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Post-retirement benefits (Tables)
 12 Months Ended
Dec. 31, 2023
Disclosure of information about defined benefit plans [abstract]  
Summary of fair value of plan assets The proportions of the total fair value of assets in the pension plans for each asset class at 31 December were as follows.
2023
2022
Equities
16.6%
18.0%
– Quoted(a)
11.1%
12.3%
– Private(b)
5.5%
5.7%
Bonds(c)
47.4%
58.1%
– Government fixed income
21.6%
24.6%
– Government inflation-linked
1.6%
5.0%
– Corporate and other publicly quoted
16.5%
19.6%
– Private
7.7%
8.9%
Property(d)
8.7%
10.0%
– Quoted property funds
2.5%
2.9%
– Unquoted property funds
6.2%
7.1%
Qualifying insurance policies(e)
24.9%
9.7%
Cash and other(f)(g)
2.4%
4.2%
Total
100.0%
100.0%
(a)The holdings of quoted equities are invested in either pooled funds or segregated accounts held in the name of the relevant pension funds. These equity portfolios are well diversified in terms of
the geographic distribution and market sectors.
(b)Investments in private equity, private debt and property are less liquid than the other investment classes listed above and therefore the Group’s investment in those asset classes is restricted to
a level that does not endanger the liquidity of the pension plans.
(c)The holdings of government bonds are generally invested in the debt of the country in which a pension plan is situated. Corporate and other quoted bonds are usually of investment grade.
Private debt is mainly held in the North American and UK pension funds and is invested in North American and European companies.
(d)The property funds held by pension plans are invested in a diversified range of properties.
(e)Qualifying insurance policies are held with insurance companies that are regulated by the relevant local authorities. In October 2023, the trustee of the Rio Tinto 2009 Pension Fund purchased a
buy-in contract for US$1.7 billion, largely through an in specie transfer of assets. The value of those policies is calculated by the local actuaries using assumptions consistent with those adopted
for valuing the insured obligations.
(f)The holdings of cash and other are predominantly cash and short-term money market instruments.
(g)The Group makes limited use of futures, repurchase agreements and other instruments to manage the interest rate risk in some of its plans. Fund managers may also use derivatives to hedge
currency movements within their portfolios and, in the case of bond managers, to take positions that could be taken using direct holdings of bonds but more efficiently. Exposure to these
instruments is closely monitored and maintained at a level that does not endanger the liquidity of any pension plan.
Summary of maturity of defined benefit obligations An approximate analysis of the maturity of the obligations is given in the table below.
Pension
benefits
Other
benefits
2023
Total
2022
Total
2021
Total
Proportion relating to current employees
17%
15%
17%
18%
20%
Proportion relating to former employees not yet retired
9%
—%
9%
9%
11%
Proportion relating to retirees
74%
85%
74%
73%
69%
Total
100%
100%
100%
100%
100%
Average duration of obligations (years)
10.8
10.8
10.8
11.4
13.8
Summary of geographical distribution of defined benefit obligations An approximate analysis of the geographic distribution of the obligations is given in the table below:
Pension
benefits
Other
benefits
2023
Total
2022
Total
2021
Total
Canada
58%
50%
57%
58%
55%
UK
26%
1%
25%
24%
28%
US
8%
46%
10%
10%
10%
Switzerland
6%
—%
6%
6%
5%
Other
2%
3%
2%
2%
2%
Total
100%
100%
100%
100%
100%
Summary of total expense recognised in the income statement Total expense recognised in the income statement
Pension
benefits
US$m
Other
benefits
US$m
2023
Total
US$m
2022
Total
US$m
2021
Total
US$m
Current employer service cost for defined benefit plans
(76)
(3)
(79)
(143)
(167)
Past service credit/(cost)
88
(1)
87
—
(2)
Settlement losses
—
—
—
—
(3)
Net interest on net defined benefit liability
13
(34)
(21)
(36)
(52)
Non-investment expenses paid from the plans
(20)
—
(20)
(13)
(15)
Total defined benefit credit/(expense)
5
(38)
(33)
(192)
(239)
Current employer service cost for defined contribution and industry-wide plans
(414)
(2)
(416)
(367)
(315)
Total expense recognised in the income statement
(409)
(40)
(449)
(559)
(554)
Summary of total amount recognised in other comprehensive income before tax Total amount recognised in other comprehensive income before tax
2023
US$m
2022
US$m
2021
US$m
Actuarial (losses)/gains
(407)
3,410
655
Impact of buy-in(a)
(216)
—
—
Return on assets, net of interest on assets
222
(2,831)
371
Losses on application of asset ceiling
(60)
(1)
—
Re-measurement (losses)/gains on pension and post-retirement healthcare plans
(461)
578
1,026
(a)In October 2023, the trustee of the Rio Tinto 2009 Pension Fund (RT09), a UK based scheme, purchased a bulk annuity contract - buy-in contract - which covers all scheme members. The bulk
annuity contract is a Fund asset which provides an income to the RT09 which matches the pension paid out by the Fund. No formal decision to progress to buy-out and winding up of the RT09
can be made until such time as the Company and trustee agree on a number of key areas, including use of any residual surplus. As such, the trustee retains the legal responsibility to make
benefit payments and the loss arising on this transaction was charged to Other Comprehensive Income.
