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v3.23.1

Post-employment benefits for employees (Tables) | 12 Months Ended
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Dec. 31, 2022
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) |  | 2022 |  | 2021 |  | 2022 |  | 2021 |
Benefit obligation at January 1 |  | 23 583 |  | 25 602 |  | 560 |  | 632 |
Current service cost |  | 348 |  | 415 |  | 12 |  | 11 |
Interest cost |  | 249 |  | 151 |  | 17 |  | 16 |
Past service costs and settlements |  | -40 |  | 63 |  | 1 |  | -3 |
Administrative expenses |  | 23 |  | 24 |  |  |  |  |
Remeasurement gains arising from changes in financial assumptions 1 |  | -5 046 |  | -713 |  | -94 |  | -20 |
Remeasurement (gains)/losses arising from changes in demographic assumptions |  | -53 |  | -377 |  |  |  | 4 |
Experience-related remeasurement losses/(gains) |  | 199 |  | 531 |  | -28 |  | -47 |
Currency translation effects |  | -650 |  | -865 |  | -2 |  | -1 |
Benefit payments |  | -1 253 |  | -1 450 |  | -44 |  | -32 |
Contributions of employees |  | 174 |  | 179 |  |  |  |  |
Effect of acquisitions, divestments or transfers |  | -1 |  | 23 |  |  |  |  |
Benefit obligation at December 31 |  | 17 533 |  | 23 583 |  | 422 |  | 560 |
Fair value of plan assets at January 1 |  | 22 420 |  | 22 317 |  | 73 |  | 89 |
Interest income |  | 220 |  | 105 |  | 2 |  | 2 |
Return on plan assets excluding interest income |  | -2 500 |  | 1 512 |  | -12 |  | 7 |
Currency translation effects |  | -539 |  | -726 |  |  |  |  |
Novartis Group contributions |  | 424 |  | 490 |  | 41 |  | 7 |
Contributions of employees |  | 174 |  | 179 |  |  |  |  |
Settlements |  | -1 |  | -7 |  |  |  |  |
Benefit payments |  | -1 253 |  | -1 450 |  | -44 |  | -32 |
Effect of acquisitions, divestments or transfers |  |  |  |  |  |  |  |  |
Fair value of plan assets at December 31 |  | 18 945 |  | 22 420 |  | 60 |  | 73 |
Funded status |  | 1 412 |  | -1 163 |  | -362 |  | -487 |
Limitation on recognition of fund surplus at January 1 |  | -62 |  | -51 |  |  |  |  |
Change in limitation on recognition of fund surplus |  | -2 504 |  | -16 |  |  |  |  |
Currency translation effects |  | -76 |  | 6 |  |  |  |  |
Interest income on limitation of fund surplus |  | -2 |  | -1 |  |  |  |  |
Limitation on recognition of fund surplus at December 31 2 |  | -2 644 |  | -62 |  |  |  |  |
Net liability in the balance sheet at December 31 |  | -1 232 |  | -1 225 |  | -362 |  | -487 |
1 The remeasurement gains arising from changes in financial assumptions is driven mainly by changes in the actuarial discount rates used to determine the benefit obligation.
2 As of December 31, 2022, the most significant pension plans where the asset ceiling was required to be applied were in Switzerland and amounted to USD 2 587 million.
Reconciliation of the net liability table |
|  | Pension plans |  | Other post-employment benefit plans |
(USD millions) |  | 2022 |  | 2021 |  | 2022 |  | 2021 |
Net liability at January 1 |  | -1 225 |  | -3 336 |  | -487 |  | -543 |
Current service cost |  | -348 |  | -415 |  | -12 |  | -11 |
Net interest expense |  | -31 |  | -47 |  | -15 |  | -14 |
Administrative expenses |  | -23 |  | -24 |  |  |  |  |
Past service costs and settlements |  | 39 |  | -70 |  | -1 |  | 3 |
Remeasurements |  | 2 400 |  | 2 071 |  | 110 |  | 70 |
Currency translation effects |  | 35 |  | 145 |  | 2 |  | 1 |
Novartis Group contributions |  | 424 |  | 490 |  | 41 |  | 7 |
Effect of acquisitions, divestments or transfers |  | 1 |  | -23 |  |  |  |  |
Change in limitation on recognition of fund surplus |  | -2 504 |  | -16 |  |  |  |  |
Net liability at December 31 |  | -1 232 |  | -1 225 |  | -362 |  | -487 |
Amounts recognized in the consolidated balance sheet |  |  |  |  |  |  |  |  |
Prepaid benefit cost |  | 491 |  | 1 415 |  |  |  |  |
Accrued benefit liability |  | -1 723 |  | -2 640 |  | -362 |  | -487 |
Principal weighted average actuarial assumptions |
|  | Pension plans |  | Other post-employment benefit plans |
|  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020 |
Weighted average assumptions used to determine benefit obligations at December 31 |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 3.0% |  | 0.9% |  | 0.6% |  | 6.3% |  | 3.3% |  | 2.9% |
