v3.24.0.1
Benefit Plans:
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Benefit Plans:
Benefit Plans:
Pension coverage for employees of PMI’s subsidiaries is provided, to the extent deemed appropriate, through separate plans, many of which are governed by local statutory requirements. In addition, PMI provides health care and other benefits to certain U.S. retired employees and certain non-U.S. retired employees. In general, health care benefits for non-U.S. retired employees are covered through local government plans.

Pension and other employee benefit costs per the consolidated statements of earnings consisted of the following for December 31, 2023, 2022 and 2021:

(in millions)202320222021
Net pension costs (income)$(84)$(93)$(1)
Net postemployment costs117 107 108 
Net postretirement costs12 10 8 
Total pension and other employee benefit costs$45 $24 $115 

Pension and Postretirement Benefit Plans

Obligations and Funded Status

The projected benefit obligations, plan assets and funded status of PMI’s pension plans, and the accumulated benefit obligation, plan assets and net amount accrued for PMI's postretirement health care plans, at December 31, 2023 and 2022, were as follows:
Pension(1)
Postretirement
(in millions)
2023202220232022
Benefit obligation at January 1$8,606 $10,998 $229 $198 
Service cost
174 233 4 2 
Interest cost
258 78 12 6 
Benefits paid
(520)(429)(13)(9)
 Employee contributions145 141 — — 
 Settlement, curtailment and plan amendment
(17)(17)— — 
Actuarial losses (gains)
1,209 (2,294)24 (46)
Currency
763 (434)(4)(5)
Acquisition of Swedish Match— 316 — 85 
Other
(51)14 (6)(2)
Benefit obligation at December 31,
10,567 8,606 246 229 
Fair value of plan assets at January 1,
7,939 9,337 3 — 
Actual return on plan assets
643 (1,061)— — 
Employer contributions, net of refunds
21 (3)13 9 
Employee contributions
145 141 — — 
Benefits paid
(520)(429)(13)(9)
 Settlement
(17)(14)— — 
Currency
639 (333)— — 
Acquisition of Swedish Match— 303 — 3 
Other1 (2)— — 
Fair value of plan assets at December 31,
8,851 7,939 3 3 
Net pension and postretirement liability recognized at December 31,
$(1,716)$(667)$(243)$(226)
(1) Primarily non-U.S. based defined benefit retirement plans.
At December 31, 2023 , actuarial losses (gains) consisted primarily of losses for assumption changes related to lower discount rates year-over-year for Swiss, German and Dutch plans. At December 31, 2022 actuarial losses (gains) consisted primarily of gains for assumption changes related to higher discount rates year-over-year for Swiss, German and Dutch plans.

At December 31, 2023 and 2022, the Swiss pension plan represented 67% and 64% of the benefit obligation, respectively, and approximately 62% and 60% of the fair value of plan assets at December 31, 2023 and 2022, respectively. At December 31, 2023 and 2022, the U.S. pension plans represented 6% and 7% of the benefit obligation, respectively, and approximately 6% and 6% of the fair value of plan assets at December 31, 2023 and 2022, respectively.

At December 31, 2023 and 2022, the amounts recognized on PMI's consolidated balance sheets for the pension and postretirement plans were as follows:
PensionPostretirement
(in millions)
2023202220232022
Other assets
$294 $410 
Accrued liabilities — employment costs
(31)(32)$(12)$(11)
Long-term employment costs
(1,979)(1,045)(231)(215)
$(1,716)$(667)$(243)$(226)

The accumulated benefit obligation, which represents benefits earned to date, for the pension plans was $10.0 billion and $8.2 billion at December 31, 2023 and 2022, respectively.

For pension plans with accumulated benefit obligations in excess of plan assets, the accumulated benefit obligation and fair value of plan assets were $8.8 billion and $7.2 billion, respectively, as of December 31, 2023. The accumulated benefit obligation and fair value of plan assets were $5.8 billion and $5.0 billion, respectively, as of December 31, 2022.

For pension plans with projected benefit obligations in excess of plan assets, the projected benefit obligation and fair value of plan assets were $9.2 billion and $7.2 billion, respectively, as of December 31, 2023. The projected benefit obligation and fair value of plan assets were $6.4 billion and $5.4 billion, respectively, as of December 31, 2022.

The following weighted-average assumptions were used to determine PMI’s pension and postretirement benefit obligations at December 31:
PensionPostretirement
2023202220232022
Discount rate
2.28 %3.03 %5.19 %5.89 %
Rate of compensation increase
2.05 1.98 
Interest crediting rate
2.99 2.97 
Health care cost trend rate assumed for next year
6.54 6.14 
Ultimate trend rate
4.49 4.78 
Year that rate reaches the ultimate trend rate
20472046

The discount rate for the largest pension plans is based on a yield curve constructed from a portfolio of high quality corporate bonds that produces a cash flow pattern equivalent to each plan’s expected benefit payments.  The discount rate for the remaining plans is developed from local bond indices that match local benefit obligations as closely as possible.
Components of Net Periodic Benefit Cost

Net periodic pension and postretirement health care costs consisted of the following for the years ended December 31, 2023, 2022 and 2021:
PensionPostretirement
(in millions)
202320222021202320222021
Service cost
$174 $233 $291 $4 $2 $2 
Interest cost
258 78 50 12 6 5 
Expected return on plan assets
(365)(352)(371)— — — 
Amortization:
Net losses
18 181 314 (1)2 3 
Prior service cost (credit)
(2)(2)1 — — — 
Net transition obligation
— — — — — — 
Settlement and curtailment
7 2 5 1 2 — 
Net periodic pension and postretirement costs$90 $140 $290 $16 $12 $10 

Settlement and curtailment charges were due primarily to employee severance and early retirement programs.

