v3.22.4

Pension and Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits Defined Benefit Pension and Other Postretirement Benefit Plans Arconic sponsors several defined benefit pension and other postretirement plans covering eligible employees and retirees in U.S. and foreign locations. Pension benefits generally depend on length of service and job grade. Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that the related plans can pay benefits to retirees as they become due. Most salaried and non-bargaining hourly U.S. employees hired after March 1, 2006, participate in a defined contribution plan instead of a defined benefit plan. The Company has one health care and life insurance postretirement benefit plan covering eligible U.S. retirees. The plan is unfunded and pays a percentage of medical expenses, reduced by deductibles and other coverage. Life benefits are provided by insurance contracts. Arconic retains the right, subject to existing agreements, to change or eliminate these benefits. Certain bargaining hourly U.S. employees hired on or after July 1, 2010 and all salaried and non-bargaining hourly U.S. employees are not eligible for postretirement health care benefits. All salaried and most hourly U.S. employees are not eligible for postretirement life insurance benefits. United Steelworkers Labor Agreement—On May 14, 2022, the Company and the United Steelworkers reached a tentative four-year labor agreement covering approximately 3,300 employees at four U.S. locations; the previous labor agreement expired on May 15, 2022. The tentative agreement was ratified by the union employees on June 1, 2022. In 2022, Arconic recognized $19 in Cost of goods sold on the accompanying Statement of Consolidated Operations primarily for a one-time signing bonus for the covered employees. Additionally, the new labor agreement provides for, among other items, established annual wage increases and higher multipliers used to calculate the union employees' future pension benefits. The change to the pension benefits qualifies as a significant plan amendment to the Company's U.S. hourly defined benefit pension plan, and, as a result, Arconic was required to complete a remeasurement of this plan (generally completed on an annual basis as of December 31st), including an interim actuarial valuation of the plan obligations. Communication of the benefit change to the union employees occurred on May 15, 2022, and the effective date of this amendment was May 16, 2022. For purposes of performing an interim remeasurement of the plan, the Company applied a practical expedient to the remeasurement date and selected May 31, 2022. Accordingly, the discount rate used in calculating the plan obligations increased to 4.66% at May 31, 2022 from 2.96% at December 31, 2021. The remeasurement of this plan, together with the amendment for increased benefits, resulted in a $13 net decrease to Accrued pension benefits and a $10 (after-tax) net decrease to Accumulated other comprehensive loss (see Note L) on the accompanying Consolidated Balance Sheet. Additionally, annual net periodic benefit cost to be recognized for this plan in 2022 increased by $8, comprised of a $2 decrease in service cost and a $10 increase in non-service costs. U.S. Pension Plan Interim Settlement—In September 2022, management concluded that it was probable that lump-sum benefit payments expected to be paid in 2022 under Arconic's U.S. salary defined benefit pension plan will exceed the pre-determined threshold (sum of annual service cost and interest cost) requiring settlement accounting. As a result, the Company was required to complete a remeasurement of this plan (generally completed on an annual basis as of December 31st), including an interim actuarial valuation of the plan obligations. For purposes of performing an interim remeasurement of the plan, Arconic applied a practical expedient to the remeasurement date and selected September 30, 2022. Accordingly, the discount rate used in calculating the plan obligations increased to 5.71% at September 30, 2022 from 2.82% at December 31, 2021. The remeasurement of this plan, together with the settlement of benefits, resulted in a $34 net decrease to Accrued pension benefits and a $26 (after-tax) net decrease to Accumulated other comprehensive loss (see Note L) on the accompanying Consolidated Balance Sheet. Unfavorable plan asset performance offset most of the impact of the increase in the discount rate. Also, the settlement resulted in the accelerated amortization of a portion of the existing net actuarial loss associated with this plan in the amount of $15 ($12 after-tax). This amount was reclassified to earnings through Restructuring and other charges (see Note E) from Accumulated