Summary of amount recognised in balance sheet The following amounts were measured in accordance with IAS 19 at 31 December.
2023
2022
Pension
benefits
US$m
Other
benefits
US$m
Total
US$m
Total
US$m
Total fair value of plan assets
11,138
—
11,138
10,708
Present value of obligations – funded
(10,799)
—
(10,799)
(10,226)
Present value of obligations – unfunded
(368)
(628)
(996)
(951)
Present value of obligations – total
(11,167)
(628)
(11,795)
(11,177)
Effect of asset ceiling
(66)
—
(66)
(1)
Net deficit to be shown in the balance sheet
(95)
(628)
(723)
(470)
Comprising:
– Deficits
(561)
(628)
(1,189)
(1,294)
– Surpluses
466
—
466
824
Net (deficit)/surplus on pension plans
(95)
—
(95)
152
Unfunded post-retirement healthcare obligation
—
(628)
(628)
(622)
Summary of funding policy and contributions to plans The Group reviews the funding position of its pension plans on a regular basis and considers whether to provide funding above the minimum level
required in each country. In Canada and the US the minimum level is prescribed by legislation. In the UK and Switzerland the minimum level is
negotiated with the local trustee in accordance with the funding guidance issued by the local regulators. In deciding whether to provide funding
above the minimum level, we consider other possible uses of cash elsewhere, the local sponsoring entity’s tax situation and any strategic advantage
we might obtain. The Group does not generally pre-fund post-retirement healthcare arrangements.
2023
2022
2021
Pension
benefits
US$m
Other
benefits
US$m
Total
US$m
Total
US$m
Total
US$m
Contributions to defined benefit plans
205
32
237
211
464
Contributions to defined contribution plans
408
2
410
363
311
Total
613
34
647
574
775
Summary of movement in net defined benefit liability A summary of the movement in the net defined benefit liability is shown in the first table below. The subsequent tables provide a more detailed
analysis of the movements in the present value of the obligations and the fair value of assets.
