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RETIREMENT BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
RETIREMENT BENEFIT PLANS | RETIREMENT BENEFIT PLANS The Company sponsors various defined contribution savings plans, primarily in the U.S., 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 make contributions to the plans and/or match a percentage of the employee contributions up to certain limits. Total expense related to the defined contribution plans was $58 million, $38 million and $37 million in the years ended December 31, 2021, 2020 and 2019, respectively. The Company has a number of defined benefit pension plans and other postretirement employee benefit plans covering eligible salaried and hourly employees and their dependents. The defined pension benefits provided are primarily based on (i) years of service and (ii) average compensation or a monthly retirement benefit amount. The Company provides defined benefit pension plans in France, Germany, Ireland, Italy, Japan, Mexico, South Korea, Sweden, U.K. and the U.S. The other postretirement employee benefit plans, which provide medical benefits, are unfunded plans. The Company’s U.S. and U.K. defined benefit plans are frozen, and no additional service cost is being accrued. All pension and other postretirement employee benefit plans in the U.S. have been closed to new employees. The measurement date for all plans is December 31. On October 1, 2020, as a result of the acquisition of Delphi Technologies, the Company assumed all of the retirement-related liabilities of Delphi Technologies, the most significant of which was the Delphi Technologies Pension Scheme (the “Scheme”) in the United Kingdom. On December 12, 2020, the Company entered into a Heads of Terms Agreement (the “Agreement”) with the Trustees of the Scheme related to the future funding of the Scheme. Under the Agreement, the Company eliminated the prior schedule of contributions between Delphi Technologies and the Scheme in exchange for a $137 million (£100 million) one-time contribution into the Scheme Plan by December 31, 2020, which was paid on December 15, 2020. The Agreement also contained other provisions regarding the implementation of a revised asset investment strategy as well as a funding progress test that will be performed every three years to determine if additional contributions need to be made into the Scheme by the Company. At this time, the Company anticipates that no additional contributions will need to be made into the Scheme until 2026 at the earliest. During the year ended December 31, 2019, the Company settled approximately $50 million of its U.S. pension projected benefit obligation by liquidating approximately $50 million in plan assets through a lump-sum disbursement made to an insurance company. Pursuant to this agreement, the insurance company unconditionally and irrevocably guaranteed all future payments to certain participants that were receiving payments from the U.S. pension plan. The insurance company assumed all investment risk associated with the assets that were delivered as part of this transaction. Additionally, during the year ended December 31, 2019, the Company discharged certain U.S. pension plan obligations by making lump-sum payments of $15 million to former employees of the Company. As a result, the Company settled $65 million of projected benefit obligation by liquidating pension plan assets and recorded a non-cash settlement loss of $27 million related to the accelerated recognition of unamortized losses. The following table summarizes the expenses for the Company’s defined contribution and defined benefit pension plans and the other postretirement defined employee benefit plans:
| Year Ended December 31,
(in millions) | 2021 |  | 2020 |  | 2019
Defined contribution expense | $ | 58 |  |  | $ | 38 |  |  | $ | 37 |
Defined benefit pension (income) expense | (19) |  |  | 15 |  |  | 45 |
