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Retirement Plans | 12 Months Ended
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Dec. 31, 2024
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 $182 million in 2024, $181 million in 2023, and $160 million in 2022. The increase in expense from 2023 to 2024 was due to headcount and salary increase for the year ended December 31, 2024. The increase in expense from 2022 to 2023 was also due to headcount and salary increase. - 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. - 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. - In 2024, an annuity purchase transaction, commonly known as a ‘buy-in’, was executed for the pension plan in the United Kingdom. The buy-in agreement was secured by paying a premium of approximately $590 million from plan assets. Under the terms of the insurance contract, which were issued by a third-party insurance company with no affiliation to the Company, all pension obligations will be funded by the insurer’s annuity payments. However, the plan retains full legal responsibility to pay the benefits to plan participants using the insurance payments. As the plan maintains full legal responsibility, and the insurance contract is considered an asset of the plan, settlement accounting has not been applied. Funded status For our international pension plans, at December 31, 2024, the projected benefit obligation was $773 million and the fair value of plan assets was $594 million, which resulted in an underfunded obligation of $179 million. 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. The accumulated benefit obligation for our international plans was $694 million at December 31, 2024 and $672 million at December 31, 2023. The increase in projected benefit obligation and accumulated benefit obligation from 2023 to 2024 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 | 2024 | 2023
Amounts recognized on the Consolidated Balance Sheets |  |
Other assets | $ | 11 |  | $ | 39 |
Accrued employee compensation and benefits | 11 |  | 10 |
Employee compensation and benefits | 177 |  | 154 |
Pension plans in which projected benefit obligation exceeded plan assets |  |
Projected benefit obligation | $ | 200 |  | $ | 179 |
Fair value of plan assets | 12 |  | 15 |
Pension plans in which accumulated benefit obligation exceeded plan assets |  |
Accumulated benefit obligation | $ | 122 |  | $ | 106 |
Fair value of plan assets | 12 |  | 15 |
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 | $ | — |  | $ | — |  | $ | — |  | $ | — |  | $ | — |
Bond funds (b) | — |  | 11 |  | — |  | — |  | 11 |
Real estate funds (c) | — |  | — |  | — |  | 8 |  | 8 |
Other investments (d) | 1 |  | 9 |  | 565 |  | — |  | 575 |
Fair value of plan assets at December 31, 2024 | $ | 1 |  | $ | 20 |  | $ | 565 |  | $ | 8 |  | $ | 594 |
Cash and equivalents | $ | 29 |  | $ | 234 |  | $ | — |  | $ | — |  | $ | 263 |
Bond funds (e) | — |  | 159 |  | — |  | 156 |  | 315 |
Real estate funds (c) | — |  | — |  | — |  | 30 |  | 30 |
Other investments (d) | 1 |  | 11 |  | 2 |  | — |  | 14 |
Fair value of plan assets at December 31, 2023 | $ | 30 |  | $ | 404 |  | $ | 2 |  | $ | 186 |  | $ | 622 |
(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 fixed income securities meeting certain ratings thresholds focused on mitigating interest rate risk and protecting funded status.
(c) | Strategy of real estate funds is to invest in diversified funds of real estate investment trusts and private real estate.
(d) | Other investments consist of insurance contracts, a buy-in annuity insurance contract, balanced funds, and government bonds. The fair value of the buy-in annuity insurance contract is determined using the quote provided by an insurance company, reflecting prevailing market conditions for similar transactions.
(e) | Strategy of bond funds is to invest in diversified funds of fixed income securities of varying geographies and credit quality.
Level 3 Rollforward The following presents our Level 3 Rollforward for buy-in annuity insurance contract for 2024. Level 3 assets in 2023 were immaterial.
Millions of dollars | 2024
Balance at the beginning of the year | $ | 2 |
Purchase of insurance contract | 590 |
Return on assets | (18) |
Payment from the insurance policy | (9) |
Balance at the end of the year | $ | 565 |
Risk management practices for these plans include diversification by issuer, industry, and geography, where permitted, as well as by asset classes and investment managers. Our United Kingdom pension plan, which constituted 73% of our international pension plans’ projected benefit obligation on December 31, 2024, is no longer accruing service benefits and completed a pension buy-in transaction during 2024 entering into a bulk annuity contract with an insurance company. The bulk annuity contract effectively covers all benefit payments to members. The investments backing the contract are invested at the discretion of the insurance company, which assumes the investment risk associated with these assets. Net periodic benefit cost Net periodic benefit cost for our international pension plans was $43 million in 2024, $32 million in 2023, and $14 million in 2022. Actuarial assumptions Certain weighted-average actuarial assumptions used to determine benefit obligations of our international pension plans at December 31 were as follows:
| 2024 | 2023
Discount rate | 5.3% | 5.1%
Rate of compensation increase | 4.9% | 5.6%
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:
| 2024 | 2023 | 2022
Discount rate | 5.1% | 5.6% | 2.3%
Expected long-term return on plan assets | 4.0% | 3.8% | 3.0%
Rate of compensation increase | 2.9% | 5.4% | 5.3%
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 $1 million to our international pension plans in 2025. Benefit payments. Expected benefit payments over the next 10 years for our international pension plans are as follows: $38 million in 2025, $32 million in 2026, $34 million in 2027, $37 million in 2028, $37 million in 2029, and an aggregate $225 million in years 2030 through 2034.

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