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Pension and Other Postretirement Plans | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
PENSION AND OTHER POSTRETIREMENT PLANS | PENSION AND OTHER POSTRETIREMENT PLANS The following summarizes the significant pension and other postretirement plans of United: Pension Plans. United maintains two primary defined benefit pension plans, one covering certain pilot employees and another covering certain U.S. non-pilot employees. Each of these plans provide benefits based on a combination of years of benefit accruals service and an employee's final average compensation. Additional benefit accruals are frozen under the plan covering certain pilot employees and for management and administrative employees covered under the non-pilot plan. Benefit accruals for certain non-pilot employees continue. United maintains additional defined benefit pension plans, which cover certain international employees. Other Postretirement Plans. United maintains postretirement medical programs which provide medical benefits to certain retirees and eligible dependents, as well as life insurance benefits to certain retirees participating in the plan. Benefits provided are subject to applicable contributions, co-payments, deductibles and other limits as described in the specific plan documentation. In 2021 and 2020, the Company offered several voluntary leave programs and voluntary separation programs ("Voluntary Programs") to certain eligible employees, which in some cases included a partially-paid leave of absence with active health benefits and travel privileges. Under these Voluntary Programs, employees generally separated (or will separate) from employment with certain post-employment health benefits and travel privileges. Included in the Voluntary Programs offered during the first quarter of 2021, the Company offered special separation benefits in the form of additional subsidies for retiree medical costs for certain U.S.-based front-line employees. The subsidies are in the form of a one-time contribution to a notional Retiree Health Account of $125,000 for full-time employees and $75,000 for part-time employees. As a result, the Company recorded $31 million for those additional benefits in 2021. During 2020, the Company offered certain of its eligible front-line employees special separation benefits in the form of additional years of pension service and additional subsidies for retiree medical costs (based on employee group, age and completed years of service) as a part of the Voluntary Programs. As a result, the Company recorded, in 2020, $54 million for those additional pension benefits and $201 million for those additional retiree medical benefits. Also, the Company recognized, in 2020, $430 million in settlement losses related to the defined benefit pension plan covering certain U.S. non-pilot employees. Actuarial assumption changes are reflected as a component of the net actuarial (gain) loss. The 2022 actuarial gains were mainly related to an increase in the discount rate applied at December 31, 2022 compared to December 31, 2021, which were partially offset by losses on pension plan assets due to asset returns being less than expected. Actuarial (gains) losses will be amortized over the average remaining service life of the covered active employees. The following tables set forth the reconciliation of the beginning and ending balances of the benefit obligation and plan assets, the funded status and the amounts recognized in these financial statements for the defined benefit and other postretirement plans (in millions):
| Pension Benefits
| Year Ended December 31, 2022 |  | Year Ended December 31, 2021
Accumulated benefit obligation: | $ | 3,596 |  |  | $ | 5,496 |
Change in projected benefit obligation: |  |  |
Projected benefit obligation at beginning of year | $ | 6,473 |  |  | $ | 6,525 |
Service cost | 204 |  |  | 239 |
Interest cost | 188 |  |  | 184 |
Actuarial gain | (2,186) |  |  | (188) |
