Annual report pursuant to Section 13 and 15(d)

PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Tables)

v3.24.0.1
PENSIONS AND OTHER POSTRETIREMENT BENEFITS (Tables)
 12 Months Ended
Dec. 31, 2023
Postemployment Benefits [Abstract]  
Schedule of Defined Benefit Plans Disclosures
The following tables and information provide additional disclosures:
(In millions) Pension Benefits OPEB
Change in benefit obligations: 2023 2022 2023 2022
Benefit obligations — beginning of year $ 4,646  $ 6,036  $ 1,233  $ 3,254 
Service cost 31  45  10  35 
Interest cost 235  144  64  72 
Plan amendments 3  122  8  (163)
Actuarial loss (gain) 116  (1,236) (158) (1,781)
Benefits paid (436) (431) (163) (232)
Participant contributions —  —  42  47 
Effect of settlement (24) (34) —  — 
Other —  —  —  1 
Benefit obligations — end of year $ 4,571  $ 4,646  $ 1,036  $ 1,233 
Change in plan assets:
Fair value of plan assets — beginning of year $ 4,338  $ 5,606  $ 728  $ 812 
Actual return on plan assets 375  (809) 67  (97)
Participant contributions —  —  42  47 
Employer contributions 29  6  65  198 
Benefits paid (436) (431) (163) (232)
Effect of settlement (24) (34) —  — 
Fair value of plan assets — end of year $ 4,282  $ 4,338  $ 739  $ 728 
Funded status $ (289) $ (308) $ (297) $ (505)
Amounts recognized in Statements of Financial Position:
Non-current assets $ 137  $ 195  $ 192  $ 161 
Current liabilities1
(18) (30) (76) (81)
Non-current liabilities (408) (473) (413) (585)
Total amount recognized $ (289) $ (308) $ (297) $ (505)
Amounts recognized in accumulated other comprehensive loss (income):
Net actuarial gain $ (304) $ (361) $ (2,033) $ (1,996)
Prior service cost (credit) 106  121  (131) (156)
Net amount recognized $ (198) $ (240) $ (2,164) $ (2,152)
1 Current liabilities are classified within Other current liabilities on the Statements of Consolidated Financial Position.
Company contributions and payments we expect to make in 2024, and made in 2023 and 2022 are as follows:
Pension Benefits OPEB
(In millions)
VEBA1
Direct Payments Total
2022 $ 6  $ 85  $ 113  $ 198 
2023 29  —  65  65 
2024 (Expected) 122  —  66  66 
1 Pursuant to the applicable bargaining agreements, benefits can be paid from certain VEBAs that are at least 70% funded (all VEBAs were over 70% funded at December 31, 2023). Certain agreements with plans holding VEBA assets have capped healthcare costs. For the Cleveland-Cliffs Steel LLC VEBA, we are required to make contributions based on earnings, and we may withdraw money from the VEBA plan to the extent funds are available for costs in excess of the cap. VEBA withdrawals are represented net of direct payments. There will be no further contributions to the Cleveland-Cliffs Steel LLC VEBA based on earnings for the remainder of the labor agreement with the USW, which expires in September of 2026.
Components Of Net Periodic Benefit Cost
COMPONENTS OF NET PERIODIC BENEFIT COST (CREDIT)
Pension Benefits OPEB
(In millions) 2023 2022 2021 2023 2022 2021
Service cost $ 31  $ 45  $ 56  $ 10  $ 35  $ 51 
Interest cost 235  144  103  64  72  74 
Expected return on plan assets (315) (355) (359) (43) (37) (40)
Amortization:
Net actuarial loss (gain) 3  13  32  (145) (43) 3 
Prior service costs (credits) 18  5  1  (17) (3) (2)
Settlements (4) (8) (22) —  —  — 
Net periodic benefit cost (credit) $ (32) $ (156) $ (189) $ (131) $ 24  $ 86 
For 2024, we estimate net periodic benefit cost (credit) as follows:
(In millions)
Defined benefit pension plans $ (58)
OPEB plans (154)
Total $ (212)
Components of Accumulated Other Comprehensive Income (Loss)
The following includes details on the significant actuarial losses (gains) impacting the benefit obligation and other components of other comprehensive loss (income):
Pension Benefits OPEB
(In millions) 2023 2022 2023 2022
Discount rates $ 124  $ (1,143) $ 28  $ (441)
Demographic updates1
(5) (102) (208) (7)
Mortality (2) 17  (11) — 
Per capita healthcare costs and healthcare trend2
—  —  33  (1,333)
Other (1) (8) —  — 
Actuarial loss (gain) on benefit obligation 116  (1,236) (158) (1,781)
Actual returns on assets under (over) expected (60) 1,165  (24) 134 
Amortization of net actuarial gain (loss) (3) (13) 145  43 
Amortization of prior service credits (costs) (18) (5) 17  3 
Settlements 4  8  —  — 
Plan amendments3
3  122  8  (163)
Total recognized in other comprehensive loss (income) $ 42  $ 41  $ (12) $ (1,764)
1 In 2023, the OPEB plans generated an actuarial gain relating to updates for demographic experience. We had adjustments relating to retirements, participation, persistency and census data updates.
