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PENSION AND POSTRETIREMENT BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2024
Retirement Benefits [Abstract] |
PENSION AND POSTRETIREMENT BENEFIT PLANS | PENSION AND POSTRETIREMENT BENEFIT PLANS Prior to the Aera Merger, we maintained two qualified defined benefit pension plans covering union employees and a postretirement health care plan for certain retired employees. In connection with the Aera Merger, we acquired a qualified defined benefit cash balance pension plan and a non-qualified cash balance pension plan that restores benefits lost due to governmental limitations on the qualified plan. We also acquired two postretirement benefit plans that provide health care benefits for certain retired employees. Certain of the postretirement benefit obligations are funded through 401(h) accounts under the qualified pension plans. Aera's pension and postretirement obligations were remeasured as of the July 1, 2024 acquisition date. At that time, for Aera's pension plans, we recognized a net benefit asset of $64 million and a net benefit liability of $8 million and for Aera's postretirement benefit plans, we recognized a net benefit asset of $9 million and a net benefit liability of $27 million. Accumulated other comprehensive income balances for the acquired Aera plans were eliminated in purchase accounting. In August 2024, we amended Aera's pension and postretirement benefit plans. For Aera’s defined benefit pension plans and post age 65 postretirement benefit plan, participants no longer accrue additional benefits for service after September 30, 2024. However, for each of the foregoing plans, future service will count towards vesting of benefits accrued based on past service. In addition, for both of Aera’s postretirement benefit plans, we expanded the eligibility provisions in the event of an involuntary layoff. Following the Aera Merger, we recognized a curtailment gain of $4 million and a one-time cost of special termination benefits of $4 million included in net periodic benefit costs for the year ended December 31, 2024. Defined Contribution Plans All of our employees are eligible to participate in our tax-qualified, defined contribution retirement plan that provides for periodic cash contributions by us based on annual cash compensation and employee deferrals. Certain salaried employees participate in non-qualified supplemental defined contribution plans that restore benefits lost due to government limitations on qualified plans. We recognized $30 million and $24 million in other long-term liabilities for the years ended December 31, 2024 and 2023, respectively, related to these supplemental plans. We expensed $27 million in 2024, $19 million in 2023 and $18 million in 2022 under the provisions of these defined contribution and supplemental plans. Defined Benefit Plans Participation in defined benefit pension plans sponsored by us is limited. During 2024, approximately 800 employees accrued benefits under these plans primarily in connection with the acquired Aera pension plans. As a result of the amendments made in September 2024 to the acquired Aera pension plans, only approximately 60 employees were accruing benefits at year-end, all of whom were union employees. Pension costs for the defined benefit pension plans, determined by independent actuarial valuations, are funded by us through payments to trust funds, which are administered by independent trustees. Postretirement Benefit Plans We provide postretirement medical and dental benefits for our eligible former employees and their dependents. Our former employees are required to make monthly contributions for the coverage, but the benefits are primarily funded by us as claims are paid during the year. Obligations and Funded Status of our Defined Benefit Plans The following table shows the amounts recognized on our balance sheets related to pension and postretirement benefit plans, as well as plans that we or our subsidiaries sponsor:
| December 31, 2024 |  | December 31, 2023
| Pension Benefit |  | Postretirement Benefit |  | Pension Benefit |  | Postretirement Benefit
| (in millions) |  | (in millions)
Amounts recognized on the balance sheet |  |  |  |  |  |  |
Other assets | $ | 67 |  |  | $ | 13 |  |  | $ | 2 |  |  | $ | — |
Accrued liabilities | (1) |  |  | (6) |  |  | — |  |  | (3) |
Other long-term liabilities | (6) |  |  | (53) |  |  | (3) |  |  | (33) |
| $ | 60 |  |  | $ | (46) |  |  | $ | (1) |  |  | $ | (36) |
Accumulated other comprehensive income, net of tax | $ | 2 |  |  | $ | 73 |  |  | $ | 2 |  |  | $ | 72 |
The following table shows the funding status of our pension and post-retirement benefit plans along with a reconciliation of our benefit obligations and changes in fair value of plan assets:
| Year ended December 31,
| 2024 |  | 2023
| (in millions)
Pension |  |  |
Changes in the benefit obligation |  |  |
Benefit obligation—beginning of year | $ | 34 |  |  | $ | 30 |
Liabilities assumed in the Aera Merger | 249 |  |  | — |
Service cost—benefits earned during the period | 3 |  |  | 1 |
Interest cost on projected benefit obligation | 8 |  |  | 1 |
Actuarial (gain) loss(a) | (2) |  |  | 3 |
Benefits paid | (20) |  |  | (1) |
Benefit obligation—end of year | $ | 272 |  |  | $ | 34 |
Changes in plan assets |  |  |
Fair value of plan assets—beginning of year | $ | 34 |  |  | $ | 32 |
Additions due to the Aera Merger | 305 |  |  | — |
Actual return on plan assets | 10 |  |  | 3 |
Employer contributions | 3 |  |  | — |
Benefits paid | (20) |  |  | (1) |
Fair value of plan assets—end of year | $ | 332 |  |  | $ | 34 |
Net benefit asset | $ | 60 |  |  | $ | — |
Postretirement |  |  |
Changes in the benefit obligation |  |  |
Benefit obligation—beginning of year | $ | 37 |  |  | $ | 38 |
Liabilities assumed in the Aera Merger | 70 |  |  | — |
Service cost—benefits earned during the period | 2 |  |  | 2 |
Interest cost on projected benefit obligation | 4 |  |  | 2 |
Actuarial gain(b) | (5) |  |  | (2) |
Cost of special termination benefits | 4 |  |  | — |
Curtailment gain | (4) |  |  | — |
Benefits paid | (5) |  |  | (3) |
Plan amendment | (3) |  |  | — |
Benefit obligation—end of year | $ | 100 |  |  | $ | 37 |
Changes in plan assets |  |  |
Fair value of plan assets—beginning of year | $ | 1 |  |  | $ | 1 |
Additions due to the Aera Merger | 52 |  |  | — |
Actual gain (loss) on plan assets | 2 |  |  | — |
Employer contributions | 4 |  |  | 3 |
Benefits paid | (5) |  |  | (3) |
Fair value of plan assets—end of year | $ | 54 |  |  | $ | 1 |
Net benefit liability | $ | (46) |  |  | $ | (36) |
(a)The gain reflected in the changes in the pension benefit obligation for the year ended December 31, 2024 was primarily due to movement in the discount rates. (b)The gain reflected in the changes in the postretirement benefit obligation for the year ended December 31, 2024 was primarily due to movement in the discount rate. The following table sets for the details of our obligations and assets related to our defined benefit pension plans for the years ended December 31:
| 2024 |  | 2023
| (in millions)
Projected benefit obligation | $ | 272 |  |  | $ | 34 |
Accumulated benefit obligation | $ | 268 |  |  | $ | 30 |
Fair value of plan assets | $ | 332 |  |  | $ | 34 |
Components of Net Periodic Benefit Cost We record the service cost component of net periodic pension cost with other employee compensation and all other components, including settlement costs, are reported as other non-operating income (expenses), net on our consolidated statements of operations. The following table set forth the components of our net periodic pension and postretirement benefit costs:
| Year ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Pension |  |  |  |  |
Net periodic benefit costs |  |  |  |  |
