Ingredion and its subsidiaries sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a substantial portion of employees in the U.S. and Canada and certain employees in other foreign countries. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat dollar amounts and years of service. Ingredion’s general funding policy is to make contributions to the plans in amounts that comply with minimum funding requirements and are within the limits of deductibility under current tax regulations. Certain foreign countries allow income tax deductions without regard to contribution levels and Ingredion’s policy in those countries is to make contributions required by the terms of the applicable plan.

Included in Ingredion’s pension obligation are nonqualified supplemental retirement plans for certain key employees. Benefits provided under these plans are unfunded and payments to plan participants are made directly by Ingredion.

Ingredion also provides healthcare and/or life insurance benefits for retired employees in the U.S., Canada and Brazil. Healthcare benefits for retirees outside the U.S., Canada and Brazil are generally covered through local government plans.

Pension Obligation and Funded Status: The changes in pension benefit obligations and plan assets during 2021 and 2020, as well as the funded status and the amounts recognized in Ingredion’s Consolidated Balance Sheets related to Ingredion’s pension plans at December 31, 2021 and 2020, were as follows:

As of December 31, 2021, the decrease in the benefit obligation for U.S. and non-U.S. plans was primarily driven by actuarial gains, which mainly resulted from an increase in discount rates due to an increase in bond yields compared to the prior year. As of December 31, 2020, the increase in benefit obligations for U.S. and non-U.S. plans was driven by actuarial losses, which mainly resulted from a decline in discount rates due to the fall in bond yields compared to the prior year.

Amounts recorded in the Consolidated Balance Sheets as of December 31, 2021 and 2020 were as follows:

Amounts recorded in AOCL, excluding tax effects that have not yet been recognized as components of net periodic benefit cost at December 31, 2021 and 2020, were as follows:

The amount recognized in AOCL at December 31, 2021 was flat compared to prior year, for the U.S. pension plans, mainly due to the increase in discount rates used to measure Ingredion’s obligations under its U.S. pension which was offset by the actual return on assets being less than the expected return on assets.

The decrease in the net amount recognized in AOCL at December 31, 2021, for the non-U.S. pension plans, as compared to December 31, 2020, was primarily due to higher discount rates used to measure Ingredion’s obligations under its non-U.S. pension plans.

The accumulated benefit obligation for all defined benefit pension plans was $619 million and $664 million at December 31, 2021 and 2020, respectively. Information for pension plans with a projected benefit obligation in excess of plan assets and an accumulated benefit obligation in excess of plan assets was as follows:

Components of net periodic benefit cost consist of the following for 2021, 2020 and 2019:

Total amounts recorded in other comprehensive income and net periodic benefit cost were as follows:

The following weighted average assumptions were used to determine Ingredion’s obligations for the pension plans for the given years:

The following weighted average assumptions were used to determine Ingredion’s net periodic benefit cost for the pension plans for the given years:

For 2021, Ingredion assumed an expected long-term rate of return on assets of 4.10 percent for U.S. plans and 3.06 percent for Canadian plans. In developing the expected long-term rate of return assumption on plan assets, which consist mainly of U.S. and Canadian debt and equity securities, we evaluated historical rates of return achieved on plan assets and the asset allocation of the plans, input from Ingredion’s independent actuaries and investment consultants, and historical trends in long-term inflation rates. Projected return estimates are based upon broad equity and bond indices.

The discount rate reflects a rate of return on high-quality fixed income investments that match the duration of the expected benefit payments. Ingredion has typically used returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption. Ingredion elects to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

Plan Assets: Ingredion’s investment policy for its pension plans is to balance risk and return through diversified portfolios of fixed income securities, equity instruments and short-term investments. Maturities for fixed income securities are managed such that sufficient liquidity exists to meet near-term benefit payment obligations. For U.S. pension plans, the weighted average target range allocation of assets was 9-19 percent in equities and 81-91 percent in fixed income inclusive of other short-term investments. The asset allocation is reviewed regularly, and portfolio investments are rebalanced to the targeted allocation when considered appropriate.

