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v3.23.1

Employee benefits | 12 Months Ended
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Dec. 31, 2022
Employee Benefits |
Employee benefits |
| 29. | Employee benefits
a) Employee post retirement obligation In Brazil, the management of the pension plans is the responsibility of Fundação Vale do Rio Doce de Seguridade Social (“Valia”) a nonprofit entity with administrative and financial autonomy. The Brazilian plans are as follows: Benefit plan Vale Mais (“Vale Mais”) and benefit plan Valiaprev (“Valiaprev”) - The Company's employees participating in Valia are associated, for the most part, with the Vale Mais plan, which has a defined benefit component (settled benefit from the former Defined Benefits Plan and specific benefit to cover death, disability retirement and sickness benefit) and defined contribution component (for programmable benefits). The Valiaprev plan is similar to the Vale Mais plan, with the exception of not having the benefit settled and the sickness benefit. Both Vale Mais and Valiaprev plans were overfunded as at December 31, 2022 and 2021. Defined benefit plan (“Plano BD”) - The Plano BD is closed to new entrants since 2000, when the Vale Mais plan was implemented. It is a plan that has defined benefit characteristics, covering almost exclusively retirees and their beneficiaries. It was overfunded as at December 31, 2022 and 2021 and the contributions made by the Company are not material. “Abono complementação” benefit plan - The Company sponsors a specific group of former employees entitled to receive additional benefits from Valia regular payments. The contributions made by the Company finished in 2014. The “abono complementação” benefit was overfunded as at December 31, 2022 and 2021. Other benefits - The Company sponsors medical plans for employees that meet specific criteria and for employees who use the “abono complementação” benefit. Although those benefits are not specific retirement plans, actuarial calculations are used to calculate future commitments. As those benefits are related to health care plans they have nature of underfunded benefits, and are presented as underfunded plans as at December 31, 2022 and 2021. The foreign plans are managed in accordance with their region. They are divided between plans in Canada, US A, UK and Indonesia. Pension plans in Canada are composed of a defined benefit and defined contribution component. Currently the defined benefit plans do not allow new entrants. The foreign defined benefit plans are underfunded as at December 31, 2022 and 2021. Employers’ disclosure about pensions and other post retirement benefits on the status of the defined benefit elements of all plans is provided as follows. i. Evolution of present value obligation
Schedule of changes in benefit obligation |  |  |  |  |
| Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Benefit obligation as at December 31, 2020 | 3,105 |  | 4,632 |  | 1,733
Service costs | 10 |  | 68 |  | 1
Interest costs | 196 |  | 122 |  | 33
Benefits paid | (235) |  | (257) |  | (56)
Participant contributions | - |  | (31) |  | -
Effect of changes in the actuarial assumptions | (330) |  | (246) |  | (261)
Translation adjustment | (208) |  | (10) |  | (23)
Transfer | 295 |  | (295) |  | -
Benefit obligation as at December 31, 2021 | 2,833 |  | 3,983 |  | 1,427
Service costs | 45 |  | 40 |  | 13
Interest costs | 325 |  | 39 |  | 60
Benefits paid | (534) |  | (58) |  | (57)
Participant contributions | - |  | (30) |  | -
Effect of changes in the actuarial assumptions | (784) |  | (109) |  | (343)
Translation adjustment | 5 |  | (5) |  | (24)
Other | - |  | - |  | (19)
Transfer | 3,252 |  | (3,252) |  | -
Benefit obligation as at December 31, 2022 | 5,142 |  | 608 |  | 1,057
ii. Evolution of assets fair value
Schedule of evolution of assets fair value |  |  |  |  |  |
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Fair value of plan assets as at December 31, 2020 |  | 3,969 |  | 3,992 |  | -
Interest income |  | 253 |  | 102 |  | -
Employer contributions |  | 29 |  | 40 |  | 56
Benefits paid |  | (235) |  | (257) |  | (56)
Return on plan assets (excluding interest income) |  | (269) |  | 181 |  | -
Translation adjustment |  | (276) |  | 2 |  | -
Transfer |  | 281 |  | (281) |  | -
