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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
The Company sponsors both funded and unfunded domestic and international defined benefit pension and defined contribution plans. In addition, the Company contributes to various domestic and international multi-employer defined benefit pension plans.

Pension Plans

Qualified domestic pension plan benefits covering collectively bargained U.S. employees comprise approximately 34% of the projected benefit obligation. This noncontributory defined benefit plan provides benefits on a flat dollar formula based on
location and is closed to new entrants. The non-U.S. plans comprise approximately 66% of the projected benefit obligation; certain of these plans provide participants with one-time payments upon separation of employment rather than a retirement annuity. These plans provide benefits based on a plan specific benefit formula. Non-qualified domestic pension plans provide supplementary retirement benefits to certain employees and are not a material component of the projected benefit obligation.

The following table details information regarding the Company's pension plans:

(In millions)20212020
Change in Benefit Obligation
Benefit obligation at beginning of year$3,224 $2,885 
Service cost27 29 
Interest cost37 52 
Actuarial (gain) loss (1)
(112)239 
Benefits paid(106)(116)
Curtailment, settlements and special termination benefits(54)(16)
Other, including expenses paid(48)151 
Liabilities held for sale (2)
(2,062)— 
Benefit obligation at end of year$906 $3,224 
Change in Plan Assets
Fair value at beginning of year$3,294 $2,953 
Actual return on plan assets67 285 
Company contributions47 41 
Benefits paid(106)(116)
Settlements(54)(15)
Other, including expenses paid(34)146 
Assets held for sale (2)
(2,623)— 
Fair value of assets end of year$591 $3,294 
Funded status of plans$(315)$70 
Amounts included in the balance sheet:
Other non-current assets$43 $542 
Accrued compensation and benefits(10)(10)
Post-employment and other benefit liabilities(348)(462)
Net amount recognized$(315)$70 

(1) Reflects the impact of foreign exchange translation, primarily for plans in the United Kingdom, Canada and Germany.
(2) See Note 20 - Divestitures for additional information.

The key contributor to the movement in the funded position was the reclassification of plans included in the sale of Chubb to held for sale. The plans to be retained by the Company experienced an improvement in the net deficit position due to better than expected asset performance globally, favorable exchange rate movements and an increase in the discount rate used to measure the benefit obligations of the plans. Discount rates in all applicable territories and countries increased over the measurement period as a result of increases in corporate bond yields.
The pretax amounts recognized in Accumulated other comprehensive (income) loss are:

(In millions)Prior Service Cost (Benefit)Net Actuarial (Gain) LossTotal
As of December 31, 2020$13 $689 $702 
Current year changes recorded in AOCI4 (34)(30)
Amortization reclassified to earnings(2)(32)(34)
Settlement/curtailment reclassified to earnings— (12)(12)
Currency translation and other— (16)(16)
As of December 31, 2021$15 $595 $610 

Information for pension plans with accumulated benefit obligations in excess of plan assets:

(In millions)20212020
Projected benefit obligation$405 $622 
Accumulated benefit obligation$374 $579 
Fair value of plan assets$47 $156 

Information for pension plans with projected benefit obligations in excess of plan assets:

(In millions)20212020
Projected benefit obligation$405 $666 
Accumulated benefit obligation$374 $615 
Fair value of plan assets$47 $194 

The components of net periodic pension benefits for the defined benefit pension plans are as follows:

(In millions)202120202019
Service cost$27 $29 $31 
Interest cost37 52 67 
Expected return on plan assets(145)(140)(154)
Amortization of prior service cost2 2 2 
Recognized actuarial net loss32 22 9 
Net settlement, curtailment and special termination benefit loss13 4 4 
Net periodic pension benefit $(34)$(31)$(41)

The accumulated benefit obligation for all defined benefit plans was $0.9 billion and $3.2 billion as of December 31, 2021 and 2020, respectively.
Major assumptions used in determining the benefit obligation and net cost for pension plans are presented in the following table as weighted-averages:

Benefit ObligationNet Costs
20212020202120202019
(2)
Discount rate
Projected benefit obligation2.1%1.4 %1.4%2.0 %2.8 %
Interest cost (1)
—%— %1.2%1.8 %2.7 %
Service cost (1)
—%— %2.1%1.8 %3.2 %
Salary scale3.1%2.8 %2.8%3.3 %3.0 %
Expected return on plan assets—%— %4.6%4.9 %5.6 %
(1) The 2021 and 2020 discount rates used to measure the service cost and interest cost applies to the significant plans of the Company. The projected benefit obligation discount rate is used for the service cost and interest cost measurements for non-significant plans.
(2) Assumptions prior to 2020 include assumptions used for the UTC plan which included Carrier employees.

The weighted-average discount rates used to measure pension benefit obligations and net costs are set by reference to specific analyses using each plan’s specific cash flows and high-quality bond indices to assess reasonableness. For those significant plans, the Company utilizes a full yield curve approach in the estimation of the service cost and interest cost components by applying the specific spot rates along the yield curve used in determination of the benefit obligation to the relevant projected cash flows.

In determining the expected return on plan assets, the Company considered the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. Return projections are assessed for reasonableness using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns.

