Chevron Corp., San Ramon, Calif., plans to contribute $1 billion to its U.S. pension plans in 2023, according to its 10-K filing with the SEC on Thursday.
The oil company is the first S&P 500 company with defined benefit plans to announce it plans to contribute $1 billion or more to its U.S. plans in 2023. In 2022, Chevron contributed $1.164 billion to the U.S. plans.
As of Dec. 31, Chevron’s U.S. pension plan assets totaled $7.942 billion, while projected benefit obligations totaled $9.713 billion, for a funding ratio of 81.8%, up from 76.5% a year earlier, according to the 10-K filing.
Chevron is an outlier among U.S. corporate pension plan sponsors as the overall funded status of S&P 500 companies with pension plans has improved considerably over the past several years, necessitating fewer contributions. An Aon Investments USA estimate said S&P 500 companies’ aggregate funding ratio was 93.8% as of Dec. 31.
According to a Pensions & Investments analysis of S&P 500 companies that announced contributions of at least $100 million completed in February 2022, a total of $11.25 billion in contributions were planned for the full year, down from $13 billion in 2021.
Despite Chevron’s U.S. pension plan assets falling 19.9% from a year earlier, the funding ratio increased thanks to liabilities falling 25.1% during the year ended Dec. 31. As of that date, the discount rate for the U.S. pension plans was 5.2%, up from 2.8% a year earlier, accounting for the fall in liabilities.
While Chevron did not disclose the reason for the drop in assets, the Russell 3000 index and Bloomberg U.S. Aggregate Bond index returned -19.2% and -13%, respectively, for the year ended Dec. 31.
As of Dec. 31, the U.S. pension plans had an actual allocation of 50.4% equities, 30.9% fixed income, 14.9% real estate, 2.5% cash and cash equivalents and 1.3% other.
