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Long-term Employee Benefits
 12 Months Ended
Dec. 31, 2020
General Discussion Of Pension And Other Postretirement Benefits [Abstract]  
Long-term Employee Benefits

 

Note 27. Long-term Employee Benefits

 

Plans Covering Employees in the U.S.

 

On July 1, 2015, Chemours established a defined contribution plan, which covered all eligible U.S. employees. The purpose of the plan is to encourage employees to save for their future retirement needs. The plan is a tax-qualified contributory profit-sharing plan, with cash or deferred arrangement, and any eligible employee of Chemours may participate. Chemours matches 100% of the first 6% of the employee’s contribution election, and the plan’s matching contributions vest immediately upon contribution. Chemours may also provide an additional discretionary retirement savings contribution to eligible employees’ compensation. The amount of this contribution, if any, is at the sole discretion of the Company, and the discretionary contribution vests for employees with at least three years of service. From time to time, Chemours provides additional discretionary retirement savings contributions to eligible employees’ compensation.

 

In lieu of a defined benefit plan, Chemours provided an enhanced 401(k) contribution for employees who previously participated in EID’s pension plan. The enhanced benefits consisted of an additional contribution of 1% to 7% of the employee’s eligible compensation, depending upon the employee’s length of service with EID at the time of the Separation. The enhancement ended in 2019.

 


Plans Covering Employees Outside the U.S.

 

Pension coverage for employees of Chemours’ non-U.S. subsidiaries is provided, to the extent deemed appropriate, through separate plans established after the Separation and comparable to the EID plans in those countries. Obligations under such plans are either funded by depositing funds with trustees, covered by insurance contracts, or unfunded.

 

In the fourth quarter of 2019, the Company, through its wholly-owned subsidiary Chemours Netherlands B.V., completed a settlement transaction related to a significant portion of its Netherlands pension plan. The Company transferred the future risk and administration associated with the $932 of its inactive participants’ vested pension benefits to a third-party asset management company in the Netherlands. The irrevocability of the transaction was contingent upon non-objection by the Dutch National Bank, which was received in October 2019. Following the receipt of non-objection, the responsibility for the associated pension obligation was transferred to the third-party asset management company in December 2019, thereby eliminating the Company’s exposure to the pension liabilities and formally effecting the settlement. At the time of settlement, a remeasurement of plan assets and projected benefit obligations was performed, resulting in a $158 decrease to net pension assets and increase to accumulated other comprehensive loss on the consolidated balance sheet. The cumulative loss associated with the inactive participants’ vested pension benefits was then immediately reclassified from accumulated other comprehensive loss and recognized in earnings, resulting in a charge of $380 recognized in other expense, net in the consolidated statements of operations. At December 31, 2019, the projected benefit obligations associated with the plan’s active employees remained on the Company’s consolidated balance sheet.

 

The following table sets forth the Company’s net periodic pension (cost) income and amounts recognized in other comprehensive income (loss) for the years ended December 31, 2020, 2019, and 2018.

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Service cost

 

$

(15

)

 

$

(13

)

 

$

(14

)

Interest cost

 

 

(6

)

 

 

(17

)

 

 

(16

)

Expected return on plan assets

 

 

17

 

 

 

48

 

 

 

58

 

Amortization of actuarial loss

 

 

(9

)

 

 

(18

)

 

 

(12

)

Amortization of prior service gain

 

 

3

 

 

 

2

 

 

 

2

 

Settlement loss

 

 

(5

)

 

 

(383

)

 

 

—

 

Curtailment gain

 

 

1

 

 

 

—

 

 

 

—

 

Total net periodic pension (cost) income

 

$

(14

)

 

$

(381

)

 

$

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss)

 

$

4

 

 

$

(144

)

 

$

(115

)

Prior service (cost) benefit

 

 

(1

)

 

 

5

 

 

 

—

 

Amortization of actuarial loss

 

 

9

 

 

 

18

 

 

 

16

 

Amortization of prior service gain

 

 

(3

)

 

 

(2

)

 

 

(2

)

Settlement loss

 

 

5

 

 

 

383

 

 

 

—

 

Curtailment gain

 

 

4

 

 

 

—

 

 

 

—

 

Effect of foreign exchange rates

 

 

(9

)

 

 

7

 

 

 

8

 

Benefit (cost) recognized in other comprehensive income

 

 

9

 

 

 

267

 

 

 

(93

)

Total changes in plan assets and benefit obligations

recognized in other comprehensive income

 

$

(5

)

 

$

(114

)

 

$

(75

)

 

The following table sets forth the pre-tax amounts recognized in accumulated other comprehensive loss at December 31, 2020, 2019, and 2018.

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Net loss

 

$

143

 

 

$

151

 

 

$

419

 

Prior service credit

 

 

(12

)

 

 

(14

)

 

 

(10

)

Total amount recognized in accumulated other comprehensive loss

 

$

131

 

 

$

137

 

 

$

409

 

 


The following table sets forth summarized information on the Company’s pension plans at December 31, 2020 and 2019.