The plans’ investment management objectives include providing the liquidity and asset levels needed to meet current and future benefit payments, while maintaining a prudent degree of portfolio diversification considering interest rate risk and market volatility. Globally, investment strategies target a mix of approximately 50% of growth seeking assets and 50% of income generating and hedging assets using a wide diversification of asset types, fund strategies and investment managers. The growth seeking allocation consists of global public equities in developed and emerging countries and alternative-asset class strategies. Within the income generating assets, the fixed income portfolio primarily consists of government and broadly diversified high quality corporate bonds.

The plans seek to reduce interest rate risk and have incorporated liability hedging programs that include the adoption of a risk reduction objective as part of the long-term investment strategy. Under this objective, the income generating and hedging assets typically increase as funded status improves. The hedging programs incorporate a range of assets and investment tools, each with various interest rate sensitivities. As a result of the improved funded status of the plans, due to favorable asset returns and funding of the plans, the income generating and hedging assets increased in recent years.
The fair values of pension plan assets by asset category are as follows:

Quoted Prices in Active Markets for Identical AssetsSignificant Observable InputsSignificant Unobservable InputsNot Subject
(In millions)(Level 1)(Level 2)(Level 3)to LevelingTotal
Asset Category
Public Equities:
Global Equities$— $29 $— $— $29 
Global Equity Funds at net asset value (1) (2)
— — — 208 208 
Fixed Income Securities:
Governments— 26 — — 26 
Corporate Bonds— 103 — — 103 
Fixed Income Securities (2)
— — — 189 189 
Real Estate (3)
— 9 — — 9 
Other (4) (5)
— 5 — — 5 
Cash & Cash Equivalents (2)(6)
— 7 — 3 10 
Subtotal$— $179 $— $400 $579 
Other assets and liabilities (7)
12 
Total as of December 31, 2021 (8)
$591 
Quoted Prices in Active Markets for Identical AssetsSignificant Observable InputsSignificant Unobservable InputsNot Subject
(In millions)(Level 1)(Level 2)(Level 3)to LevelingTotal
Asset Category
Public Equities:
Global Equities (1) (2)
$— $52 $— $65 $117 
Global Equity Funds at net asset value (1)
— — — 733 733 
Fixed Income Securities:
Governments— 1,270 — — 1,270 
Corporate Bonds— 121 — 41 162 
Fixed Income Securities (2)
— — — 923 923 
Real Estate (3)(2)
— 2 — 11 13 
Other (4)(2)(5)
— (422)— 407 (15)
Cash & Cash Equivalents (2)(6)
— 32 — 22 54 
Subtotal$— $1,055 $— $2,202 $3,257 
Other assets and liabilities (7)
37 
Total as of December 31, 2020
$3,294 
(1) Represents commingled funds that invest primarily in common stocks.
(2) In accordance with ASU 2015-07, Fair Value Measurement (Topic 820), certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension plan assets.
(3) Represents investments in real estate, including commingled funds and directly held properties.
(4) Represents insurance contracts and global balanced risk commingled funds consisting mainly of equity, bonds and some commodities.
(5) Includes fixed income repurchase agreements entered into for purposes of pension asset and liability matching.
(6) Represents short-term commercial paper, bonds and other cash or cash-like instruments.
(7) Represents trust receivables and payables that are not leveled.
(8) Chubb plan assets for 2021, totaling $2.6 billion are not included within this table, as the business has been reclassified as held for sale.

Derivatives in the plan are primarily used to manage risk and gain asset class exposure while still maintaining liquidity. Derivative instruments mainly consist of fixed income repurchase agreements, interest rate swaps, total return swaps and currency forward contracts.

Quoted market prices are used to value investments when available. Investments in securities traded on exchanges, including listed futures and options, are valued at the last reported sale prices on the last business day of the year or, if not available, the
last reported bid prices. Fixed income securities are primarily measured using a market approach pricing methodology, whereby observable prices are obtained by market transactions involving identical or comparable securities of issuers with similar credit ratings. Over-the-counter securities and government obligations are valued at the bid prices or the average of the bid and ask prices on the last business day of the year from published sources or, if not available, from other sources considered reliable, including broker quotes. Temporary cash investments are stated at cost, which approximates fair value.

For the years ended December 31, 2021, 2020 and 2019, the Company made $47 million, $41 million and $36 million, respectively, of cash contributions to its defined benefit pension plans. The Company expects to make total contributions of approximately $3 million to its defined benefit pension plans in 2022. Contributions do not reflect benefits to be paid directly from corporate assets. Benefit payments, including amounts to be paid from corporate assets, and reflecting expected future service, as appropriate, are expected to be paid as follows: $25 million in 2022, $28 million in 2023, $29 million in 2024, $32 million in 2025, $34 million in 2026 and $197 million from 2027 through 2030.

Multiemployer Benefit Plans

The Company contributes to various domestic and foreign multiemployer defined benefit pension plans. The risks of participating in these multiemployer plans are different from those of single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. The Company's contributions to these plans for the years ended December 31, 2021 and 2020 was $14 million and $15 million, respectively.
Employee Savings Plans

The Company sponsors various employee savings plans. Certain employees of Carrier participate in these plans. Carrier’s contributions to employer sponsored defined contribution plans were $115 million, $103 million and $88 million for the years ended December 31, 2021, 2020 and 2019, respectively.