v3.25.4
Pension and Postretirement Plans
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Pension and Postretirement Plans Pension and Postretirement Plans
The following table provides a reconciliation of the projected benefit obligations and plan assets for our pension plans and accumulated benefit obligations for our other postretirement benefit plans:

 Millions of Dollars
Pension BenefitsOther Benefits
 2025202420252024
U.S.Int’l.U.S.Int’l.
Change in Benefit Obligations
Benefit obligations at January 1$2,349 697 2,260 752 137 150 
Service cost123 12 116 14 3 3 
Interest cost127 35 114 32 7 7 
Plan participant contributions— 4 — 3 7 7 
Actuarial loss (gain)104 (24)68 (48)1 (8)
Benefits paid(291)(35)(209)(34)(22)(22)
Divestiture*— (127)— — — — 
Foreign currency exchange rate change— 60 — (22)— — 
Benefit obligations at December 31$2,412 622 2,349 697 133 137 
Change in Fair Value of Plan Assets
Fair value of plan assets at January 1$2,121 751 2,139 778 — — 
Actual return on plan assets269 34 172 14 — — 
Company contributions150 5 19 5 15 15 
Plan participant contributions— 4 — 3 7 7 
Benefits paid(291)(35)(209)(34)(22)(22)
Divestiture*— (13)— — — — 
Foreign currency exchange rate change— 60 — (15)— — 
Fair value of plan assets at December 31$2,249 806 2,121 751 — — 
Funded Status at December 31$(163)184 (228)54 (133)(137)
* Derecognition in connection with the disposition of 65% of our interest in Germany and Austria Marketing. See Note 9—Investments, Loans and Long-Term Receivables.
Amounts recognized in the consolidated balance sheet for our pension and other postretirement benefit plans at December 31 include:
Millions of Dollars
Pension BenefitsOther Benefits
2025202420252024
U.S.Int’l.U.S.Int’l.
Amounts Recognized in the Consolidated Balance Sheet
Noncurrent assets$— 199 — 181 — — 
Current liabilities(20)— (60)— (15)(15)
Noncurrent liabilities(143)(15)(168)(127)(118)(122)
Total recognized$(163)184 (228)54 (133)(137)


Included in accumulated other comprehensive loss at December 31 were the following before-tax amounts that had not been recognized in net periodic benefit cost:

Millions of Dollars
Pension BenefitsOther Benefits
2025202420252024
U.S.Int’l.U.S.Int’l.
Unrecognized net actuarial loss (gain)$102 (15)141 (16)(48)(54)


Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

Millions of Dollars
Pension BenefitsOther Benefits
2025202420252024
U.S.Int’l.U.S.Int’l.
Sources of Change in Other Comprehensive Income
Net actuarial gain (loss) arising during the period$14 12 (49)18 (1)8 
Divestiture*— (12)— — — — 
Amortization of net actuarial loss (gain) and settlements25 (1)19 — (5)(5)
Total recognized in other comprehensive income$39 (1)(30)18 (6)3 
* Related to the disposition of 65% of our interest in Germany and Austria Marketing and is included in the “Net gain on dispositions” line item on the consolidated statement of income. See Note 9—Investments, Loans and Long-Term Receivables.

The accumulated benefit obligations for all U.S. and international pension plans were $2,298 million and $552 million, respectively, at December 31, 2025, and $2,218 million and $609 million, respectively, at December 31, 2024.
Information for U.S. and international pension plans with an accumulated benefit obligation in excess of plan assets at December 31 was:

Millions of Dollars
Pension Benefits
20252024
U.S.Int’l.U.S.Int’l.
Accumulated benefit obligations$55 16 100 134 
Fair value of plan assets
— 1 — 13 


Information for U.S. and international pension plans with a projected benefit obligation in excess of plan assets at December 31 was:

Millions of Dollars
Pension Benefits
20252024
U.S.Int’l.U.S.Int’l.
Projected benefit obligations$2,412 16 2,349 139 
Fair value of plan assets
2,249 1 2,121 13 


Components of net periodic benefit cost for all defined benefit plans are presented in the table below:

Millions of Dollars
Pension BenefitsOther Benefits
202520242023202520242023
U.S.Int’l.U.S.Int’l.U.S.Int’l.
Components of Net Periodic Benefit Cost
Service cost$123 12 116 14 108 13 3 3 3 
Interest cost127 35 114 32 118 31 7 7 8 
Expected return on plan assets(151)(46)(153)(45)(126)(43)— — — 
Amortization of net actuarial loss (gain)16 (1)12 — 11 (3)(5)(5)(6)
Settlement losses9 — 7 — 17 — — — — 
Net periodic benefit cost (credit)*$124 — 96 1 128 (2)5 5 5 
* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.
In determining net periodic benefit cost, we amortize prior service costs on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plan. For net actuarial gains and losses, we amortize 10% of the unamortized balance each year. The amount subject to amortization is determined on a plan-by-plan basis.

The following weighted-average assumptions were used to determine benefit obligations and net periodic benefit costs for the years ended December 31:

Pension BenefitsOther Benefits
 2025202420252024
 U.S.Int’l.U.S.Int’l.
Assumptions Used to Determine Benefit Obligations:
Discount rate5.63 %5.53 5.75 4.99 5.30 5.70 
Rate of compensation increase4.29 3.98 4.25 3.74 — — 
Interest crediting rate on cash balance plan5.34 — 4.88 — — — 
Assumptions Used to Determine Net Periodic Benefit Cost:
Discount rate5.75 %4.99 5.35 4.36 5.70 5.45 
Expected return on plan assets7.50 5.89 7.50 5.86 — — 
Rate of compensation increase4.25 3.74 4.30 3.34 — — 
Interest crediting rate on cash balance plan4.88 — 3.98 — — — 


For both U.S. and international pension plans, the overall expected long-term rate of return is developed from the expected future return of each asset class, weighted by the expected allocation of pension assets to that asset class. We rely on a variety of independent market forecasts in developing the expected rate of return for each class of assets.

For the year ended December 31, 2025, actuarial losses resulted in increases in our U.S. pension benefit obligations of $104 million and actuarial gains resulted in a decrease in our international pension benefit obligation of $24 million. For the year ended December 31, 2024, actuarial losses resulted in increases in our U.S. pension benefit obligations of $68 million and actuarial gains resulted in a decrease in our international pension benefit obligation of $48 million. The primary driver for the actuarial losses in 2025 were decreases in the discount rates and lump-sum conversion rates. The primary driver for the actuarial gains in 2025 and 2024 were increases in the discount rates. The primary driver for the actuarial losses in 2024 were changes in demographic experience.

For the year ended December 31, 2025, the weighted-average actual return on plan assets was 11%, which resulted in an increase in our U.S. and international plan assets of $269 million and $34 million, respectively. For the year ended December 31, 2024, the weighted-average actual return on plan assets was 7%, which resulted in an increase in our U.S. and international plan assets of $172 million and $14 million, respectively. The primary driver of the return on plan assets in 2025 and 2024 was fluctuations in the equity and fixed income markets.

Our other postretirement benefit plans for health insurance are contributory. Effective December 31, 2012, we terminated the subsidy for retiree medical plans. Since January 1, 2013, eligible employees have been able to utilize notional amounts credited to an account during their period of service with the company to pay all, or a portion, of their cost to participate in postretirement health insurance. In general, employees hired after December 31, 2012, will not receive credits to an account, but will have unsubsidized access to health insurance through the plan. The cost of health insurance will be adjusted annually by the company’s actuary to reflect actual experience and expected health care cost trends. The measurement of the accumulated benefit obligation assumes a health care cost trend rate of 8.00% in 2026 that declines to 5% by 2032.
Plan Assets
The investment strategy for managing pension plan assets is to seek a reasonable rate of return relative to an appropriate level of risk and provide adequate liquidity for benefit payments and portfolio management. We follow a policy of diversifying pension plan assets across asset classes, investment managers, and individual holdings. As a result, our plan assets have no significant concentrations of credit risk. Asset classes that are considered appropriate include equities, fixed income, cash, real estate and infrastructure investments and insurance contracts. Plan fiduciaries may consider and add other asset classes to the investment program from time to time. The target allocations for plan assets are approximately 43% equity securities, 34% debt securities, 10% real estate investments and 13% in all other types of investments as of December 31, 2025. Generally, the investments in the plans are publicly traded, therefore minimizing the liquidity risk in the portfolio.