The following weighted-average assumptions were used to determine PMI’s net pension and postretirement health care costs:
PensionPostretirement
202320222021202320222021
Discount rate - service cost
3.27 %1.03 %0.72 %5.89 %3.08 %2.84 %
Discount rate - interest cost
3.03 0.71 0.44 5.89 3.08 2.84 
Expected rate of return on plan assets
4.42 4.17 4.43 
Rate of compensation increase
1.98 1.77 1.79 
Interest crediting rate
2.97 3.15 3.20 
Health care cost trend rate
6.14 6.27 6.21 

PMI’s expected rate of return on pension plan assets is determined by the plan assets’ historical long-term investment performance, current asset allocation and estimates of future long-term returns by asset class.

PMI and certain of its subsidiaries sponsor defined contribution plans. Amounts charged to expense for defined contribution plans totaled $111 million, $82 million and $71 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Plan Assets

PMI’s investment strategy for pension plans is based on an expectation that equity securities will outperform debt securities over the long term. Accordingly, the target allocation of PMI’s plan assets is broadly characterized as approximately 55% in equity securities and approximately 45% in debt securities and other assets. The strategy primarily utilizes indexed U.S. equity securities, international equity securities and investment-grade debt securities. PMI attempts to mitigate investment risk by rebalancing between equity and debt asset classes once a year or as PMI’s contributions and benefit payments are made.
The fair value of PMI’s pension plan assets at December 31, 2023 and 2022, by asset category was as follows:
Asset Category
(in millions)		At December 31, 2023
Quoted Prices
In Active
Markets for
Identical
Assets/Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash and cash equivalents
$117 $117 
Equity securities:
U.S. securities
158 158 
International securities
569 569 
Investment funds(a)
7,123 5,366 $1,757 
Government bonds
255 183 72 
Corporate bonds
320 320 
Other
37 — 5 32 
(c)
Total assets in the fair value hierarchy
$8,579 $6,713 $1,834 $32 
Investment funds measured at net asset value(b)
272 
Total assets
$8,851 
(a) Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan, Emerging Markets for equities, and FTSE EMU, FTSE Non-EGBI EuroBIG, SBI AAA-BBB and JP Morgan EMBI for bonds), primarily consist of mutual funds, common trust funds and commingled funds. Of these funds, 57% are invested in U.S. and international equities; 15% are invested in U.S. and international government bonds; 15% are invested in corporate bonds and 13% are invested in real estate.
(b) In accordance with FASB ASC Subtopic 820-10, certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
(c) Amount relates to annuity policies of which the fair value is calculated using an actuarial model.

Asset Category
(in millions)		At December 31, 2022
Quoted Prices
In Active
Markets for
Identical
Assets/Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash and cash equivalents
$79 $79 
Equity securities:
U.S. securities
140 140 
International securities
521 521 
Investment funds(a)
6,419 4,870 $1,549 
Government bonds
178 117 61 
Corporate bonds
302 302 
Other
35 — 3 32 
(c)
Total assets in the fair value hierarchy
$7,674 $6,029 $1,613 $32 
Investment funds measured at net asset value(b)
265 
Total assets
$7,939 
(a) Investment funds whose objective seeks to replicate the returns and characteristics of specified market indices (primarily MSCI — Europe, Switzerland, North America, Asia Pacific, Japan; Russell 3000, S&P 500 for equities and Citigroup EMU, Citigroup Non-EGBI EuroBIG, SBI AAA-BBB and JP Morgan EMBI for bonds), primarily consist of mutual funds, common trust funds and commingled funds. Of these funds, 57% were invested in U.S. and international equities; 15% were invested in U.S. and international government bonds; 16% were invested in corporate bonds, and 12% were invested in real estate.
(b) In accordance with FASB ASC Subtopic 820-10, certain investments measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
(c) Amount relates to annuity policies of which the fair value is calculated using an actuarial model.

For a description of the fair value hierarchy and the three levels of inputs used to measure fair values, see Note 2. Summary of Significant Accounting Policies.

PMI makes, and plans to make, contributions, to the extent that they are tax deductible and meet specific funding requirements of its funded pension plans. Currently, PMI anticipates making contributions of approximately $119 million in 2024 to its pension plans, based on current tax and benefit laws. However, this estimate is subject to change as a result of changes in tax and other benefit laws, as well as asset performance significantly above or below the assumed long-term rate of return on pension assets, or changes in interest and currency rates.

