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Pension Postretirement Benefits Plans
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Pension Postretirement Benefits Plans Pension and Postretirement Benefit Plans
Pension
The Company has various non-contributory defined benefit pension plans covering certain employees and retired employees of the Company, UL Research Institutes and UL Standards & Engagement. The benefits are based on years of service and participant compensation. With the exception of Taiwan, Japan and Switzerland, these plans have been closed to new entrants. No future employees will be eligible to participate in these plans. The pension amounts reported here represent the balances related to all participants in the plans, including those of the U.S. employees and former employees of UL Research Institutes and UL Standards & Engagement. The Company uses the spot rate approach for calculating service cost and interest cost.
The Company recognized settlement losses of $18 million in 2022 in other income (expense), net related to its U.S. pension plan. The settlement losses resulted from lump sum payments that exceeded annual service and interest costs of the plan. The Company’s funding policy is to contribute to defined benefit pension plans in the United States and a number of other countries when pension laws and/or economics either require or encourage funding. The Company did not recognize settlement losses in 2024 or 2023 related to its U.S. pension plan.
The following table provides a reconciliation of changes in the defined benefit pension obligations and fair value of plan assets for the years ended December 31, and a statement of funded status as of December 31:
U.S.Non U.S.
(in millions)2024202320242023
Change in projected benefit obligation
Projected benefit obligation at beginning of year$336 $341 $132 $124 
Service cost2 2 5 4 
Interest cost16 17 3 4 
Benefits paid(16)(27)(5)(3)
Actuarial (gain) loss(9)3 8 1 
Exchange rate (gain) loss— — (9)2 
Projected benefit obligation at end of year329 336 134 132 
Change in fair value of plan assets
Fair value of plan assets at beginning of year208 195 56 48 
Actual return on plan assets21 33 4 6 
Employer contributions19 7 2 3 
Benefits paid(16)(27)(5)(3)
Exchange rate (loss) gain— — (4)2 
Fair value of plan assets at end of year232 208 53 56 
Underfunded status of plans$(97)$(128)$(81)$(76)
Amounts recognized in Consolidated Balance Sheets
Non-current assets$— $— $7 $7 
Current liabilities— — (1)(1)
Non-current liabilities(97)(128)(87)(82)
Net liability at end of year$(97)$(128)$(81)$(76)
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss(53)(74)(7)— 
Net amount recognized$(53)$(74)$(7)$— 
Total benefits cost and amounts recognized in other comprehensive income for the years ended December 31 are as follows:
U.S.Non U.S.
(in millions)202420232022202420232022
Components of net periodic benefit cost
Service cost$2 $2 $3 $5 $4 $6 
Interest cost16 17 16 3 4 2 
Expected return on plan assets(13)(14)(14)(2)(2)(2)
Amortization of net actuarial loss3 3 9 — — 2 
Settlement losses— — 18 — — — 
Net periodic benefit cost$8 $8 $32 $6 $6 $8 
Amounts recorded in other comprehensive income
Balance at beginning of the year$74 $92 $167 $— $3 $41 
Net actuarial (gain) loss(18)(15)(48)6 (3)(36)
Amortization of net actuarial loss(3)(3)(27)— — (2)
Exchange rate loss— — — 1 — — 
Balance at end of the year$53 $74 $92 $7 $— $3 
The service cost component of net periodic benefit cost is recorded in the same line items as other compensation arising from services rendered, in cost of revenue, and in selling, general and administrative expense. The other components of net periodic benefit cost are recorded in other income (expense), net.
The following benefit payments, which reflect expected future service, are expected to be paid as follows:
(in millions)U.S.Non U.S.Total
2025$51 $5 $56 
202631 5 36 
202730 6 36 
202829 6 35 
202929 6 35 
Years 2030 through 2034125 40 165 
The Company anticipates making approximately $20 million of required contributions to its U.S. pension plan and approximately $3 million to its non U.S. pension plans in 2025.
The weighted average assumptions used in the measurement of the benefit obligations at December 31 are as follows:
U.S.Non U.S.
2024202320242023
Discount rate5.7 %5.0 %
0.9 - 4.6%
1.3 - 4.7%
Rate of compensation increase
4.0% for 2024 and 2025
3.0% for 2026+
4.0% for 2024
3.0% for 2025+
1.6 - 4.0%
2.3 - 4.0%
The weighted average assumptions used in the measurement of the net periodic benefit costs for the years ended December 31 are as follows:
U.S.Non U.S.
202420232022202420232022
Discount rate5.0 %5.2 %3.0 %
1.3 - 4.7%
1.6- 5.2%
0.8 - 4.2%
Expected return on plan assets6.9 %7.8 %6.0 %
2.4 - 5.6%
1.6 - 5.6%
1.2- 4.8%
Rate of compensation increase
4.0% for 2024
3.0% for 2025+
4.25% for 2023
3.0% for 2024+
3.0 %
0.0- 4.0%
2.3 - 4.0%
2.3- 4.0%
The expected rate of return on plan assets is determined based on long-term historical performance of plan assets, current asset allocation and expected future long-term asset returns.