Fair value of plan assets as at December 31, 2021 |  | 3,752 |  | 3,779 |  | -
Interest income |  | 412 |  | 17 |  | -
Employer contributions |  | 45 |  | 14 |  | 57
Benefits paid |  | (534) |  | (58) |  | (57)
Return on plan assets (excluding interest income) |  | (752) |  | (31) |  | -
Translation adjustment |  | 44 |  | (9) |  | -
Transfer |  | 3,373 |  | (3,373) |  | -
Fair value of plan assets as at December 31, 2022 |  | 6,340 |  | 339 |  | -
iii. Reconciliation of assets and liabilities recognized in the statement of financial position
Summary of reconciliation of net liabilities recognized in the statement of financial position |  |  |  |  |  |  |  |  |  |  |  |
|  | Plans in Brazil
|  | December 31, 2022 |  | December 31, 2021
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Balance at beginning of the year |  | 876 |  | - |  | - |  | 864 |  | - |  | -
Interest income |  | 83 |  | - |  | - |  | 58 |  | - |  | -
Changes on asset ceiling |  | (89) |  | - |  | - |  | 16 |  | - |  | -
Translation adjustment |  | 54 |  | - |  | - |  | (62) |  | - |  | -
Balance at end of the year |  | 924 |  | - |  | - |  | 876 |  | - |  | -
Amount recognized in the statement of financial position |  |  |  |  |  |  |  |  |  |  |  |
Present value of actuarial liabilities |  | (2,634) |  | (246) |  | (321) |  | (2,572) |  | (237) |  | (301)
Fair value of assets |  | 3,558 |  | 101 |  | - |  | 3,448 |  | 94 |  | -
Effect of the asset ceiling |  | (924) |  |  |  |  |  | (876) |  | - |  | -
Liabilities |  | - |  | (145) |  | (321) |  | - |  | (143) |  | (301)
Current liabilities |  | - |  | (3) |  | (16) |  | - |  | (40) |  | (5)
Non-current liabilities |  | - |  | (142) |  | (305) |  | - |  | (103) |  | (296)
Liabilities |  | - |  | (145) |  | (321) |  | - |  | (143) |  | (301)
|  | Foreign plan
|  | December 31, 2022 |  |  |  | December 31, 2021
|  | Overfunded pension plans (i) |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Movements of assets ceiling |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, |  | 44 |  | - |  | - |  | - |  | - |  | -
Interest income |  | 1 |  | - |  | - |  | - |  | - |  | -
Changes on asset ceiling and onerous liability |  | 160 |  |  |  |  |  | 44 |  | - |  | -
Translation adjustment |  | (15) |  | - |  | - |  | - |  | - |  | -
Balance at December 31, |  | 190 |  | - |  | - |  | 44 |  | - |  | -
Amount recognized in the statement of financial position |  |  |  |  |  |  |  |  |  |  |  |
Present value of actuarial liabilities |  | (2,508) |  | (362) |  | (736) |  | (261) |  | (3,746) |  | (1,127)
Fair value of assets |  | 2,782 |  | 238 |  |  |  | 305 |  | 3,685 |  | -
Effect of the asset ceiling |  | (190) |  |  |  |  |  | (44) |  | - |  | -
Assets (liabilities) |  | 84 |  | (124) |  | (736) |  | - |  | (61) |  | (1,127)
Current liabilities |  | - |  | (7) |  | (40) |  | - |  | (7) |  | (47)
Non-current assets (liabilities) |  | 84 |  | (117) |  | (696) |  | - |  | (54) |  | (1,080)
Assets (liabilities) |  | 84 |  | (124) |  | (736) |  | - |  | (61) |  | (1,127)
|  | Total
|  | December 31, 2022 |  | December 31, 2021
|  | Overfunded pension plans (i) |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Balance at beginning of the year |  | 919 |  | - |  | - |  | 864 |  | - |  | -
Interest income |  | 84 |  | - |  | - |  | 58 |  | - |  | -
Changes on asset ceiling |  | 65 |  | - |  | - |  | 60 |  | - |  | -
Translation adjustment |  | 46 |  | - |  | - |  | (63) |  | - |  | -
Balance at end of the year |  | 1,114 |  | - |  | - |  | 919 |  | - |  | -
Amount recognized in the statement of financial position
Present value of actuarial liabilities |  | (5,142) |  | (608) |  | (1,057) |  | (2,833) |  | (3,983) |  | (1,428)
Fair value of assets |  | 6,340 |  | 339 |  | - |  | 3,752 |  | 3,779 |  | -
Effect of the asset ceiling |  | (1,114) |  | - |  | - |  | (919) |  | - |  | -
Assets (liabilities) |  | 84 |  | (269) |  | (1,057) |  | - |  | (204) |  | (1,428)
Current liabilities |  | - |  | (10) |  | (56) |  | - |  | (47) |  | (52)
Non-current assets (liabilities) |  | 84 |  | (259) |  | (1,001) |  | - |  | (157) |  | (1,376)
Assets (liabilities) |  | 84 |  | (269) |  | (1,057) |  | - |  | (204) |  | (1,428)
(i) | The pension plan asset is recorded as “Other non-current assets” in the balance sheet.