Other postretirement employee benefit income | (1) |  |  | (1) |  |  | — |
Total | $ | 38 |  |  | $ | 52 |  |  | $ | 82 |
The following provides a roll forward of the plans’ benefit obligations, plan assets, funded status and recognition in the Consolidated Balance Sheets:
| Pension benefits |  | Other postretirement
| Year Ended December 31, |  | employee benefits
| 2021 |  | 2020 |  | Year Ended December 31,
(in millions) | U.S. |  | Non-U.S. |  | U.S. |  | Non-U.S. |  | 2021 |  | 2020
Change in projected benefit obligation: |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation, January 1 | $ | 202 |  |  | $ | 2,527 |  |  | $ | 198 |  |  | $ | 695 |  |  | $ | 65 |  |  | $ | 81 |
Service cost | — |  |  | 25 |  |  | — |  |  | 21 |  |  | — |  |  | — |
Interest cost | 3 |  |  | 30 |  |  | 5 |  |  | 16 |  |  | 1 |  |  | 2 |
Plan amendments | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | (12) |
Settlement and curtailment | (4) |  |  | (13) |  |  | — |  |  | (19) |  |  | — |  |  | — |
Actuarial (gain) loss | (7) |  |  | (208) |  |  | 14 |  |  | 161 |  |  | (6) |  |  | 1 |
Currency translation | — |  |  | (59) |  |  | — |  |  | 147 |  |  | — |  |  | — |
Delphi Technologies acquisition 1 | — |  |  | — |  |  | — |  |  | 1,542 |  |  | — |  |  | 1 |
Benefits paid | (11) |  |  | (76) |  |  | (15) |  |  | (36) |  |  | (6) |  |  | (8) |
Projected benefit obligation, December 31 2 | $ | 183 |  |  | $ | 2,227 |  |  | $ | 202 |  |  | $ | 2,527 |  |  | $ | 54 |  |  | $ | 65 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets, January 1 | $ | 187 |  |  | $ | 2,041 |  |  | $ | 176 |  |  | $ | 505 |  |  |  |  |
Actual return on plan assets | 5 |  |  | 110 |  |  | 16 |  |  | 83 |  |  |  |  |
Employer contribution | — |  |  | 24 |  |  | 10 |  |  | 164 |  |  |  |  |
Settlements | (4) |  |  | (11) |  |  | — |  |  | (18) |  |  |  |  |
Currency translation | — |  |  | (39) |  |  | — |  |  | 115 |  |  |  |  |
Delphi Technologies acquisition 1 | — |  |  | — |  |  | — |  |  | 1,228 |  |  |  |  |
Benefits paid | (11) |  |  | (76) |  |  | (15) |  |  | (36) |  |  |  |  |
Fair value of plan assets, December 31 | $ | 177 |  |  | $ | 2,049 |  |  | $ | 187 |  |  | $ | 2,041 |  |  |  |  |
Funded status | $ | (6) |  |  | $ | (178) |  |  | $ | (15) |  |  | $ | (486) |  |  | $ | (54) |  |  | $ | (65) |
Amounts in the Consolidated Balance Sheets consist of: |  |  |  |  |  |  |  |  |  |  |
Non-current assets | $ | — |  |  | $ | 68 |  |  | $ | — |  |  | $ | 26 |  |  | $ | — |  |  | $ | — |
Current liabilities | (2) |  |  | (7) |  |  | (1) |  |  | (6) |  |  | (7) |  |  | (9) |
Non-current liabilities | (4) |  |  | (239) |  |  | (14) |  |  | (506) |  |  | (47) |  |  | (56) |
Net amount | $ | (6) |  |  | $ | (178) |  |  | $ | (15) |  |  | $ | (486) |  |  | $ | (54) |  |  | $ | (65) |
Amounts in accumulated other comprehensive loss consist of: |  |  |  |  |  |  |  |  |  |  |
Net actuarial loss | $ | 84 |  |  | $ | 74 |  |  | $ | 86 |  |  | $ | 330 |  |  | $ | 10 |  |  | $ | 16 |
Net prior service (credit) cost | (3) |  |  | 2 |  |  | (4) |  |  | 2 |  |  | (13) |  |  | (16) |
Net amount | $ | 81 |  |  | $ | 76 |  |  | $ | 82 |  |  | $ | 332 |  |  | $ | (3) |  |  | $ | — |
Total accumulated benefit obligation for all plans | $ | 183 |  |  | $ | 2,183 |  |  | $ | 202 |  |  | $ | 2,471 |  |  |  |  |
_____________________________ 1 Balances are based on actuarial valuations as of October 1, 2020, the date of the Delphi Technologies acquisition. All subsequent activity is included elsewhere within the table. 2 The decrease in the projected benefit obligation was primarily due to actuarial gains during the period. The main driver of these gains was the increase of 0.53% in the weighted average discount rate for Non-U.S. plans. The funded status of pension plans with accumulated benefit obligations in excess of plan assets is as follows:
| December 31,
(in millions) | 2021 |  | 2020
Accumulated benefit obligation | $ | (658) |  |  | $ | (2,401) |
Plan assets | 442 |  |  | 1,924 |
