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Retirement Plans | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
Retirement Plans | Retirement Plans Our company and subsidiaries have various plans that cover a significant number of our employees. These plans include defined contribution plans, defined benefit plans, and other postretirement plans: - our defined contribution plans provide retirement benefits in return for services rendered. These plans provide an individual account for each participant and have terms that specify how contributions to the participant’s account are to be determined rather than the amount of pension benefits the participant is to receive. Contributions to these plans are based on a percentage of pre-tax income, after-tax income, or discretionary amounts determined on an annual basis. Our expense for the defined contribution plans totaled $136 million in 2021, $100 million in 2020, and $206 million in 2019. The increase in expense from 2020 to 2021 was due to a headcount increase and the payment of a discretionary contribution for the year ended December 31, 2021. - our defined benefit plans, which include both overfunded and underfunded pension plans, define an amount of pension benefit to be provided, usually as a function of age, years of service and/or compensation. The underfunded obligations and net periodic benefit cost of our United States defined benefit plans were not material for the periods presented; and - our postretirement plans other than pensions are offered to specific eligible employees. The accumulated benefit obligations and net periodic benefit cost for these plans were not material for the periods presented. Funded status For our international pension plans, at December 31, 2021, the projected benefit obligation was $1.1 billion and the fair value of plan assets was $1.2 billion, which resulted in an overfunded obligation of $80 million. At December 31, 2020, the projected benefit obligation was $1.2 billion and the fair value of plan assets was $1.1 billion, which resulted in an underfunded obligation of $152 million. The accumulated benefit obligation for our international plans was $1.0 billion at December 31, 2021 and $1.1 billion at December 31, 2020. The following table presents additional information about our international pension plans.
| December 31
Millions of dollars | 2021 | 2020
Amounts recognized on the Consolidated Balance Sheets |  |
Other Assets | $ | 265 |  | $ | 45 |
Accrued employee compensation and benefits | 7 |  | 8 |
Employee compensation and benefits | 178 |  | 189 |
Pension plans in which projected benefit obligation exceeded plan assets |  |
Projected benefit obligation | $ | 199 |  | $ | 228 |
Fair value of plan assets | 14 |  | 31 |
Pension plans in which accumulated benefit obligation exceeded plan assets |  |
Accumulated benefit obligation | $ | 114 |  | $ | 126 |
Fair value of plan assets | 9 |  | 25 |
Fair value measurements of plan assets The fair value of our plan assets categorized within level 1 on the fair value hierarchy is based on quoted prices in active markets for identical assets. The fair value of our plan assets categorized within level 2 on the fair value hierarchy is based on significant observable inputs for similar assets. The fair value of our plan assets categorized within level 3 on the fair value hierarchy is based on significant unobservable inputs. The following table sets forth the fair values of assets held by our international pension plans by level within the fair value hierarchy.
Millions of dollars | Level 1 | Level 2 | Level 3 | Net Asset Value (a) | Total
Cash and equivalents | $ | — |  | $ | 251 |  | $ | — |  | $ | — |  | $ | 251 |
Equity funds (b) | — |  | 120 |  | — |  | — |  | 120 |
Bond funds (c) | — |  | 405 |  | — |  | 143 |  | 548 |
Alternatives funds (d) | — |  | — |  | — |  | 176 |  | 176 |
Real estate funds (e) | — |  | 23 |  | — |  | 23 |  | 46 |
Other investments (f) | 3 |  | 21 |  | 3 |  | — |  | 27 |
Fair value of plan assets at December 31, 2021 | $ | 3 |  | $ | 820 |  | $ | 3 |  | $ | 342 |  | $ | 1,168 |
Cash and equivalents | $ | — |  | $ | 136 |  | $ | — |  | $ | — |  | $ | 136 |
Equity funds (b) | — |  | 170 |  | — |  | — |  | 170 |
Bond funds (c) | — |  | 319 |  | — |  | 149 |  | 468 |
Alternatives funds (d) | — |  | 4 |  | — |  | 163 |  | 167 |
Real estate funds (e) | — |  | 68 |  | — |  | 28 |  | 96 |
Other investments (f) | 5 |  | 21 |  | 14 |  | — |  | 40 |
Fair value of plan assets at December 31, 2020 | $ | 5 |  | $ | 718 |  | $ | 14 |  | $ | 340 |  | $ | 1,077 |
(a) | Represents investments measured at fair value using the Net Asset Value (NAV) per share practical expedient and thus has not been categorized 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 total value of our international pension plans assets.
(b) | Strategy of equity funds is to invest in diversified funds of global common stocks.
(c) | Strategy of bond funds is to invest in diversified funds of fixed income securities of varying geographies and credit quality.
(d) | Strategy of alternative funds is to invest in a fund of diversifying investments, including but not limited to reinsurance, commodities, and currencies.
(e) | Strategy of real estate funds is to invest in diversified funds of real estate investment trusts and private real estate.
(f) | Other investments primarily include investments in insurance contracts, balanced funds, and government bonds.
Risk management practices for these plans include diversification by issuer, industry, and geography, as well as the use of multiple asset classes and investment managers within each asset class. Our investment strategy for our United Kingdom pension plan, which constituted 81% of our international pension plans’ projected benefit obligation at December 31, 2021 and is no longer accruing service benefits, aims to achieve full funding of the benefit obligation, with the plan's assets increasingly composed of investments whose cash flows match the projected liabilities of the plan. Net periodic benefit cost Net periodic benefit cost for our international pension plans was $25 million in 2021, $30 million in 2020, and $23 million in 2019. Actuarial assumptions Certain weighted-average actuarial assumptions used to determine benefit obligations of our international pension plans at December 31 were as follows:
| 2021 | 2020
Discount rate | 2.3% | 1.8%
Rate of compensation increase | 5.3% | 5.9%
Certain weighted-average actuarial assumptions used to determine net periodic benefit cost of our international pension plans for the years ended December 31 were as follows:
| 2021 | 2020 | 2019
Discount rate | 1.8% | 2.5% | 3.3%
Expected long-term return on plan assets | 2.7% | 3.5% | 4.4%
Rate of compensation increase | 5.9% | 6.0% | 5.8%
Assumed long-term rates of return on plan assets, discount rates for estimating benefit obligations, and rates of compensation increases vary by plan according to local economic conditions. Where possible, discount rates were determined based on the prevailing market rates of a portfolio of high-quality debt instruments with maturities matching the expected timing of the payment of the benefit obligations. Expected long-term rates of return on plan assets were determined based upon an evaluation of our plan assets and historical trends and experience, taking into account current and expected market conditions. Other information Contributions. Funding requirements for each plan are determined based on the local laws of the country where such plan resides. In certain countries the funding requirements are mandatory, while in other countries they are discretionary. We currently expect to contribute $18 million to our international pension plans in 2022. Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $43 million in 2022, $41 million in 2023, $42 million in 2024, $44 million in 2025, $46 million in 2026, and an aggregate $256 million in years 2027 through 2031.

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