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Pension, Retiree Medical and Retiree Savings Plans | 12 Months Ended
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Dec. 31, 2024
Retirement Benefits [Abstract] |
Retiree Medical Benefits | Pension, Retiree Medical and Retiree Savings Plans U.S. Pension Plans We sponsor qualified and supplemental (non-qualified) noncontributory defined benefit plans covering certain full-time salaried and hourly U.S. employees. The qualified plan meets the requirements of certain sections of the Internal Revenue Code and provides benefits to a broad group of employees with restrictions on discriminating in favor of highly compensated employees with regard to coverage, benefits and contributions. The supplemental plans provide additional benefits to certain employees. We fund our supplemental plans as benefits are paid. The most significant of our U.S. plans is the YUM Retirement Plan (the “Plan”), which is a qualified plan. Our funding policy with respect to the Plan is to contribute amounts necessary to satisfy minimum pension funding requirements, including requirements of the Pension Protection Act of 2006, plus additional amounts from time-to-time as are determined to be necessary to improve the Plan’s funded status. We do not expect to make any significant contributions to the Plan in 2025. Our two significant U.S. plans, including the Plan and a supplemental plan, were previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in those plans. Additionally, these two significant U.S. plans are currently closed to new hourly participants. We do not anticipate any plan assets being returned to the Company during 2025 for any U.S. plans. Obligation and Funded Status at Measurement Date: The following charts summarize the balance sheet impact, as well as benefit obligations, assets, and funded status associated with our two significant U.S. pension plans. The actuarial valuations for all plans reflect measurement dates coinciding with our fiscal year end.
|  | 2024 |  | 2023
Change in benefit obligation: |  |  |  |
Benefit obligation at beginning of year |  | $ | 778 |  |  | $ | 755 |
Service cost |  | 4 |  |  | 5 |
Interest cost |  | 42 |  |  | 41 |
Benefits paid |  | (45) |  |  | (34) |
Actuarial (gain) loss |  | (3) |  |  | 11 |
Benefit obligation at end of year |  | $ | 776 |  |  | $ | 778 |
A significant component of the overall decrease in the Company's benefit obligation for the year ended December 31, 2024, was due to benefits paid during the year partially offset by interest cost on the benefit obligation. A significant component of the overall increase in the Company's benefit obligation for the year ended December 31, 2023, was due to interest cost on the benefit obligation partially offset by benefits paid during the year.
|  | 2024 |  | 2023
Change in plan assets: |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 680 |  |  | $ | 664 |
Actual return on plan assets |  | 6 |  |  | 46 |
Employer contributions |  | 3 |  |  | 4 |
Benefits paid |  | (45) |  |  | (34) |
Fair value of plan assets at end of year |  | $ | 644 |  |  | $ | 680 |
Funded status at end of year |  | $ | (132) |  |  | $ | (98) |
Amounts recognized in the Consolidated Balance Sheet:
|  | 2024 |  | 2023
Accrued benefit asset - non-current |  | $ | — |  |  | $ | — |
Accrued benefit liability - current |  | (11) |  |  | (8) |
Accrued benefit liability - non-current |  | (121) |  |  | (90) |
|  | $ | (132) |  |  | $ | (98) |
The accumulated benefit obligation was $764 million and $763 million at December 31, 2024 and 2023, respectively.
The table below provides information for those pension plan(s) with an accumulated benefit obligation in excess of plan assets. The pension plan(s) included also have a projected benefit obligation in excess of plan assets. |  |  |  |
|  | 2024 |  | 2023 |  |  |  |
Projected benefit obligation |  | $ | 776 |  |  | $ | 778 |  |  |  |  |
Accumulated benefit obligation |  | 764 |  |  | 763 |  |  |  |  |
Fair value of plan assets |  | 644 |  |  | 680 |  |  |  |  |
Components of net periodic benefit cost:
|  | 2024 |  | 2023 |  | 2022
Service cost |  | $ | 4 |  |  | $ | 5 |  |  | $ | 7 |
Interest cost |  | 42 |  |  | 41 |  |  | 31 |
Amortization of prior service cost(a) |  | 1 |  |  | 1 |  |  | 6 |
Expected return on plan assets |  | (51) |  |  | (50) |  |  | (46) |
Amortization of net loss (gain) |  | 1 |  |  | (1) |  |  | 11 |
Net periodic benefit cost (income) |  | $ | (3) |  |  | $ | (4) |  |  | $ | 9 |
Additional (gain) loss recognized due to: Settlement charges(b) |  | $ | — |  |  | $ | — |  |  | $ | 6 |
(a)Prior service costs are amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits. (b)Settlement losses result when benefit payments exceed the sum of the service cost and interest cost within a plan during the year. These losses were recorded in Other pension (income) expense.