Deficiency | $ | (216) |  |  | $ | (477) |
Pension deficiency by country: |  |  |
United States | $ | (6) |  |  | $ | (15) |
United Kingdom | (11) |  |  | (202) |
Germany | (89) |  |  | (139) |
Other | (110) |  |  | (121) |
Total pension deficiency | $ | (216) |  |  | $ | (477) |
The funded status of pension plans with projected benefit obligations in excess of plan assets is as follows:
| December 31,
(in millions) | 2021 |  | 2020
Projected benefit obligation | $ | (731) |  |  | $ | (2,500) |
Plan assets | 478 |  |  | 1,973 |
Deficiency | $ | (253) |  |  | $ | (527) |
Pension deficiency by country: |  |  |
United States | $ | (6) |  |  | $ | (15) |
United Kingdom | (11) |  |  | (202) |
Germany | (95) |  |  | (147) |
Other | (141) |  |  | (163) |
Total pension deficiency | $ | (253) |  |  | $ | (527) |
The weighted average asset allocations of the Company’s funded pension plans and target allocations by asset category are as follows:
| December 31, |  | Target Allocation
| 2021 |  | 2020 |
U.S. Plans: |  |  |  |  |
Alternative credit, real estate, cash and other | 12 | % |  | 23 | % |  | 3% - 23%
Fixed income securities | 72 | % |  | 43 | % |  | 66% - 76%
Equity securities | 16 | % |  | 34 | % |  | 11% - 21%
| 100 | % |  | 100 | % |  |
Non-U.S. Plans: |  |  |  |  |
Insurance contract, real estate, cash and other 1 | 45 | % |  | 31 | % |  | 19% - 39%
Fixed income securities 1 | 35 | % |  | 55 | % |  | 47% - 57%
Equity securities | 20 | % |  | 14 | % |  | 14% - 24%
| 100 | % |  | 100 | % |  |
_____________________________ 1 As of December 31, 2021, £122 million in the Company’s non-U.S. plans was deemed cash in-transit, driving the variances between actual allocation and target allocation. The Company’s investment strategy is to maintain actual asset weightings within a preset range of target allocations. The Company believes these ranges represent an appropriate risk profile for the planned benefit payments of the plans based on the timing of the estimated benefit payments. In each asset category, separate portfolios are maintained for additional diversification. Investment managers are retained in each asset category to manage each portfolio against its benchmark. Each investment manager has appropriate investment guidelines. In addition, the entire portfolio is evaluated against a relevant peer group. The defined benefit pension plans did not hold any Company securities as investments as of December 31, 2021 and 2020. A portion of pension assets is invested in common and commingled trusts. The Company expects to contribute a total of $20 million to $30 million into its defined benefit pension plans during 2022. Of the $20 million to $30 million in projected 2022 contributions, $7 million are contractually obligated, while any remaining payments would be discretionary. Refer to Note 16, “Fair Value Measurements,” to the Consolidated Financial Statements for more detail surrounding the fair value of each major category of plan assets, as well as the inputs and valuation techniques used to develop the fair value measurements of the plans’ assets at December 31, 2021 and 2020. See the table below for a breakout of net periodic benefit cost between U.S. and non-U.S. pension plans:
| Pension benefits |  | Other postretirement employee benefits
| Year Ended December 31, |
| 2021 |  | 2020 |  | 2019 |  | Year Ended December 31,
(in millions) | U.S. |  | Non-U.S. |  | U.S. |  | Non-U.S. |  | U.S. |  | Non-U.S. |  | 2021 |  | 2020 |  | 2019
Service cost | $ | — |  |  | $ | 25 |  |  | $ | — |  |  | $ | 21 |  |  | $ | — |  |  | $ | 18 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest cost | 3 |  |  | 30 |  |  | 5 |  |  | 16 |  |  | 8 |  |  | 12 |  |  | 1 |  |  | 2 |  |  | 3 |
Expected return on plan assets | (10) |  |  | (83) |  |  | (10) |  |  | (36) |  |  | (11) |  |  | (22) |  |  | — |  |  | — |  |  | — |
Settlements, curtailments and other | 2 |  |  | (2) |  |  | — |  |  | 5 |  |  | 27 |  |  | 1 |  |  | — |  |  | — |  |  | — |