Ingredion’s weighted average asset allocations as of December 31, 2021 and 2020, for U.S. and non-U.S. pension plan assets are as follows:

With the exception of cash, which is considered Level 1 in the fair value hierarchy, all significant pension plan assets are held in collective trusts by Ingredion’s U.S. and non-U.S. plans. The fair values of shares of collective trusts are based upon the net asset values of the funds reported by the fund managers based on quoted market prices of the underlying securities as of the balance sheet date and are considered to be Level 2 fair value measurements. Investments measured at net asset value (“NAV”), as a practical expedient for fair value, are excluded from the fair value hierarchy. This may produce a fair value measurement that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Ingredion believes its valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies could result in different fair value measurements at the reporting date.

(a)

This category consists of both passively and actively managed equity index funds that track the return of large capitalization U.S. equities.

(b)

This category consists of both passively and actively managed equity index funds that track an index of returns on international developed market equities.

(c)

This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income corporate securities with maturities generally exceeding 10 years.

(d)

This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income U.S. treasury securities with maturities generally exceeding 10 years.

(e)

This category consists of an actively managed common collective fund that invests in government bonds, collateralized mortgage obligations, investment grade private credit and real estate debt. This fund is priced monthly at the aggregated market value of the underlying investments and can be redeemed with 95 days notification.

(f)

This category represents cash or cash equivalents.

(g)

This category consists of both passively and actively managed fixed income index funds that track the return of short-duration government and investment grade corporate bonds.

(h)

This category consists of both passively and actively managed fixed income index funds that track the return of intermediate duration government and investment grade corporate bonds.

(i)

This category consists of both passively and actively managed fixed income index funds that track the return of government bonds and investment grade corporate bonds.

(j)

This category mainly consists of investment products provided by insurance companies that offer returns that are subject to a minimum guarantee and mutual funds.

During 2021 Ingredion made cash contributions of $1 million and $7 million to its U.S. and non-U.S. pension plans, respectively. Ingredion anticipates that in 2022 we will make cash contributions of $1 million and $3 million to our U.S. and non-U.S. pension plans, respectively. Cash contributions in subsequent years will depend on a number of factors including the performance of plan assets.

The following benefit payments to beneficiaries, which reflect anticipated future service, as appropriate, are expected to be made in the following years:


(in millions)	U.S. Plans		Non-U.S. Plans
2022		23		12
2023		24		13
2024		24		13
2025		23		13
2026		25		13
Years 2027 - 2031		125		72

Ingredion also maintains defined contribution plans. We make matching contributions to these plans that are subject to certain vesting requirements and are based on a percentage of employee contributions. Amounts charged to expense for defined contribution plans totaled $22 million, $22 million and $20 million in 2021, 2020 and 2019, respectively.

Postretirement Benefit Plans

Ingredion’s postretirement benefit plans currently are not funded. The information presented below includes plans in the U.S., Brazil and Canada. The changes in the benefit obligations of the plans during 2021 and 2020, as well as the amounts recognized in Ingredion’s Consolidated Balance Sheets at December 31, 2021 and 2020, are as follows:


(in millions)	2021		2020
Accumulated postretirement benefit obligation
At January 1	$	68	$	69
Service cost		1		—
Interest cost		2		3
Amendments		4		—
Actuarial (gain) loss		(5)		4
Benefits paid		(4)		(5)
Foreign currency translation		(1)		(3)
At December 31		65		68
Fair value of plan assets		—		—
Funded status	$	(65)	$	(68)

As of December 31, 2021, the decrease in the postretirement benefit obligation was mainly driven by higher actuarial gains, partially offset by a $4 million amendment and favorable foreign currency translation related to Ingredion’s Canada and Brazil postretirement plans. The North Kansas City retiree medical group shifted from a multiemployer plan to the Ingredion Post Retirement Medical Health and Life Plan at the end of 2021, causing an increase to the postretirement obligation of $4 million in 2021. As of December 31, 2020, the decrease in the postretirement benefit obligation was mainly driven by favorable foreign currency translation related to Ingredion’s Canada and Brazil postretirement plans.