The following is a description of the valuation methodologies used for the pension plan assets.
 
•Fair values of equity securities and government debt securities are based on quoted market prices.

•Fair values of corporate debt securities are estimated using recently executed transactions and market price quotations. If there have been no market transactions in a particular fixed income security, its fair value is calculated by pricing models that benchmark the security against other securities with actual market prices.

•Fair values of cash and cash equivalents approximate their carrying amounts.

•Fair values of insurance contracts are valued at the present value of the future benefit payments owed by the insurance company to the plans’ participants.

•Fair values of investments in common/collective trusts (CCT) and real estate and infrastructure investments, which include a CCT, limited partnerships, and other real estate funds, are valued at the net asset value (NAV) as a practical expedient. The NAV is based on the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. These investments valued at NAV are not classified within the fair value hierarchy, but are presented in the fair value table to permit reconciliation of total plan assets to the amounts presented in the fair value table.

The fair values of our pension plan assets at December 31, by asset class, were:

 Millions of Dollars
United StatesInternational
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
2025
Equity securities$219 — — 219 — — — — 
Government debt securities360 — — 360 — — — — 
Corporate debt securities— 115 — 115 — — — — 
Cash and cash equivalents76 — — 76 6 — — 6 
Insurance contracts— — — — — — 235 235 
Total assets in the fair value hierarchy655 115 — 770 6 — 235 241 
Common/collective trusts measured at NAV1,215 462 
Real estate and infrastructure investments measured at NAV264 103 
Total$655 115 — 2,249 6 — 235 806 
 
 Millions of Dollars
United StatesInternational
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
2024
Equity securities$298 — — 298 — — — — 
Government debt securities330 — — 330 — — — — 
Corporate debt securities
— 109 — 109 — — — — 
Cash and cash equivalents28 — — 28 21 — — 21 
Insurance contracts— — — — — — 190 190 
Total assets in the fair value hierarchy656 109 — 765 21 — 190 211 
Common/collective trusts measured at NAV1,079 419 
Real estate and infrastructure investments measured at NAV277 121 
Total$656 109 — 2,121 21 — 190 751 

The following table is a reconciliation of the changes in our Level 3 plan asset balance:

 Millions of Dollars
 20252024
Balance at January 1$190 13 
Transfer in46 186 
Actual return on plan assets(1)(6)
Divestiture(13)— 
Foreign currency exchange rate change13 (3)
Balance at December 31$235 190 

Our funding policy for U.S. plans is to contribute at least the minimum required by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986, as amended. Contributions to international plans are subject to local laws and tax regulations. Actual contribution amounts are dependent upon plan asset returns, changes in pension obligations, regulatory environments, and other economic factors. In 2026, we expect to contribute approximately $200 million to our U.S. pension plans and other postretirement benefit plans and $4 million to our international pension plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid to plan participants in the years indicated:
 
 Millions of Dollars
Pension BenefitsOther Benefits
U.S.Int’l.
2026$225 21 15 
2027222 22 15 
2028221 27 15 
2029224 29 15 
2030224 31 15 
2031-20351,201 164 65 
Defined Contribution Plans
Most U.S. employees are eligible to participate in the Phillips 66 Savings Plan (Savings Plan). Employees can contribute up to 75% of their eligible pay, subject to certain statutory limits, in the Savings Plan to a choice of investment funds. For the years ended December 31, 2025, 2024, and 2023, Phillips 66 provided a company match of participant contributions up to 8% of eligible pay. For the year ended December 31, 2023, Phillips 66 provided an additional Success Share contribution ranging from 0% to 4% of eligible pay based on management discretion.

For the years ended December 31, 2025, 2024 and 2023, we recorded expense of $163 million, $155 million and $196 million, respectively, related to our contributions to the Savings Plan.