Benefits paid | (464) |  |  | (263) |
Curtailment | — |  |  | (12) |
Other | (34) |  |  | (12) |
Projected benefit obligation at end of year | $ | 4,181 |  |  | $ | 6,473 |
Change in plan assets: |  |  |
Fair value of plan assets at beginning of year | $ | 4,626 |  |  | $ | 4,069 |
Actual income (loss) on plan assets | (678) |  |  | 437 |
Employer contributions | 8 |  |  | 387 |
Benefits paid | (464) |  |  | (263) |
Other | (25) |  |  | (4) |
Fair value of plan assets at end of year | $ | 3,467 |  |  | $ | 4,626 |
Funded status—Net amount recognized | $ | (714) |  |  | $ | (1,847) |
| Pension Benefits
| December 31, 2022 |  | December 31, 2021
Amounts recognized in the consolidated balance sheets consist of: |  |  |
Noncurrent asset | $ | 44 |  |  | $ | 75 |
Current liability | (11) |  |  | (2) |
Noncurrent liability | (747) |  |  | (1,920) |
Total liability | $ | (714) |  |  | $ | (1,847) |
Amounts recognized in accumulated other comprehensive income ( loss) consist of: |  |  |
Net actuarial loss | $ | (77) |  |  | $ | (1,406) |
Prior service cost | (1) |  |  | (1) |
Total accumulated other comprehensive loss | $ | (78) |  |  | $ | (1,407) |
| Other Postretirement Benefits
| Year Ended December 31, 2022 |  | Year Ended December 31, 2021
Change in benefit obligation: |  |  |
Benefit obligation at beginning of year | $ | 1,129 |  |  | $ | 1,082 |
Service cost | 9 |  |  | 10 |
Interest cost | 30 |  |  | 25 |
Plan participants' contributions | 69 |  |  | 66 |
Benefits paid | (179) |  |  | (199) |
Actuarial (gain) loss | (270) |  |  | 114 |
Special termination benefit | — |  |  | 31 |
Benefit obligation at end of year | $ | 788 |  |  | $ | 1,129 |
Change in plan assets: |  |  |
Fair value of plan assets at beginning of year | $ | 49 |  |  | $ | 51 |
Actual return on plan assets | 1 |  |  | 1 |
Employer contributions | 108 |  |  | 130
Plan participants' contributions | 69 |  |  | 66 |
Benefits paid | (179) |  |  | (199) |
Fair value of plan assets at end of year | 48 |  |  | 49 |
Funded status—Net amount recognized | $ | (740) |  |  | $ | (1,080) |
| Other Postretirement Benefits
| December 31, 2022 |  | December 31, 2021
Amounts recognized in the consolidated balance sheets consist of: |  |  |
Current liability | $ | (69) |  |  | $ | (80) |
Noncurrent liability | (671) |  |  | (1,000) |
Total liability | $ | (740) |  |  | $ | (1,080) |
Amounts recognized in accumulated other comprehensive income (loss) consist of: |  |  |
Net actuarial gain | $ | 369 |  |  | $ | 113 |
Prior service credit | 335 |  |  | 447 |
Total accumulated other comprehensive income | $ | 704 |  |  | $ | 560 |
The following information relates to all pension plans with an accumulated benefit obligation and a projected benefit obligation in excess of plan assets at December 31 (in millions):
| 2022 |  | 2021
Projected benefit obligation | $ | 4,045 |  |  | $ | 6,231 |
Accumulated benefit obligation | 3,461 |  |  | 5,255 |
Fair value of plan assets | 3,287 |  |  | 4,309 |
Net periodic benefit cost (credit) for the years ended December 31 included the following components (in millions):
| 2022 |  | 2021 |  | 2020
| Pension Benefits |  | Other Postretirement Benefits |  | Pension Benefits |  | Other Postretirement Benefits |  | Pension Benefits |  | Other Postretirement Benefits
Service cost | $ | 204 |  |  | $ | 9 |  |  | $ | 239 |  |  | $ | 10 |  |  | $ | 216 |  |  | $ | 10 |
Interest cost | 188 |  |  | 30 |  |  | 184 |  |  | 25 |  |  | 209 |  |  | 28 |
Expected return on plan assets | (306) |  |  | (1) |  |  | (283) |  |  | (1) |  |  | (328) |  |  | (1) |
Amortization of unrecognized actuarial (gain) loss | 120 |  |  | (14) |  |  | 170 |  |  | (28) |  |  | 162 |  |  | (40) |
Amortization of prior service credits | — |  |  | (112) |  |  | — |  |  | (123) |  |  | — |  |  | (124) |
Settlement loss - Voluntary Programs | — |  |  | — |  |  | — |  |  | — |  |  | 430 |  |  | — |
Special termination benefits - Voluntary Programs | — |  |  | — |  |  | — |  |  | 31 |  |  | 54 |  |  | 201 |
