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v3.20.4

Post-employment benefits for associates (Tables) | 12 Months Ended
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Dec. 31, 2020
Statement [line items] |
Summary of the funded and unfunded defined benefit obligation for pension and other post retirement benefit plans table |
|  | Pension plans |  | Other post-employment benefit plans |
(USD millions) |  | 2020 |  | 2019 |  | 2020 |  | 2019 |
Benefit obligation at January 1 |  | 23 066 |  | 22 179 |  | 746 |  | 1 073 |
Benefit obligations related to discontinued operations 1 |  |  |  | – 662 |  |  |  | – 385 |
Current service cost |  | 372 |  | 336 |  | 11 |  | 13 |
Interest cost |  | 222 |  | 330 |  | 20 |  | 29 |
Past service costs and settlements |  | – 102 |  | – 168 |  | 1 |  |  |
Administrative expenses |  | 24 |  | 24 |  |  |  |  |
Remeasurement losses/(gains) arising from changes in financial assumptions |  | 1 166 |  | 1 791 |  | 40 |  | 76 |
Remeasurement (gains)/losses arising from changes in demographic assumptions |  | – 28 |  | – 193 |  | – 13 |  | – 9 |
Experience-related remeasurement losses/(gains) |  | 159 |  | 184 |  | – 132 |  | – 22 |
Currency translation effects |  | 1 810 |  | 283 |  | – 7 |  |  |
Benefit payments |  | – 1 264 |  | – 1 256 |  | – 33 |  | – 30 |
Contributions of associates |  | 186 |  | 169 |  |  |  |  |
Effect of acquisitions, divestments or transfers |  | – 9 |  | 49 |  | – 1 |  | 1 |
Benefit obligation at December 31 |  | 25 602 |  | 23 066 |  | 632 |  | 746 |
Fair value of plan assets at January 1 |  | 19 810 |  | 18 838 |  | 134 |  | 119 |
Plan assets related to discontinued operations 1 |  |  |  | – 424 |  |  |  | – 40 |
Interest income |  | 166 |  | 257 |  | 4 |  | 3 |
Return on plan assets excluding interest income |  | 1 318 |  | 1 656 |  | 4 |  | 10 |
Currency translation effects |  | 1 620 |  | 304 |  |  |  |  |
Novartis Group contributions |  | 464 |  | 420 |  | – 20 |  | 74 |
Contributions of associates |  | 186 |  | 169 |  |  |  |  |
Settlements |  | 15 |  | – 193 |  |  |  |  |
Benefit payments |  | – 1 264 |  | – 1 256 |  | – 33 |  | – 30 |
Effect of acquisitions, divestments or transfers |  | 2 |  | 39 |  |  |  | – 2 |
Fair value of plan assets at December 31 |  | 22 317 |  | 19 810 |  | 89 |  | 134 |
Funded status |  | – 3 285 |  | – 3 256 |  | – 543 |  | – 612 |
Limitation on recognition of fund surplus at January 1 |  | – 65 |  | – 68 |  |  |  |  |
Change in limitation on recognition of fund surplus (incl. exchange rate differences) |  | 16 |  | 7 |  |  |  |  |
Interest income on limitation of fund surplus |  | – 2 |  | – 4 |  |  |  |  |
Limitation on recognition of fund surplus at December 31 |  | – 51 |  | – 65 |  |  |  |  |
Net liability in the balance sheet at December 31 |  | – 3 336 |  | – 3 321 |  | – 543 |  | – 612 |