Expected rate of pension increase |  | 0.4% |  | 0.5% |  | 0.3% |  |  |  |  |  |  |
Expected rate of salary increase |  | 2.9% |  | 2.7% |  | 2.7% |  |  |  |  |  |  |
Interest on savings account |  | 2.2% |  | 0.5% |  | 0.1% |  |  |  |  |  |  |
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 2022 year-end defined benefit pension obligation |  | Change in 2021 year-end defined benefit pension obligation |
25 basis point increase in discount rate |  | -466 |  | -790 |
25 basis point decrease in discount rate |  | 491 |  | 839 |
One-year increase in life expectancy |  | 535 |  | 869 |
25 basis point increase in rate of pension increase |  | 316 |  | 512 |
25 basis point decrease in rate of pension increase |  | -63 |  | -136 |
25 basis point increase of interest on savings account |  | 38 |  | 58 |
25 basis point decrease of interest on savings account |  | -37 |  | -58 |
25 basis point increase in rate of salary increase |  | 37 |  | 54 |
25 basis point decrease in rate of salary increase |  | -37 |  | -54 |
The healthcare cost trend rate assumptions used for other post-employment benefits |
|  | 2022 |  | 2021 |  | 2020 |
Healthcare cost trend rate assumed for next year |  | 6.5% |  | 6.0% |  | 6.3% |
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 |  | 2031 |  | 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 |  | 2022 |  | 2021 |
Equity securities |  | 15 |  | 40 |  | 24 |  | 27 |
Debt securities |  | 20 |  | 60 |  | 31 |  | 33 |
Real estate |  | 5 |  | 30 |  | 21 |  | 19 |
Alternative investments |  | 0 |  | 20 |  | 18 |  | 15 |
Cash and other investments |  | 0 |  | 15 |  | 6 |  | 6 |
Total |  |  |  |  |  | 100 |  | 100 |
Asset allocation, investments in shares of Novartis AG |
|  | December 31, 2022 |  | December 31, 2021 |
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 |  |  |  |  |
2023 (estimated) |  | 397 |  | 38 |
Expected future benefit payments |  |  |  |  |
2023 |  | 1 268 |  | 38 |
2024 |  | 1 441 |  | 38 |
2025 |  | 1 128 |  | 38 |
2026 |  | 1 114 |  | 38 |
2027 |  | 1 099 |  | 38 |
2028–2032 |  | 5 310 |  | 171 |
Defined contribution plans |
(USD millions) |  | 2022 |  | 2021 |  | 2020 |
Contributions for defined contribution plans |  | 520 |  | 523 |  | 501 |
The Group’s total personnel costs amounted to USD 14.9 billion in 2022.
Pension plans |
Statement [line items] |
Breakdown of defined benefit obligation for pension plans and other post-employment benefit |
|  | 2022 |  | 2021 |
(USD millions) |  | Switzerland |  | United States |  | Rest of the world |  | Total |  | Switzerland |  | United States |  | Rest of the world |  | Total |
Benefit obligation at December 31 |  | 11 824 |  | 2 746 |  | 2 963 |  | 17 533 |  | 15 268 |  | 3 645 |  | 4 670 |  | 23 583 |
Thereof unfunded |  |  |  | 556 |  | 363 |  | 919 |  |  |  | 688 |  | 439 |  | 1 127 |
By type of member |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Active |  | 4 799 |  | 431 |  | 931 |  | 6 161 |  | 6 478 |  | 620 |  | 1 412 |  | 8 510 |
Deferred pensioners |  |  |  | 830 |  | 861 |  | 1 691 |  |  |  | 1 208 |  | 1 730 |  | 2 938 |
Pensioners |  | 7 025 |  | 1 485 |  | 1 171 |  | 9 681 |  | 8 790 |  | 1 817 |  | 1 528 |  | 12 135 |
Fair value of plan assets at December 31 |  | 14 701 |  | 1 978 |  | 2 266 |  | 18 945 |  | 16 436 |  | 2 551 |  | 3 433 |  | 22 420 |
Funded status |  | 2 877 |  | -768 |  | -697 |  | 1 412 |  | 1 168 |  | -1 094 |  | -1 237 |  | -1 163 |
Other post-employment benefit plans |
Statement [line items] |
Breakdown of defined benefit obligation for pension plans and other post-employment benefit |
|  | 2022 |  | 2021 |
(USD millions) |  | United States |  | Rest of the world |  | Total |  | United States |  | Rest of the world |  | Total |
Benefit obligation at December 31 |  | 346 |  | 76 |  | 422 |  | 473 |  | 87 |  | 560 |
Thereof unfunded |  | 286 |  | 76 |  | 362 |  | 400 |  | 87 |  | 487 |
By type of member |  |  |  |  |  |  |  |  |  |  |  |  |
Active |  | 30 |  | 18 |  | 48 |  | 60 |  | 23 |  | 83 |
Deferred pensioners |  | 8 |  | 0 |  | 8 |  | 13 |  | 0 |  | 13 |
Pensioners |  | 308 |  | 58 |  | 366 |  | 400 |  | 64 |  | 464 |
Fair value of plan assets at December 31 |  | 60 |  | 0 |  | 60 |  | 73 |  | 0 |  | 73 |
Funded status |  | -286 |  | -76 |  | -362 |  | -400 |  | -87 |  | -487 |

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