2 The gain in per capita healthcare costs in 2022 relating to our OPEB plans is primarily due to the negotiation of favorable Medicare Advantage Prescription Drug healthcare rates, which went into effect on January 1, 2023. Additionally, we expanded the Medicare Advantage program to retirees on some of our other plans during the 2022 USW labor negotiations which added additional savings. The negotiated rates extend through 2025.
3 In 2022, the plan amendment gains and losses were generated from the ratification of the 2022 USW labor agreements. The plan amendment loss related to our pension plans is attributable to the increase to the pre-2023 service multiplier to $115 and the service multiplier applicable to service beginning in 2023 to $126 for retirements after January 1, 2023. The plan amendment gain related to our OPEB plans is attributable to the implementation of a cap on healthcare costs for employees retiring after January 1, 2026 on one of our Cleveland-Cliffs Steel LLC plans as well as the extension of the Medicare Advantage program to plans that previously did not have the offering.
Estimated Future Benefit Payments
(In millions) Pension Benefits
OPEB1
2024 $ 503  $ 107 
2025 442  98 
2026 433  95 
2027 415  89 
2028 400  86 
2029-2033 1,728  380 
1 OPEB benefit payments are displayed net of participant contributions.
Defined Benefit Plan, Assumptions
The following represents weighted-average assumptions used to determine benefit obligations:
Pension Benefits OPEB
December 31, December 31,
2023 2022 2023 2022
Discount rate 5.12 % 5.47 % 5.15 % 5.52 %
Interest crediting rate 5.46 5.39 N/A N/A
Compensation rate increase 3.00 3.00 3.00 3.00
The following represents weighted-average assumptions used to determine net benefit cost:
Pension Benefits OPEB
December 31, December 31,
2023 2022 2021 2023 2022 2021
Obligation discount rate 5.47  % 3.21  % 2.32  % 5.52  % 3.33  % 2.46  %
Service cost discount rate 5.61  3.49  2.78  5.65  3.91  3.28 
Interest cost discount rate 5.34  2.75  1.64  5.38  3.01  2.04 
Interest crediting rate 5.46  5.39  5.35  N/A N/A N/A
Expected return on plan assets 7.66  6.87  6.84  5.87  4.86  5.20 
Compensation rate increase 3.00  2.74  2.54  3.00  3.00  3.00 
Assumed Health Care Cost Trend Rates
The following represents assumed weighted-average health care cost trend rates:
December 31,
2023 2022
Health care cost trend rate assumed for next year1
5.49  % 5.44  %
Ultimate health care cost trend rate 4.50  % 4.50  %
Year that the ultimate rate is reached 2032 2030
1 The health care trend rate for the next year is weighted for all of our OPEB plans and factors in our Medicare Advantage Prescription Drug pricing arrangements. In 2023, we increased our assumed health care cost trend rate for self insured plans to 6.50% from 6.00% for 2024, which grades down on a linear basis to 4.50% by 2032. The health care trend rate for the Medicare Advantage Prescription Drug plans is set to match the negotiated rates through 2025 and then converts to the same trend rate as our self insured plan. In 2023, we layered in a one time increase to the healthcare trend rate for the Medicare Advantage Prescription Drug plans for 2026. These increases align with our expectation of higher health care costs due to increased popularity of specialty medication, current carrier and provider negotiations and impacts from third party funding associated with the Inflation Reduction Act.