2023
2022
Pension
benefits
US$m
Other
benefits
US$m
Total
US$m
Total
US$m
Change in the net defined benefit liability
Net defined benefit surplus/(liability) at the start of the year
152
(622)
(470)
(1,028)
Amounts recognised in income statement
5
(38)
(33)
(192)
Amounts recognised in other comprehensive income
(468)
7
(461)
578
Employer contributions
205
32
237
211
Assets transferred to defined contribution section
(6)
—
(6)
(4)
Currency exchange rate gains/(losses)
17
(7)
10
(35)
Net defined benefit liability at the end of the year
(95)
(628)
(723)
(470)
2023
2022
Pension
benefits
US$m
Other
benefits
US$m
Total
US$m
Total
US$m
Change in present value of obligation
Present value of obligation at the start of the year
(10,555)
(622)
(11,177)
(15,728)
Current employer service costs
(76)
(3)
(79)
(143)
Past service credit/(cost)
88
(1)
87
—
Settlements
4
—
4
—
Interest on obligation
(499)
(34)
(533)
(370)
Contributions by plan participants
(19)
—
(19)
(20)
Benefits paid
716
32
748
783
Experience (losses)/gains
(69)
29
(40)
(170)
Changes in financial assumptions (losses)/gains
(393)
(25)
(418)
3,563
Changes in demographic assumptions gains
48
3
51
17
Currency exchange rate (losses)/gains
(412)
(7)
(419)
891
Present value of obligation at the end of the year
(11,167)
(628)
(11,795)
(11,177)
2023
2022
Pension
benefits
US$m
Other
benefits
US$m
Total
US$m
Total
US$m
Change in plan assets
Fair value of plan assets at the start of the year
10,708
—
10,708
14,700
Settlements
(4)
—
(4)
—
Interest on assets
512
—
512
334
Contributions by plan participants
19
—
19
20
Contributions by employer
205
32
237
211
Benefits paid
(716)
(32)
(748)
(783)
Non-investment expenses
(20)
—
(20)
(13)
Return on plan assets, net of interest on assets
222
—
222
(2,831)
Impact of buy-in
(216)
—
(216)
—
Assets transferred to defined contribution section
(6)
—
(6)
(4)
Currency exchange rate gains/(losses)
434
—
434
(926)
Fair value of plan assets at the end of the year
11,138
—
11,138
10,708
Summary of main assumptions rate for valuations of plans and sensitivity analysis
Key estimate - Estimation of obligations for post-employment costs
The value of the Group’s obligations for post-employment benefits is dependent on the amount of benefits that are expected to be paid out,
discounted to the balance sheet date. The most significant assumptions used in accounting for pension plans are:
–The discount rate - used to determine the net present value of the obligations, the interest cost on the obligations and the interest income on
plan assets. We use the yield from high-quality corporate bonds with maturities and terms that match those of the post-employment
obligations as closely as possible. Where there is no developed corporate bond market in a currency, the rate on government bonds is used.
–The long-term inflation rate - used to project increases in future benefit payments for those plans that have benefits linked to inflation. The
assumption regarding future inflation is based on market yields on inflation linked instruments, where possible, combined with consensus
views.
–The mortality rates - used to project the period over which benefits will be paid, which is then discounted to arrive at the net present value of
the obligations. The Group reviews the actual mortality rates of retirees in its major pension plans on a regular basis and uses these rates to
set its current mortality assumptions. It also uses its judgement with respect to allowances for future improvements in longevity having regard
to standard improvement scales in each relevant country and after taking external actuarial advice.
The weighted-average assumptions used for the valuation at year end are summarised below:
Canada
UK
US
Switzerland
At 31 December 2023
Discount rate
4.6%
4.5%
4.8%
1.5%
Long-term inflation(a)
1.9%
3.1%
2.2%
1.2%
Rate of increase in pensions
0.2%
2.6%
—%
2.3%
At 31 December 2022
Discount rate
5.0%
4.9%
5.3%
2.3%
Long-term inflation(a)
2.1%
3.3%
2.4%
1.2%
Rate of increase in pensions
0.5%
2.8%
—%
3.4%
(a)The long-term inflation assumption shown for the UK is for the Retail Price Index. The assumption for the Consumer Price Index at 31 December 2023 was 2.5% (2022: 2.7%).
2023
2022
Approximate
(increase)/
decrease in obligations
Approximate
(increase)/
decrease in obligations
Assumption
Change in assumption
Pensions
US$m
Other
US$m
Pensions
US$m
Other
US$m
Discount rate
Increase of 0.5 percentage points
460
31
483
32
Decrease of 0.5 percentage points
(514)
(33)
(510)
(34)
Long-term inflation
Increase of 0.5 percentage points
(183)
(9)
(174)
(10)
Decrease of 0.5 percentage points
176
8
168
9
Demographic – allowance for future
improvements in longevity
Participants assumed to have the mortality rates of individuals
who are one year older
244
7
241
8
Participants assumed to have the mortality rates of individuals
who are one year younger
(244)
(7)
(241)
(8)