Pension gains (losses) in AOCI:
|  | 2024 |  | 2023
Beginning of year |  | $ | (87) |  |  | $ | (74) |
Net actuarial (loss) gain |  | (42) |  |  | (13) |
Amortization of net loss (gain) |  | 1 |  |  | (1) |
Amortization of prior service cost |  | 1 |  |  | 1 |
End of year |  | $ | (127) |  |  | $ | (87) |
Accumulated pre-tax losses recognized within AOCI:
|  | 2024 |  | 2023
Actuarial net loss |  | $ | (125) |  |  | $ | (84) |
Prior service cost |  | (2) |  |  | (3) |
|  | $ | (127) |  |  | $ | (87) |
Weighted-average assumptions used to determine benefit obligations at the measurement dates:
|  | 2024 |  | 2023
Discount rate |  | 5.80 | % |  | 5.60 | %
Rate of compensation increase |  | 3.00 | % |  | 3.00 | %
Weighted-average assumptions used to determine the net periodic benefit cost for fiscal years:
|  | 2024 |  | 2023 |  | 2022
Discount rate |  | 5.60 | % |  | 5.60 | % |  | 3.00 | %
Long-term rate of return on plan assets |  | 6.35 | % |  | 6.25 | % |  | 5.40 | %
Rate of compensation increase |  | 3.00 | % |  | 3.00 | % |  | 3.00 | %
Our estimated long-term rate of return on plan assets represents the weighted-average of expected future returns on the asset categories included in our target investment allocation based primarily on the historical returns for each asset category and future growth expectations. Plan Assets The fair values of our pension plan assets at December 31, 2024 and 2023 by asset category and level within the fair value hierarchy are as follows:
|  | 2024 |  | 2023
Level 1: |  |  |  |
Cash |  | $ | 2 |  |  | $ | — |
Cash Equivalents(a) |  | 30 |  |  | 61 |
Fixed Income Securities - U.S. Corporate(b) |  | 16 |  |  | 7 |
Level 2: |  |  |  |
Equity Securities(b) |  | 212 |  |  | 213 |
Fixed Income Securities - U.S. Corporate(c) |  | 21 |  |  | 25 |
Fixed Income Securities - U.S. Government and Government Agencies(d) |  | 113 |  |  | 124 |
Fixed Income Securities - Other(d) |  | 15 |  |  | 11 |
Total assets in the fair value hierarchy |  | 409 |  |  | 441 |
Investments measured at net asset value(e) |  |  |  |
Fixed Income |  | 146 |  |  | 132 |
Real Assets |  | 141 |  |  | 149 |
Total fair value of plan assets(f) |  | $ | 696 |  |  | $ | 722 |
(a)Short-term investments in money market funds. (b)Securities held in common or collective trusts. (c)Investments held directly by the Plan. (d)Includes securities held in common or collective trusts and investments held directly by the Plan. (e)Includes securities that have been measured at fair value using the net asset value per unit practical expedient due to the absence of readily available market prices. Accordingly, these securities have not been classified in the fair value hierarchy. (f)2024 and 2023 exclude net unsettled trade payables of $52 million and $42 million, respectively. Our primary objectives regarding the investment strategy for the Plan’s assets are to reduce interest rate and market risk and to provide adequate liquidity to meet immediate and future payment requirements. To achieve these objectives, we are using a combination of active and passive investment strategies. As of December 31, 2024, the Plan’s assets consist of the weighted-average target allocation summarized as follows:
Asset Category |  | Target Allocation
Fixed income |  | 49 | %
Equity securities |  | 32 | %
Real assets |  | 19 | %
Actual allocations to each asset class may vary from target allocations due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions and the timing of benefit payments and contributions. Fixed income securities at December 31, 2024, primarily consist of a diversified portfolio of long duration instruments that are intended to mitigate interest rate risk or reduce the interest rate duration mismatch between the assets and liabilities of the Plan. A smaller allocation (constituting 40% of the fixed income target allocation) is to diversified credit investments in a range of public and credit securities, including below investment grade rated bonds and loans, securitized credit and emerging market debt. Equity securities at December 31, 2024, consist primarily of investments in publicly traded common stocks and other equity-type securities issued by companies throughout the world, including convertible securities, preferred stock, rights and warrants. Real assets represent investments in real estate and infrastructure. These may take the form of debt or equity securities in public or private funds. A mutual fund held as an investment by the Plan includes shares of Common Stock valued at $0.1 million at both December 31, 2024 and 2023, (less than 1% of total plan assets in each instance). Benefit Payments The benefits expected to be paid in each of the next five years and in the aggregate for the five years thereafter are set forth below:
Year ended: |  |  |  |
2025 |  | $ | 59 |  |  |
2026 |  | 63 |  |  |
2027 |  | 59 |  |  |
2028 |  | 63 |  |  |
2029 |  | 58 |  |  |
2030 - 2034 |  | 284 |  |  |
Expected benefit payments are estimated based on the same assumptions used to measure our benefit obligation on the measurement date and include benefits attributable to estimated future employee service. International Pension Plans We also sponsor various defined benefit plans covering certain of our non-U.S. employees, the most significant of which are in the U.K. Both of our U.K. plans have previously been frozen such that they are closed to new participants and existing participants can no longer earn future service credits. At the end of 2024 and 2023, the projected benefit obligations of these U.K. plans totaled $170 million and $190 million, respectively, and plan assets totaled $197 million and $226 million, respectively. These plans were both in a net overfunded position at the end of 2024 and 2023. Total actuarial pre-tax losses related to the U.K. plans of $72 million and $63 million were recognized in AOCI at the end of 2024 and 2023, respectively. The total net periodic cost or benefit recorded was less than $1 million of benefit in 2024, $2 million of cost in 2023 and $2 million of benefit in 2022. The benefits expected to be paid associated with our U.K. plans in each of the next five years are approximately $4 million and in aggregate for the five years thereafter are $22 million. The funding rules for our pension plans outside of the U.S. vary from country to country and depend on many factors including discount rates, performance of plan assets, local laws and regulations. We do not plan to make significant contributions to either of our U.K. plans in 2025. Retiree Medical Benefits Our post-retirement plan provides health care benefits, principally to U.S. salaried retirees and their dependents, and includes retiree cost-sharing provisions and a cap on our liability. This plan was previously amended such that any salaried employee hired or rehired by YUM after September 30, 2001, is not eligible to participate in this plan. Employees hired prior to September 30, 2001, are eligible for benefits if they meet age and service requirements and qualify for retirement benefits. We fund our post-retirement plan as benefits are paid. At the end of 2024 and 2023, the accumulated post-retirement benefit obligation was $25 million and $27 million, respectively. Actuarial pre-tax gains of $13 million and $15 million were recognized in AOCI at the end of 2024 and 2023, respectively. The net periodic benefit cost or benefit recorded was less than $1 million of benefit in both 2024 and 2023 and $1 million of cost in 2022. The weighted-average assumptions used to determine benefit obligations and net periodic benefit cost for the post-retirement medical plan are identical to those as shown for the U.S. pension plans. The benefits expected to be paid in each of the next five years are approximately $3 million and in aggregate for the five years thereafter are $11 million. U.S. Retiree Savings Plan We sponsor a contributory plan to provide retirement benefits under the provisions of Section 401(k) of the Internal Revenue Code (the “401(k) Plan”) for eligible U.S. salaried and hourly employees. Participants are able to elect to contribute up to 75% of eligible compensation on a pre-tax basis. Participants may allocate their contributions to one or any combination of multiple investment options or a self-managed account within the 401(k) Plan. We match 100% of the participant’s contribution to the 401(k) Plan up to 6% of eligible compensation. We recognized as compensation expense our total matching contribution of $24 million in 2024, $15 million in 2023 and $13 million in 2022.

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