iv. Costs recognized in the income statement
Summary of costs recognized in the income statement |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Year ended December 31,
|  | 2022 |  | 2021 |  | 2020
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Service cost |  | 45 |  | 40 |  | 13 |  | 10 |  | 68 |  | 1 |  | 7 |  | 52 |  | 18
Interest expense |  | 325 |  | 39 |  | 60 |  | 196 |  | 122 |  | 33 |  | 222 |  | 134 |  | 64
Interest income |  | (412) |  | (17) |  | - |  | (253) |  | (102) |  | - |  | (297) |  | (107) |  | -
Interest expense on effect of (asset ceiling)/ onerous liability |  | 84 |  | - |  | - |  | 58 |  | - |  | - |  | 74 |  | - |  | -
Total of cost, net |  | 42 |  | 62 |  | 73 |  | 11 |  | 88 |  | 34 |  | 6 |  | 79 |  | 82
v. Costs recognized in the statement of comprehensive income
Summary of costs recognized in the statement of comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Year ended December 31,
|  | 2022 |  | 2021 |  | 2020
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Balance at beginning of the year |  | (93) |  | (92) |  | (172) |  | (101) |  | (400) |  | (363) |  | (173) |  | (459) |  | (238)
Effect of changes actuarial assumptions |  | 784 |  | 109 |  | 343 |  | 330 |  | 246 |  | 261 |  | (118) |  | (271) |  | (243)
Return on plan assets (excluding interest income) |  | (752) |  | (31) |  | - |  | (269) |  | 181 |  | - |  | (114) |  | 305 |  | -
Change of asset ceiling |  | (65) |  | - |  | - |  | (60) |  | - |  | - |  | 278 |  | - |  | -
Other |  | (3) |  | - |  | - |  | (5) |  | 3 |  | (4) |  | - |  | 9 |  | 11
Total |  | (36) |  | 78 |  | 343 |  | (4) |  | 430 |  | 257 |  | 46 |  | 43 |  | (232)
Deferred income tax |  | 12 |  | (26) |  | (102) |  | 5 |  | (130) |  | (83) |  | (15) |  | (12) |  | 82
Others comprehensive income |  | (24) |  | 52 |  | 241 |  | 1 |  | 300 |  | 174 |  | 31 |  | 31 |  | (150)
Translation adjustments |  | (7) |  | (5) |  | (7) |  | 7 |  | 8 |  | 17 |  | 41 |  | 28 |  | 25
Accumulated other comprehensive income |  | (124) |  | (45) |  | 62 |  | (93) |  | (92) |  | (172) |  | (101) |  | (400) |  | (363)
vi. Risks related to plans The Administrators of the plans have committed to strategic planning to strengthen internal controls and risk management. This commitment is achieved by conducting audits and assessments of internal controls, which aim to mitigate operational market and credit risks. Risks are presented as follow: Legal - Lawsuits: issuance of periodic reports to the audit and Board of Directors, including the lawyers' analysis of the chances of success (remote, probable or possible), focusing on the administrative decision on provisions. Promote and monitor adaptations to new legal obligations and monitor compliance with established legal obligations. Due diligence of third parties from the perspective of the Integrity Program. Actuarial - The annual actuarial evaluation of the benefit plans comprises the assessment of taxes, income and adequacy of the costing plans. Technical study of compliance with the assumptions adopted in the actuarial evaluation of benefit plans prepared by an external actuary, in accordance with current legislation. Monitoring of biometric, demographic and economic-financial assumptions. Market – Technical allocation studies are carried out with the objective of evaluating investment portfolios of the different obligations of the plans and projecting the future result of these portfolios. Asset Liability Management studies are carried out for