Plan Assets and Asset Allocation The following table reflects the actual asset allocations for pension and VEBA assets as of December 31, 2023 and 2022, as well as the 2024 weighted average target asset allocations:
Pension Assets VEBA Assets
Asset Category 2024
Target
Allocation		 Actual Asset Allocation at December 31, 2024
Target
Allocation		 Actual Asset Allocation at December 31,
2023 2022 2023 2022
Equity securities 33.8  % 32.1  % 36.1  % 16.6  % 18.4  % 22.0  %
Fixed income 41.1  38.8  40.9  78.5  74.5  67.4 
Hedge funds 9.4  9.4  2.7  1.4  1.5  1.9 
Private equity 3.3  3.4  3.3  —  —  — 
Structured credit 2.4  5.1  6.9  0.2  0.9  1.2 
Real estate 10.0  11.2  8.2  3.3  4.7  1.7 
Absolute return fixed income —  —  1.9  —  —  5.8 
Total 100.0  % 100.0  % 100.0  % 100.0  % 100.0  % 100.0  %
Fair Value of Pension Assets by Asset Category
The fair value of our pension assets by asset category is as follows:
(In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant  Other Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Investments Measured at Net Asset Value Total
Asset Category 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Equity securities:
U.S. equities $ 809  $ 564  $ —  $ —  $ —  $ —  $ —  $ 569  $ 809  $ 1,133 
Global equities 502  328  —  —  —  —  65  106  567  434 
Fixed income:
U.S. government securities1
22  87  657  380  —  —  142  63  821  530 
U.S. corporate bonds 587  574  —  266  —  —  94  373  681  1,213 
Non U.S. and other bonds —  —  —  32  —  —  160  —  160  32 
Hedge funds —  —  —  —  118  115  285  —  403  115 
Private equity —  —  —  —  146  143  —  —  146  143 
Structured credit —  —  —  —  220  298  —  —  220  298 
Real estate —  —  —  —  286  356  189  —  475  356 
Absolute return fixed income —  —  —  —  —  —  —  84  —  84 
Total $ 1,920  $ 1,553  $ 657  $ 678  $ 770  $ 912  $ 935  $ 1,195  $ 4,282  $ 4,338 
1 Includes cash equivalents.
The fair value of our VEBA assets by asset category is as follows:
(In millions) Quoted Prices  in Active Markets for Identical Assets
(Level 1)		 Significant  Other Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)		 Investments Measured at Net Asset Value Total
Asset Category 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Equity securities:
U.S. equities $ 102  $ 24  $ —  $ —  $ —  $ —  $ —  $ 89  $ 102  $ 113 
Global equities 3  5  —  —  —  —  30  42  33  47 
Fixed income:
U.S. government securities1
119  149  27  79  —  —  47  —  193  228 
U.S. corporate bonds 214  146  94  117  —  —  49  —  357  263 
Non U.S. and other bonds 3  —  —  —  —  —  —  —  3  — 
Hedge funds —  —  —  —  10  14  —  —  10  14 
Private equity —  —  —  —  —  —  —  —  —  — 
Structured credit —  —  —  —  7  9  —  —  7  9 
Real estate —  —  —  —  10  12  24  —  34  12 
Absolute return fixed income —  —  —  —  —  —  —  42  —  42 
Total $ 441  $ 324  $ 121  $ 196  $ 27  $ 35  $ 150  $ 173  $ 739  $ 728 
1 Includes cash equivalents.
Effect of Fair Value Measurements Using Significant Unobservable Inputs on Changes in Plan Assets
The following represents the fair value measurements of changes in plan assets using significant unobservable inputs (Level 3):
Pension Assets VEBA Assets
(In millions) 2023 2022 2023 2022
Beginning balance — January 1 $ 912  $ 904  $ 35  $ 42 
Actual return on plan assets:
Relating to assets still held at the reporting date (16) (6) 2  1 
Relating to assets sold during the period 10  15  1  1 
Purchases 24  28  —  — 
Sales (160) (29) (11) (9)
Ending balance — December 31 $ 770  $ 912  $ 27  $ 35 
Multiemployer Plan
Information with respect to multiemployer plans in which we participate follows:
Pension Fund EIN/Pension Plan Number
Pension Protection Act Zone Status1
FIP/RP Status Pending/Implemented2
Contributions
(in millions)
Surcharge Imposed3
Expiration Date of Collective Bargaining Agreement4
2023 2022 2023 2022 2021
Steelworkers Pension Trust
23-6648508/499
 Green Green No $ 119  $ 93  $ 88  No 4/1/2025 to 9/1/2026
IAM National Pension Fund’s National Pension Plan
51-6031295/002
 Red Red Yes 23  22  16  Yes 5/31/2025 to 5/15/2027
Other Plans5
1  —  — 
Total $ 143  $ 115  $ 104 
1 The most recent Pension Protection Act zone status available in 2023 and 2022 is for each plan's year-end at December 31, 2022 and 2021. The plan's actuary certifies the zone status. Generally, plans in the red zone are less than 65% funded, plans in the yellow zone are between 65% and 80% funded, and plans in the green zone are at least 80% funded. The IAM National Pension Fund's National Pension Plan voluntarily elected to place itself in the "Red Zone" in April 2019 and has implemented a rehabilitation plan to address its underfunded status. Additional contributions will be required as part of the rehabilitation plan until the plan exits the "Red Zone".
2 The "FIP/RP Status Pending/Implemented" column indicates plans for which a financial improvement plan or a rehabilitation plan is either pending or has been implemented, as defined by ERISA.
3 The surcharge represents an additional required contribution due as a result of the critical funding status of the plan.
4 We are a party to six collective bargaining agreements that require contributions to the Steelworkers Pension Trust and three collective bargaining agreements that require contributions to the IAM National Pension Fund's National Pension Plan.
5 Plans that are not individually significant to our Company are presented in aggregate.