v3.25.4
RETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
RETIREMENT BENEFITS RETIREMENT BENEFITS
Defined benefit pension and OPEB plan obligations are remeasured at least annually as of December 31 based on the present value of projected future benefit payments for all participants for services rendered to date. The measurement of projected future benefits is dependent on the provisions of each specific plan, demographics of the group covered by the plan, and other key measurement assumptions. For plans that provide benefits dependent on salary assumptions, we include a projection of salary growth in our measurements. No assumption is made regarding any potential future changes to benefit provisions beyond those to which we are presently committed (e.g., in existing labor contracts).

Net periodic benefit costs, including service cost, interest cost, and expected return on assets, are determined using assumptions regarding the benefit obligation and the fair value of plan assets (where applicable) as of the beginning of each year. We have elected to use the fair value of plan assets to calculate the expected return on assets in net periodic benefit cost. The funded status of the benefit plans, which represents the difference between the benefit obligation and fair value of plan assets, is calculated on a plan-by-plan basis. The benefit obligation and related funded status are determined using assumptions as of the end of each year. Actuarial gains and losses resulting from plan remeasurement are recognized in net periodic benefit cost in the period of the remeasurement. The impact of a retroactive plan amendment is recorded in Accumulated other comprehensive income/(loss) and is amortized as a component of net periodic cost, generally over the remaining service period of the active employees. The service cost component is included in Cost of sales and Selling, administrative, and other expenses. Other components of net periodic benefit cost/(income) are included in Other income/(loss), net on our consolidated income statements.

A curtailment results from an event that significantly reduces the expected years of future service or eliminates the accrual of defined benefits for the future service of a significant number of employees. A curtailment gain is recorded when the employees who are entitled to a benefit terminate their employment or when a plan suspension or amendment that results in a curtailment gain is adopted. A curtailment loss is recorded when it becomes probable a curtailment loss will occur. We recognize settlement expense when the costs associated with all settlements during the year exceed the interest component of net periodic cost for the affected plan. Expense from curtailments and settlements is recorded in Other income/(loss), net.

Defined Benefit Pension Plans.  We have defined benefit pension plans covering hourly and salaried employees in the United States, Canada, the United Kingdom, Germany, and other locations. The largest portion of our worldwide obligation is associated with our U.S. plans. Virtually all of our worldwide defined benefit plans are closed to new participants.

In general, our defined benefit pension plans are funded (i.e., have restricted assets from which benefits are paid). Our unfunded defined benefit pension plans are treated on a “pay as you go” basis with benefit payments from Company cash. These unfunded plans primarily include certain plans in Germany and the U.S. defined benefit plans for senior management.

OPEB.  We have defined benefit OPEB plans, primarily certain health care and life insurance benefits, covering hourly and salaried employees in the United States, Canada, and other locations. The largest portion of our worldwide obligation is associated with our U.S. plans. Our OPEB plans are unfunded and the benefits are paid from Company cash.

Defined Contribution and Savings Plans. We also have defined contribution and savings plans for hourly and salaried employees in the United States and other locations. Company contributions to these plans are made from Company cash and are expensed as incurred. The expense for our worldwide defined contribution and savings plans was $546 million, $699 million, and $761 million for the years ended December 31, 2023, 2024, and 2025, respectively. This includes the expense for Company-matching contributions to our primary employee savings plan in the United States of $155 million, $177 million, and $184 million for the years ended December 31, 2023, 2024, and 2025, respectively.
NOTE 16.  RETIREMENT BENEFITS (Continued)

Defined Benefit Plans – Expense and Status

The assumptions used to determine benefit obligation and net periodic benefit cost/(income) were as follows:
 20242025
 Pension BenefitsOPEBPension BenefitsOPEB
 U.S. PlansNon-U.S. PlansWorldwideU.S. PlansNon-U.S. PlansWorldwide
Weighted Average Assumptions at December 31
      
Discount rate5.65 %4.51 %5.46 %5.34 %4.80 %5.27 %
Average rate of increase in compensation3.80 3.52 3.80 3.80 3.27 3.70 
Weighted Average Assumptions Used to Determine Net Benefit Cost for the Year Ended December 31
  
Discount rate - Service cost5.25 %3.92 %5.28 %5.83 %4.60 %5.73 %
Effective interest rate on benefit obligation5.02 4.01 5.02 5.35 4.36 5.14 
Expected long-term rate of return on assets5.93 4.53 — 6.37 5.23 — 
Average rate of increase in compensation4.05 3.54 3.98 3.80 3.52 3.80 