The estimated future benefit payments from PMI pension plans at December 31, 2023, are as follows:
(in millions)
2024$417 
2025430 
2026428 
2027438 
2028457 
2029 - 20332,490 
PMI's expected future annual benefit payments for its postretirement health care plans are estimated to be not material through 2032.
Postemployment Benefit Plans

PMI and certain of its subsidiaries sponsor postemployment benefit plans covering certain designated salaried and hourly employees. The cost of these plans is charged to expense over the working life of the covered employees. Net postemployment costs were $213 million, $184 million and $228 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The amounts recognized in accrued postemployment costs net of plan assets on PMI's consolidated balance sheets at December 31, 2023 and 2022, were $915 million and $807 million, respectively.

The accrued postemployment costs were determined using a weighted-average discount rate of 4.3% and 5.6% in 2023 and 2022, respectively; an assumed ultimate annual weighted-average turnover rate of 2.8% and 2.9% in 2023 and 2022, respectively; assumed compensation cost increases of 2.4% in 2023 and 2.8% in 2022, and assumed benefits as defined in the respective plans. In accordance with local regulations, certain postemployment plans are funded. As a result, the accrued postemployment costs disclosed above are presented net of the related assets of $33 million and $30 million at December 31, 2023 and 2022, respectively. Postemployment costs arising from actions that offer employees benefits in excess of those specified in the respective plans are charged to expense when incurred.

Comprehensive Earnings (Losses)

The amounts recorded in accumulated other comprehensive losses at December 31, 2023, consisted of the following:
(in millions)
PensionPost-
retirement		Post-
employment		Total
Net (losses) gains
$(2,325)$(36)$(770)$(3,131)
Prior service (cost) credit
77 1 (21)57 
Net transition (obligation) asset
(3)— — (3)
Deferred income taxes
283 19 186 488 
Losses to be amortized
$(1,968)$(16)$(605)$(2,589)
The amounts recorded in accumulated other comprehensive losses at December 31, 2022, consisted of the following:
(in millions)
PensionPost-
retirement		Post-
employment		Total
Net (losses) gains
$(1,437)$(14)$(753)$(2,204)
Prior service (cost) credit
70 1 (21)50 
Net transition (obligation) asset
(3)— — (3)
Deferred income taxes
138 14 183 335 
Losses to be amortized
$(1,232)$1 $(591)$(1,822)

The amounts recorded in accumulated other comprehensive losses at December 31, 2021, consisted of the following:
(in millions)
PensionPost-
retirement		Post-
employment		Total
Net (losses) gains
$(2,495)$(64)$(884)$(3,443)
Prior service (cost) credit
71 1 (22)50 
Net transition (obligation) asset
(3)— — (3)
Deferred income taxes
278 24 214 516 
Losses to be amortized
$(2,149)$(39)$(692)$(2,880)

The movements in other comprehensive earnings (losses) during the year ended December 31, 2023, were as follows:
(in millions)
PensionPost-
retirement		Post-
employment		Total
Amounts transferred to earnings:
Amortization:
Net losses (gains)
$19 $1 $76 $96 
Prior service cost (credit)
7 — — 7 
Net transition obligation (asset)
— — — — 
Other income/expense:
Net losses (gains)
11 1 — 12 
    Prior service cost (credit)
— — — — 
Deferred income taxes
(9)(1)(18)(28)
28 1 58 87 
Other movements during the year:
Net (losses) gains
(918)(24)(93)(1,035)
Prior service (cost) credit
— — — — 
Deferred income taxes
154 6 21 181 
(764)(18)(72)(854)
Total movements in other comprehensive earnings (losses)
$(736)$(17)$(14)$(767)
The movements in other comprehensive earnings (losses) during the year ended December 31, 2022, were as follows:
(in millions)
PensionPost-
retirement		Post-
employment		Total
Amounts transferred to earnings:
Amortization:
Net losses (gains)
$178 $3 $85 $266 
Prior service cost (credit)
(4)— — (4)
Other income/expense:
Net losses (gains)
2 1 — 3 
Prior service cost (credit)
— — 1 1 
Deferred income taxes
(28)(1)(20)(49)
148 3 66 217 
Other movements during the year:
Net (losses) gains
878 46 46 970 
Prior service (cost) credit
3 — — 3 
Deferred income taxes(112)(9)(11)(132)
769 37 35 841 
Total movements in other comprehensive earnings (losses)
$917 $40 $101 $1,058 

The movements in other comprehensive earnings (losses) during the year ended December 31, 2021, were as follows:
(in millions)
PensionPost-
retirement		Post-
employment		Total
Amounts transferred to earnings:
Amortization:
Net losses (gains)
$294 $4 $85 $383 
Prior service cost (credit)
7 (1)— 6 
Other income/expense:
Net losses (gains)
5 1 — 6 
Prior service cost (credit)
— — — — 
Deferred income taxes(51)(1)(20)(72)
255 3 65 323 
Other movements during the year:
Net (losses) gains
1,353 (5)(130)1,218 
Prior service (cost) credit
42 — — 42 
Deferred income taxes(241)1 30 (210)
1,154 (4)(100)1,050 
Total movements in other comprehensive earnings (losses)
$1,409 $(1)$(35)$1,373