defined benefit type obligations (Asset Liability Management study), while for defined contribution type obligations there are efficient frontier studies (investment profiles) and glidepath (life cycles). Periodic monitoring of the plans' short-term market risk based on risk indicators (VaR - Value at Risk, Benchmark VaR, Maximum Drawdown, Stress Tests, among others). Credit - Risk classification of securities from corporate and bank issuers based on quantitative and qualitative assessments of the credit risk of the issuer, the asset and its guarantees, from acquisition to maturity. This internal rating sensitizes provisions for credit risk losses, as well as verified defaults, in accordance with current legislation. Provisions for loan losses with participants are realized based on default verified in payments. Liquidity - Technical study of the liquidity of plans with defined benefit obligations, focusing on the long term, whose objective is to verify the sufficiency of the assets in fulfilling the plan's obligations. Monitoring of short-term liquidity with a focus on cash available to meet plan obligations for the coming years. The defined contribution bond portfolios (investment profiles and life cycles) have assets available for sale at any time in normal market situations. vii. Actuarial and economic assumptions and sensitivity analysis All calculations involve future actuarial projections about some parameters, such as: salaries, interest, inflation, mortality and disability. The economic and actuarial assumptions adopted have been formulated considering the long-term period for maturity and should therefore be analyzed accordingly. In the short term they may not be realized. The following assumptions were adopted in the assessment:
Schedule of actuarial and economic assumptions and sensitivity analysis |  |  |  |  |  |  |  |  |  |  |  |
| Brazil
| December 31, 2022 |  | December 31, 2021
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Discount rate to determine benefit obligation |  | 9.77% - 9.88% |  | 10.66% |  | 9.81% - 9.90% |  | 8.62% - 8.82% |  | 10.25% |  | 8.68% - 8.86%
Nominal average rate to determine expense/ income |  | 9.77% - 9.88% |  | 10.66% |  | N/A |  | 8.62% - 8.82% |  | 10.25% |  | N/A
Nominal average rate of salary increase |  | 3.50% - 5.36% |  | 6.86% |  | N/A |  | 3.25% - 5.32% |  | 7.50% |  | N/A
Nominal average rate of benefit increase |  | 3.50% - 4.02% |  | 6.86% |  | N/A |  | 3.25% |  | 7.50% |  | N/A
Immediate health care cost trend rate |  | N/A |  | N/A |  | 6.35% |  | N/A |  | N/A |  | 6.35%
Ultimate health care cost trend rate |  | N/A |  | N/A |  | 6.35% |  | N/A |  | N/A |  | 6.35%
Nominal average rate of price inflation |  | 3.50% |  | 4.25% |  | 3.50% |  | 3.25% |  | 5.00% |  | 3.25%
|  | Foreign
|  | December 31, 2022 |  | December 31, 2021
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits |  | Underfunded pension plans |  | Other benefits
Discount rate to determine benefit obligation |  | 5.10% |  | 5.10% |  | 5.14% |  | 2.84% |  | 3.03%
Nominal average rate to determine expense/ income |  | 2.84% |  | 2.84% |  | 3.03% |  | 2.62% |  | 2.62%
Nominal average rate of salary increase |  | 3.23% |  | 3.23% |  | N/A |  | 3.28% |  | N/A
Nominal average rate of benefit increase |  | 3.00% |  | 3.00% |  | N/A |  | 3.00% |  | N/A
Immediate health care cost trend rate |  | N/A |  | N/A |  | 5.11% |  | N/A |  | 5.11%
Ultimate health care cost trend rate |  | N/A |  | N/A |  | 4.57% |  | N/A |  | 4.57%