Curtailment | — |  |  | — |  |  | (8) |  |  | — |  |  | 1 |  |  | — |
Other | 5 |  |  | — |  |  | 5 |  |  | — |  |  | 22 |  |  | — |
Net periodic benefit cost (credit) | $ | 211 |  |  | $ | (88) |  |  | $ | 307 |  |  | $ | (86) |  |  | $ | 766 |  |  | $ | 74 |
Service cost is recorded in Salaries and related costs on the statement of consolidated operations. All other components of net periodic benefit costs are recorded in Miscellaneous, net on the statement of consolidated operations. The Company's expected Net periodic benefit cost (credit) for 2023 is as follows (in millions):
|  | Pension Benefits |  | Other Postretirement Benefits
Net periodic benefit cost (credit) |  | $ | 97 |  |  | $ | (105) |
The assumptions used for the benefit plans were as follows:
|  | Pension Benefits
Assumptions used to determine benefit obligations |  | 2022 |  | 2021
Discount rate |  | 5.20 | % |  | 2.90 | %
Rate of compensation increase |  | 3.83 | % |  | 3.83 | %
Assumptions used to determine net expense |  |
Discount rate |  | 2.90 | % |  | 2.72 | %
Expected return on plan assets |  | 7.16 | % |  | 7.28 | %
Rate of compensation increase |  | 3.83 | % |  | 3.88 | %
|  | Other Postretirement Benefits
Assumptions used to determine benefit obligations |  | 2022 |  | 2021
Discount rate |  | 5.66 | % |  | 2.82 | %
Assumptions used to determine net expense |  |  |  |
Discount rate |  | 2.82 | % |  | 2.43 | %
Expected return on plan assets |  | 3.00 | % |  | 3.00 | %
Health care cost trend rate assumed for next year |  | 5.60 | % |  | 5.70 | %
Rate to which the cost trend rate is assumed to decline (ultimate trend rate in 2033) |  | 4.50 | % |  | 4.50 | %
The Company used the Society of Actuaries' PRI-2012 Private Retirement Plans Mortality Tables projected generationally using the Society of Actuaries' MP-2021 projection scale. The Company selected the 2022 discount rate for substantially all of its plans by using a hypothetical portfolio of high-quality bonds at December 31, 2022 that would provide the necessary cash flows to match projected benefit payments. We develop our expected long-term rate of return assumption for our defined benefit plans based on historical experience and by evaluating input from the trustee managing the plans' assets. Our expected long-term rate of return on plan assets for these plans is based on a target allocation of assets, which is based on our goal of earning the highest rate of return while maintaining risk at acceptable levels. The plans strive to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio. Plan fiduciaries regularly review our actual asset allocation and the pension plans' investments are periodically rebalanced to our targeted allocation when considered appropriate. United's plan assets are allocated within the following guidelines:
| Percent of Total |  | Expected Long-Term Rate of Return
Equity securities | 25-40 | % |  | 9 |  | %
Fixed-income securities | 40-55 |  |  | 7 |  |
Alternatives | 15-25 |  |  | 8 |  |
The table below shows the impacts of a change in certain assumptions on the 2023 net periodic benefit cost and the benefit obligations at December 31, 2022 (in millions):
|  | Pension Benefits |  | Other Postretirement Benefits
Impact on Benefit Obligation at December 31, 2022 |  |  |  |
100 basis points decrease in the weighted average discount rate |  | $ | 813 |  |  | $ | 50 |
Impact on 2023 Net Periodic Benefit Cost |  |  |  |
100 basis points decrease in the weighted average discount rate (a) |  | $ | 93 |  |  | $ | 1 |
100 basis points decrease in the expected long-term rate of return on plan assets |  | 33 |  |  | — |
(a) In general, as discount rates increase, the impact of changes in discount rates decreases. Therefore, these sensitivities cannot be extrapolated for larger increases or decreases in the discount rate. In addition, benefit cost is affected by other factors including, but not limited to, investment performance, contributions, demographic experience and other assumption changes.
