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Pensions and Post-Employment Benefits

12 Months Ended

Dec. 31, 2023

Pensions and other post-employment benefits

19)	PENSIONS AND POST-EMPLOYMENT BENEFITS

Defined contribution pension plans

The consolidated costs of defined contribution plans for the years ended December 31, 2023, 2022 and 2021 were $64, $59 and $54, respectively. Cemex contributes periodically the amounts offered by the pension plan to the employee’s individual accounts, not retaining any remaining liability as of the financial statements’ date.

Defined benefit pension plans

Most of Cemex’s defined benefit plans have been closed to new participants for several years. Actuarial results related to pension and other post-employment benefits are recognized in earnings and/or in “Other comprehensive income” for the period in which they are generated, as appropriate. For the years ended December 31, 2023, 2022 and 2021, the effects of pension plans and other post-employment benefits are summarized as follows:


		Pensions									Other benefits									Total

Net period cost (income):		2023			2022			2021			2023			2022			2021			2023			2022			2021

Recorded in operating costs and expenses
Service cost	$		7			8			9			4			4			3			11			12			12
Past service cost			–			1			–			–			–			–			–			1			–
Settlements, curtailments and other changes			(10	)		–			(1	)		(1	)		–			(1	)		(11	)		–			(2)

			(3	)		9			8			3			4			2			–			13			10

Recorded in other financial expenses
Net interest cost			36			23			26			8			6			5			44			29			31

Recorded in other comprehensive income
Actuarial losses (gains) for the period			46			(166	)		(257	)		(1	)		(10	)		(6	)		45			(176	)		(263)

	$		79			(134	)		(223	)		10			–			1			89			(134	)		(222)

As of December 31, 2023 and 2022, the reconciliation of the actuarial benefits’ obligations and pension plan assets, are presented as follows:


			Pensions						Other benefits						Total

		2023			2022			2023			2022			2023			2022

Change in benefits obligation:
Projected benefit obligation at beginning of the period	$		1,811			2,685			92			98			1,903			2,783
Service cost			7			8			4			4			11			12
Interest cost			101			66			8			6			109			72
Actuarial losses (gains)			30			(632	)		(1	)		(10	)		29			(642)
Initial valuation from new plan			–			13			–			–			–			13
Reduction from disposal of assets			–			(6	)		–			–			–			(6)
Settlements and curtailments			(2	)		–			–			–			(2	)		–
Plan amendments			(10	)		1			(1	)		–			(11	)		1
Benefits paid			(122	)		(130	)		(8	)		(7	)		(130	)		(137)
Foreign currency translation			94			(194	)		7			1			101			(193)

Projected benefit obligation at end of the period			1,909			1,811			101			92			2,010			1,903

Change in plan assets:
Fair value of plan assets at beginning of the period			1,207			1,783			1			1			1,208			1,784
Return on plan assets			65			43			–			–			65			43
Actuarial losses			(16	)		(466	)		–			–			(16	)		(466)
Employer contributions			97			96			8			7			105			103
Initial valuation from new plan			–			13			–			–			–			13
Settlements			(2	)		–			–			–			(2	)		–
Benefits paid			(122	)		(130	)		(8	)		(7	)		(130	)		(137)
Foreign currency translation			44			(132	)		1			–			45			(132)

Fair value of plan assets at end of the period			1,273			1,207			2			1			1,275			1,208

Net projected liability in the statement of financial position	$		636			604			99			91			735			695

For the years 2023, 2022 and 2021, actuarial (gains) losses for the period were generated by the following main factors as follows:


		2023			2022			2021
Actuarial (gains) losses due to experience	$		13			96			(87	)
Actuarial (gains) losses due to demographic assumptions			(5	)		(2	)		20
Actuarial (gains) losses due to financial assumptions			37			(270	)		(196	)

	$		45			(176	)		(263	)

In 2023, net actuarial losses due to financial assumptions were mainly driven by a decrease in the discount rates applicable to the calculation of the benefits’ obligations in the United Kingdom, the United States, Germany, Colombia and Poland. Moreover, the overall net actual asset performances in most countries were less than the expected returns for a total of $16, of which $31 refers to the United Kingdom, partially offset by a higher performance than expected in Mexico of $12 and the United States of $8. In addition, there was an increase effect in the net projected liability related to adjustments due to experience for $13, mainly in the United Kingdom and Germany.