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Change in benefit obligation:

 

 

 

 

 

 

 

 

Benefit obligation at beginning of year

 

$

507

 

 

$

1,168

 

Service cost

 

 

15

 

 

 

13

 

Interest cost

 

 

6

 

 

 

17

 

Plan participants’ contributions

 

 

2

 

 

 

2

 

Actuarial loss

 

 

33

 

 

 

313

 

Benefits paid

 

 

(2

)

 

 

(37

)

Plan amendments

 

 

—

 

 

 

(5

)

Settlements and transfers

 

 

(24

)

 

 

(945

)

Currency translation

 

 

47

 

 

 

(19

)

Benefit obligation at end of year

 

 

584

 

 

 

507

 

Change in plan assets:

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

 

500

 

 

 

1,268

 

Actual return on plan assets

 

 

55

 

 

 

217

 

Employer contributions

 

 

20

 

 

 

19

 

Plan participants’ contributions

 

 

2

 

 

 

2

 

Benefits paid

 

 

(2

)

 

 

(37

)

Settlements and transfers

 

 

(21

)

 

 

(945

)

Currency translation

 

 

50

 

 

 

(24

)

Fair value of plan assets at end of year

 

 

604

 

 

 

500

 

Total funded status at end of year

 

$

20

 

 

$

(7

)

 

The following table sets forth the net amounts recognized in the Company’s consolidated balance sheets at December 31, 2020 and 2019.

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Non-current assets

 

$

79

 

 

$

59

 

Current liabilities

 

 

(2

)

 

 

(2

)

Non-current liabilities

 

 

(57

)

 

 

(64

)

Total net amount recognized

 

$

20

 

 

$

(7

)

 

The accumulated benefit obligation for all pension plans was $513 and $445 as of December 31, 2020 and 2019, respectively.

 

For the year ended December 31, 2020, the liability component of the Company’s global pension plans generated a net actuarial loss of $33, driven by a decrease in discount rates that resulted in a loss of $38 across all plans. This loss was partially offset by a gain of $7 related to a change in the mortality assumption in the Netherlands, as well as a gain of $1 from changes in other demographic assumptions. The Company also recorded an additional loss of $3 from unfavorable actuarial experience and other assumption changes.

 

The asset component of the Company’s global pension plans generated an actual return on plan assets of $55, driven by favorable performance on equities and bonds that resulted in incremental gains of $38 in the plans’ investment portfolios.

 


The following tables set forth information related to the Company’s pension plans with projected and accumulated benefit obligations in excess of the fair value of plan assets at December 31, 2020 and 2019.

 

 

 

December 31,

 

Pension plans with projected benefit obligation in excess of plan assets

 

2020

 

 

2019

 

Projected benefit obligation

 

$

175

 

 

$

178

 

Accumulated benefit obligation

 

 

148

 

 

 

150

 

Fair value of plan assets

 

 

116

 

 

 

111

 

 

 

 

December 31,

 

Pension plans with accumulated benefit obligation in excess of plan assets

 

2020

 

 

2019

 

Projected benefit obligation

 

$

153

 

 

$

178

 

Accumulated benefit obligation

 

 

131

 

 

 

150

 

Fair value of plan assets

 

 

98

 

 

 

111

 

 

Assumptions

 

The Company generally utilizes discount rates that are developed by matching the expected cash flows of each benefit plan to various yield curves constructed from a portfolio of high-quality, fixed income instruments provided by the plans’ actuaries as of the measurement date. The expected rate of return on plan assets reflects economic assumptions applicable to each country.

 

The following tables set forth the assumptions that have been used to determine the Company’s benefit obligations and net benefit cost at December 31, 2020 and 2019.

 

 

 

December 31,

 

Weighted-average assumptions used to determine benefit obligations

 

2020

 

 

2019

 

Discount rate

 

 

1.0

%

 

 

1.4

%

Rate of compensation increase (1)

 

 

2.5

%

 

 

2.6

%

Interest crediting rate (2)

 

 

1.3

%

 

 

1.5

%

 

(1)

The rate of compensation increase represents the single annual effective salary increase that an average plan participant would receive during the participant’s entire career at Chemours.

 

(2)

The interest crediting rate, which is applicable only for account balance type plans, represents the single effective annual account balance increase that an average participant would receive during the participant’s entire career at Chemours.

 

 

 

December 31,

 

Weighted-average assumptions used to determine net benefit cost

 

2020

 

 

2019

 

Discount rate

 

 

1.4

%

 

 

2.0

%

Rate of compensation increase (1)

 

 

2.5

%

 

 

2.5

%

Expected return on plan assets

 

 

3.2

%

 

 

4.1

%

 

(1)

The rate of compensation increase represents the single annual effective salary increase that an average plan participant would receive during the participant’s entire career at Chemours.

 

Plan Assets

 

Each pension plan’s assets are invested through either an insurance vehicle, a master trust fund, or a stand-alone pension fund. The strategic asset allocation for each plan is selected by management, together with the pension board, where appropriate, reflecting the results of comprehensive asset and liability modeling. For assets under its control, Chemours establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes with the aim of achieving a prudent balance between return and risk. Strategic asset allocations in countries are selected in accordance with the laws and practices of those countries.