Fair Value Information. Accounting standards require us to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:
Level 1 | Unadjusted quoted prices in active markets for assets or liabilities identical to those to be reported at fair value
Level 2 | Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs
Level 3 | Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants would price the assets or liabilities
Assets and liabilities measured at fair value are based on the valuation techniques identified in the tables below. The valuation techniques are as follows: (a) Market approach. Prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities; and (b) Income approach. Techniques to convert future amounts to a single current value based on market expectations (including present value techniques, option-pricing and excess earnings models). The following tables present information about United's pension and other postretirement plan assets at December 31 (in millions):
|  | 2022 |  |  | 2021
Pension Plan Assets: |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Assets Measured at NAV(a) |  |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Assets Measured at NAV(a)
Equity securities funds |  | $ | 1,183 |  |  | $ | 58 |  |  | $ | 26 |  |  | $ | 114 |  |  | $ | 985 |  |  |  | $ | 1,754 |  |  | $ | 71 |  |  | $ | 44 |  |  | $ | 147 |  |  | $ | 1,492 |
Fixed-income securities |  | 1,316 |  |  | — |  |  | 527 |  |  | 5 |  |  | 784 |  |  |  | 1,850 |  |  | — |  |  | 739 |  |  | 15 |  |  | 1,096 |
Alternatives |  | 887 |  |  | — |  |  | — |  |  | 161 |  |  | 726 |  |  |  | 847 |  |  | — |  |  | — |  |  | 216 |  |  | 631 |
Other investments |  | 81 |  |  | 6 |  |  | 16 |  |  | 5 |  |  | 54 |  |  |  | 175 |  |  | 108 |  |  | 59 |  |  | 8 |  |  | — |
Total |  | $ | 3,467 |  |  | $ | 64 |  |  | $ | 569 |  |  | $ | 285 |  |  | $ | 2,549 |  |  |  | $ | 4,626 |  |  | $ | 179 |  |  | $ | 842 |  |  | $ | 386 |  |  | $ | 3,219 |
Other Postretirement Benefit Plan Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deposit administration fund |  | $ | 48 |  |  | $ | — |  |  | $ | — |  |  | $ | 48 |  |  | $ | — |  |  |  | $ | 49 |  |  | $ | — |  |  | $ | — |  |  | $ | 49 |  |  | $ | — |
(a) In accordance with the relevant accounting standards, certain investments that are measured at fair value using the net asset value ("NAV") per share (or its equivalent) have not been classified in the fair value hierarchy. These investments are commingled funds that invest in equity securities and fixed-income instruments including bonds, debt securities, and other similar instruments issued by various U.S. and non-U.S. public- or private-sector entities. Redemption periods for these investments range from daily to semiannually. Equity and Fixed-Income. Equities include investments in both developed market and emerging market equity securities. Fixed-income includes primarily U.S. and non-U.S. government fixed-income securities and non-U.S. corporate fixed-income securities, as well as securitized debt securities. Deposit Administration Fund. This investment is a stable value investment product structured to provide investment income. Alternatives. Alternative investments consist primarily of investments in hedge funds, real estate and private equity interests. Other investments. Other investments consist of primarily cash equivalents, as well as insurance contracts. The following table presents reconciliation of United's benefit plan assets measured at fair value using unobservable inputs (Level 3) for the years ended December 31, 2022 and 2021 (in millions):
|  | 2022 |  | 2021
Balance at beginning of year |  | $ | 435 |  |  | $ | 401 |
Actual income (loss) on plan assets: |  |  |  |
Sold during the year |  | 34 |  |  | 2 |
Held at year end |  | (39) |  |  | 48 |
Purchases, sales, issuances and settlements (net) |  | (97) |  |  | (16) |
Balance at end of year |  | $ | 333 |  |  | $ | 435 |
