return on plan assets(77)(88)(88)(400)(404)(448)
Amortization:
Net loss/(gain)17 30 32 118 148 163 
Prior service cost/(benefit)1 1 2 (7)(6)(2)
Settlement losses and other expenses (1)
18 16 35 4 (3)5 
Net periodic pension cost$14 $57 $85 $(15)$59 $63 
 
(1)Settlement losses of $3 million in 2020, $5 million in 2019 and $5 million in 2018 were incurred in connection with our Simplify to Grow Program. See Note 8, Restructuring Program, for more information. Net settlement losses of $13 million for our U.S. plans and settlement losses of $6 million for our non-U.S. plans in 2020, settlement losses of $12 million for our U.S. plans and settlement gains of $4 million for our non-U.S. plans in 2019 and settlement losses of $31 million for our U.S. plans and $4 million for our non-U.S. plans in 2018 related to lump-sum payment elections made by retired employees.

For the U.S. plans, we determine the expected return on plan assets component of net periodic benefit cost using a calculated market return value that recognizes the cost over a four-year period. For our non-U.S. plans, we utilize a similar approach with varying cost recognition periods for some plans, and with others, we determine the expected return on plan assets based on asset fair values as of the measurement date.

We used the following weighted-average assumptions to determine our net periodic pension cost:
 U.S. PlansNon-U.S. Plans
 For the Years Ended December 31,For the Years Ended December 31,
 202020192018202020192018
Discount rate3.44 %4.40 %3.68 %1.74 %2.45 %2.20 %
Expected rate of return
on plan assets		5.00 %5.75 %5.50 %4.20 %4.80 %4.90 %
Rate of compensation increase4.00 %4.00 %4.00 %3.17 %3.31 %3.31 %
Plan Assets:
The fair value of pension plan assets was determined using the following fair value measurements:
 As of December 31, 2020
Asset CategoryTotal Fair
Value		Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
 (in millions)
U.S. equity securities$4 $4 $— $— 
Non-U.S. equity securities1 1 — — 
Pooled funds - equity securities2,225 999 1,226 — 
Total equity securities2,230 1,004 1,226 — 
Government bonds4,340 60 4,280 — 
Pooled funds - fixed-income securities622 439 183 — 
Corporate bonds and other
fixed-income securities		2,860 258 811 1,791 
Total fixed-income securities7,822 757 5,274 1,791 
Real estate212 142 — 70 
Private equity3 — — 3 
Cash117 107 10 — 
Other5 4 — 1 
Total assets in the fair value hierarchy$10,389 $2,014 $6,510 $1,865 
Investments measured at net asset value2,413 
Total investments at fair value$12,802 
 As of December 31, 2019
Asset CategoryTotal Fair
Value		Quoted Prices
in Active Markets
for Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
 (in millions)
U.S. equity securities$2 $2 $— $— 
Non-U.S. equity securities2 2 — — 
Pooled funds - equity securities2,186 890 1,296 — 
Total equity securities2,190 894 1,296 — 
Government bonds3,328 53 3,275 — 
Pooled funds - fixed-income securities575 417 158 — 
Corporate bonds and other
fixed-income securities		2,727 66 825 1,836 
Total fixed-income securities6,630 536 4,258 1,836 
Real estate186 124 — 62 
Private equity3 — — 3 
Cash122 117 5 — 
Other2 1 — 1 
Total assets in the fair value hierarchy$9,133 $1,672 $5,559 $1,902 
Investments measured at net asset value2,297 
Total investments at fair value$11,430 

We excluded plan assets of $129 million at December 31, 2020 and $67 million at December 31, 2019 from the above tables related to certain insurance contracts as they are reported at contract value, in accordance with authoritative guidance.
Fair value measurements
•Level 1 – includes primarily U.S and non-U.S. equity securities and government bonds valued using quoted prices in active markets.
•Level 2 – includes primarily pooled funds, including assets in real estate pooled funds, valued using net asset values of participation units held in common collective trusts, as reported by the managers of the trusts and as supported by the unit prices of actual purchase and sale transactions. Level 2 plan assets also include corporate bonds and other fixed-income securities, valued using independent observable market inputs, such as matrix pricing, yield curves and indices.
•Level 3 – includes investments valued using unobservable inputs that reflect the plans’ assumptions that market participants would use in pricing the assets, based on the best information available.
•Fair value estimates for pooled funds are calculated by the investment advisor when reliable quotations or pricing services are not readily available for certain underlying securities. The estimated value is based on either cost or last sale price for most of the securities valued in this fashion.
•Fair value estimates for private equity investments are calculated by the general partners using the market approach to estimate the fair value of private investments. The market approach utilizes prices and other relevant information generated by market transactions, type of security, degree of liquidity, restrictions on the disposition, latest round of financing data, company financial statements, relevant valuation multiples and discounted cash flow analyses.
•Fair value estimates for private debt placements are calculated using standardized valuation methods, including but not limited to income-based techniques such as discounted cash flow projections or market-based techniques utilizing public and private transaction multiples as comparables.
•Fair value estimates for real estate investments are calculated by investment managers using the present value of future cash flows expected to be received from the investments, based on valuation methodologies such as appraisals, local market conditions, and current and projected operating performance.
•Fair value estimates for fixed-income securities that are buy-in annuity policies are calculated on a replacement policy value basis by discounting the projected cash flows of the plan members using a discount rate based on risk-free rates and adjustments for estimated levels of insurer pricing.
•Net asset value – primarily includes equity funds, fixed income funds, real estate funds, hedge funds and private equity investments for which net asset values are normally used.

