In addition to the legally required social security schemes, Alcon has sponsored numerous independent pension and other post-employment benefit plans. In most cases, these plans are externally funded in entities that are legally separate from Alcon. For certain subsidiaries, however, no independent plan assets exist for the pension and other post-employment benefit obligations of associates. In these cases the related unfunded liability is included in the Consolidated Balance Sheet. The value of the post-employment benefits promised under the pension and other post-employment benefit plans is represented by the defined benefit obligation ("DBO"), which is measured based on the projected unit credit method ("PUC"). Independent actuaries reappraise the DBOs of all major pension and other post-employment benefit plans annually. Plan assets are recognized at fair value.

The major pension and other post-employment benefit plans are based in Switzerland, the United States, Germany, and the United Kingdom. As of December 31, 2023, these plans represent 88% of Alcon's total DBO and are independently sponsored by Alcon. Details of the plans in those significant countries are provided below.

The pension plans in Switzerland represent the most significant portion of Alcon's total pension DBO and total plan assets. The principal plan in Switzerland is funded and open for new joiners. For the Swiss pension plan, active insured members' benefits are partially linked to the contributions paid into the plan. Certain features of the Swiss pension plan required by law preclude the plan from being categorized as a defined contribution plan. These factors include a minimum interest guarantee on retirement savings accounts, a pre-determined factor for converting the accumulated savings account balance into a pension and embedded death and disability benefits. All benefits granted under a Swiss-based principal

pension plan are vested, and Swiss legislation prescribes that the employer has to contribute a fixed percentage of an associate's pay to an external pension trust. Additional employer contributions may be required whenever the foundation's statutory funding ratio falls below a certain level. The associate also contributes to the plan.

Alcon's Swiss pension obligation is set-up under an Alcon-sponsored arrangement affiliated with Copré La Collective de Prévoyance ("Copré") – a Swiss collective foundation. As a collective foundation, Copré is governed by its own board of trustees which is responsible for the foundation regulations and asset investment strategy for multiple entities participating in the collective foundation. Alcon maintains its own pension committee, consisting of representatives nominated by Alcon and the active insured associates. During the fourth quarter of 2021, Copré announced the rates to be used to convert participant balances to pension annuities for 2024 to 2026. This announcement resulted in a plan amendment with a benefit of $15 million recognized in Other income and a corresponding decrease in the DBO. During the third quarter of 2023, Copré announced that the rates to be used to convert participant balances to pension annuities will remain constant until 2028.

The United States pension plans represent the second largest component of Alcon's total pension DBO and total plan assets. The principal plan (Qualified Plan) is funded, whereas the plans providing additional benefits for executives (Defined Benefit Restoration Plan and Grandfathered Supplemental Executive Plan) are unfunded. Benefits in the Qualified Plan and Restoration Plan are frozen for all participants. Employer contributions are required for the Qualified Plan whenever the statutory funding ratio falls below a certain level. Furthermore, the United States other post-employment benefit plans (US OPEB plans) represent 98% of the total DBO for other post-employment benefit plans. These benefits in the US primarily consist of post-employment healthcare which has been closed to new members since 2015. Effective January 1, 2021, the Alcon sponsored group health plan for current and future eligible retired participants age 65 and over utilizes a private Medicare marketplace while providing an annual notional contribution to a Health Reimbursement Account for each covered member and spouse. There is no statutory funding requirement for the US OPEB plans.

The major pension arrangements in Germany are governed by the Occupational Pensions Act ("BetrAVG") and represent the third largest component of Alcon's total pension DBO and the fifth largest component of Alcon's total plan assets. The plans are partly funded by a Contractual Trust arrangement or direct insurances. The employer is responsible for contributing the premiums to the insurances and paying certain benefits when they fall due. All plans are closed for new entrants and the benefits are fully vested for all participants. For some participants the benefits are based on final salary and length of employment, and for others the benefit is earned each year based on the current salary in the year of service. Associates do not contribute towards the cost of the benefits.

