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Retirement Plans | 12 Months Ended
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Dec. 31, 2023
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 $181 million in 2023, $160 million in 2022, and $136 million in 2021. The increase in expense from 2022 to 2023 was due to headcount and salary increase for the year ended December 31, 2023. - 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, 2023, the projected benefit obligation was $745 million and the fair value of plan assets was $622 million, which resulted in an underfunded obligation of $123 million. At December 31, 2022, the projected benefit obligation was $669 million and the fair value of plan assets was $665 million, which resulted in an underfunded obligation of $4 million. The accumulated benefit obligation for our international plans was $672 million at December 31, 2023 and $601 million at December 31, 2022. The increase in projected benefit obligation and accumulated benefit obligation from 2022 to 2023 was due to assumption changes, mainly a decrease in discount rate. The following table presents additional information about our international pension plans.
| December 31
Millions of dollars | 2023 | 2022
Amounts recognized on the Consolidated Balance Sheets |  |
Other assets | $ | 39 |  | $ | 151 |
Accrued employee compensation and benefits | 10 |  | 7 |
Employee compensation and benefits | 154 |  | 145 |
Pension plans in which projected benefit obligation exceeded plan assets |  |
Projected benefit obligation | $ | 179 |  | $ | 159 |
Fair value of plan assets | 15 |  | 7 |
Pension plans in which accumulated benefit obligation exceeded plan assets |  |
Accumulated benefit obligation | $ | 106 |  | $ | 91 |
Fair value of plan assets | 15 |  | 7 |
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 | $ | 29 |  | $ | 234 |  | $ | — |  | $ | — |  | $ | 263 |
Bond funds (b) | — |  | 159 |  | — |  | 156 |  | 315 |
Real estate funds (d) | — |  | — |  | — |  | 30 |  | 30 |
Other investments (e) | 1 |  | 11 |  | 2 |  | — |  | 14 |
Fair value of plan assets at December 31, 2023 | $ | 30 |  | $ | 404 |  | $ | 2 |  | $ | 186 |  | $ | 622 |
Cash and equivalents | $ | 26 |  | $ | 100 |  | $ | — |  | $ | — |  | $ | 126 |
Bond funds (b) | — |  | 242 |  | — |  | 100 |  | 342 |
Alternatives funds (c) | — |  | — |  | — |  | 145 |  | 145 |
Real estate funds (d) | — |  | — |  | — |  | 31 |  | 31 |
Other investments (e) | 1 |  | 18 |  | 2 |  | — |  | 21 |
Fair value of plan assets at December 31, 2022 | $ | 27 |  | $ | 360 |  | $ | 2 |  | $ | 276 |  | $ | 665 |
(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 bond funds is to invest in diversified funds of fixed income securities of varying geographies and credit quality.
(c) | Strategy of alternative funds is to invest in a fund of diversifying investments, including but not limited to reinsurance, commodities, and currencies.
(d) | Strategy of real estate funds is to invest in diversified funds of real estate investment trusts and private real estate.
(e) | 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 75% of our international pension plans’ projected benefit obligation at December 31, 2023 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 $32 million in 2023, $14 million in 2022, and $25 million in 2021. Actuarial assumptions Certain weighted-average actuarial assumptions used to determine benefit obligations of our international pension plans at December 31 were as follows:
| 2023 | 2022
Discount rate | 5.1% | 5.7%
Rate of compensation increase | 5.6% | 5.5%
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:
| 2023 | 2022 | 2021
Discount rate | 5.6% | 2.3% | 1.8%
Expected long-term return on plan assets | 3.8% | 3.0% | 2.7%
Rate of compensation increase | 5.4% | 5.3% | 5.9%
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 $2 million to our international pension plans in 2024. Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $38 million in 2024, $35 million in 2025, $37 million in 2026, $39 million in 2027, $42 million in 2028, and an aggregate $247 million in years 2029 through 2033.

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