The pre-tax net periodic benefit cost/(income) for our defined benefit pension and OPEB plans for the years ended December 31 was as follows (in millions):
 202320242025
 Pension BenefitsOPEBPension BenefitsOPEBPension BenefitsOPEB
 U.S. PlansNon-U.S. PlansWorldwideU.S. PlansNon-U.S. PlansWorldwideU.S. PlansNon-U.S. PlansWorldwide
Service cost$292 $245 $21 $288 $248 $24 $209 $199 $21 
Interest cost1,641 965 231 1,581 938 226 1,571 949 220 
Expected return on assets(1,897)(890)— (1,817)(1,019)— (1,826)(1,156)— 
Amortization of prior service costs/(credits)
— 22 3 92 25 10 88 25 9 
Net remeasurement (gain)/loss841 932 286 444 (1,019)(112)308 308 (19)
Separation costs/other20 261 1 22 111 — 30 120 — 
Settlements and curtailments
69 9 — 129 (22)— — 6 — 
Net periodic benefit cost/(income)$966 $1,544 $542 $739 $(738)$148 $380 $451 $231 

In 2023, we recognized an expense of $360 million related to separation programs, settlements, and curtailments, which included $71 million of settlement losses primarily related to a U.S. pension plan and separation and curtailment expenses of $268 million for non-U.S. pension plans related to ongoing restructuring programs.

In 2024, we recognized an expense of $240 million related to separation programs, settlements, and curtailments, which included $129 million of settlement and curtailment losses related to U.S. pension plans and separation and curtailment expenses of $89 million for non-U.S. pension plans related to ongoing restructuring programs.

In 2025, we recognized an expense of $156 million related to separation programs, settlements, and curtailments, which included separation and curtailment expenses of $126 million for non-U.S. pension plans related to ongoing restructuring programs.
NOTE 16.  RETIREMENT BENEFITS (Continued)

The year-end status of these plans was as follows (in millions):
 20242025
 Pension BenefitsOPEBPension BenefitsOPEB
 U.S. PlansNon-U.S. PlansWorldwideU.S. PlansNon-U.S. PlansWorldwide
Change in Benefit Obligation     
Benefit obligation at January 1$32,676 $24,004 $4,696 $30,555 $21,245 $4,415 
Service cost288 248 24 209 199 21 
Interest cost1,581 938 226 1,571 949 220 
Amendments— — — — — — 
Separation costs/other(19)103 — 30 94 — 
Curtailments87 (22)— — 1 — 
Settlements(8)(6)— — — — 
Plan participant contributions15 9 — 16 8 — 
Benefits paid(2,706)(1,416)(324)(2,851)(1,362)(331)
Foreign exchange translation— (989)(95)— 1,970 56 
Actuarial (gain)/loss(1,359)(1,624)(112)1,117 (779)(19)
Benefit obligation at December 3130,555 21,245 4,415 30,647 22,325 4,362 
Change in Plan Assets   
Fair value of plan assets at January 131,423 22,958 — 29,502 21,751 — 
Actual return on plan assets13 414 — 2,635 69 — 
Company contributions808 685 — 703 462 — 
Plan participant contributions15 9 — 16 8 — 
Benefits paid(2,706)(1,416)— (2,851)(1,362)— 
Settlements(8)(6)— — — — 
Foreign exchange translation— (880)— — 1,875 — 
Other(43)(13)— — (28)— 
Fair value of plan assets at December 3129,502 21,751 — 30,005 22,775 — 
Funded status at December 31$(1,053)$506 $(4,415)$(642)$450 $(4,362)
Amounts Recognized on the Balance Sheets   
Prepaid assets$983 $3,155 $— $964 $2,773 $— 
Other liabilities(2,036)(2,649)(4,415)(1,606)(2,323)(4,362)
Total$(1,053)$506 $(4,415)$(642)$450 $(4,362)
Amounts Recognized in Accumulated Other Comprehensive Loss (pre-tax)
   
Unamortized prior service costs/(credits)$449 $132 $42 $361 $110 $34 
Pension Plans in which Accumulated Benefit Obligation Exceeds Plan Assets at December 31
    
Accumulated benefit obligation$1,641 $2,793  $1,669 $2,916  
Fair value of plan assets85 500  89 687  
Accumulated Benefit Obligation at December 31$30,070 $20,209  $30,177 $21,420  
Pension Plans in which Projected Benefit Obligation Exceeds Plan Assets at December 31
Projected benefit obligation$13,696 $8,813 $1,695 $3,016 
Fair value of plan assets11,660 6,164 89 693 
Projected Benefit Obligation at December 31$30,555 $21,245 $30,647 $22,325 
NOTE 16.  RETIREMENT BENEFITS (Continued)

The actuarial (gain)/loss for our pension benefit obligations in 2024 and 2025 was primarily related to changes in discount rates.

Pension Plan Contributions

Our policy for funded pension plans is to contribute annually, at a minimum, amounts required by applicable laws and regulations. We may make contributions beyond those legally required.