other comprehensive loss (see Note L). Additionally, annual net periodic benefit cost to be recognized for this plan in 2022 increased by $8, all of which relates to non-service costs. U.S. Pension Plan Annuitizations—In April 2021, Arconic purchased a group annuity contract to transfer the obligation to pay the remaining retirement benefits of approximately 8,400 participants in two U.S. defined benefit pension plans to an insurance company. In connection with this transaction, the Company contributed a total of $250 to the two plans to maintain the funding level of the remaining plan obligations not transferred. This contribution was funded with the net proceeds from a March 2021 debt offering (see 2021 Activity in Note Q). Prior to this action, these two plans had an aggregate of approximately 23,000 participants. This transaction represents a significant settlement event, and, as a result, the Company was required to complete a remeasurement of these two plans (generally completed on an annual basis as of December 31st), including an interim actuarial valuation of the plan obligations. Accordingly, the weighted-average discount rate used in calculating the plan obligations increased to 3.10% as of April 30, 2021 from 2.54% as of December 31, 2020. The remeasurement resulted in a combined projected benefit obligation and fair value of plan assets of $3,337 and $2,790, respectively, as of April 30, 2021. From these amounts, the group annuity transaction resulted in the settlement of $995 in plan obligations and the transfer of $1,007 in plan assets. The remeasurement of these two plans, together with the annuitization, resulted in a $152 net decrease to Accrued pension benefits and a $117 (after-tax) net decrease to Accumulated other comprehensive loss (see Note L). Additionally, the annuitization resulted in the accelerated amortization of a portion of the existing net actuarial loss associated with these two plans in the amount of $549 ($423 after-tax). This amount was reclassified to earnings through Restructuring and other charges (see Note E) from Accumulated other comprehensive loss (see Note L). In December 2020, Arconic purchased a group annuity contract to transfer the obligation to pay the remaining retirement benefits of approximately 7,000 participants from two U.S. defined benefit pension plans to an insurance company. On a combined basis, this transaction resulted in the settlement of approximately $240 in plan obligations and the transfer of approximately $245 in plan assets. Prior to this action, these two plans had approximately 30,000 participants combined. The Company recognized a $140 ($108 after-tax) settlement charge, which represents the accelerated amortization of a portion of the existing net actuarial loss associated with these plans. This amount was reclassified to earnings through Restructuring and other charges (see Note E) from Accumulated other comprehensive loss (see Note L). U.S. OPEB Plan Amendments—In August 2021, Arconic modified the medical benefit coverage offered to certain Medicare-eligible participants under the Company's U.S. other postretirement benefit plan. Effective January 1, 2022, this modification results in lower premiums and increased benefits to the participants. This change qualifies as a significant plan amendment to the Company's U.S. other postretirement benefit plan. Accordingly, this plan was required to be remeasured, and through this process, the discount rate was updated to 2.78% at August 31, 2021 from 2.61% at December 31, 2020. The amendment, together with the remeasurement of this plan, resulted in a $34 net decrease to the Company's other postretirement benefits liability and a $26 (after-tax) net decrease to Accumulated other comprehensive loss (see Note L) on the accompanying Consolidated Balance Sheet. The impact of this change on the Company's annual net periodic benefit cost is not material. The Company's estimated annual benefit payments will decrease by approximately $4 beginning in 2022. In July 2020, Arconic and the United Steelworkers agreed to modify the medical benefit coverage offered to certain Medicare-eligible participants under the Company's U.S. other postretirement benefit plan, as provided for in the current master collective bargaining agreement between the parties. Effective January 1, 2021, this modification results in lower premiums and increased benefits to the participants. This change qualifies as a significant plan amendment to the Company's U.S. other postretirement benefit plan. Accordingly, this plan was required to be remeasured, and through this process, the discount rate was updated to 2.54% at July 31, 2020 from 3.17% at December 31, 2019. The amendment, together with the remeasurement