Annual report pursuant to Section 13 and 15(d)

Retirement Benefit Plans

v3.23.4
Retirement Benefit Plans
 12 Months Ended
Dec. 30, 2023
Retirement Benefits [Abstract]  
Retirement Benefit Plans [Text Block]
Note 17 : Retirement Benefit Plans
Defined Contribution Plans
We provide tax-qualified defined contribution plans for the benefit of eligible employees, former employees, and retirees in the US and certain other countries. The plans are designed to provide employees with an accumulation of funds for retirement on a tax-deferred basis. For the benefit of eligible US employees, we also provide an unfunded non-tax-qualified supplemental deferred compensation plan for certain highly compensated employees.
We expensed $272 million in 2023, $489 million in 2022, and $444 million in 2021 for matching contributions based on the amount of employee contributions under the US qualified defined contribution and non-qualified deferred compensation plans. The matching contribution in the US qualified defined contribution plan was reduced from March 1 through December 31, 2023.
US Retiree Medical Plan
Upon retirement, we provide certain benefits to eligible US employees who were hired prior to 2014 under the US Retiree Medical Plan. The benefits can be used to pay all or a portion of the cost to purchase eligible coverage in a medical plan.
As of December 30, 2023 and December 31, 2022, the projected benefit obligation was $490 million and $527 million, which used the discount rates of 5.3% and 5.6%. The December 30, 2023 and December 31, 2022 corresponding fair value of plan assets was $548 million and $501 million. As of December 30, 2023, the US Retiree Medical Plan was in the net asset position.
The investment strategy for US Retiree Medical Plan assets is to invest primarily in liquid assets, due to the level of expected future benefit payments. The assets are invested in tax-aware global equity and fixed-income long credit portfolios. Both portfolios are actively managed by external managers. The tax-aware global equity portfolio is composed of a diversified mix of equities in developed countries. The tax-aware fixed-income long credit portfolio is composed of domestic securities. The allocation to each asset class will fluctuate with market conditions, such as volatility and liquidity concerns, and will typically be rebalanced when outside the target ranges, which are 45% equity and 55% fixed-income investments. As of December 30, 2023, the majority of the US Retiree Medical Plan assets were invested in exchange-traded equity securities and were measured at fair value using Level 1 inputs. The remaining US Retiree Medical Plan assets were invested in fixed-income investments and were measured at fair value using Level 2 inputs.
As of December 30, 2023, the estimated benefit payments for this plan over the next 10 years are as follows:
(In Millions) 2024 2025 2026 2027 2028 2029-2033
Postretirement medical benefits $ 34  $ 35  $ 35  $ 35  $ 36  $ 187 
Pension Benefit Plans
We provide defined-benefit pension plans in certain countries, most significantly Ireland, the US, Germany and Israel. The majority of the plans' benefits have been frozen.
Benefit Obligation and Plan Assets for Pension Benefit Plans
The vested benefit obligation for a defined-benefit pension plan is the actuarial present value of the vested benefits to which the employee is currently entitled based on the employee's expected date of separation or retirement.
 
