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Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
We sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a substantial portion of our 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. Our general funding policy is to make contributions to the plans 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 our policy in those countries is to make contributions required by the terms of the applicable plan.
Included in our pension obligation are nonqualified supplemental retirement plans for certain key employees. Benefits provided under these plans are unfunded and we make direct payments to plan participants. We also provide 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 Plans
Pension Obligation and Funded Status: The changes in pension benefit obligations and plan assets during 2022 and 2021, as well as the funded status and the amounts recognized in our Consolidated Balance Sheets related to our pension plans at December 31, 2022 and 2021, were as follows:
U.S. PlansNon-U.S. Plans
(in millions)2022202120222021
Benefit obligation
At January 1$383 $409 $254 $275 
Service cost4 4 3 4 
Interest cost9 8 9 9 
Benefits paid(25)(24)(13)(13)
Actuarial (gain) loss(71)(14)(49)(15)
Curtailment/settlement/amendments— — (2)(1)
Foreign currency translation— — (14)(5)
Benefit obligation at December 31$300 $383 $188 $254 
Fair value of plan assets
At January 1$420 $439 $244 $249 
Actual return on plan assets(79)4 (30)3 
Employer contributions1 1 5 7 
Benefits paid(25)(24)(13)(13)
Plan settlements— — (2)(1)
Foreign currency translation— — (15)(1)
Fair value of plan assets at December 31$317 $420 $189 $244 
Funded status$17 $37 $1 $(10)
As of December 31, 2022, 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 compared to the prior year. 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.
Amounts recorded in the Consolidated Balance Sheets as of December 31, 2022 and 2021 were as follows:
U.S. PlansNon-U.S. Plans
(in millions)2022202120222021
Non-current asset$25 $47 $43 $44 
Current liabilities(1)(1)(1)(1)
Non-current liabilities(7)(9)(41)(53)
Net asset (liability) recognized$17 $37 $1 $(10)
Amounts recorded in AOCL, excluding tax effects that have not yet been recognized as components of net periodic benefit cost at December 31, 2022 and 2021, were as follows:
U.S. PlansNon-U.S. Plans
(in millions)2022202120222021
Net actuarial loss$36 $11 $24 $38 
Transition obligation— — — — 
Prior service (credit) cost(3)(4)— — 
Net amount recognized$33 $7 $24 $38 
The amount recognized in AOCL at December 31, 2022 increased compared to prior year for the U.S. pension plans mainly due to the actual return on assets being less than the expected return on assets, which was partially offset by the increase in discount rates used to measure our obligations under our U.S. pension. The decrease in the net amount recognized in AOCL at December 31, 2022 for the non-U.S. pension plans as compared to December 31, 2021 was primarily due to higher discount rates used to measure our obligations.
The accumulated benefit obligation for all defined benefit pension plans was $469 million and $619 million at December 31, 2022 and 2021, respectively. Information for pension plans with a projected benefit obligation in excess of plan assets and an accumulated benefit obligation in excess of plan assets was as follows:
U.S. PlansNon-U.S. Plans
(in millions)2022202120222021
Projected benefit obligation$(8)$(10)$(45)$(57)
Accumulated benefit obligation(8)(9)(35)(48)
Fair value of plan assets— — 3 3 
Components of net periodic benefit cost consist of the following for 2022, 2021 and 2020:
U.S. PlansNon-U.S. Plans
(in millions)202220212020202220212020
Service cost$4 $4 $5 $3 $4 $4 
Interest cost9 8 11 9 9 10 
Expected return on plan assets(16)(17)(21)(7)(8)(8)
Amortization of actuarial loss— — — 1 2 2 
Amortization of prior service credit(1)(1)(1)— — — 
Net periodic benefit cost$(4)$(6)$(6)$6 $7 $8 
Total amounts recorded in other comprehensive income and net periodic benefit cost were as follows:
(in millions, pre-tax)U.S. PlansNon-U.S. Plans
202220212020202220212020
Net actuarial (gain) loss $25 $(1)$(3)$(11)$(11)$1 
Prior service cost— — — — — — 
Amortization of actuarial loss— — — (1)(2)(2)
Amortization of prior service credit1 1 1 — — — 
Foreign currency translation— — — (2)(11)— 
Total recorded in other comprehensive income26 — (2)(14)(24)(1)
Net periodic benefit cost(4)(6)(6)6 7 8 
Total recorded in other comprehensive income and net periodic benefit cost$22 $(6)$(8)$(8)$(17)$7 
The following weighted average assumptions were used to determine our obligations for the pension plans for the given years:
U.S. PlansNon-U.S. Plans
2022202120222021
Discount rate5.19 %2.91 %5.66 %3.47 %
Rate of compensation increase3.92 4.18 3.83 3.67 
Cash balance interest credit rate4.21 4.11 — — 
The following weighted average assumptions were used to determine our net periodic benefit cost for the pension plans for the given years:
U.S. PlansNon-U.S. Plans
202220212020202220212020
Discount rate2.91 %2.58 %3.34 %3.66 %2.84 %3.55 %
Expected long-term return on plan assets4.10 4.10 5.30 3.50 3.37 3.81 
Rate of compensation increase4.18 4.26 4.21 3.77 3.54 3.68 
Cash balance interest crediting rate4.11 3.76 4.16 — — — 
For 2022, we 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 our 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. We typically use returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption, and we elect to use a full yield curve approach to estimate these components of benefit cost by applying the specific spot rates along the yield curve used to determine the benefit obligation to the relevant projected cash flows.
Plan Assets: Our investment policy for our 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 to 19 percent in equities and 81 to 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.