 

The following table sets forth the weighted-average allocation for the Company’s pension plan assets at December 31, 2020 and 2019.

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Cash and cash equivalents

 

 

7

%

 

 

8

%

U.S. and non-U.S. equity securities

 

 

37

%

 

 

52

%

Fixed income securities

 

 

56

%

 

 

40

%

Total weighted-average allocation

 

 

100

%

 

 

100

%

 

Fixed income securities include corporate-issued, government-issued, and asset-backed securities. Corporate debt investments encompass a range of credit risk and industry diversification.

 

Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, although Chemours believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 

The following tables set forth the fair values of the Company’s pension assets by level within the fair value hierarchy at December 31, 2020 and 2019.

 

 

 

Fair Value Measurements at December 31, 2020

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

Asset category:

 

 

 

 

 

 

 

 

 

 

 

 

Debt - government issued

 

$

60

 

 

$

10

 

 

$

50

 

Debt - corporate issued

 

 

158

 

 

 

42

 

 

 

116

 

U.S. and non-U.S. equities

 

 

220

 

 

 

33

 

 

 

187

 

Derivatives - asset position

 

 

93

 

 

 

—

 

 

 

93

 

Cash and cash equivalents

 

 

43

 

 

 

43

 

 

 

—

 

Other

 

 

2

 

 

 

—

 

 

 

2

 

Total pension assets at fair value

 

 

576

 

 

$

128

 

 

$

448

 

Pooled mortgage funds (1)

 

 

28

 

 

 

 

 

 

 

 

 

Total pension assets

 

$

604

 

 

 

 

 

 

 

 

 

 

(1)

Pooled mortgage funds consist of funds that invest in residential mortgages. These funds generally allow for monthly redemption with 30 days' notice. Timing for redemption could be delayed based on the priority of our request and the availability of funds. Interests in these funds are valued using the net asset value ("NAV") per share practical expedient and are not classified in the fair value hierarchy.

 

 

 

Fair Value Measurements at December 31, 2019

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

Asset category:

 

 

 

 

 

 

 

 

 

 

 

 

Debt - government issued

 

$

150

 

 

$

9

 

 

$

141

 

Debt - corporate issued

 

 

51

 

 

 

47

 

 

 

4

 

U.S. and non-U.S. equities

 

 

102

 

 

 

101

 

 

 

1

 

Mutual funds

 

 

135

 

 

 

—

 

 

 

135

 

Derivatives - asset position

 

 

28

 

 

 

—

 

 

 

28

 

Cash and cash equivalents

 

 

41

 

 

 

41

 

 

 

—

 

Other

 

 

2

 

 

 

2

 

 

 

—

 

Total pension assets at fair value

 

 

509

 

 

$

200

 

 

$

309

 

Pension trust payables, net (1)

 

 

(9

)

 

 

 

 

 

 

 

 

Total pension assets

 

$

500

 

 

 

 

 

 

 

 

 

 

(1)

Pension trust payables are primarily for investments purchased and received but not yet paid.

 

For pension plan assets classified as Level 1 instruments within the fair value hierarchy, total fair value is either the price of the most recent trade at the time of the market close or the official close price, as defined by the exchange on which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without consideration of transaction costs.

 

For pension plan assets classified as Level 2 instruments within the fair value hierarchy, where the security is frequently traded in less active markets, fair value is based on the closing price at the end of the period; where the security is less frequently traded, fair value is based on the price a dealer would pay for the security or similar securities, adjusted for any terms specific to that asset or liability. Market inputs are obtained from well-established, recognized vendors of market data and subjected to tolerance and/or quality checks. For derivative assets and liabilities, standard industry models are used to calculate the fair value of the various financial instruments based on significant observable market inputs, such as foreign exchange rates, commodity prices, swap rates, interest rates, and implied volatilities obtained from various market sources. With the exception of pooled mortgage funds, pooled funds are valued at the per-unit NAV as determined by the fund manager based on the value of the underlying traded securities.

 

Cash Flows – Defined Benefit Plans

 

Employer Contributions

 

For the years ended December 31, 2020, 2019, and 2018, Chemours contributed $20, $19, and $15, respectively, to its defined benefit plans.

  

Chemours expects to contribute $16 to its pension plans in 2021. The Company’s future contributions to its defined benefit pension plans are dependent on market-based discount rates, and, as stated in “Note 2 – Basis of Presentation” to these consolidated financial statements, may differ due to the impacts of the COVID-19 pandemic on the macroeconomic environment.

 

Future Benefit Payments

 

The following table sets forth the benefit payments that are expected to be paid by the plans over the next five years and the five years thereafter.

 

2021

 

$

10

 

2022

 

 

10

 

2023

 

 

13

 

2024

 

 

15

 

2025

 

 

15

 

2026 to 2030

 

 

98

 

 

Cash Flows – Defined Contribution Plan

 

Employer Contributions

 

For the years ended December 31, 2020, 2019, and 2018, Chemours contributed $27, $34, and $51, respectively, to its defined contribution plan.