1 Notes 1, 2 and 30 provide information related to discontinued operations.
Reconciliation of the net liability table |
|  | Pension plans |  | Other post-employment benefit plans |
(USD millions) |  | 2020 |  | 2019 |  | 2020 |  | 2019 |
Net liability at January 1 |  | – 3 321 |  | – 3 409 |  | – 612 |  | – 954 |
Less: net liability related to discontinued operations 1 |  |  |  | 238 |  |  |  | 345 |
Current service cost |  | – 372 |  | – 336 |  | – 11 |  | – 13 |
Net interest expense |  | – 58 |  | – 77 |  | – 16 |  | – 26 |
Administrative expenses |  | – 24 |  | – 24 |  |  |  |  |
Past service costs and settlements |  | 117 |  | – 25 |  | – 1 |  |  |
Remeasurements |  | 21 |  | – 126 |  | 109 |  | – 35 |
Currency translation effects |  | – 190 |  | 21 |  | 7 |  |  |
Novartis Group contributions |  | 464 |  | 420 |  | – 20 |  | 74 |
Effect of acquisitions, divestments or transfers |  | 11 |  | – 10 |  | 1 |  | – 3 |
Change in limitation on recognition of fund surplus |  | 16 |  | 7 |  |  |  |  |
Net liability at December 31 |  | – 3 336 |  | – 3 321 |  | – 543 |  | – 612 |
Amounts recognized in the consolidated balance sheet |  |  |  |  |  |  |  |  |
Prepaid benefit cost |  | 202 |  | 148 |  |  |  |  |
Accrued benefit liability |  | – 3 538 |  | – 3 469 |  | – 543 |  | – 612 |
1 Notes 1, 2 and 30 provide information related to discontinued operations.
Principal weighted average actuarial assumptions |
|  | Pension plans |  | Other post-employment benefit plans |
|  | 2020 |  | 2019 |  | 2018 |  | 2020 |  | 2019 |  | 2018 |
Weighted average assumptions used to determine benefit obligations at December 31 |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 0.6% |  | 1.0% |  | 1.6% |  | 2.9% |  | 3.6% |  | 4.4% |
Expected rate of pension increase |  | 0.3% |  | 0.3% |  | 0.4% |  |  |  |  |  |  |
Expected rate of salary increase |  | 2.7% |  | 2.8% |  | 2.8% |  |  |  |  |  |  |
Interest on savings account |  | 0.1% |  | 0.3% |  | 0.8% |  |  |  |  |  |  |
Current average life expectancy for a 65-year-old male in years |  | 22 |  | 22 |  | 22 |  | 21 |  | 21 |  | 21 |
Current average life expectancy for a 65-year-old female in years |  | 24 |  | 24 |  | 24 |  | 23 |  | 23 |  | 23 |
The sensitivity of the defined benefit pension obligation to the principal actuarial assumptions |
(USD millions) |  | Change in 2020 year-end defined benefit pension obligation |
25 basis point increase in discount rate |  | – 885 |
25 basis point decrease in discount rate |  | 942 |
One-year increase in life expectancy |  | 993 |
25 basis point increase in rate of pension increase |  | 589 |
25 basis point decrease in rate of pension increase |  | – 143 |
25 basis point increase of interest on savings account |  | 62 |
25 basis point decrease of interest on savings account |  | – 30 |
25 basis point increase in rate of salary increase |  | 61 |
25 basis point decrease in rate of salary increase |  | – 61 |
The healthcare cost trend rate assumptions used for other post-employment benefits |
|  | 2020 |  | 2019 |  | 2018 |
Healthcare cost trend rate assumed for next year |  | 6.3% |  | 6.5% |  | 7.0% |
Rate to which the cost trend rate is assumed to decline |  | 4.5% |  | 4.5% |  | 4.5% |
Year that the rate reaches the ultimate trend rate |  | 2028 |  | 2028 |  | 2028 |
The weighted average plan asset allocation of funded defined benefit pension plans |