In 2022, net actuarial gains due to financial assumptions were driven by a general increase in the discount rates applicable to the calculation of the benefits’ obligations in the United Kingdom, the United States, Germany, and Mexico, partially offset by actual returns in plan assets lower than estimated for a total of $466, of which $373 refers to the United Kingdom, $52 to the United States and $19 to Mexico. In addition, there were significant increase effects in the net projected liability related to adjustments due to experience for $96, mainly in the United Kingdom for $77 and Germany for $13. In addition, the net actuarial gains were also driven by a gain in demographic assumptions of $2.

In 2021, net actuarial gains due to financial assumptions were mainly driven by increases in the discount rates in the United Kingdom, the United States, Germany and Mexico. In addition, there were significant reduction effects in the net projected liability related to adjustments due to experience in the United Kingdom, the United States and Germany for a combined amount of $81. Moreover, the net projected liability significantly decreased by actual returns in plan assets higher than estimated returns for a total of $122, of which $86 refers to the United Kingdom, $13 to the United States and $23 to other countries, partially offset by actuarial losses due to demographic assumption of $20, of which $12 refers to the United Kingdom.

As of December 31, 2023 and 2022, based on the hierarchy of fair values, plan assets are detailed as follows:


		2023									2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash	$		24		–		–		24	$		38		–		–		38
Investments in corporate bonds			11		391		–		402			7		289		–		296
Investments in government bonds			114		209		–		323			90		266		–		356

Total fixed-income securities			149		600		–		749			135		555		–		690

Investment in marketable securities			179		43		–		222			226		42		–		268
Other investments and private funds			70		33		201		304			91		42		117		250

Total variable-income securities			249		76		201		526			317		84		117		518

Total plan assets	$		398		676		201		1,275	$		452		639		117		1,208

The most significant assumptions used in the determination of the benefit obligation were as follows:


	2023						2022
	Mexico			United States	United Kingdom	Range of rates in other countries	Mexico	United States	United Kingdom	Range of rates in other countries
Discount rates		10.50	%	5.20%	4.70%	3.1% – 11.0%	10.50%	5.50%	5.00%	3.6% – 13.0%
Rate of return on plan assets		10.50	%	5.20%	4.70%	3.1% – 11.0%	10.50%	5.50%	5.00%	3.6% – 13.0%
Rate of salary increases		4.50	%	–	3.10%	2.5% – 7.3%	4.50%	–	3.25%	2.5% – 7.3%

As of December 31, 2023, estimated payments for pensions and other post-employment benefits over the next 10 years were as follows:


		Estimated payments
2024	$		173
2025			149
2026			151
2027			148
2028 – 2033			882

As of December 31, 2023 and 2022, the aggregate projected benefit obligation (“PBO”) for pension plans and other post-employment benefits and the plan assets by country were as follows:


		2023								2022
		PBO		Assets		Deficit				PBO		Assets		Deficit
Mexico	$		253		44		209		$		220		25		195
United States			184		188		(4	)			194		166		28
United Kingdom			1,129		821		308				1,062		791		271
Germany			141		6		135				134		6		128
Other countries			303		216		87				293		220		73

	$		2,010		1,275		735		$		1,903		1,208		695

In some countries, Cemex has established health care benefits for retired personnel limited to a certain number of years after retirement. As of December 31, 2023 and 2022, the projected benefits obligation related to these benefits was $57 and $60, respectively, included within other benefits liability. The medical inflation rates used to determine the projected benefits obligation of these benefits in 2023 and 2022 for Mexico were 8% in both years, for Puerto Rico 6.6% and 5.4%, respectively, for the United Kingdom were 6.6% and 6.8%, respectively, and for TCL was a rate range between 5.0% and 9.0% and 5.0% and 13.0%, respectively.