of this plan, resulted in a net decrease to both the Company's other postretirement benefits liability of $7 and Accumulated other comprehensive loss of $5 (after-tax). The impact of this change on the Company's annual net periodic benefit cost is not material. The Company's estimated annual benefit payments decreased by approximately $20 beginning in 2021. U.K. Pension Plan Annuitization—In June 2020, Arconic and Howmet, together, executed several liability management actions related to approximately 1,800 participants in a U.K. defined benefit pension plan. The primary action was the purchase of a group annuity contract to transfer the obligation to pay the remaining retirement benefits of certain plan participants to an insurance company. On a combined basis, these actions resulted in the settlement of approximately $400 in plan obligations and the transfer of approximately $460 in plan assets. In the 2020 second quarter, the Company contributed $10 to the plan to facilitate these actions and maintain the funding level of the remaining plan obligations. Prior to these actions, this plan had approximately 3,350 participants combined. Accordingly, this plan was required to be remeasured, and through this process, the discount rate was updated to 1.55% at June 30, 2020 from 2.05% at December 31, 2019. The settlement events, together with the remeasurement of the plan, resulted in an approximately $250 net reduction to the Company’s remaining plan obligation and both a decrease to the Company’s pension benefit asset and a settlement charge of $58 ($48 after-tax) in 2020. The settlement charge represents the accelerated amortization of a portion of the existing net actuarial loss associated with this plan. This amount was reclassified to earnings through Restructuring and other charges (see Note E) from Accumulated other comprehensive loss. Subsequent to this remeasurement, the remaining respective plan obligations and plan assets attributable to Arconic and Howmet were transferred into separate plans and the existing U.K. plan was terminated. Immediately following the completion of the transfer, the Company’s remaining plan obligation was approximately $240 and the plan assets were approximately $260 related to 1,050 plan participants. The Separation—The above descriptions of retirement benefits for Arconic participants also describe the retirement benefits provided to the employees and retirees of ParentCo prior to the Separation Date. Prior to the Separation Date for certain non-U.S. plans, eligible employees and retirees related to the Arconic Corporation Businesses participated in ParentCo-sponsored defined benefit pension and other postretirement plans (the “Shared Plans”), which included participants related to the Howmet Aerospace Businesses and ParentCo corporate participants, as well as eligible retirees from previously closed or sold operations. Also, prior to the Separation Date, other eligible employees and retirees related to the Arconic Corporation Businesses participated in certain non-U.S. defined benefit pension and other postretirement plans (the “Direct Plans”). The Company accounted for the portion of the Shared Plans related to its employees as multiemployer benefit plans. Accordingly, Arconic did not record an asset or liability to recognize the funded status of the Shared Plans. However, the related pension and other postretirement benefit expenses attributable to Arconic were based primarily on pensionable compensation of active Arconic participants and estimated interest costs, respectively. The Company also recorded an allocation of pension and other postretirement benefit expenses for the Shared Plans attributable to ParentCo corporate participants, as well as to participants related to closed and sold operations (see Cost Allocations in Note A). The Direct Plans were accounted for as defined benefit pension and other postretirement plans. Accordingly, the funded status of each Direct Plan was recorded in the Company’s Consolidated Balance Sheet. Actuarial gains and losses that had not yet been recognized in earnings were recorded in Accumulated other comprehensive loss until they were amortized as a component of net periodic benefit cost. The determination of benefit obligations and recognition of expenses related to Direct Plans were dependent on various assumptions, including, among others, discount rates, long-term expected rates of return on plan assets, and future compensation increases. Management developed each assumption using relevant company experience in conjunction with market-related data for each of the plans. In preparation for the Separation, effective January 1, 2020, certain U.S. pension and other postretirement benefit plans