Nominal average rate of price inflation |  | 2.06% |  | 2.06% |  | N/A |  | 2.10% |  | N/A
For the sensitivity analysis, the Company applies the effect of 1.0% in nominal discount rate to the present value of the Company´s actuarial liability. The effects of this analysis on the Company´s actuarial liability and assumptions adopted are as follows:
|  | Brazil
|  | December 31, 2022
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Nominal discount rate - 1% increase |  |  |  |  |  |
Actuarial liability adjusted for sensitivity test |  | 2,451 |  | 237 |  | 413
Assumptions made |  | 10.83% |  | 11.66% |  | 10.86%
Nominal discount rate - 1% reduction |  |  |  |  |  |
Actuarial liability adjusted for sensitivity test |  | 2,845 |  | 257 |  | 320
Assumptions made |  | 8.83% |  | 9.66% |  | 8.86%
|  | Foreign
|  | December 31, 2022
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
Nominal discount rate - 1% increase |  |  |  |  |  |
Actuarial liability adjusted for sensitivity test |  | 2,244 |  | 322 |  | 649
Assumptions made |  | 6.11% |  | 6.11% |  | 6.14%
Nominal discount rate - 1% reduction |  |  |  |  |  |
Actuarial liability adjusted for sensitivity test |  | 2,799 |  | 403 |  | 832
Assumptions made |  | 4.11% |  | 4.11% |  | 4.14%
viii. Assets of pension plans Brazilian plan assets as at December 31, 2022 and 2021 includes respectively (i) investments in a portfolio of Vale’s share and other instruments in the amount of US$47 and US$50, which are presented as “Investments funds – Equity” and (ii) Brazilian Federal Government securities in the amount of US$4,214 and US$3,682, which are presented as “Debt securities governments” and “Investments funds – Fixed” Foreign plan assets as at December 31, 2022 and 2021 includes Canadian Government securities in the amount of US$454 and US$682, respectively. ix. Overfunded pension plans Assets by category are as follows:
Schedule of measurement of plan assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | December 31, 2022 |  | December 31, 2021
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents |  | - |  | 55 |  | - |  | 55 |  | - |  | 1 |  | - |  | 1
Equity securities |  | 1,115 |  | - |  | - |  | 1,115 |  | - |  | - |  | - |  | -
Debt securities - Corporate |  | 1 |  | 367 |  | - |  | 368 |  | 1 |  | 74 |  | - |  | 75
Debt securities - Government |  | 3,354 |  | 435 |  | - |  | 3,789 |  | 2,042 |  | - |  | - |  | 2,042
Investments funds - Fixed Income |  | 1,040 |  | 133 |  | - |  | 1,173 |  | 1,910 |  | 175 |  | - |  | 2,085
Investments funds - Equity |  | 455 |  | 1 |  | - |  | 456 |  | 452 |  | - |  | - |  | 452
International investments |  | 23 |  | 231 |  | - |  | 254 |  | 91 |  | - |  | - |  | 91
Structured investments - Private Equity funds |  | - |  | 188 |  | 240 |  | 428 |  | - |  | 129 |  | 103 |  | 232
Structured investments - Real estate funds |  | - |  | - |  | 3 |  | 3 |  | - |  | - |  | 5 |  | 5
Real estate |  | - |  | - |  | 293 |  | 293 |  | - |  | - |  | 212 |  | 212
Loans to participants |  | - |  |  |  | 128 |  | 128 |  | - |  | - |  | 106 |  | 106
Total |  | 5,988 |  | 1,410 |  | 664 |  | 8,062 |  | 4,496 |  | 379 |  | 426 |  | 5,301
Funds not related to risk plans (i) |  |  |  |  |  |  |  | (1,722) |  |  |  |  |  |  |  | (1,549)
Fair value of plan assets at end of year |  |  |  |  |  |  |  | 6,340 |  |  |  |  |  |  |  | 3,752
(i) | Financial investments not related to coverage of overfunded pension plans. Funds are related to the Company´s unconsolidated entities and former employees.