Our weighted average asset allocations as of December 31, 2022 and 2021, for U.S. and non-U.S. pension plan assets are as follows:
U.S. PlansNon-U.S. Plans
Asset Category2022202120222021
Equity securities11 %14 %8 %18 %
Debt securities87 85 77 57 
Cash and other2 1 15 25 
Total100 %100 %100 %100 %
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 our U.S. and non-U.S. plans. The fair value of shares of collective trusts are based upon the net asset value (“NAV”) of the fund 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 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 we believe our 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.
The fair values of our plan assets by asset category are as follows:
Fair Value Measurements at December 31, 2022
NAVLevel 1Level 2Total
(in millions)20222021202220212022202120222021
U.S. Plans:
Equity index:
U.S. (a)
$— $— $— $— $22 $37 $22 $37 
International (b)
— — — — 14 22 14 22 
Fixed income index:
Long bond (c)
— — — — 127 179 127 179 
Long government bond (d)
— — — — 89 109 89 109 
Other fixed income (e)
59 69 — — — — 59 69 
Cash & Short-term Investments (f)
— — — — 6 4 6 4 
Total U.S. Plans$59 $69 $— $— $258 $351 $317 $420 
Non-U.S. Plans:
Equity index:
U.S. (a)
$— $— $— $— $9 $26 $9 $26 
International (b)
— — — — 6 17 6 17 
Fixed income index:
Short bond (g)
— — — — 25 34 25 34 
Intermediate bond (h)
— — — — 51 45 51 45 
Long bond (i)
— — — — 69 93 69 93 
Other (j)
— — — — 22 21 22 21 
Cash & Short-term Investments (f)
— — 2 8 5 — 7 8 
Total Non-U.S. Plans$— $— $2 $8 $187 $236 $189 $244 
______________________
(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 fully redeemed with 95 days notification.
(f)This category represents cash, cash equivalents, or highly liquid short-term investments.
(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 2022, we made cash contributions of $1 million and $5 million to our U.S. and non-U.S. pension plans, respectively. Ingredion anticipates that in 2023 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. PlansNon-U.S. Plans
202326 14 
202425 13 
202525 13 
202625 13 
202726 14 
Years 2028 - 2032115 78 
We also maintain 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 for each of 2022, 2021 and 2020.
Postretirement Benefit Plans
Our 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 2022 and 2021, as well as the amounts recognized in our Consolidated Balance Sheets at December 31, 2022 and 2021, are as follows:
(in millions)20222021
Accumulated postretirement benefit obligation
At January 1$65 $68 
Service cost1 1 
Interest cost3 2 
Amendments— 4 
Actuarial (gain) loss(7)(5)
Benefits paid(4)(4)
Foreign currency translation— (1)
At December 3158 65 
Fair value of plan assets— — 
Funded status$(58)$(65)
As of December 31, 2022, the decrease in the postretirement benefit obligation was mainly driven by higher discount rates. 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 multi-employer plan to the Ingredion Post Retirement Medical Health and Life Plan at the end of 2021, causing an increase to the postretirement obligation of $4 million in 2021.
Amounts recorded in the Consolidated Balance Sheets at December 31, 2022 and 2021 consist of:
(in millions)20222021
Current liabilities$(5)$(4)
Non-current liabilities(53)(61)
Net liability recognized$(58)$(65)
Amounts recorded in AOCL, excluding tax effects that have not yet been recognized as components of net periodic benefit cost at December 31, 2022 and 2021 were as follows:
(in millions)20222021
Net actuarial loss$1 $8 
Prior service cost5 5 
Net amount recognized$6 $13 
Components of net periodic benefit cost consisted of the following for 2022, 2021 and 2020:
(in millions)202220212020
Service cost$1 $1 $— 
Interest cost3 2 3 
Amortization of actuarial loss— 1 1 
Amortization of prior service credit— (2)(2)
Net periodic benefit cost$4 $2 $2 
Total amounts recorded in other comprehensive income and net periodic benefit cost for 2022, 2021 and 2020 was as follows:
(in millions, pre-tax)202220212020
Net actuarial loss (gain)$(7)$(5)$4 
Prior service cost— 4 — 
Amortization of prior service credit— 2 2 
Amortization of actuarial loss— (1)(1)
Foreign currency translation— (4)— 
Total recorded in other comprehensive income (7)(4)5 
Net periodic benefit cost4 2 2 
Total recorded in other comprehensive income and net periodic benefit cost$(3)$(2)$7 
The following weighted average assumptions were used to determine our obligations under the postretirement plans for 2022 and 2021:
20222021
Discount rate7.30 %4.22 %
The following weighted average assumptions were used to determine our net postretirement benefit cost:
202220212020
Discount rate4.22 %3.69 %4.42 %
The discount rate reflects a rate of return on high-quality fixed-income investments that match the duration of expected benefit payments. We typically use returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption.
The healthcare cost trend rates used in valuing our 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, 2022:
U.S. Canada Brazil
2022 increase in per capita cost6.82 %4.82 %8.68 %
Ultimate trend4.50 %4.05 %8.68 %
Year ultimate trend reached203220402022
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)
2023$5 
20244 
20254 
20264 
20274 
Years 2028 - 203221 
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.
We are 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 we do not provide more than five percent of the total contributions to the plan. For 2022, 2021 and 2020, we made regular contributions of $10 million, $14 million and $14 million, respectively, to the plan. We cannot currently estimate the amount of multi-employer plan contributions that will be required in 2023 and future years, but these contributions could increase due to healthcare cost trends. As described above, the North Kansas City retiree medical group shifted from a multi-employer 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 2025.