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RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS |
NOTE 11 - RETIREMENT AND POSTRETIREMENT BENEFIT PLANS
Occidental has various defined contribution and defined benefit plans for its salaried, domestic union and nonunion hourly and certain foreign national employees. In addition, Occidental also provides medical and other benefits for certain active, retired and disabled employees and their eligible dependents. DEFINED CONTRIBUTION PLANS All domestic employees and certain foreign national employees are eligible to participate in one or more of the defined contribution retirement or savings plans that provide for periodic contributions by Occidental based on plan-specific criteria, such as base pay, level and employee contributions. Certain salaried employees participate in a supplemental retirement plan that restores benefits lost due to government limitations on qualified retirement benefits. The accrued liabilities for the supplemental retirement plan were $330 million and $288 million as of December 31, 2023 and 2022, respectively. In 2023, 2022 and 2021 Occidental expensed $221 million, $202 million and $166 million, respectively under the provisions of these defined contribution and supplemental retirement plans. DEFINED BENEFIT PLANS Participation in defined benefit plans is limited. Approximately 300 domestic and 300 foreign national employees, mainly union, nonunion hourly and certain employees that joined Occidental from acquired operations with grandfathered benefits, are currently accruing benefits under these plans. Pension costs for Occidental’s defined benefit pension plans, determined by independent actuarial valuations, are generally funded by payments to trust funds, which are administered by independent trustees. POSTRETIREMENT AND OTHER BENEFIT PLANS Occidental provides medical and dental benefits and life insurance coverage for certain active, retired and disabled employees and their eligible dependents. Occidental generally funds the benefits as they are paid during the year. In 2023, 2022 and 2021, these benefit costs, including the postretirement costs, were $175 million, $211 million and $211 million, respectively. OBLIGATIONS AND FUNDED STATUS The following tables show the amounts recognized in Occidental’s Consolidated Balance Sheets related to its pension and postretirement benefit plans as of December 31:
| Pension Benefits | Postretirement Benefits
millions | 2023 | 2022 | 2023 | 2022
Amounts recognized in the Consolidated Balance Sheet: |  |  |  |
Other long-term assets | $ | 126 |  | $ | 102 |  | $ | — |  | $ | — |
Accrued liabilities | (3) |  | (3) |  | (57) |  | (62) |
Deferred credits and other liabilities — pension and postretirement obligations | (270) |  | (344) |  | (661) |  | (711) |
| $ | (147) |  | $ | (245) |  | $ | (718) |  | $ | (773) |
Accumulated other comprehensive loss included the following after-tax balances: |  |  |  |
Net (gain) loss | $ | 3 |  | $ | 17 |  | $ | (217) |  | $ | (190) |
Prior service credit | — |  | — |  | (45) |  | (52) |
| $ | 3 |  | $ | 17 |  | $ | (262) |  | $ | (242) |
The following tables show the funding status, obligations and plan asset fair values of Occidental related to its pension and postretirement benefit plans for the years ended December 31:
| Pension Benefits | Postretirement Benefits
millions | 2023 | 2022 | 2023 | 2022
Changes in the benefit obligation: |  |  |  |
Benefit obligation — beginning of year | $ | 886 |  | $ | 1,273 |  | $ | 773 |  | $ | 1,220 |
Service cost — benefits earned during the period | 5 |  | 7 |  | 16 |  | 38 |
Interest cost on projected benefit obligation | 45 |  | 36 |  | 37 |  | 33 |
Actuarial (gain) loss | 19 |  | (297) |  | (53) |  | (468) |
Benefits paid | (80) |  | (123) |  | (65) |  | (58) |
Other | 4 |  | (10) |  | 10 |  | 8 |
Benefit obligation — end of year | $ | 879 |  | $ | 886 |  | $ | 718 |  | $ | 773 |
Changes in plan assets: |  |  |  |
Fair value of plan assets — beginning of year | $ | 641 |  | $ | 1,070 |  | $ | — |  | $ | — |