Amounts recorded in the Consolidated Balance Sheets at December 31, 2021 and 2020 consist of:


(in millions)	2021		2020
Current liabilities	$	(4)	$	(4)
Non-current liabilities		(61)		(64)
Net liability recognized	$	(65)	$	(68)

Amounts recorded in AOCL, excluding tax effects that have not yet been recognized as components of net periodic benefit cost at December 31, 2021 and 2020 were as follows:


(in millions)	2021		2020
Net actuarial loss	$	8	$	17
Prior service cost		5		—
Net amount recognized	$	13	$	17

Components of net periodic benefit cost consisted of the following for 2021, 2020 and 2019:


(in millions)	2021		2020		2019
Service cost	$	1	$	—	$	1
Interest cost		2		3		3
Amortization of actuarial loss		1		1		—
Amortization of prior service credit		(2)		(2)		(2)
Net periodic benefit cost	$	2	$	2	$	2

Total amounts recorded in other comprehensive income and net periodic benefit cost for 2021, 2020 and 2019 was as follows:


(in millions, pre-tax)	2021		2020		2019
Net actuarial loss (gain)	$	(5)	$	4	$	6
Prior service cost		4		—		—
Amortization of prior service credit		2		2		2
Amortization of actuarial loss		(1)		(1)		—
Foreign currency translation		(4)		—		—
Total recorded in other comprehensive income		(4)		5		8
Net periodic benefit cost		2		2		2
Total recorded in other comprehensive income and net periodic benefit cost	$	(2)	$	7	$	10

The following weighted average assumptions were used to determine Ingredion’s obligations under the postretirement plans in the given years:


	2021		2020
Discount rate	4.22	%	3.69	%

The following weighted average assumptions were used to determine Ingredion’s net postretirement benefit cost:


	2021		2020		2019
Discount rate	3.69	%	4.42	%	5.49	%

The discount rate reflects a rate of return on high-quality fixed-income investments that match the duration of expected benefit payments. Ingredion has typically used returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption.

The healthcare cost trend rates used in valuing Ingredion’s postretirement benefit obligations are established based upon actual healthcare trends and consultation with actuaries and benefit providers. The following assumptions were used as of December 31, 2021:


	U.S.		Canada		Brazil
2021 increase in per capita cost	6.00	%	5.74	%	7.79	%
Ultimate trend	4.50	%	4.00	%	7.79	%
Year ultimate trend reached	2032		2040		2021

The following benefit payments to beneficiaries, which reflect anticipated future service, as appropriate, are expected to be made under Ingredion’s postretirement benefit plans:


(in millions)
2022	$	4
2023		4
2024		4
2025		4
2026		4
Years 2027 - 2031		21

Multi-employer Plan

Ingredion participates in and contributes to one multi-employer benefit plan under the terms of collective bargaining agreements that cover certain union-represented employees and retirees in the U.S. The plan covers medical and dental benefits for active hourly employees and retirees represented by the United Steelworkers Union for certain U.S. locations. The risks of participating in this multi-employer plan are different from single-employer plans. This plan receives contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements and the assets contributed by one employer may be used to fund the benefits of all employees covered within the plan.

Ingredion is required to make contributions to this multi-employer plan as determined by the terms and conditions of the collective bargaining agreements and plan terms, but Ingredion does not provide more than five percent of the total contributions to the plan. For 2021, 2020 and 2019, Ingredion made regular contributions of $14 million, $14 million and $13 million, respectively, to the plan. Ingredion cannot currently estimate the amount of multi-employer plan contributions that will be required in 2022 and future years, but these contributions could increase due to healthcare cost trends. The North Kansas City retiree medical group shifted from a multiemployer plan to the U.S. postretirement benefit plan at the end of 2021. The remaining collective bargaining agreements associated with the multi-employer plan expire during 2023 through 2024.