The Company determines the discount rate used to measure plan liabilities as of the December 31 measurement date for the pension and postretirement benefit plans, which is also the date used for the related annual measurement assumptions. The Company uses the full Aon AA Above Median Yield Curve rather than a single discount rate.
The accumulated benefit obligation for all U.S. defined benefit pension plans was $313 million and $316 million at December 31, 2024 and 2023, respectively. The accumulated benefit obligation for all Non U.S. defined benefit pension plans was $110 million and $113 million at December 31, 2024 and 2023, respectively. The table below outlines the projected benefit obligations and the accumulated benefit obligations in excess of plan assets at December 31:
U.S.Non U.S.
(In millions)2024202320242023
Projected benefit obligation$329 $336 $100 $94 
Accumulated benefit obligation313 316 77 76 
Fair value of plan assets232 208 11 11 
Pension Assets
The assets in the investment portfolio for defined benefit pension plans are diversified in a manner that is intended to achieve the return objective and reduce the volatility of returns on the assets. The Company’s investment objective is to ensure that funds are available to meet the plans’ benefit obligations when they become due. The overall investment strategy is to prudently invest plan assets into diversified equity and debt securities, as well as alternative investments, to achieve long-term return expectations. The plan relies on a total return strategy in which investment returns consist of both capital appreciation (both realized and unrealized), as well as current yield (interest and dividends) over a long-term period.
The following tables present the Company’s fair value hierarchy (as defined in Note 1) for those pension assets measured at fair value at December 31:
2024
(In millions)Level 1Level 2Level 3Total Asset
Balance
U.S.
Cash and cash equivalents$1 $— $— $1 
Fixed income investments— 44 — 44 
Fixed income mutual funds26 — — 26 
Corporate equities6 — — 6 
Commingled equities— 48 — 48 
Equity mutual funds58 — — 58 
Real estate mutual funds10 — — 10 
Private real estate— — 5 5 
Total U.S. assets in the fair value hierarchy101 92 5 198 
Hedge funds(a)
34 
Total U.S. investments at fair value$232 
Non U.S.
Commingled funds— 30 — 30 
Other— — 23 23 
Total non U.S. assets— 30 23 53 
Total pension assets$285 
__________
(a)In accordance with ASC 820, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified 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 amounts presented in the Consolidated Balance Sheets. The terms and conditions of the Company's hedge fund investments vary, however, the majority of the Company’s hedge fund investments may be redeemed quarterly with redemption notice periods between 45-90 days. The Company does not intend to sell or otherwise dispose of these investments at prices different than the net asset value per share.
2023
(In millions)Level 1Level 2Level 3Total Asset
Balance
U.S.
Cash and cash equivalents$2 $— $— $2 
Fixed income investments— 28 — 28 
Fixed income mutual funds21 — — 21 
Corporate equities— 22 — 22 
Commingled equities— 43 — 43 
Equity mutual funds43 — — 43 
Real estate mutual funds10 — — 10 
Private real estate— — 6 6 
Total U.S. assets in the fair value hierarchy76 93 6 175 
Hedge funds(a)
33 
Total U.S. investments at fair value$208 
Non U.S.
Cash and cash equivalents1 — — 1 
Commingled funds— 32 — 32 
Other— — 23 23 
Total non U.S. assets1 32 23 56 
Total pension assets$264 
__________
(a)Described in previous table.
The following table summarizes the changes in fair value of the Company’s Level 3 pension assets:
(In millions)
Balance at year ended December 31, 2022$27 
Purchases, sales and settlements, net1 
Unrealized gain1 
Balance at year ended December 31, 2023$29 
Purchases, sales and settlements, net(2)
Unrealized gain1 
Balance at year ended December 31, 2024$28 
Valuation Methods
The Company follows ASC Topic 820, Fair Value Measurement, in determining the fair value of plan assets within the Company’s defined benefit pension plans.
Quoted market prices in active markets for all Level 1 investments were available at December 31, 2024 and 2023.
Fixed-income investments, corporate equities, and master limited partnerships have been categorized as Level 2 as these investments do not have publicly quoted prices in active markets. Commingled funds have been categorized as Level 2 and are maintained by investment companies that hold investments in accordance with a stated set of fund objectives. The values of the commingled funds are not publicly quoted and must trade through a broker. These funds are invested in equity and fixed-income mutual funds. The fund administrator values the fund using the net asset value per fund share, derived from the quoted prices in active markets of the underlying securities.
Level 3 investments include several guaranteed investment contracts, government mandated pooled investments, and a private real estate fund. These investments do not have actively traded quotes as of December 31, 2024 and 2023, and require the use of unobservable inputs, such as indicative quotes from dealers, estimates provided by the fund managers and third-party property appraisals, to value these securities.
For the U.S. plan, the 2024 target investment allocation was 48% for equity strategies, 30% for fixed-income and cash strategies and 22% for alternative strategies. The 2023 target investment allocation was 52% for equity strategies, 25% for fixed-income and cash strategies and 23% for alternative strategies. Actual investment allocations may vary from target investment allocations due to prevailing market conditions. The Company regularly reviews actual investment allocations and periodically rebalances investments to achieve target allocations.