Actual return (loss) on plan assets | 77 |  | (304) |  | — |  | — |
Employer contributions | 89 |  | 16 |  | 54 |  | 49 |
Benefits paid | (80) |  | (123) |  | (64) |  | (57) |
Other | 5 |  | (18) |  | 10 |  | 8 |
Fair value of plan assets — end of year | $ | 732 |  | $ | 641 |  | $ | — |  | $ | — |
Unfunded status: | $ | (147) |  | $ | (245) |  | $ | (718) |  | $ | (773) |
Changes in actuarial gains and losses in the projected benefit obligation are primarily driven by discount rate movement and changes in expected claims assumptions in the postretirement plans. The following table sets forth details of the obligations and assets of Occidental’s defined benefit pension plans for the years ended December 31:
| Accumulated Benefit Obligation in Excess of Plan Assets | Plan Assets in Excess of Accumulated Benefit Obligation
millions | 2023 | 2022 | 2023 | 2022
Projected benefit obligation | $ | 719 |  | $ | 738 |  | $ | 160 |  | $ | 148 |
Accumulated benefit obligation | $ | 717 |  | $ | 736 |  | $ | 157 |  | $ | 146 |
Fair value of plan assets | $ | 543 |  | $ | 458 |  | $ | 189 |  | $ | 183 |
COMPONENTS OF NET PERIODIC BENEFIT COST The following table sets forth the components of net periodic benefit costs for the years ended December 31:
| Pension Benefits | Postretirement Benefits
millions | 2023 | 2022 | 2021 | 2023 | 2022 | 2021
Net periodic benefit costs: |  |  |  |  |  |
Service cost — benefits earned during the period | $ | 5 |  | $ | 7 |  | $ | 8 |  | $ | 16 |  | $ | 38 |  | $ | 42 |
Interest cost on projected benefit obligation | 45 |  | 36 |  | 35 |  | 37 |  | 33 |  | 33 |
Expected return on plan assets | (45) |  | (38) |  | (59) |  | — |  | — |  | — |
Recognized actuarial loss (gain) | 4 |  | 1 |  | 2 |  | (20) |  | 5 |  | 15 |
Recognized prior service credit | — |  | — |  | — |  | (9) |  | (9) |  | (9) |
Gain (loss) due to settlement | 1 |  | (1) |  | (19) |  | — |  | — |  | — |
Net periodic benefit (cost) | $ | 10 |  | $ | 5 |  | $ | (33) |  | $ | 24 |  | $ | 67 |  | $ | 81 |
The service cost component of net periodic benefit cost is included in selling, general and administrative, oil and gas operating expense, chemical and midstream costs and exploration expense on Occidental’s Consolidated Statements of Operations. All other components of net periodic benefit cost are included in other operating and non-operating expense. ADDITIONAL INFORMATION The following table sets forth the weighted-average assumptions used to determine Occidental’s benefit obligation and net periodic benefit cost for domestic plans for the years ended December 31:
| Pension Benefits | Postretirement Benefits
| 2023 | 2022 | 2023 | 2022
Benefit Obligation Assumptions: |  |  |  |
Discount rate | 4.98 | % | 5.27 | % | 5.12 | % | 5.43 | %
Rate of increase in compensation levels | 3.96 | % | 3.95 | % | — |  | — |
Net Periodic Benefit Cost Assumptions: |  |  |  |
Discount rate | 5.27 | % | 2.65 | % | 5.43 | % | 2.94 | %
Rate of increase in compensation levels | 3.95 | % | 3.98 | % | — |  | — |
Assumed long-term rate of return on assets | 6.65 | % | 4.36 | % | — |  | — |
For domestic pension plans and postretirement benefit plans, Occidental based the discount rate on a AA-AAA Universe yield curve in 2023 and 2022. The assumed long-term rate of return on assets is estimated with regard to current market factors but within the context of historical returns for the asset mix that exists at year end. Assumed rates of compensation increases for active participants in certain plans vary by age group. I n 2021, Occidental adopted the Society of Actuaries Pri-2012 Private Retirement Plans Mortality Tables with MP-2021 Mortality Improvement Scale, which updated the mortality assumptions that private defined-benefit plans in the United States use in the actuarial valuations that determine a plan sponsor’s pension obligations. These mortality assumptions reflect additional data that the Social Security Administration released since the previous mortality tables and improvement scales were released. The