v3.25.4
Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
Retirement Plan Summary Information
The Company maintains multiple pension plans, both contributory and non-contributory, covering employees at certain locations. Eligibility requirements for participation in the plans vary and benefits
generally are based on the participant's compensation and years of service, as defined in the respective plan. The Company's funding policy generally is to contribute in accordance with cost accounting standards that affect government contractors, subject to the Tax Code and regulations thereunder. With respect to U.S. qualified pension plans, we intend to contribute annually not less than the required minimum funding thresholds. For all periods presented, the Company made no discretionary pension contributions. Plan assets are invested primarily in collective trust funds, which are primarily invested in bonds (both corporate and U.S. government), U.S. government-sponsored entity instruments, and cash and cash equivalents.
The Company also provides postretirement medical benefits for certain retired employees and dependents at certain locations. Participants are eligible for these benefits when they retire from active service and meet the eligibility requirements for the Company's postretirement benefit plans. The Company's contractual arrangements with the U.S. government provide for the recovery of contributions to a Voluntary Employees' Beneficiary Association trust and, for non-funded plans, recovery of claims on a pay-as-you-go basis, subject to the Tax Code and regulations thereunder, with the retiree generally paying a portion of the costs through contributions, deductibles and coinsurance provisions.
The Company also maintains certain non-contributory and unfunded supplemental retirement plans. Eligibility for participation in the supplemental retirement plans is limited, and benefits generally are based on the participant's compensation and/or years of service.
In April 2024, the Company purchased group annuity contracts to transfer approximately $24 million of gross defined benefit pension plan obligations and related plan assets for certain of its qualified defined benefit pension plans to an insurance company for approximately 700 U.S. retirees and beneficiaries. In June 2024, the Company made lump sum distributions from plan assets for terminated vested participants in certain of its defined pension benefit plans in the amount of approximately $8 million. Settlement charges related to these activities were immaterial.
The following tables provide certain information regarding the Company's pension plans as of December 31, 2025 and 2024. In addition to the defined benefit pension plan information shown below, pension and other postretirement benefit plan liabilities on the Consolidated Balance Sheets includes other immaterial postretirement benefit plan and supplemental retirement plan liabilities.
Defined Benefit Pension Plans
(Dollars in millions)20252024
Change in benefit obligation:
Benefit obligation at beginning of year$127$165
Interest cost77
Actuarial loss (gain)3(4)
Benefits paid(1)
(8)(41)
Benefit obligation at end of year$129$127
Change in plan assets:
Fair value of plan assets at beginning of year$100$134
Actual return on plan assets8—
Employer contributions127
Benefits paid(1)
(8)(41)
Fair value of plan assets at end of year112100
Funded status of the plans at year end$(17)$(27)
________________
(1)The 2024 amounts include the purchase of group annuity contracts to transfer certain benefit obligations and related plan assets of $24 million to an insurance company and lump sum payments to certain participants of $8 million.
The amounts recognized in the Consolidated Balance Sheets as of December 31, 2025 and 2024 consist of:
Defined Benefit Pension Plans
(Dollars in millions)20252024
Noncurrent assets$1$2
Noncurrent liabilities(18)(29)
Net liability recognized
$(17)$(27)
Amounts recognized in accumulated other comprehensive loss (before taxes) at December 31, 2025 and 2024 consist of:
Defined Benefit Pension Plans
(Dollars in millions)20252024
Net actuarial loss (gain)$28$30
Total amount recognized in accumulated other comprehensive loss$28$30
The aggregate accumulated benefit obligation (“ABO”) for the Company's defined benefit pension plans combined was $119 million and $144 million at December 31, 2025 and 2024, respectively. The ABO represents benefits accrued without assuming future compensation increases to plan participants and is approximately equal to our projected benefit obligation (“PBO”). The table below presents information for the pension plans with an ABO and PBO in excess of the fair value of plan assets at December 31, 2025 and 2024:
(Dollars in millions)20252024
Projected benefit obligation$119 $144 
Accumulated benefit obligation119 144 
Fair value of plan assets101 113 
The following table summarizes the weighted average actuarial assumptions used to determine our benefit obligations at December 31, 2025 and 2024:
Defined Benefit Pension Plans
20252024
Rate assumptions
Discount rate5.2%5.5%
Expected long-term return on plan assets5.8%6.4%
The following table summarizes the components of net periodic benefit cost for the Company's pension plans for the years ended December 31, 2025, 2024 and 2023. Net actuarial gains and losses are amortized to expense when they exceed the 10% accounting corridor, based on the greater of the
plan assets or benefit obligations, over the average future lifetime for all plans that are frozen, and over the average remaining service period for active plans.