Measurement of overfunded plan assets at fair value with no observable market variables (level 3) are as follows:
Schedule of measurement of plan assets at fair value with no observable market variables (Level 3) |  |  |  |  |  |  |  |  |  |
|  | Private equity funds |  | Real estate funds |  | Real estate |  | Loans to participants |  | Total
Balance as at December 31, 2020 |  | 126 |  | 5 |  | 255 |  | 105 |  | 491
Return on plan assets |  | 10 |  | - |  | (15) |  | 16 |  | 11
Assets purchases |  | - |  | - |  | 4 |  | 67 |  | 71
Assets sold during the year |  | (25) |  | - |  | (14) |  | (74) |  | (113)
Translation adjustment |  | (8) |  | - |  | (18) |  | (8) |  | (34)
Balance as at December 31, 2021 |  | 103 |  | 5 |  | 212 |  | 106 |  | 426
Return on plan assets |  | (5) |  | (2) |  | 15 |  | 26 |  | 34
Assets purchases |  | 10 |  | - |  | 25 |  | 280 |  | 315
Assets sold during the year |  | (36) |  | - |  | (22) |  | (292) |  | (350)
Translation adjustment |  | 4 |  | - |  | 14 |  | 8 |  | 26
Transfer |  | 164 |  | - |  | 49 |  | - |  | 213
Balance as at December 31, 2022 |  | 240 |  | 3 |  | 293 |  | 128 |  | 664
| x. | Underfunded pension plans
Assets by category are as follows:
Schedule of measurement of plan assets at fair value with no observable market variables |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | December 31, 2022 |  | December 31, 2021
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents |  | - |  | 2 |  | - |  | 2 |  | 5 |  | 70 |  | - |  | 75
Equity securities |  | 55 |  | - |  | - |  | 55 |  | 1,708 |  | 3 |  | - |  | 1,711
Debt securities - Corporate |  | - |  | 24 |  | - |  | 24 |  | - |  | 556 |  | - |  | 556
Debt securities - Government |  | 46 |  | 19 |  | - |  | 65 |  | 133 |  | 683 |  | - |  | 816
Investments funds - Fixed Income |  | 40 |  | - |  | - |  | 40 |  | 38 |  | - |  | - |  | 38
Investments funds - Equity |  | 7 |  | 6 |  | - |  | 13 |  | 3 |  | 173 |  | 53 |  | 229
Structured investments - Private Equity funds |  | - |  | - |  | 8 |  | 8 |  | - |  | - |  | 181 |  | 181
Real estate |  | - |  | - |  | 6 |  | 6 |  | - |  | - |  | 3 |  | 3
Loans to participants |  | - |  | - |  | 1 |  | 1 |  | - |  | - |  | 1 |  | 1
Other |  | - |  | - |  | 125 |  | 125 |  | - |  | - |  | 168 |  | 168
Total |  | 148 |  | 51 |  | 140 |  | 339 |  | 1,887 |  | 1,485 |  | 406 |  | 3,778
Measurement of underfunded plan assets at fair value with no observable market variables (level 3) are as follows:
Schedule of measurement of plan assets at fair value with no observable market variables (Level 3) |  |  |  |  |  |  |  |  |  |  |
|  | Private equity funds |  | Equity pool |  | Real estate |  | Loans to participants | Other |  | Total
Balance as at December 31, 2020 |  | 250 |  | - |  | 5 |  | 2 | 180 |  | 437
Return on plan assets |  | 11 |  | 14 |  | - |  | - | (14) |  | 11
Assets purchases |  | 28 |  | 39 |  | - |  | - | - |  | 67
Assets sold during the year |  | (108) |  | - |  | (1) |  | - | - |  | (109)
Translation adjustment |  | - |  | - |  | (1) |  | (1) | 2 |  | -
Balance as at December 31, 2021 |  | 181 |  | 53 |  | 3 |  | 1 | 168 |  | 406
Return on plan assets |  | 1 |  | - |  | - |  | - | (33) |  | (32)
Assets purchases |  | - |  | - |  | 1 |  | - | - |  | 1
Assets sold during the year |  | (2) |  | - |  | (1) |  | - | - |  | (3)
Translation adjustment |  | (8) |  | - |  | (2) |  | - | (10) |  | (20)
Transfer between surplus and deficit plans |  | (164) |  | (53) |  | 5 |  | - | - |  | (212)
Balance as at December 31, 2022 |  | 8 |  | - |  | 6 |  | 1 | 125 |  | 140
xi. Disbursement of future cash flow Vale expects to disburse US$61 in 2023 in relation to pension plans and other benefits. xii. Expected benefit payments The expected benefit payments, which reflect future services, are as follows:
Schedule of expected benefit payments |  |  |  |  |  |
|  | December 31, 2022
|  | Overfunded pension plans |  | Underfunded pension plans |  | Other benefits
2023 |  | 248 |  | 31 |  | 22
2024 |  | 252 |  | 30 |  | 24
2025 |  | 256 |  | 30 |  | 24
2026 |  | 259 |  | 29 |  | 26
2027 |  | 261 |  | 29 |  | 27