In 2025, we contributed $720 million to our global funded pension plans and made $445 million of benefit payments to participants in unfunded plans. During 2026, we expect to contribute about $550 million of cash to our global funded pension plans. We also expect to make about $400 million of benefit payments to participants in unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. pension plans in 2026.

Expected Future Benefit Payments

The expected future benefit payments at December 31, 2025 were as follows (in millions):
 Benefit Payments
 PensionOPEB
 U.S. PlansNon-U.S.
Plans		Worldwide
2026$2,695 $1,440 $340 
20272,630 1,420 335 
20282,600 1,425 330 
20292,600 1,430 330 
20302,550 1,425 325 
2031-203511,990 7,080 1,570 

Pension Plan Asset Information

Investment Objectives and Strategies. Our investment objectives for the U.S. plans are to minimize the volatility of the value of our U.S. pension assets relative to U.S. pension obligations and to ensure assets are sufficient to pay plan benefits. Our largest non-U.S. plans (e.g., the United Kingdom and Canada) have similar investment objectives to the U.S. plans.

Investment strategies and policies for the U.S. plans and the largest non-U.S. plans reflect a balance of risk-reducing and return-seeking considerations.  The objective of minimizing the volatility of assets relative to obligations is addressed primarily through asset-liability matching, asset diversification, and hedging.  The fixed income asset allocation matches the bond-like and long-dated nature of the pension obligations. Assets are broadly diversified within asset classes to achieve risk-adjusted returns that, in total, lower asset volatility relative to the obligations.  Strategies to address the goal of ensuring sufficient assets to pay benefits include target allocations to a broad array of asset classes, and strategies within asset classes that provide adequate returns, diversification, and liquidity.
NOTE 16.  RETIREMENT BENEFITS (Continued)

Derivatives are permitted for fixed income investment and public equity managers to use as efficient substitutes for traditional securities and to manage exposure to interest rate and foreign exchange risks.  Interest rate and foreign currency derivative instruments are used for the purpose of hedging changes in the fair value of assets that result from interest rate changes and currency fluctuations.  Interest rate derivatives are also used to adjust portfolio duration. Derivatives may not be used to leverage or to alter the economic exposure to an asset class outside the scope of the mandate an investment manager has been given.  Alternative investment managers are permitted to employ leverage (including through the use of derivatives or other tools) that may alter economic exposure.

Alternative investments execute diverse strategies that provide exposure to a broad range of hedge fund strategies, equity investments in private companies, and investments in private property funds.

Significant Concentrations of Risk.  Significant concentrations of risk in our plan assets relate to interest rates, growth assets, and operating risks.  In order to minimize asset volatility relative to the obligations, the majority of plan assets are allocated to fixed income investments, which are exposed to interest rate risk.  Rate increases generally will result in a decline in the value of fixed income assets, while reducing the present value of the obligations. Conversely, rate decreases generally will increase the value of fixed income assets, offsetting the related increase in the obligations.

In order to ensure assets are sufficient to pay benefits, a portion of plan assets is allocated to growth assets (primarily hedge funds, real estate, private equity, and public equity) that are expected over time to earn higher returns with more volatility than fixed income investments, which more closely match pension obligations.  Within growth assets, risk is mitigated by constructing a portfolio that is broadly diversified by asset class, investment strategy, manager, style, and process.

Operating risks include the risks of inadequate diversification and weak controls.  To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives.  Policies and practices to address operating risks include ongoing manager oversight (e.g., style adherence, team strength, firm health, and internal risk controls), plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance reviews to ensure adherence.

At year-end 2025, Ford securities comprised less than 1% of our plan assets.

Expected Long-Term Rate of Return on Assets.  The long-term return assumption at year-end 2025, which will be used to determine the 2026 expected return on assets, is 6.20% for the U.S. plans, 5.38% for the U.K. plans, and 5.11% for the Canadian plans, and averages 5.15% for all non-U.S. plans. A generally consistent approach is used worldwide to develop this assumption. This approach considers inputs from advisors for long-term capital market returns adjusted for specific aspects of our investment strategy by plan.  Historical returns also are considered where appropriate. The assumption is based on consideration of all inputs, with a focus on long-term trends to avoid short-term market influences.
NOTE 16.  RETIREMENT BENEFITS (Continued)