Changes in our Level 3 plan assets, which are recorded in other comprehensive earnings/(losses), included:
Asset CategoryJanuary 1,
2020
Balance		Net Realized
and Unrealized
Gains/
(Losses)		Net Purchases,
Issuances and
Settlements		Net Transfers
Into/(Out of)
Level 3		Currency
Impact		December 31,
2020
Balance
 (in millions)
Corporate bond and other
fixed-income securities		$1,836 $16 $(110)$— $49 $1,791 
Real estate62 5 — — 3 70 
Private equity and other4 — — — — 4 
Total Level 3 investments$1,902 $21 $(110)$— $52 $1,865 
Asset CategoryJanuary 1,
2019
Balance		Net Realized
and Unrealized
Gains/
(Losses)		Net Purchases,
Issuances and
Settlements		Net Transfers
Into/(Out of)
Level 3		Currency
Impact		December 31,
2019
Balance
 (in millions)
Corporate bond and other
fixed-income securities		$1,032 $8 $727 $— $69 $1,836 
Real estate22 36 3 — 1 62 
Private equity and other3 1 — — — 4 
Total Level 3 investments$1,057 $45 $730 $— $70 $1,902 

The decrease in Level 3 pension plan investments during 2020 was primarily due to maturities of corporate bond and other fixed income securities. The increase in Level 3 pension plan investments during 2019 was primarily due to additional purchases of a buy-in annuity and other fixed income securities.
The percentage of fair value of pension plan assets was:
 U.S. PlansNon-U.S. Plans
 As of December 31,As of December 31,
Asset Category2020201920202019
Equity securities15 %15 %23 %26 %
Fixed-income securities85 %85 %58 %54 %
Real estate— — 5 %6 %
Hedge funds— — 2 %1 %
Buy-in annuity policies— — 11 %12 %
Cash— — 1 %1 %
Total100 %100 %100 %100 %

For our U.S. plans, our investment strategy is to reduce our funded status risk in part through appropriate asset allocation within our plan assets. We attempt to maintain our target asset allocation by rebalancing between asset classes as we make monthly benefit payments. The strategy involves using indexed U.S. equity and international equity securities and actively managed U.S. investment grade fixed-income securities (which constitute 95% or more of fixed-income securities) with smaller allocations to high yield fixed-income securities.

For our non-U.S. plans, the investment strategy is subject to local regulations and the asset/liability profiles of the plans in each individual country. In aggregate, the asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 23% equity securities, 60% fixed-income securities, 12% buy-in annuity policies and 5% real estate.

Employer Contributions:
In 2020, we contributed $13 million to our U.S. pension plans and $194 million to our non-U.S. pension plans. In addition, employees contributed $14 million to our non-U.S. plans. We make contributions to our pension plans in accordance with local funding arrangements and statutory minimum funding requirements. Discretionary contributions are made to the extent that they are tax deductible and do not generate an excise tax liability. In 2021, we estimate that our pension contributions will be $8 million to our U.S. plans and $228 million to our non-U.S. plans based on current tax laws. Our actual contributions may be different due to many factors, including changes in tax and other benefit laws, significant differences between expected and actual pension asset performance or interest rates.

Future Benefit Payments:
The estimated future benefit payments from our pension plans at December 31, 2020 were (in millions):
 202120222023202420252025-2030
U.S. Plans$168 $104 $105 $103 $104 $506 
Non-U.S. Plans411 410 420 431 438 2,291 

Multiemployer Pension Plans:
In accordance with obligations we have under collective bargaining agreements, we made contributions to multiemployer pension plans for continuing participation of $5 million in 2020, $5 million in 2019 and $17 million in 2018. Our contributions are based on our contribution rates under our collective bargaining agreements, the number of our eligible employees and Fund surcharges.

In 2018, we executed a complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund and recorded a $429 million estimated withdrawal liability. On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Fund totaling $526 million requiring pro-rata monthly payments over 20 years. We began making monthly payments during the third quarter of 2019. Within selling, general and administrative expenses, we recorded a $35 million ($26 million net of tax) adjustment related to the discounted withdrawal liability. Within interest and other expense, net, we recorded accreted interest of $11 million in 2020, $12 million in 2019 and $6 million in 2018. As of December 31, 2020, the remaining discounted withdrawal liability was $375 million, with $14 million recorded in other current liabilities and $361 million recorded in long-term other liabilities.
Other Costs:
We sponsor and contribute to employee defined contribution plans. These plans cover eligible salaried, non-union and union employees. Our contributions and costs are determined by the matching of employee contributions, as defined by the plans. Amounts charged to expense in continuing operations for defined contribution plans totaled $83 million in 2020, $72 million in 2019 and $57 million in 2018.