The pension plan in the United Kingdom represents the fourth largest component of Alcon's total pension DBO and the third largest component of Alcon's total plan assets. The plan is closed with only former Alcon associates entitled to current or future benefits. The Alcon United Kingdom Pension Scheme is governed and administered by a board of trustees in accordance with its Trust Deed. United Kingdom legislation requires that pension schemes are funded prudently (i.e., to a level in excess of the "best estimate" expected cost of providing benefits). Funding is assessed on a triennial basis using assumptions agreed by the board of trustees and Alcon. The board of trustees is responsible for jointly agreeing with Alcon the level of contributions needed to eliminate any shortfall over a reasonable period of time, typically not exceeding 10 years. Under the governing documentation, if a surplus remains once liabilities have been settled it would be refunded to Alcon.


	Pension plans		Other post-employment benefit plans
($ millions)	2023	2022	2023	2022
Benefit obligation at January 1	563	791	221	300
Current service cost	16	20	5	8
Interest cost	20	12	11	8
Past service costs and settlements	(1)	(3)	—	—
Administrative expenses	2	2	—	—
Remeasurement losses/(gains) arising from changes in financial assumptions	46	(185)	6	(62)
Remeasurement (gains) arising from changes in demographic assumptions	(2)	(15)	—	—
Remeasurement losses/(gains) arising from experience-related changes	16	3	(16)	(19)
Currency translation effects	22	(31)	—	—
Benefit payments	(49)	(36)	(18)	(18)
Contributions of associates	5	5	4	4

Benefit obligation at December 31	638	563	213	221
Fair value of plan assets at January 1	417	541	—	—
Interest income	14	8	—	—
Return on plan assets excluding interest income	15	(93)	—	—
Currency translation effects	16	(27)	—	—
Employer contributions	31	19	14	14
Contributions of associates	5	5	4	4
Settlements	(1)	—	—	—
Benefit payments	(49)	(36)	(18)	(18)

Fair value of plan assets at December 31	448	417	—	—
Funded status	(190)	(146)	(213)	(221)
Limitation on recognition of fund surplus at January 1	(21)	(20)
Change in limitation on recognition of fund surplus (including exchange rate differences)	(4)	(1)
Limitation on recognition of fund surplus at December 31	(25)	(21)
Net liability in the balance sheet at December 31	(215)	(167)	(213)	(221)


	Pension plans		Other post-employment benefit plans
($ millions)	2023	2022	2023	2022
Net liability at January 1	(167)	(270)	(221)	(300)
Current service cost	(16)	(20)	(5)	(8)
Net interest expense	(6)	(4)	(11)	(8)
Administrative expenses	(2)	(2)	—	—
Past service costs and settlements	—	3	—	—
Remeasurements	(45)	104	10	81
Currency translation effects	(6)	4	—	—
Employer contributions	31	19	14	14

Change in limitation on recognition of fund surplus	(4)	(1)	—	—
Net liability at December 31	(215)	(167)	(213)	(221)

Amounts recognized in the balance sheet
Prepaid benefit cost	6	8	—	—
Accrued benefit liability	(221)	(175)	(213)	(221)


	2023
($ millions)	Switzerland	United States	Germany	United Kingdom	Rest of the world	Total
By type of member
Active	(241)	(31)	(47)	—	(80)	(399)
Deferred pensioners	(8)	(31)	(19)	(31)	(15)	(104)
Pensioners	(33)	(37)	(27)	(31)	(7)	(135)
Benefit obligation at December 31	(282)	(99)	(93)	(62)	(102)	(638)
Thereof: unfunded plans	49	22	—	—	17	88
Thereof: unfunded portion of funded plans	42	3	74	—	14	133
Prepaid benefit costs and assets subject to limitation on recognition of fund surplus	—	—	—	(5)	(26)	(31)
Fair value of plan assets at December 31	191	74	19	67	97	448
Funded status	(91)	(25)	(74)	5	(5)	(190)