postretirement benefit obligation was determined by application of the terms of medical and dental benefits and life insurance coverage, including the effect of established maximums on covered costs, together with relevant actuarial assumptions and health care cost trend rates. Health care cost trend rates for Medicare advantaged prescription drug plans are 8.7% starting in 2023, then grading down to 4.5% in 2028 and beyond. Health care cost trend rates used for non-medicare advantaged prescription drug plans are 5.8% to 6.3% in 2023, then grading down to 4.5% in 2028 and beyond. The actuarial assumptions used could change in the near-term as a result of changes in expected future trends and other factors that, depending on the nature of the changes, could cause increases or decreases in the plan assets and liabilities. FAIR VALUE OF PENSION PLAN ASSETS Qualified defined benefit plan assets are monitored by Occidental’s Pension and Retirement Trust and Investment Committee in its role as a fiduciary. The Investment Committee selects and employs various external professional investment management firms to manage specific investments across the spectrum of asset classes. The Investment Committee employs a liability driven investment approach that uses a diversified blend of investments (equity securities, fixed-income securities, and alternative investments) along a glide path to optimize the long-term return of plan assets relative to plan liabilities, at a prudent level of risk. Equity investments are diversified across U.S. and non-U.S. stocks, as well as differing styles and market capitalizations. Investment performance is measured and monitored on an ongoing basis through quarterly investment portfolio and manager guideline compliance reviews, annual liability measurements and periodic studies. The fair values of Occidental’s pension plan assets by asset category were as follows:
millions | Level 1 | Level 2 | Level 3 | Total
December 31, 2023 |  |  |  |
Asset Class: |  |  |  |
Government securities | $ | 42 |  | $ | — |  | $ | — |  | $ | 42 |
Corporate bonds (a) | — |  | 19 |  | — |  | 19 |
Equity securities (b) | 33 |  | — |  | — |  | 33 |
Other | — |  | 47 |  | — |  | 47 |
Investments measured at fair value | $ | 75 |  | $ | 66 |  | $ | — |  | $ | 141 |
Investments measured at net asset value (c) | — |  | — |  | — |  | 591 |
Total pension plan assets (d) | $ | 75 |  | $ | 66 |  | $ | — |  | $ | 732 |
December 31, 2022 |  |  |  |
Asset Class: |  |  |  |
Cash and cash equivalents | $ | 8 |  | $ | — |  | $ | — |  | $ | 8 |
Government securities | 29 |  | — |  | — |  | 29 |
Corporate bonds (a) | — |  | 16 |  | — |  | 16 |
Equity securities (b) | 34 |  | — |  | — |  | 34 |
Other | — |  | 46 |  | — |  | 46 |
Investments measured at fair value | $ | 71 |  | $ | 62 |  | $ | — |  | $ | 133 |
Investments measured at net asset value (c) | — |  | — |  | — |  | 509 |
Total pension plan assets (d) | $ | 71 |  | $ | 62 |  | $ | — |  | $ | 642 |
(a)This category represents investment grade bonds of U.S. and non-U.S. issuers from diverse industries. (b)This category represents direct investments in mutual funds and common and preferred stocks from diverse U.S. and non-U.S. industries. (c)Certain investments measured at fair value using the NAV per share (or its equivalent) have not been categorized in the fair value hierarchy. Amounts presented in this table are intended to reconcile the fair value hierarchy to the pension plan assets. (d)Amounts exclude net payables of zero as of December 31, 2023 and $1 million as of December 31, 2022. Occidental expects to contribute approximately $25 million to its defined benefit pension plans during 2024. Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows for the years ended December 31:
millions | Pension Benefits | Postretirement Benefits
2024 |  | $ | 74 |  |  | $ | 58 |
2025 |  | 69 |  |  | 56 |
2026 |  | 66 |  |  | 54 |
2027 |  | 67 |  |  | 52 |
2028 |  | 63 |  |  | 50 |
2029 - 2033 |  | 292 |  |  | 238 |

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