Service cost—benefits earned during the period | $ | 3 |  |  | $ | 1 |  |  | $ | 1 |
Interest cost on projected benefit obligation | 8 |  |  | 1 |  |  | 1 |
Expected return on plan assets | (13) |  |  | (2) |  |  | (1) |
Net periodic benefit costs | $ | (2) |  |  | $ | — |  |  | $ | 1 |
Postretirement |  |  |  |  |
Net periodic benefit costs |  |  |  |  |
Service cost—benefits earned during the period | $ | 2 |  |  | $ | 2 |  |  | $ | 2 |
Interest cost on projected benefit obligation | 4 |  |  | 2 |  |  | 1 |
Expected return on plan assets | (2) |  |  | — |  |  | — |
Cost of special termination benefits | 4 |  |  | — |  |  | — |
Amortization of prior service cost credit | (5) |  |  | (5) |  |  | (5) |
Amortization of net actuarial gain | (1) |  |  | (2) |  |  | — |
Curtailment gain | (4) |  |  | (3) |  |  | — |
Net periodic benefit costs | $ | (2) |  |  | $ | (6) |  |  | $ | (2) |
Components of accumulated other comprehensive income (loss) (AOCI) are presented net of tax. The following table presents the changes in plan assets and benefit obligations recognized in other comprehensive (loss) income:
| Year ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Pension |  |  |  |  |
Net actuarial (gain) loss | $ | — |  |  | $ | (1) |  |  | $ | 4 |
Total | $ | — |  |  | $ | (1) |  |  | $ | 4 |
Postretirement |  |  |  |  |
Net actuarial (gain) loss | $ | (5) |  |  | $ | 1 |  |  | $ | 9 |
Prior service credit | (3) |  |  | — |  |  | — |
Actuarial net gain due to curtailment | 4 |  |  | — |  |  | — |
Special termination benefits | (4) |  |  | — |  |  | — |
Amortization of prior service credit due to curtailment | — |  |  | (2) |  |  | — |
Amortization of prior service credit | 5 |  |  | (4) |  |  | (4) |
Amortization net actuarial gain (loss) | 2 |  |  | (1) |  |  | — |
Total | $ | (1) |  |  | $ | (6) |  |  | $ | 5 |
The following table sets forth the valuation assumptions, on a weighted-average basis, used to determine our benefit obligations and net periodic benefit cost:
| Year ended December 31,
| 2024 |  | 2023
Pension |  |  |
Benefit Obligation Assumptions |  |  |
Discount rate | 5.61 | % |  | 4.98 | %
Rate of compensation increase | 4.93 | % |  | 4.00 | %
Interest crediting rate | 5.28 | % |  | N/A
Net Periodic Benefit Cost Assumptions |  |  |
Discount rate | 5.22 | % |  | 5.19 | %
Expected return on assets | 7.00 | % |  | 6.98 | %
Rate of compensation increase | 4.96 | % |  | 4.00 | %
Interest crediting rate | 6.37 | % |  | N/A
Postretirement |  |  |
Benefit Obligation Assumptions |  |  |
Discount rate | 5.50 | % |  | 4.99 | %
Net Periodic Benefit Cost Assumptions |  |  |
Discount rate | 5.13 | % |  | 5.20 | %
Expected return on assets | 6.99 | % |  | 6.50 | %
For pension plans and postretirement benefit plans that we or our subsidiaries sponsor, we based the discount rate on the FTSE Above Median AA yield curve in 2024 and in 2023. The weighted-average rate of increase in future compensation levels is consistent with our past and anticipated future compensation increases for employees participating in pension plans that determine benefits using compensation. The assumed return on assets is estimated with regard to current market factors but within the context of historical returns for the asset mix that exists at year end. In 2024 and 2023, we used the Society of Actuaries Pri-2012 mortality assumptions reflecting the MP-2021 scale which plan sponsors in the U.S. use in the actuarial valuations that determine a plan sponsor’s pension and postretirement obligations. The postretirement benefit obligation was determined by application of the terms of medical and dental benefits, including the effect of established maximums on covered costs, together with relevant actuarial assumptions and healthcare cost trend rates projected at an assumed U.S. Consumer Price Index (CPI) increase of 2.45% and 2.38% as of December 31, 2024 and 2023, respectively. Under the terms of our postretirement plans, participants other than