Funding requirements for tax-qualified defined benefit pension plans are determined by government regulations. The Company does not expect any minimum required contributions for 2023 for its tax-qualified defined benefit pension plans. The Company expects to make approximately $113 million in contributions to its other postretirement benefit plans in 2023. The estimated future benefit payments, net of expected participant contributions, in United's pension plans and other postretirement benefit plans for the next ten years, as of December 31, 2022, are as follows (in millions):
| Pension |  | Other Postretirement
2023 | $ | 255 |  |  | $ | 120 |
2024 | 253 |  |  | 109 |
2025 | 282 |  |  | 94 |
2026 | 304 |  |  | 86 |
2027 | 323 |  |  | 78 |
Years 2028 – 2032 | 1,776 |  |  | 293 |
Defined Contribution Plans. United offers several defined contribution plans to its employees. Depending upon the employee group, employer contributions consist of matching contributions and/or non-elective employer contributions. United's employer contribution percentages to its primary 401(k) defined contribution plans vary from 1% to 16% of eligible earnings depending on the terms of each plan. United recorded expenses for its primary 401(k) defined contribution plans of $756 million, $651 million and $687 million in the years ended December 31, 2022, 2021 and 2020, respectively. Multi-Employer Plans. United's participation in the IAM National Pension Plan ("IAM Plan") for the annual period ended December 31, 2022 is outlined in the table below. The risks of participating in these multi-employer plans are different from single-employer plans, as United may be subject to additional risks that others do not meet their obligations, which in certain circumstances could revert to United. The IAM Plan reported $507 million in employers' contributions for the year ended December 31, 2021. For 2021, the Company's contributions to the IAM Plan represented more than 5% of total contributions to the IAM Plan. The 2022 information is not available as the applicable Form 5500 is not final for the plan year.
Pension Fund | IAM National Pension Fund ("Fund")
EIN/ Pension Plan Number | 51-6031295 — 002
Pension Protection Act Zone Status (2022 and 2021) | Critical (2022 and 2021). A plan is in "critical" status if the funded percentage is less than 65 percent. On April 17, 2019, the IAM National Pension Fund Board of Trustees voluntarily elected for the Fund to be in critical status effective for the plan year beginning January 1, 2019 to strengthen the Fund's financial health. The Fund's funded percentage was 83.7% as of January 1, 2021.
FIP/RP Status Pending/Implemented | A 10-year Rehabilitation Plan effective, January 1, 2022, was adopted on April 17, 2019 that requires the Company to make an additional contribution of 2.5% of the hourly contribution rate, compounded annually for the length of the Rehabilitation Plan, effective June 1, 2019.
United's Contributions | $75 million, $58 million and $53 million in the years ended December 31, 2022, 2021 and 2020, respectively
Surcharge Imposed | No
Expiration Date of Collective Bargaining Agreement | N/A
Profit Sharing. Substantially all employees participate in profit sharing based on a percentage of pre-tax earnings, excluding special charges, profit sharing expense and share-based compensation. Profit sharing percentages range from 5% to 20% depending on the work group, and in some cases profit sharing percentages vary above and below certain pre-tax margin thresholds. Eligible U.S. co-workers in each participating work group receive a profit sharing payout using a formula based on the ratio of each qualified co-worker's annual eligible earnings to the eligible earnings of all qualified co-workers in all domestic work groups. Eligible non-U.S. co-workers receive profit sharing based on the calculation under the U.S. profit sharing plan for management and administrative employees. The Company recorded profit sharing and related payroll tax expense of $133 million in 2022. As a result of the pre-tax losses in 2021 and 2020, no profit sharing was recorded. Profit sharing expense is recorded as a component of Salaries and related costs in the Company's statements of consolidated operations.

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