|  | Pension plans |
(as a percentage) |  | Long-term target minimum |  | Long-term target maximum |  | 2020 |  | 2019 |
Equity securities |  | 15 |  | 40 |  | 28 |  | 27 |
Debt securities |  | 20 |  | 60 |  | 34 |  | 36 |
Real estate |  | 5 |  | 20 |  | 17 |  | 17 |
Alternative investments |  | 0 |  | 20 |  | 13 |  | 15 |
Cash and other investments |  | 0 |  | 15 |  | 8 |  | 5 |
Total |  |  |  |  |  | 100 |  | 100 |
Asset allocation, investments in shares of Novartis AG |
|  | December 31, 2020 |  | December 31, 2019 |
Investment in shares of Novartis AG |  |  |  |  |
Number of shares (in millions) |  | 2.3 |  | 2.3 |
Market value (in USD billions) |  | 0.2 |  | 0.2 |
The expected future cash flows in respect of pension and other post- employment benefit plans |
(USD millions) |  | Pension plans |  | Other post- employment benefit plans |
Novartis Group contributions |  |  |  |  |
2021 (estimated) |  | 404 |  | 40 |
Expected future benefit payments |  |  |  |  |
2021 |  | 1 245 |  | 40 |
2022 |  | 1 198 |  | 41 |
2023 |  | 1 191 |  | 41 |
2024 |  | 1 182 |  | 40 |
2025 |  | 1 165 |  | 40 |
2026–2030 |  | 5 651 |  | 181 |
Defined contribution plans |
(USD millions) |  | 2020 |  | 2019 |  | 2018 |
Contributions for defined contribution plans continuing operations |  | 501 |  | 422 |  | 443 |
Pension plans |
Statement [line items] |
Breakdown of defined benefit obligation for pension plans and other post-employment benefit |
|  | 2020 |  | 2019 |
(USD millions) |  | Switzerland |  | United States |  | Rest of the world |  | Total |  | Switzerland |  | United States |  | Rest of the world |  | Total |
Benefit obligation at December 31 |  | 16 807 |  | 3 788 |  | 5 007 |  | 25 602 |  | 15 106 |  | 3 552 |  | 4 408 |  | 23 066 |
Thereof unfunded |  |  |  | 701 |  | 516 |  | 1 217 |  |  |  | 670 |  | 466 |  | 1 136 |
By type of member |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Active |  | 6 837 |  | 665 |  | 1 573 |  | 9 075 |  | 6 167 |  | 630 |  | 1 400 |  | 8 197 |
Deferred pensioners |  |  |  | 1 290 |  | 1 819 |  | 3 109 |  |  |  | 1 205 |  | 1 517 |  | 2 722 |
Pensioners |  | 9 970 |  | 1 833 |  | 1 615 |  | 13 418 |  | 8 939 |  | 1 717 |  | 1 491 |  | 12 147 |
Fair value of plan assets at December 31 |  | 16 396 |  | 2 487 |  | 3 434 |  | 22 317 |  | 14 457 |  | 2 311 |  | 3 042 |  | 19 810 |
Funded status |  | – 411 |  | – 1 301 |  | – 1 573 |  | – 3 285 |  | – 649 |  | – 1 241 |  | – 1 366 |  | – 3 256 |
Other post-employment benefit plans |
Statement [line items] |
Breakdown of defined benefit obligation for pension plans and other post-employment benefit |
|  | 2020 |  | 2019 |
(USD millions) |  | United States |  | Rest of the world |  | Total |  | United States |  | Rest of the world |  | Total |
Benefit obligation at December 31 |  | 543 |  | 89 |  | 632 |  | 658 |  | 88 |  | 746 |
Thereof unfunded |  | 454 |  | 89 |  | 543 |  | 524 |  | 88 |  | 612 |
By type of member |  |  |  |  |  |  |  |  |  |  |  |  |
Active |  | 80 |  | 25 |  | 105 |  | 121 |  | 36 |  | 157 |
Deferred pensioners |  | 17 |  | 0 |  | 17 |  | 15 |  | 0 |  | 15 |
Pensioners |  | 446 |  | 64 |  | 510 |  | 522 |  | 52 |  | 574 |
Fair value of plan assets at December 31 |  | 89 |  | 0 |  | 89 |  | 134 |  | 0 |  | 134 |
Funded status |  | – 454 |  | – 89 |  | – 543 |  | – 524 |  | – 88 |  | – 612 |

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