previously sponsored by ParentCo (the “U.S. Shared Plans” – see above) were separated into standalone plans for both Arconic (the “New Direct Plans”) and Howmet. Accordingly, on January 1, 2020, Arconic recognized an aggregate liability of $1,920, of which $60 was current, reflecting the combined net funded status of the New Direct Plans, comprised of a benefit obligation of $4,255 and plan assets of $2,335, as well as $1,752 (net of tax impact) in Accumulated other comprehensive loss representing a net actuarial loss. Additionally, effective on the Separation Date, certain other Shared Plans (the “Additional New Direct Plans,” and, collectively with the Direct Plans and New Direct Plans, the “Cumulative Direct Plans”) were assumed by Arconic. Accordingly, on the Separation Date, Arconic recognized a noncurrent asset of $65 and a noncurrent liability of $15, reflecting the combined net funded status of the Additional New Direct Plans, as well as $50 (net of tax impact) in Accumulated other comprehensive loss representing a net actuarial loss. The funded status of Arconic’s Cumulative Direct Plans is measured as of December 31 each calendar year. All the information that follows for pension and other postretirement benefit plans is only applicable to the Cumulative Direct Plans, as appropriate. Obligations and Funded Status
|  | Pension benefits |  | Other postretirement benefits |
December 31, |  | 2022 |  | 2021 |  | 2022 |  | 2021 |
Change in benefit obligation |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 2,817 |  |  | $ | 4,081 |  |  | $ | 440 |  |  | $ | 514 |  |
Service cost |  | 16 |  |  | 21 |  |  | 5 |  |  | 6 |  |
Interest cost |  | 75 |  |  | 63 |  |  | 10 |  |  | 11 |  |
Amendments |  | 23 |  |  | — |  |  | — |  |  | (30) |  |
Actuarial gains(1) |  | (722) |  |  | (105) |  |  | (96) |  |  | (23) |  |
Benefits paid |  | (135) |  |  | (183) |  |  | (30) |  |  | (38) |  |
Settlements |  | (78) |  |  | (1,051) |  |  | — |  |  | — |  |
Foreign currency translation impact |  | (33) |  |  | (9) |  |  | — |  |  | — |  |
Divestitures |  | (2) |  |  | — |  |  | — |  |  | — |  |
Benefit obligation at end of year(2) |  | $ | 1,961 |  |  | $ | 2,817 |  |  | $ | 329 |  |  | $ | 440 |  |
Change in plan assets |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 2,124 |  |  | $ | 2,754 |  |  | $ | — |  |  | $ | — |  |
Actual return on plan assets |  | (535) |  |  | 177 |  |  | — |  |  | — |  |
Employer contributions |  | 31 |  |  | 458 |  |  | — |  |  | — |  |
Benefits paid |  | (127) |  |  | (176) |  |  | — |  |  | — |  |
Settlements |  | (78) |  |  | (1,069) |  |  | — |  |  | — |  |
Foreign currency translation impact |  | (32) |  |  | (3) |  |  | — |  |  | — |  |
Administrative expenses |  | — |  |  | (17) |  |  | — |  |  | — |  |
Fair value of plan assets at end of year(2) |  | $ | 1,383 |  |  | $ | 2,124 |  |  | $ | — |  |  | $ | — |  |
Funded status(2) |  | $ | (578) |  |  | $ | (693) |  |  | $ | (329) |  |  | $ | (440) |  |
Amounts recognized on the Consolidated Balance Sheet: |  |  |  |  |  |  |  |  |
Noncurrent assets |  | $ | 15 |  |  | $ | 32 |  |  | $ | — |  |  | $ | — |  |
Current liabilities |  | (7) |  |  | (8) |  |  | (27) |  |  | (29) |  |
Noncurrent liabilities |  | (586) |  |  | (717) |  |  | (302) |  |  | (411) |  |
Net amount recognized |  | $ | (578) |  |  | $ | (693) |  |  | $ | (329) |  |  | $ | (440) |  |
Amounts recognized in Accumulated Other Comprehensive Loss (pretax): |  |  |  |  |  |  |  |  |
Net actuarial loss |  | $ | 1,165 |  |  | $ | 1,389 |  |  | $ | 62 |  |  | $ | 166 |  |
Prior service cost (benefit) |  | 20 |  |  | — |  |  | (77) |  |  | (85) |  |
Net amount recognized |  | $ | 1,185 |  |  | $ | 1,389 |  |  | $ | (15) |  |  | $ | 81 |  |
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income (pretax): |  |  |  |  |  |  |  |  |
Net actuarial gain |  | $ | (103) |  |  | $ | (137) |  |  | $ | (96) |  |  | $ | (23) |  |
Amortization of net actuarial loss (includes settlements) |  | (121) |  |  | (678) |  |  | (8) |  |  | (8) |  |
Prior service cost (benefit) |  | 23 |  |  | — |  |  | — |  |  | (30) |  |
Amortization of prior service (cost) benefit |  | (3) |  |  | — |  |  | 8 |  |  | 6 |  |
Total |  | $ | (204) |  |  | $ | (815) |  |  | $ | (96) |  |  | $ | (55) |  |
_____________________ (1)At December 31, 2022 and 2021, actuarial gains for pension benefits include approximately $(725) and $(130), respectively, and for other postretirement benefits includes approximately $(100) and $(15), respectively, attributable to the change in the discount rate used to determine the benefit obligation (see “Assumptions” below). (2)At December 31, 2022, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $1,716, $1,167, and $549, respectively. At December 31, 2021, the benefit obligation, fair value of plan assets, and funded status for U.S. pension plans were $2,398, $1,744, and $654, respectively. Pension Plan Benefit Obligations
|  | Pension benefits