2028 and thereafter |  | 1,326 |  | 138 |  | 153
b) Profit sharing program (“PLR”) The Company recorded as cost of goods sold and services rendered and other operating expenses related to the profit sharing program US$499, US$474 and US$416 for the years ended on December 31, 2022, 2021 and 2020, respectively. c) Long-term incentive programs For the long-term awarding of eligible executives, the Company compensation plans includes Matching program and Performance Share Unit program (“PSU”), with three-year-vesting cycles, respectively, with the aim of encouraging employee’s retention and encouraging their performance. The fair value of the programs is recognized on a straight-line basis over the three-year required service period, net of estimated losses. Matching Program For the Matching program, the participants can acquire Vale’s common shares in the market without any benefits being provided by Vale. If the shares acquired are held for a period of three years and the participants keep an employment relationship with Vale, the participant is entitled to receive from Vale an award in shares, equivalent to the number of shares originally acquired by the executive. It should be noted that, although a specific custodian of the shares is defined by Vale, the share initially purchased by the executives have no restriction and can be sold at any time. However, if it’s done before the end of the three-year-vesting period, they would lose its right of receiving the related award to be paid by Vale. Performance Shares Units (“PSU”) Under the PSU, eligible executives can earn, during a three-year vesting cycle, an award equivalent to the market value of a certain number of common shares and conditioned to Vale's performance factor measured based on Total Shareholder Return ("TSR") and Environmental, Social and Governance ("ESG") metrics. It is comprised of 75% of TSR metrics and 25% of ESG indicators and health and safety. d) New accounting policy adopted in 2021 IFRS 2 defines that the accounting for share-based payments depends on the form of settlement of the plans, which can be “cash-settled” or “equity-settled”. When a plan is settled in cash, the payment obligation to the employee is recognized as a liability, which is updated to fair value recognized in the income statement at each reporting date and on the settlement date of the obligation. When the plan is settled with equity instruments, the fair value of the plan is calculated only on the grant date of the benefit and the fair value of the plan is recognized in the income statement for the year on a straight-line basis to equity over the period of service required. New accounting policy adopted in 2021 Until December 2020, the long-term incentive programs for the Company's executives, were recorded as liabilities based on the practice adopted by the Company to settle its obligation related to these programs with cash payment instead of Vale’s shares for its executives. On April 30, 2021, the modification of the Regulation of the Performance Share Unit program(“PSU”) was approved at the Ordinary and Extraordinary Annual General Meeting (“date of modification”), enabling the use of treasury shares of the Company to settle the obligation. Thus, the plans started to be treated as “equity-settled” and their fair value was remeasured on the modification date. Remeasurement of the fair value of plans The fair value of the Matching program was estimated using the Company's share price and ADR on the modification date, in the amount of R$109.02 and US$20.12 per share, respectively. The number of shares granted on the grant date for the 2019, 2020 and 2021 cycles were 1,222,721, 2,154,534 and 1,046,255, respectively. For the PSU, the program was remeasured by estimating the performance factor using Monte Carlo simulations for the Return to Shareholders Indicator and health and safety and sustainability indicators. The assumptions used for the Monte Carlo simulations are shown in the table below, as well as the result used to calculate the expected value of the total performance factor.