Amortization of unrecognized prior service (credit) cost | (1) |  |  | — |  |  | — |  |  | — |  |  | (1) |  |  | — |  |  | (3) |  |  | (4) |  |  | (4) |
Amortization of unrecognized loss | 4 |  |  | 13 |  |  | 3 |  |  | 11 |  |  | 4 |  |  | 9 |  |  | 1 |  |  | 1 |  |  | 1 |
Net periodic cost (income) | $ | (2) |  |  | $ | (17) |  |  | $ | (2) |  |  | $ | 17 |  |  | $ | 27 |  |  | $ | 18 |  |  | $ | (1) |  |  | $ | (1) |  |  | $ | — |
The components of net periodic benefit cost other than the service cost component are included in Other postretirement income in the Consolidated Statements of Operations. The Company’s weighted-average assumptions used to determine the benefit obligations for its defined benefit pension and other postretirement employee benefit plans were as follows:
| December 31,
(percent) | 2021 |  | 2020
U.S. pension plans: |  |  |
Discount rate | 2.73 |  |  | 2.31 |
Rate of compensation increase | N/A |  | N/A
U.S. other postretirement employee benefit plans: |  |  |
Discount rate | 2.46 |  |  | 1.93 |
Rate of compensation increase | N/A |  | N/A
Non-U.S. pension plans: |  |  |
Discount rate 1 | 1.97 |  |  | 1.44 |
Rate of compensation increase | 3.21 |  |  | 3.23 |
________________ 1 Includes 1.91% and 1.39% for the U.K. pension plans for December 31, 2021 and 2020, respectively. The Company’s weighted-average assumptions used to determine the net periodic benefit cost/(income) for its defined benefit pension and other postretirement employee benefit plans were as follows:
| Year Ended December 31,
(percent) | 2021 |  | 2020
U.S. pension plans: |  |  |
Discount rate | 2.31 |  |  | 3.17 |
Effective interest rate on benefit obligation | 1.62 |  |  | 2.73 |
Expected long-term rate of return on assets | 5.75 |  |  | 6.00 |
Average rate of increase in compensation | N/A |  | N/A
U.S. other postretirement plans: |  |  |
Discount rate | 1.93 |  |  | 2.95 |
Effective interest rate on benefit obligation | 1.21 |  |  | 2.50 |
Expected long-term rate of return on assets | N/A |  | N/A
Average rate of increase in compensation | N/A |  | N/A
Non-U.S. pension plans: |  |  |
Discount rate 1 | 1.44 |  |  | 1.69 |
Effective interest rate on benefit obligation | 1.24 |  |  | 2.19 |
Expected long-term rate of return on assets 2 | 4.10 |  |  | 4.75 |
Average rate of increase in compensation | 3.23 |  |  | 3.10 |
________________ 1 Includes 1.39% and 1.82% for the U.K. pension plans for December 31, 2021 and 2020, respectively. 2 Includes 4.00% and 3.97% for the U.K. pension plans for December 31, 2021 and 2020, respectively. The Company's approach to establishing the discount rate is based upon the market yields of high-quality corporate bonds, with appropriate consideration of each plan's defined benefit payment terms and duration of the liabilities. In determining the discount rate, the Company utilizes a full-yield approach in the estimation of service and interest components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The Company determines its expected return on plan asset assumptions by evaluating estimates of future market returns and the plans’ asset allocation. The Company also considers the impact of active management of the plans’ invested assets. The estimated future benefit payments for the pension and other postretirement employee benefits are as follows:
|  | Pension benefits |  | Other postretirement employee benefits
(in millions) |  |  |  |  |
Year |  | U.S. |  | Non-U.S. |
2022 |  | $ | 19 |  |  | $ | 73 |  |  | $ | 7 |
2023 |  | 14 |  |  | 75 |  |  | 6 |
2024 |  | 13 |  |  | 74 |  |  | 6 |
2025 |  | 13 |  |  | 77 |  |  | 5 |
2026 |  | 13 |  |  | 81 |  |  | 5 |
2027-2031 |  | 55 |  |  | 462 |  |  | 16 |
The weighted-average rate of increase in the per capita cost of covered health care benefits is projected to range from 6.25% in 2022 down to an ultimate trend rate of 4.75%.

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