Significant events of settlements or curtailments related to employees’ pension benefits and other post-employment benefits during the reported periods

In 2023, as a result of an extension in the retirement age for the Company’s operations in Mexico, there was a reduction of $11 in the retirement obligations recognized against the statement of income for the period. Additionally, in France, there was a pension reform that increased the legal minimum retirement age, resulting in a total past service amendment of $1 in its pension plan recognized in the statement of income for the period.

During 2022, there were no significant settlements or curtailments related to employees’ pension benefits and other post-employment benefits.

In 2021, as an effect of a sale of assets in France (note 4.2), there was a curtailment gain of $1 in its pension plan recognized in the statement of income for the period. In addition, one of the participating companies in other postretirement benefits of TCL ceased operations in February 2021, resulting in a curtailment gain in other postretirement benefits of $1 reflected in the statement of income for the period.

Sensitivity analysis of pension and other post-employment benefits

As of December 31, 2023, Cemex performed sensitivity analyses on the most significant assumptions that affect the PBO, considering reasonable independent changes of plus or minus 50 basis points in each of these assumptions. The increase (decrease) that would have resulted in the PBO of pensions and other post-employment benefits are shown below:


		Pensions						Other benefits						Total
Assumptions:		+50 bps			-50 bps			+50 bps			-50 bps			+50 bps			-50 bps
Discount Rate Sensitivity	$		(95	)		104			(4	)		4			(99	)		108
Salary Increase Rate Sensitivity			4			(4	)		1			(1	)		5			(5	)
Pension Increase Rate Sensitivity			73			(68	)		–			–			73			(68	)

Multiemployer defined benefit pension plans

In addition to the Company’s sponsored plans, Cemex contributes to union-sponsored multiemployer retirement defined benefit pension plans (the “Multiemployer Plans”) under the terms of collective bargaining agreements for certain union employees in the United States and the United Kingdom. The Company’s main risks of participating in Multiemployer Plans are different from its single-employer plans in the following aspects:

Assets contributed to the Multiemployer Plans by one employer may be used to provide benefits to employees of other participating employers;

If a participating employer stops contributing to the Multiemployer Plans, the unfunded obligations of the Multiemployer Plans may be borne by the remaining participating employers; and

If Cemex chooses to stop participating in the Multiemployer Plans, the Company may be required to pay the Multiemployer Plans an amount based on the underfunded status of the Multiemployer Plans, referred to as a withdrawal liability.

The Company’s funding arrangements, rate of contributions and funding requirements were made in accordance with the contractual multiemployer agreements. The combined amounts contributed to the Multiemployer Plans were $20 in 2023, $21 in 2022 and $17 in 2021. The Company expects to contribute $21 to the Multiemployer Plans in 2024.

Among other factors, Multiemployers Plans in the red zone (critical) are generally less than 65% funded, Multiemployers Plans in the yellow zone (endangered) are less than 80% funded and Multiemployers Plans in the green zone (neither critical and declining, critical, or endangered) are at least 80% funded. Over 99% of Cemex’s obligations and contributions under the Multiemployer Plans are related to the United States where 422 former employees are beneficiaries and where, according to data obtained from Multiemployer Plans actuary, most of the plans are considered to be in the green zone and one plan is in the yellow zone. As a result, the Company’s risk of increasing contributions is considered low. In the United Kingdom, the Multiemployer Plan, which covers only two of Cemex’

former employees, is in the green zone. In both the United States and the United Kingdom, Cemex is a very small participant in the applicable Multiemployer Plans.