December 31, |  | 2022 |  | 2021
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans was as follows: |  |  |  |
Projected benefit obligation |  | $ | 1,961 |  |  | $ | 2,817 |
Accumulated benefit obligation |  | 1,956 |  |  | 2,807 |
The aggregate projected benefit obligation and fair value of plan assets for defined benefit pension plans with projected benefit obligations in excess of plan assets was as follows: |  |  |  |
Projected benefit obligation |  | 1,759 |  |  | 2,472 |
Fair value of plan assets |  | 1,167 |  |  | 1,747 |
The aggregate accumulated benefit obligation and fair value of plan assets for defined benefit pension plans with accumulated benefit obligations in excess of plan assets was as follows: |  |  |  |
Accumulated benefit obligation |  | 1,755 |  |  | 2,464 |
Fair value of plan assets |  | 1,167 |  |  | 1,747 |
Components of Net Periodic Benefit Cost
|  | Pension benefits(1) |  | Other postretirement benefits |  |  |  |
For the year ended December 31, |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020 |  |  |  |
Service cost |  | $ | 16 |  |  | $ | 21 |  |  | $ | 21 |  |  | $ | 5 |  |  | $ | 6 |  |  | $ | 5 |  |  |  |  |
Interest cost |  | 75 |  |  | 63 |  |  | 108 |  |  | 10 |  |  | 11 |  |  | 13 |  |  |  |  |
Expected return on plan assets |  | (87) |  |  | (110) |  |  | (170) |  |  | — |  |  | — |  |  | — |  |  |  |  |
Amortization of net actuarial loss |  | 74 |  |  | 94 |  |  | 123 |  |  | 8 |  |  | 8 |  |  | 8 |  |  |  |  |
Amortization of prior service benefit |  | 3 |  |  | — |  |  | — |  |  | (8) |  |  | (6) |  |  | (4) |  |  |  |  |
Settlements(2) |  | 47 |  |  | 584 |  |  | 199 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Net periodic benefit cost(3) |  | $ | 128 |  |  | $ | 652 |  |  | $ | 281 |  |  | $ | 15 |  |  | $ | 19 |  |  | $ | 22 |  |  |  |  |
_____________________ (1)In 2022 and 2021, net periodic benefit cost for U.S pension plans was $127 and $653, respectively. (2)In 2022, Settlements were due to the payment of lump-sum benefits. In 2021, Settlements were due to the purchase of a group annuity contract ($549 - see U.S. Pension Plan Annuitizations above) and the payment of lump-sum benefits ($35). In 2020, Settlements were due to two separate purchases of a group annuity contract (see U.S. Pension Plan Annuitizations and U.K. Pension Plan Annuitization above). (3)Service cost was included within Cost of goods sold, Settlements were included within Restructuring and other charges, and all other components were included in Other expenses (income), net on the accompanying Statement of Consolidated Operations. Assumptions Weighted average assumptions used to determine benefit obligations and net periodic benefit cost for pension and other postretirement benefit plans were as follows:
| Benefit obligations |  | Net periodic benefit cost
| December 31, |  | For the year ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2020
Discount rate—pension plans | 5.49 | % |  | 2.76 | % |  | 2.76 | % |  | 2.27 | % |  | 2.86 | %
Discount rate—other postretirement benefit plans | 5.62 |  |  | 2.90 |  |  | 2.99 |  |  | 2.19 |  |  | 2.49 |
Rate of compensation increase—pension plans | 2.67 |  |  | 2.66 |  |  | 2.66 |  |  | 2.54 |  |  | 3.20 |
Expected long-term rate of return on plan assets—pension plans | — |  |  | — |  |  | 5.18 |  |  | 4.91 |  |  | 6.09 |
The discount rate is determined using a Company-specific yield curve model (above-median) developed with the assistance of an external actuary. The cash flows of the projected benefit obligations are discounted using a single equivalent rate derived from yields on high quality corporate bonds, which represent a broad diversification of issuers in various sectors. The yield curve model parallels the projected plan cash flows, which have a weighted average duration of 11 years, and the underlying cash flows of the bonds included in the model exceed the cash flows needed to satisfy the plan obligations multiple times. If a deep market of high quality corporate bonds does not exist in a country, then the yield on government bonds is used. The expected long-term rate of return on plan assets is generally applied to a five-year market-related value of plan assets (the fair value at the plan measurement date is used for certain non-U.S. plans). The process used by management to develop this assumption is one that relies on forward-looking investment returns by asset class. Management incorporates expected future investment returns on current and planned asset allocations using information from various external investment managers and consultants, as well as management’s own judgment. For 2022 and 2021, the expected long-term rate of return used by management was based on the prevailing and planned strategic asset allocations, as well as estimates of future returns by asset class. For 2023, management anticipates that the weighted-average expected long-term rate of return will be in the range of 5.50% to 6.50%. Weighted-average assumed health care cost trend rates for U.S. other postretirement benefit plans were as follows (non-U.S. plans are not material):