Postretirement Benefit Plans
Obligations:
Our postretirement health care plans are not funded. The changes in and the amount of the accrued benefit obligation were:
 As of December 31,
 20202019
 (in millions)
Accrued benefit obligation at January 1$403 $366 
Service cost5 5 
Interest cost12 15 
Benefits paid(17)(16)
Currency(1)5 
Actuarial losses/(gains)(41)28 
Accrued benefit obligation at December 31$361 $403 

The current portion of our accrued postretirement benefit obligation of $16 million at December 31, 2020 and $16 million at December 31, 2019 was included in other current liabilities.

The actuarial (gain) for all postretirement plans in 2020 was driven by gains related to assumption changes partially offset by losses related to a change in the discount rate used to measure the benefit obligations of those plans. All postretirement plans in 2019 experienced an actuarial loss related to a change in the discount rate used to measure the benefit obligations of those plans.

We used the following weighted-average assumptions to determine our postretirement benefit obligations:
 U.S. PlansNon-U.S. Plans
 As of December 31,As of December 31,
 2020201920202019
Discount rate2.68 %3.41 %3.35 %3.86 %
Health care cost trend rate assumed for next year5.75 %6.00 %5.66 %5.42 %
Ultimate trend rate5.00 %5.00 %4.44 %5.42 %
Year that the rate reaches the ultimate trend rate2024202420402019

Year-end discount rates for our U.S., Canadian and U.K. plans were developed from a model portfolio of high quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. Year-end discount rates for our remaining non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible. Changes in our discount rates were primarily the result of changes in bond yields year-over-year. Our expected health care cost trend rate is based on historical costs.

For the periods presented, we measure service and interest costs for other postretirement benefits by applying the specific spot rates along a yield curve used to measure plan obligations to the plans’ liability cash flows. We believe this approach provides a good measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve.
Components of Net Periodic Postretirement Health Care Costs:
Net periodic postretirement health care costs consisted of the following:
 For the Years Ended December 31,
 202020192018
 (in millions)
Service cost$5 $5 $6 
Interest cost12 15 14 
Amortization:
Net loss/(gain)7 6 15 
Prior service credit(30)(38)(39)
Net periodic postretirement health care costs/(benefit)$(6)$(12)$(4)

We used the following weighted-average assumptions to determine our net periodic postretirement health care cost:
 U.S. PlansNon-U.S. Plans
 For the Years Ended December 31,For the Years Ended December 31,
 202020192018202020192018
Discount rate3.41%4.37%3.66%3.86%4.40%4.24%
Health care cost trend rate6.00%6.25%6.25%5.42%5.44%5.56%

Future Benefit Payments:
Our estimated future benefit payments for our postretirement health care plans at December 31, 2020 were (in millions):
 202120222023202420252025-2030
U.S. Plans$11 $11 $12 $12 $12 $60 
Non-U.S. Plans5 5 5 5 5 29 

Other Costs:
We made contributions to multiemployer medical plans totaling $20 million in 2020, $20 million in 2019 and $19 million in 2018. These plans provide medical benefits to active employees and retirees under certain collective bargaining agreements.

Postemployment Benefit Plans
Obligations:
Our postemployment plans are not funded. The changes in and the amount of the accrued benefit obligation at December 31, 2020 and 2019 were:
 As of December 31,
 20202019
 (in millions)
Accrued benefit obligation at January 1$66 $74 
Service cost6 6 
Interest cost3 5 
Benefits paid(10)(9)
Actuarial losses/(gains)— (10)
Accrued benefit obligation at December 31$65 $66 

The accrued benefit obligation was determined using a weighted-average discount rate of 4.3% in 2020 and 5.3% in 2019, an assumed weighted-average ultimate annual turnover rate of 0.3% in 2020 and 2019, assumed compensation cost increases of 4.0% in 2020 and 2019 and assumed benefits as defined in the respective plans.

Postemployment costs arising from actions that offer employees benefits in excess of those specified in the respective plans are charged to expense when incurred.
Components of Net Periodic Postemployment Costs:
Net periodic postemployment costs consisted of the following:
 For the Years Ended December 31,
 202020192018
 (in millions)
Service cost$6 $6 $6 
Interest cost3 5 4 
Amortization of net gains(2)(4)(3)
Net periodic postemployment costs$7 $7 $7 

As of December 31, 2020, the estimated net gain for the postemployment benefit plans that we expect to amortize from accumulated other comprehensive earnings/(losses) into net periodic postemployment costs during 2021 is approximately $3 million.