	2022
($ millions)	Switzerland	United States	Germany	United Kingdom	Rest of the world	Total
By type of member
Active	(207)	(32)	(38)	—	(79)	(356)
Deferred pensioners	(6)	(28)	(18)	(33)	(9)	(94)
Pensioners	(23)	(35)	(21)	(25)	(9)	(113)
Benefit obligation at December 31	(236)	(95)	(77)	(58)	(97)	(563)
Thereof: unfunded plans	35	24	—	—	19	78
Thereof: unfunded portion of funded plans	26	7	60	—	4	97
Prepaid benefit costs and assets subject to limitation on recognition of fund surplus	—	—	—	(6)	(23)	(29)
Fair value of plan assets at December 31	175	64	17	64	97	417
Funded status	(61)	(31)	(60)	6	—	(146)


	Pension plans				Other post-employment benefit plans
	2023		2022		2023		2022
Discount rate	3.0	%	3.6	%	5.0	%	5.3	%
Expected rate of pension increase	1.1	%	1.1	%
Expected rate of salary increase	2.7	%	2.5	%
Interest on savings account	2.2	%	2.9	%
Current average life expectancy for a 65-year-old male (in years)	20		20		21		21
Current average life expectancy for a 65-year-old female (in years)	22		22		23		23

Changes in the aforementioned actuarial assumptions can result in significant volatility in the accounting for pension plans and other post-employment benefit plans in the Consolidated Financial Statements. This can result in substantial changes in Alcon's other comprehensive income, non-current liabilities and prepaid pension assets.

The DBO is significantly impacted by assumptions related to the rate used to discount the actuarially determined post-employment benefit liability. This rate is based on yields of high-quality corporate bonds in the country of the plan. Decreasing corporate bond yields decrease the discount rate. A decrease in the discount rate results in an increase in the DBO and a decrease in the funded status.

The impact of decreasing interest rates on a plan's assets is more difficult to predict. A significant part of plan assets is invested in bonds. Bond values typically are inversely correlated to interest rates. Bond values usually increase when interest rates fall and may therefore partially offset the decrease in the funded status. Furthermore, pension assets also

include significant holdings of equity instruments. Share prices tend to rise when interest rates decrease and therefore often offset the negative impact of the increasing DBO on the funded status (although the correlation of interest rates with returns on equities is not as strong as with bonds, especially in the short term).

The assumption for the expected rate for pension increases significantly affects the DBO of most plans in Switzerland, Germany and the United Kingdom. While the average rate remained flat at 1.1% in the current year, such pension increases generally decrease the funded status, although there is no strong correlation between the value of the plan assets and pension/inflation increases.

Assumptions regarding life expectancy significantly impact the DBO. While the life expectancy assumption remained flat in the current year, generally an increase in longevity increases the DBO. There is no offsetting impact from the plan assets, as no longevity bonds or swaps are held by the pension funds. Generational mortality tables are used where this data is available.


($ millions)			(Decrease)/increase in 2023 year-end liability
25 basis point increase in discount rate			(26)
25 basis point decrease in discount rate			27
1 year increase in life expectancy			17
25 basis point increase in rate of pension increase			7
25 basis point decrease in rate of pension increase(1)			(4)
25 basis point increase of interest on savings account			3
25 basis point decrease of interest on savings account			(3)
25 basis point increase in rate of salary increase			3
25 basis point decrease in rate of salary increase			(3)

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes of the assumptions may be correlated. When calculating the sensitivity of the DBO to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the PUC method at the end of the reporting period) has been applied as when calculating the net liability recognized in the Consolidated Balance Sheet.

The strategic allocation of assets of the different pension plans is determined with the objective of achieving an investment return that, together with employer contributions and contributions of associates (where applicable), is sufficient to manage the various funding risks of the plans. Based upon the market and economic environments, actual asset allocations may temporarily be permitted to deviate from policy targets.