Defined Benefit Pension Plans
(Dollars in millions)202520242023
Interest cost$7 $7 $8 
Expected return on plan assets(4)(5)(7)
Amortization of net actuarial loss1 1 1 
Net periodic benefit cost
$4 $3 $2 
The following table summarizes the other changes in plan assets and benefit obligations recognized in other comprehensive income for the Company's pension plans for the years ended December 31, 2025, 2024 and 2023:
Defined Benefit Pension Plans
(Dollars in millions)202520242023
Net actuarial (gain) loss$(1)$1 $1 
Amortization of net actuarial loss from prior years
(1)(1)(1)
Total recognized in other comprehensive income
$(2)$— $— 
The following table summarizes the weighted average actuarial assumptions used to determine our net periodic benefit cost of the pension plans for the years ended December 31, 2025, 2024 and 2023:
Defined Benefit Pension Plans
202520242023
Rate assumptions
Discount rate5.5 %4.8%5.0%
Expected long-term return on plan assets6.4 %6.5%7.2%
The expected long-term return on plan assets assumption represents the average rate that the Company expects to earn over the long-term on the assets of the Company's benefit plans, including those from dividends, interest income and capital appreciation. The assumption has been determined based on expectations regarding future rates of return for the plans' investment portfolio, with consideration given to the allocation of investments by asset class and historical rates of return for each individual asset class.
Pension related expenses, other than service cost, are reflected in other, net on the Consolidated Statements of Earnings.
Plan Assets
The Retirement Committee has been authorized by the Company’s management to manage the strategic oversight of our defined benefit plan assets held in trust. The Retirement Committee has adopted an investment policy and provides oversight of a third-party investment manager who reports to the Retirement Committee on a regular basis. The outsourced third-party manager develops investment strategies and makes all of the day to day investment decisions related to the defined benefit plan assets in accordance with the investment policy and target asset allocation targets, therein. Presently all of the plans are governed by a single investment policy and are uniformly invested. As part of the policy statement the Company has implemented a glide path which adjusts the percentage of assets invested in return seeking assets based upon the attainment of specific funding percentages. The non-return seeking assets are invested primarily in bonds with maturities closely matching the anticipated payment of
benefits. As the funding percentage increases the glide path reduces the amount of the assets invested in return seeking assets.
The table below represents all of the Company's funded pension plans' weighted average asset allocation at December 31, 2025 and 2024 by asset category:
Asset Allocation
20252024
Asset Category
Equity securities— %18 %
Debt securities94 %72 %
Other, primarily cash and cash equivalents, and hedge funds6 %10 %
The table below presents the target allocation ranges for each major asset category for the Company's pension plans for the years ended December 31, 2025 and 2024:
Target Asset Allocation Range
20252024
Asset Category
Equity securities
0%
11% - 19%
Debt securities
96% - 100%
75% - 91%
Other, primarily cash and cash equivalents and hedge funds
0% - 4%
0% - 4%
The following tables provides the fair value of plan assets held by our pension plans by asset category and by fair value hierarchy level.
December 31, 2025
(Dollars in millions)Level 1Level 2Level 3Total
Asset category
Investments measured at fair value:
Collective trust funds$— $112 $— $112 
Total$— $112 $— $112 
December 31, 2024
(Dollars in millions)Level 1Level 2Level 3Total
Asset category
Investments measured at fair value:
Cash and cash equivalents$8 $— $— $8 
Equity securities6 — — 6 
Collective trust funds— 100 — 100 
Total$14 $100 $— $114 
For the year ended December 31, 2026, the Company expects to contribute $6 million to its pension plans.
The following table presents expected pension benefit payments over the next ten years:
(Dollars in millions)
Year Ending December 31,
Defined Benefit Pension Plans
2026$9 
20279 
202810 
202910 
203010 
2031-203549 
Defined Contribution Plans
The Company maintains defined contribution plans covering substantially all domestic full-time eligible employees. The Company's contributions to these plans for the years ended December 31, 2025, 2024 and 2023, amounted to $35 million, $31 million, and $28 million, respectively.