Summary of assumptions used for the Monte Carlo simulation |  |
|  | 2021
Granted shares |  | 1,474,723
Date shares were granted |  | 01/03/2021
VALE (BRL) |  | 109.02
VALE ON (USD) |  | 20.12
Expected volatility |  | 39.00% p.y
Expected term (in years) |  | 3
Expected shareholder return indicator |  | 51.20%
Expected performance factor |  | 60.96%
e) Measurement of the fair value of the 2022 plans On March 30, 2022, a new cycle of the Matching program started and the Company estimates a fair value based on the prices of Company’s shares and ADRs on the share grant date of US$20.03 and R$95.87 per share. In relation to the 2022 cycle, the Company will grant 1,437,588 shares (2021: 1,046,255 shares). During 2022, a new cycle of the PSU program has started as well and the Company will grant 1,709,955 shares (2021: 1,474,723 shares). The assumptions used for the Monte Carlo simulations are shown in the table below, as well as the result used to calculate the expected value of the total performance factor.
Summary of assumptions used for the Monte Carlo simulation |  |
|  | 2022
Granted shares |  | 1,709,955
Date shares were granted |  | 01/03/2022
VALE (BRL) |  | 78.00
VALE ON (USD) |  | 13.81
Expected volatility |  | 39.00% p.y.
Expected term (in years) |  | 3
Expected shareholder return indicator |  | 51.20%
Expected performance factor |  | 53.08%
Accounting policy Employee benefits i. Current benefits – wages, vacations and related taxes Employee benefits Payments of benefits such as wages or accrued vacation, as well the related social security taxes over those benefits are recognized monthly in income, on an accrual basis. ii. Current benefits – profit sharing program The Company has the Annual Incentive Program (AIP) based on Team and business unit’s contribution and Company-wide performance through operational cash generation. The Company makes an accrual based on evaluation periodic of goals achieved and Company result, using the accrual basis and recognition of present obligation arising from past events in the estimated outflow of resources in the future. The accrual is recorded as cost of goods sold and services rendered or operating expenses in accordance with the activity of each employee. iii. Non-current benefits – long-term incentive programs The Company has established a procedure for awarding certain eligible executives (Matching and Performance Share unit (“PSU”) Programs) with the goal of encouraging employee retention and optimum performance. Share-based long-term compensation programs are equity-settled, under which the Company receives employee services as consideration for equity instruments. The fair value of employee services received in exchange for the grant of options is recognized as an expense. The total amount of expenses is recognized during the period in which the right is acquired; period during which the specific vesting conditions are met. iv. Non-current benefits – pension costs and other post retirement benefits The Company has several retirement plans for its employees. For defined contribution plans, the Company's obligations are limited to a monthly contribution linked to a pre-defined percentage of the remuneration of employees enrolled into these plans. For defined benefit plans, actuarial calculations are periodically obtained for liabilities determined in accordance with the Projected Unit Credit Method in order to estimate the Company’s obligation. The liability recognized in the statement of financial position represents the present value of the defined benefit obligation as at that date, less the fair value of plan assets. The Company recognized in the income statement the costs of services, the interest expense of the obligations and the interest income of the plan assets. The remeasurement of gains and losses, return on plan assets (excluding the amount of interest on return of assets, which is recognized in income for the year) and changes in the effect of the ceiling of the active and onerous liabilities are recognized in comprehensive income for the year. For overfunded plans, the Company recognizes the net defined benefit assets limited to the present value of the economic benefits available as refunds or reductions in future contributions, considering minimum funding requirements applicable. For underfunded plans, the Company recognizes net defined benefit liabilities. The gain or loss on recognition/remeasurement of these net assets/liabilities are recognized in income statement or in comprehensive income, when arising from the actuarial valuation. Critical accounting estimates and judgments Post retirement benefits for employees - The amounts recognized depend on several factors that are determined based on actuarial calculations using various assumptions in order to determine costs and liabilities. One of these assumptions is selection and use of the discount rate. Any changes to these assumptions will affect the amount recognized. At the end of each year the Company and external actuaries review the assumptions that will be used for the following year. These assumptions are used in determining the fair values of assets and liabilities, costs and expenses and the future values of estimated cash outflows, which are recorded in the plan obligations.

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