Actual pension plan asset allocations are as follows:
U.S.Non U.S.
2024202320242023
Equity securities48 %52 %9 %37 %
Fixed-income securities30 %24 %49 %20 %
Alternatives21 %23 %— %— %
Other— %— %42 %41 %
Cash1 %1 %— %2 %
100 %100 %100 %100 %
Postretirement Benefit Plans
The Company has contributory postretirement medical benefits plans for certain employees and retired employees of the Company, and in 2023 also included certain employees and retired employees of UL Research Institutes and UL Standards & Engagement. The U.S. plan has been closed to new entrants since January 1, 2016. The postretirement amounts reported here represent the balances related to all participants in the plans, including those of the U.S. employees and former employees of UL Research Institutes and UL Standards & Engagement, as applicable. For its U.S. plan, the Company adopted the spot rate approach for calculating service cost and interest cost.
The following table sets forth the projected benefit obligation of postretirement benefits at December 31:
U.S.Canada
(in millions)2024202320242023
Change in projected benefit obligation
Projected benefit obligation at beginning of year$17 $16 $6 $5 
Interest cost1 1 — — 
Plan amendment(a)
(8)— — — 
Plan participant contributions1 1 — — 
Benefits paid(3)(1)— — 
Actuarial gain(1)— — — 
Exchange rate (gain) loss— — (1)1 
Projected postretirement benefit obligation at end of year$7 $17 $5 $6 
Change in fair value of plan assets
Fair value of plan assets at beginning of year— — — — 
Employer contributions2 — — — 
Plan participant contributions1 1 — — 
Benefits paid(3)(1)— — 
Fair value of plan assets at end of year— — — — 
Underfunded status of plans$(7)$(17)$(5)$(6)
Amounts recognized in Consolidated Balance Sheets
Current liabilities$(1)$(1)$— $— 
Non-current liabilities(6)(16)(5)(6)
Total liability at end of year$(7)$(17)$(5)$(6)
Amounts recognized in accumulated other comprehensive loss
Prior service credit$8 $— $— $— 
Net actuarial gain12 12 — — 
Net amount recognized$20 $12 $— $— 
__________
(a)During the fourth quarter of 2024, the Company adopted a negative plan amendment to reduce benefits to certain retired employees of its U.S. postretirement medical plan. The amendment resulted in a reduction of the postretirement benefit plan liability of $8 million and a corresponding increase in prior service credits recorded in accumulated other comprehensive loss on the Company’s Consolidated Balance Sheet. The prior service credits will be recognized as a component of net periodic benefit costs within other income (expense), net over the average expected remaining service period of the plan participants.
Total benefits cost and amounts recognized in other comprehensive income for the years ended December 31 are as follows:
U.S.Canada
(in millions)202420232022202420232022
Component of net periodic benefit cost
Service cost$— $— $1 $— $— $— 
Interest cost1 1 1 — — — 
Amortization of net actuarial gain(1)(1)(1)— — — 
Net periodic cost$— $— $1 $— $— $— 
Amounts recorded in other comprehensive income
Balance at beginning of the year$(12)$(13)$(8)$— $(1)$3 
Net actuarial gain(1)— (6)— — (2)
Prior service credit(8)— — — — — 
Amortization of net actuarial gain1 1 1 — — — 
Exchange rate loss (gain)— — — — 1 (2)
Balance at end of the year$(20)$(12)$(13)$— $— $(1)
The service cost component of net periodic benefit cost is recorded in the same line items as other compensation arising from services rendered, in cost of revenue, and in selling, general and administrative expense. The other components of net periodic benefit cost are recorded in other income (expense), net.
The projected future benefit payments, which reflect expected future services are as follows:
(In millions)U.S.CanadaTotal
2025$1 $— $1 
20261 — 1 
2027— 1 1 
2028— 1 1 
20291 — 1 
Years 2030 through 20343 1 4 
The Company’s expected contributions to its U.S. and Canada postretirement benefit plans in 2025 are immaterial.
The following assumptions were used to determine the benefit obligations under the plans at December 31:
U.S.Canada
2024202320242023
Discount rate5.6 %5.1 %4.7 %4.7 %
Health care cost trend rate (Pre-65 for U.S.)9.0 %7.9 %5.2 %— %
Ultimate trend rate reached in 2035 for U.S. / 2040 for Canada4.5 %4.5 %4.1 %4.1 %
The following assumptions were used to determine the net periodic benefit costs under the plans for the years ended December 31:
U.S.Canada
202420232022202420232022
Discount rate5.1 %5.2 %3.1 %4.7 %4.7 %5.2 %
Health care cost trend rate7.9 %6.7 %6.3 %4.9 %4.9 %4.6 %
Savings Plans
The Company sponsors various defined contribution savings plans in the U.S., as well as certain international locations, that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, the Company will contribute to certain savings plans based on the employee’s eligible pay and/or will match a percentage of the employee contributions up to certain limits. For the years ended December 31, 2024, 2023 and 2022, the Company’s contributions were $46 million, $46 million and $45 million, respectively.