DowDuPont Inc., Midland, Mich., plans to contribute about $500 million to the global Dow Chemical defined benefit plans and $200 million to the global DuPont DB plans in 2018, according to the company's 10-K filing with the Securities and Exchange Commission on Thursday.
Dow Chemical and E.I. du Pont de Nemours & Co. completed a merger of equals on Aug. 31, 2017, but the companies' defined benefit plans have not been merged.
DowDuPont did not disclose how much would go to individual U.S. and non-U.S. plans. In 2017, the company contributed $3 billion to the DuPont global DB plans and $1.7 billion to the Dow global DB plans, according to their individual 10-K filings.
The discount rate for Dow's U.S. defined benefit plans in 2017 was 3.66%, down from 4.11% in 2016. The global DB plan discount rate for 2017 was 3.17%, down from 3.52% in 2016. The discount rate for DuPont's global DB plans in 2017 was 3.56%, down from 4.03% in 2016.
As of Dec. 31, Dow's overall DB plan assets totaled $23.401 billion, while projected benefit obligations totaled $31.851 billion, for a funding ratio of 73.5%, up from 70% a year earlier. Contributing to the improvement in funding ratio in 2017 beyond employer contributions and investment returns were the transfer of $940 million in lump sums to former employees who were vested but not yet receiving benefits, and $230 million to an unnamed insurance company as the result of a group annuity purchase.
As of Dec. 31, the actual allocation of the Dow global DB plans was 34.2% fixed income, 23.7% international equities, 16% domestic equities, 9.5% real estate, 6.8% hedge funds, 5.9% private market securities, 3.3% cash and cash equivalents, and 0.5% other.
DuPont's global defined benefit plan assets totaled $20.284 billion as of Dec. 31, according to its 10-K filing, with projected benefit obligations totaling $25.55 billion, for a funding ratio of 79.4%, up from 67.1% the year before. In the fourth quarter of 2017, DuPont made about $140 million in lump-sum payments to former employees who were vested but not yet receiving benefits. DuPont's DB plans will freeze benefit accruals effective Nov. 30, 2018.
As of Dec. 31, DuPont's global asset allocation was 35.2% fixed income, 19.9% domestic equities, 15.1% each cash and international equities, 6.9% private market securities, 4.1% hedge funds and 3.8% real estate.