|  | 2022 |  | 2021
Health care cost trend rate assumed for next year |  | 6.3 | % |  | 4.5 | %
Rate to which the cost trend rate gradually declines |  | 4.5 | % |  | 4.7 | %
Year that the rate reaches the rate at which it is assumed to remain |  | 2029 |  | 2027
The assumed health care cost trend rate is used to measure the expected cost of gross eligible charges covered by the Company’s other postretirement benefit plans. For 2023, a 6.3% trend rate will be used, reflecting management’s best estimate of the change in future health care costs covered by the plans. Plan Assets Arconic’s pension plan investment policy and weighted average asset allocations at December 31, 2022 and 2021, by asset class, were as follows:
|  |  |  | Plan assets at December 31,
Asset class |  | Policy maximum |  | 2022 |  | 2021
Equities |  | 40% |  | 22 | % |  | 31 | %
Fixed income |  | 100% |  | 62 |  |  | 56 |
Other investments |  | 30% |  | 16 |  |  | 13 |
Total |  |  |  | 100 | % |  | 100 | %
The principal objectives underlying the investment of the pension plan assets are to ensure that Arconic can properly fund benefit obligations as they become due under a broad range of potential economic and financial scenarios, maximize the long-term investment return with an acceptable level of risk based on such obligations, and broadly diversify investments across and within various asset classes to protect asset values against adverse movements. The use of derivative instruments is permitted where appropriate and necessary for achieving diversification across the balance of the asset portfolio. Investment practices comply with the requirements of applicable country laws and regulations. The following section describes the valuation methodologies used by the trustees to measure the fair value of pension plan assets. For plan assets measured at net asset value, this refers to the net asset value of the investment on a per share basis (or its equivalent) as a practical expedient. Otherwise, an indication of the level in the fair value hierarchy in which each type of asset is generally classified is provided (see Note U for the definition of fair value and a description of the fair value hierarchy). Equities—These securities consist of: (i) direct investments in the stock of publicly traded U.S. and non-U.S. companies and are valued based on the closing price reported in an active market on which the individual securities are traded (generally classified in Level 1); (ii) the plans’ share of commingled funds that are invested in the stock of publicly traded companies and are valued at net asset value; and (iii) direct investments in long/short equity hedge funds and private equity (limited partnerships and venture capital partnerships) and are valued at net asset value. Fixed income—These securities consist of: (i) U.S. government debt and are generally valued using quoted prices (included in Level 1); and (ii) publicly traded U.S. and non-U.S. fixed interest obligations (principally corporate bonds and debentures) and are valued through consultation and evaluation with brokers in the institutional market using quoted prices and other observable market data (included in Level 2). Other investments—These investments include, among others: (i) real estate investment trusts valued based on the closing price reported in an active market on which the investments are traded (included in Level 1); (ii) the plans’ share of commingled funds that are invested in real estate partnerships and are valued at net asset value; (iii) direct investments in discretionary and systematic macro hedge funds and private real estate (includes limited partnerships) and are valued at net asset value; and (iv) absolute return strategy funds and are valued at net asset value. The fair value methods described above may not be indicative of net realizable value or reflective of future fair values. Additionally, while Arconic believes the valuation methods used by the plans’ trustees 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 table presents the fair value of pension plan assets classified under either the appropriate level of the fair value hierarchy or net asset value:
December 31, 2022 |  | Level 1 |  | Level 2 |  | Level 3 |  | Net Asset Value |  | Total
Equities: |  |  |  |  |  |  |  |  |  |
Equity securities |  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 120 |  |  | $ | 121 |
Long/short equity hedge funds |  | — |  |  | — |  |  | — |  |  | 23 |  |  | 23 |
Private equity |  | — |  |  | — |  |  | — |  |  | 156 |  |  | 156 |
|  | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 299 |  |  | $ | 300 |
Fixed Income: |  |  |  |  |  |  |  |  |  |
Intermediate and long duration government/credit |  | $ | 113 |  |  | $ | 277 |  |  | $ | — |  |  | $ | 369 |  |  | $ | 759 |
Other |  | 5 |  |  | — |  |  | — |  |  | 91 |  |  | 96 |
|  | $ | 118 |  |  | $ | 277 |  |  | $ | — |  |  | $ | 460 |  |  | $ | 855 |
Other investments: |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 93 |  |  | $ | 93 |
Discretionary and systematic macro hedge funds |  | — |  |  | — |  |  | — |  |  | 100 |  |  | 100 |
Other |  | — |  |  | — |  |  | — |  |  | 29 |  |  | 29 |
|  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 222 |  |  | $ | 222 |
Total* |  | $ | 119 |  |  | $ | 277 |  |  | $ | — |  |  | $ | 981 |  |  | $ | 1,377 |
December 31, 2021 |  | Level 1 |  | Level 2 |  | Level 3 |  | Net Asset Value |  | Total
Equities: |  |  |  |  |  |  |  |  |  |
Equity securities |  | $ | 12 |  |  | $ | — |  |  | $ | — |  |  | $ | 392 |  |  | $ | 404 |
Long/short equity hedge funds |  | — |  |  | — |  |  | — |  |  | 24 |  |  | 24 |
Private equity |  | — |  |  | — |  |  | — |  |  | 224 |  |  | 224 |
|  | $ | 12 |  |  | $ | — |  |  | $ | — |  |  | $ | 640 |  |  | $ | 652 |
Fixed Income: |  |  |  |  |  |  |  |  |  |
Intermediate and long duration government/credit |  | $ | 95 |  |  | $ | 412 |  |  | $ | — |  |  | $ | 612 |  |  | $ | 1,119 |
Other |  | 23 |  |  | — |  |  | — |  |  | 50 |  |  | 73 |
|  | $ | 118 |  |  | $ | 412 |  |  | $ | — |  |  | $ | 662 |  |  | $ | 1,192 |
Other investments: |  |  |  |  |  |  |  |  |  |
Real estate |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 108 |  |  | $ | 108 |
Discretionary and systematic macro hedge funds |  | — |  |  | — |  |  | — |  |  | 99 |  |  | 99 |
Other |  | — |  |  | — |  |  | — |  |  | 77 |  |  | 77 |
|  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 284 |  |  | $ | 284 |
Total* |  | $ | 130 |  |  | $ | 412 |  |  | $ | — |  |  | $ | 1,586 |  |  | $ | 2,128 |
______________________ *As of December 31, 2022 and 2021, the total fair value of pension plan assets excludes a net receivable of $7 and net payable of $4, respectively, which represents securities not yet settled plus interest and dividends earned on various investments. Funding and Cash Flows It is Arconic’s policy to contribute amounts to funded defined benefit pension plans sufficient to meet the minimum requirements set forth in applicable country employee benefit and tax regulations, including ERISA for U.S. plans. From time to time, Arconic may contribute additional amounts as deemed appropriate. In 2022, 2021, and 2020, cash contributions to Arconic’s funded defined benefit pension plans were $31, $458, and $271, respectively. The 2021 cash contributions include a total of $250 made by the Company in April 2021 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract (see U.S. Pension Plan Annuitizations above). The minimum required contributions to Arconic’s funded defined benefit pension plans in 2023 are estimated to be $38, of which $31 is for U.S. plans. Benefit payments expected to be paid to pension (funded and unfunded) and other postretirement benefit plan participants are as follows:
For the year ended December 31, |  | Pension benefits |  | Other postretirement benefits
2023 |  | $ | 142 |  |  | $ | 27 |
2024 |  | 142 |  | 27
2025 |  | 143 |  | 27
2026 |  | 146 |  | 27
2027 |  | 145 |  | 26
2028 through 2032 |  | 719 |  | 127
|  | $ | 1,437 |  |  | $ | 261 |
Defined Contribution Plans Arconic sponsors savings and investment plans in the United States and certain other countries. Prior to the Separation Date, employees attributable to the Arconic Businesses participated in ParentCo-sponsored plans. In the United States, employees may contribute a portion of their compensation to the plans, and Arconic (ParentCo prior to the Separation Date) matches a specified percentage of these contributions in equivalent form of the investments elected by the employee. Also, Arconic (ParentCo prior to the Separation Date) makes contributions to a retirement savings account based on a percentage of eligible compensation for certain U.S. employees. Arconic’s expenses (contributions) related to all defined contribution plans were $45 in 2022, $39 in 2021, and $35 in 2020.

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