Investor Presentaiton
Employer Contributions to Retirement Benefits Plans
Contributions to pension plans that Eaton expects to make in 2023, and made in 2022, 2021 and 2020, are as follows:
(In millions)
United States plans
Non-United States plans
Total contributions
Expected in 2023
2022
2021
2020
$
23 $
30 $
237 $
18
86
85
106
104
$
108 $
116 $
343 $
122
The following table provides the estimated pension and other postretirement benefit payments for each of the next five
years, and the five years thereafter in the aggregate. For other postretirement benefits liabilities, the expected subsidy receipts
related to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 would reduce the gross payments
listed below.
Estimated other postretirement
benefit payments
Medicare
(In millions)
Estimated
United States
pension payments
Estimated
non-United States
pension payments
Gross
prescription
drug subsidy
2023
281
101
20
2024
267
101
18
2025
261
101
17
2026
253
107
16
2027
242
110
19
1,100
595
84
2028 - 2032
Pension Plan Assets
(1)
Investment policies and strategies are developed on a country and plan specific basis. The United States plan, representing
64% of worldwide pension assets, and the United Kingdom plans representing 25% of worldwide pension assets, are invested
primarily in debt securities largely for liability hedging, as the majority of the assets are in plans that are well-funded. In
general, the plans are primarily allocated to diversified high-quality publicly traded debt, primarily through separately managed
accounts and commingled funds in the form of common collective and other trusts. The United States plan's target allocation is
19% United States equities, 13% non-United States equities, 3% public real estate (primarily equity of real estate investment
trusts), 54% debt securities and 11% other, including private equity, private debt and cash equivalents. The United Kingdom
plans' target asset allocations are 32% equities and the remainder in debt securities, cash equivalents and real estate investments.
The equity risk for the plans is managed through broad diversification across industries, geographies, and levels of market
capitalization. The majority of debt allocations for these plans are longer duration government and corporate debt. The United
States, United Kingdom and Canada pension plans are authorized to use derivatives, including the use of futures, swaps and
options, to achieve more economically desired market exposures.
Fair Value Measurements
Financial instruments included in pension and other postretirement benefits plan assets are categorized into a fair value
hierarchy of three levels, based on the degree of subjectivity inherent in the valuation methodology are as follows:
Level 1
Level 2 -
Level 3 -
Quoted prices (unadjusted) for identical assets in active markets.
Quoted prices for similar assets in active markets, and inputs that are observable for the asset, either
directly or indirectly, for substantially the full term of the financial instrument.
Unobservable prices or inputs.
Certain investments that are measured at fair value using the net asset value per share practical expedient have not been
categorized in the fair value hierarchy and are being presented in the tables to permit a reconciliation to total plan assets.
49View entire presentation