(In Millions)
 Dec 30, 2023 Dec 31, 2022
Changes in projected benefit obligation:
Beginning projected benefit obligation $ 2,705  $ 4,456 
Service cost 36  58 
Interest cost 127  91 
Actuarial (gain) loss 57  (1,500)
Currency exchange rate changes 38  (233)
Plan settlements (103) (96)
Other (35) (71)
Ending projected benefit obligation1
2,825  2,705 
Changes in fair value of plan assets:
Beginning fair value of plan assets 2,130  2,817 
Actual return on plan assets 151  (478)
Currency exchange rate changes 34  (102)
Plan settlements (103) (96)
Other —  (11)
Ending fair value of plan assets2
2,212  2,130 
Net unfunded status $ 613  $ 575 
Amounts recognized in the Consolidated Balance Sheets
Other long-term assets $ 62  $ 74 
Other long-term liabilities $ 675  $ 649 
Accumulated other comprehensive loss (income), before tax3
$ 410  $ 406 
Accumulated benefit obligation $ 2,706  $ 2,507 
1    The projected benefit obligation was approximately 30% in the US and 70% outside of the US as of December 30, 2023 and December 31, 2022.
2    The fair value of plan assets was approximately 40% in the US and 60% outside of the US as of December 30, 2023 and December 31, 2022.
3    The accumulated other comprehensive loss (income), before tax, was approximately 70% in the US and 30% outside of the US as of December 30, 2023 (approximately 90% in the US and 10% outside of the US as of December 31, 2022).
Changes in actuarial gains and losses in the projected benefit obligation are generally driven by discount rate movement. We use the corridor approach to amortize actuarial gains and losses. Under this approach, net actuarial gains or losses in excess of 10% of the larger of the projected benefit obligation or the fair value of plan assets are amortized on a straight-line basis.
As of December 30, 2023, the accumulated benefit obligations were $0.8 billion and $1.9 billion for the US plan and non-US plans, respectively. As of December 30, 2023, the US plan was in the net asset position and the other non-US plans had projected benefit obligations and accumulated benefit obligations in excess of plan assets. As of December 31, 2022, the accumulated benefit obligations were $0.9 billion and $1.6 billion for the US plan and non-US plans, respectively. As of December 31, 2022, the US and Ireland plans were in the net asset position and the other non-US plans had projected benefit obligations in excess of plan assets. As of December 31, 2022, the US, Ireland, and Israel plans had assets in excess of accumulated benefit obligations, whereas the remaining non-US plans had accumulated benefit obligations in excess of plan assets.
Dec 30, 2023 Dec 31, 2022
Plan with accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation $ 1,857  $ 559 
Plan assets $ 1,301  $ 97 
Plan with projected benefit obligation in excess of plan assets
Projected benefit obligation $ 1,976  $ 1,048 
Plan assets $ 1,301  $ 399 
Assumptions for Pension Benefit Plans
Dec 30, 2023 Dec 31, 2022
Weighted average actuarial assumptions used to determine benefit obligations
Discount rate 4.5  % 4.9  %
Rate of compensation increase 3.3  % 3.7  %
2023 2022 2021
Weighted average actuarial assumptions used to determine costs
Discount rate 4.9  % 2.2  % 1.9  %
Expected long-term rate of return on plan assets 5.0  % 3.2  % 2.7  %
Rate of compensation increase 3.7  % 3.2  % 3.2  %
We establish the discount rate for each pension plan by analyzing current market long-term bond rates and matching the bond maturity with the average duration of the pension liabilities.
We establish the expected long-term rate of return on plan assets by developing a forward-looking, long-term return assumption for each pension fund asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation percentages and the long-term return assumption for each asset class.
Funding
Our practice is to fund the various pension plans in amounts sufficient to meet the minimum requirements of applicable local laws and regulations. Funding for the US Retiree Medical Plan is discretionary under applicable laws and regulations. Additional funding may be provided for the pension and retiree medical plans as deemed appropriate.
On a worldwide basis, our pension and retiree medical plans were 83% funded as of December 30, 2023. The US Pension Plan, which accounts for 26% of the worldwide pension and retiree medical benefit obligations, was 107% funded. Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund retirement trusts. Required pension funding for US retirement plans is determined in accordance with ERISA, which sets required minimum contributions. Cumulative company funding to the US Pension Plan currently exceeds the minimum ERISA funding requirements.
Net Periodic Benefit Cost
The net periodic benefit cost for pension and US retiree medical benefits was $107 million in 2023 ($139 million in 2022 and $162 million in 2021).
Pension Plan Assets
December 30, 2023 Dec 31, 2022
Fair Value Measured at Reporting Date Using
(In Millions)
Level 1
Level 2
Level 3
 Total Total
Equity securities $ —  $ 383  $ —  $ 383  $ 297 
Fixed income —  139  25  164  130 
Assets measured by fair value hierarchy $ —  $ 522  $ 25  $ 547  $ 427 
Assets measured at net asset value 1,648  1,683 
Cash and cash equivalents 17  20 
Total pension plan assets at fair value $ 2,212  $ 2,130 
US Plan Assets
The investment strategy for US Pension Plan assets is to manage the funded status volatility, taking into consideration the investment horizon and expected volatility to help enable sufficient assets to be available to pay pension benefits as they come due. The allocation to each asset class will fluctuate with market conditions, such as volatility and liquidity concerns, and will typically be rebalanced when outside the target ranges, which are 91% fixed income and 9% equity investments. During 2023, the US Pension Plan assets were invested in collective investment trust funds, which are measured at net asset value.
Non-US Plan Assets
The investments of the non-US plans are managed by insurance companies, pension funds, or third-party trustees, consistent with regulations or market practice of the country where the assets are invested. The investment manager makes investment decisions within the guidelines set by Intel or local regulations. Investments managed by qualified insurance companies or pension funds under standard contracts follow local regulations, and we are not actively involved in their investment strategies. For the assets that we have the discretion to set investment guidelines, the assets are invested in developed country equity investments and fixed-income investments, either through index funds or direct investment. In general, the investment strategy is designed to accumulate a diversified portfolio among markets, asset classes, or individual securities to reduce market risk and to help enable sufficient pension assets to be available to pay benefits as they come due. The equity investments in the non-US plan assets are invested in a diversified mix of equities of developed countries, including the US, and emerging markets throughout the world. We have control over the investment strategy related to the majority of the assets measured at net asset value, which are invested in hedge funds, bond index funds, and equity index funds. The target allocation of the non-US plan assets that we have control over was approximately 40% fixed income, 40% equity, and 20% hedge fund investments in 2023.
Estimated Future Benefit Payments for Pension Benefit Plans
As of December 30, 2023, estimated benefit payments over the next 10 years are as follows:
(In Millions)
 2024 2025 2026 2027 2028 2029-2033
Pension benefits $ 95  $ 97  $ 101  $ 106  $ 109  $ 638