certain union employees pay for all medical cost increases in excess of increases in the CPI. For those union employees, we projected that, as of December 31, 2024, health care cost trend rates would be 6.50% in 2025 decreasing until they reach 4.50% in 2033 and remain at 4.50% thereafter. For those union employees, we projected that, as of December 31, 2023, health care cost trend rates would be 6.75% in 2024 decreasing until they reach 4.50% in 2033 and remain at 4.50% thereafter. The actuarial assumptions used could change in the near term as a result of changes in expected future trends and other factors that, depending on the nature of the changes, could cause increases or decreases in the plan assets and liabilities. Fair Value of Plan Assets We employ a total return investment approach that uses a diversified blend of equity and fixed-income investments to optimize the long-term return of plan assets at a prudent level of risk. Equity investments were diversified across U.S. and non-U.S. stocks, as well as differing styles and market capitalizations. Other asset classes, such as private equity and real estate, may have been used with the goals of enhancing long-term returns and improving portfolio diversification. In 2024 and 2023, the target allocation of pension plan assets was 45% and 50% equity securities and 55% and 50% debt securities, respectively. Investment performance was measured and monitored on an ongoing basis through quarterly investment portfolio and manager guideline compliance reviews, annual liability measurements and periodic studies. The fair values of our pension plan assets by asset category are as follows:
| Fair Value Measurements at December 31, 2024
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Asset Class | (in millions)
Comingled funds |  |  |  |  |  |  |
Bonds | 24 |  |  | 162 |  |  | — |  |  | 186 |
Commodities | 17 |  |  | — |  |  | — |  |  | 17 |
U.S. equity | — |  |  | 84 |  |  | — |  |  | 84 |
International equity | 24 |  |  | 20 |  |  | — |  |  | 44 |
Total pension plan assets | $ | 65 |  |  | $ | 266 |  |  | $ | — |  |  | $ | 331 |
| Fair Value Measurements at December 31, 2023
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Asset Class | (in millions)
Commingled funds |  |  |  |  |  |  |
Bonds | — |  |  | 18 |  |  | — |  |  | 18 |
Commodities | — |  |  | — |  |  | — |  |  | — |
U.S. equity | — |  |  | 6 |  |  | — |  |  | 6 |
International equity | — |  |  | 10 |  |  | — |  |  | 10 |
Total pension plan assets | $ | — |  |  | $ | 34 |  |  | $ | — |  |  | $ | 34 |
The fair values of our postretirement benefit plan assets by asset category are as follows:
| Fair Value Measurements at December 31, 2024
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Asset Class | (in millions)
Comingled funds |  |  |  |  |  |  |
Bonds | 4 |  |  | 26 |  |  | — |  |  | 30 |
Commodities | 3 |  |  | — |  |  | — |  |  | 3 |
U.S. equity | — |  |  | 13 |  |  | — |  |  | 13 |
International equity | 4 |  |  | 2 |  |  | — |  |  | 6 |
Total pension plan assets | $ | 11 |  |  | $ | 41 |  |  | $ | — |  |  | $ | 52 |
Our postretirement benefit plan assets of $1 million in 2023 were invested in mutual funds (Level 1 on the fair value hierarchy) with target allocations of 40% equities and 60% debt securities. Expected Contributions and Benefit Payments In 2025, we expect to contribute $1 million to our pension plans and expect to contribute $7 million to our postretirement benefit plans. Estimated future undiscounted benefit payments by the plans, which reflect expected future service, as appropriate, are as follows:
| Pension Benefits |  | Postretirement Benefits
For the years ended December 31, | (in millions)
2025 | $ | 25 |  |  | $ | 10 |
2026 | $ | 17 |  |  | $ | 9 |
2027 | $ | 16 |  |  | $ | 9 |
2028 | $ | 18 |  |  | $ | 9 |
2029 | $ | 17 |  |  | $ | 8 |
2030 - 2034 | $ | 85 |  |  | $ | 41 |

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