The fair value of our defined benefit pension plan assets (including dividends and interest receivables of $236 million and $65 million for U.S. and non-U.S. plans, respectively) by asset category at December 31 was as follows (in millions):
2024
U.S. PlansNon-U.S. Plans
 Level 1Level 2Level 3Assets measured at NAV (a)TotalLevel 1Level 2Level 3Assets measured at NAV (a)Total
Asset Category    
Equity    
U.S. companies
$1,035 $2 $2 $— $1,039 $1,719 $25 $— $— $1,744 
International companies
490 38 6 — 534 1,080 47 1 — 1,128 
Total equity
1,525 40 8 — 1,573 2,799 72 1 — 2,872 
Fixed Income
U.S. government and agencies
7,106 1,079 — — 8,185 4 26 — — 30 
Non-U.S. government
1 607 — — 608 1,360 10,698 6 — 12,064 
Corporate bonds
— 15,079 21 — 15,100 — 1,667 56 — 1,723 
Mortgage/other asset-backed
— 433 — — 433 — 291 13 — 304 
Commingled funds
— — — — — 30 186 — — 216 
Derivative financial instruments, net
(6)(57)— — (63)(1)(20)51 — 30 
Total fixed income
7,101 17,141 21 — 24,263 1,393 12,848 126 — 14,367 
Alternatives
Hedge funds
— — — 3,732 3,732 — — — 779 779 
Private equity
— — — 845 845 — — — 370 370 
Real estate
— — — 1,298 1,298 — — — 370 370 
Total alternatives
— — — 5,875 5,875 — — — 1,519 1,519 
Cash, cash equivalents, and repurchase agreements (b)
(1,656)— — — (1,656)(197)— — — (197)
Other (c)
(553)— — — (553)(248)— 3,438 — 3,190 
Total assets at fair value
$6,417 $17,181 $29 $5,875 $29,502 $3,747 $12,920 $3,565 $1,519 $21,751 
__________
(a)Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(b)Primarily short-term investment funds to provide liquidity to plan investment managers and cash held to pay benefits, offset by repurchase agreements valued at $(2.6) billion in U.S. plans and $(0.7) billion in non-U.S. plans.
(c)For U.S. plans, amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales). For non-U.S plans, $2.7 billion of insurance contracts, primarily the Ford-Werke plan, and amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales).
NOTE 16.  RETIREMENT BENEFITS (Continued)

The fair value of our defined benefit pension plan assets (including dividends and interest receivables of $256 million and $48 million for U.S. and non-U.S. plans, respectively) by asset category at December 31 was as follows (in millions):
2025
U.S. PlansNon-U.S. Plans
 Level 1Level 2Level 3Assets measured at NAV (a)TotalLevel 1Level 2Level 3Assets measured at NAV (a)Total
Asset Category    
Equity    
U.S. companies
$842 $29 $2 $— $873 $1,273 $31 $— $— $1,304 
International companies
452 10 7 — 469 786 45 1 — 832 
Total equity
1,294 39 9 — 1,342 2,059 76 1 — 2,136 
Fixed Income
     
U.S. government and agencies
7,388 941 — — 8,329 3 58 — — 61 
Non-U.S. government
1 688 — — 689 2,629 6,974 51 — 9,654 
Corporate bonds
— 15,355 23 — 15,378 — 1,025 38 — 1,063 
Mortgage/other asset-backed
— 453 3 — 456 — 172 3 — 175 
Commingled funds
— — — 611 611 26 124 — — 150 
Derivative financial instruments, net
(4)20 — — 16 — 21 — — 21 
Total fixed income
7,385 17,457 26 611 25,479 2,658 8,374 92 — 11,124 
Alternatives
     
Hedge funds
— — — 2,908 2,908 — — — 488 488 
Private equity
— — — 820 820 — — — 325 325 
Real estate
— — — 1,175 1,175 — — — 278 278 
Total alternatives
— — — 4,903 4,903 — — — 1,091 1,091 
Cash, cash equivalents, and repurchase agreements (b)
(1,460)— — — (1,460)(1,296)— — — (1,296)
Other (c)
(259)— — — (259)(42)— 9,762 — 9,720 
Total assets at fair value
$6,960 $17,496 $35 $5,514 $30,005 $3,379 $8,450 $9,855 $1,091 $22,775 
__________
(a)Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
(b)Primarily short-term investment funds to provide liquidity to plan investment managers and cash held to pay benefits, offset by repurchase agreements valued at $(2.2) billion in U.S. plans and $(1.6) billion in non-U.S. plans.
(c)For U.S. plans, amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales). For non-U.S plans, $9.0 billion of insurance contracts, primarily in the U.K. and Germany, and amounts related to net pending security (purchases)/sales and net pending foreign currency purchases/(sales).
NOTE 16.  RETIREMENT BENEFITS (Continued)

The following table summarizes the changes in Level 3 defined benefit pension plan assets for the years ended December 31 (in millions):
2024
 Return on plan assets  
Fair
Value
at
January 1		Attributable
to Assets
Held
at
December 31		Attributable
to
Assets
Sold		Net Purchases/
(Settlements)		Transfers Into/(Out of) Level 3Fair
Value
at
December 31
U.S. Plans$21 $— $3 $4 $1 $29 
Non-U.S. Plans (a)4,138 (387)(16)(2)(168)3,565 
2025
 Return on plan assets  
Fair
Value
at
January 1		Attributable
to Assets
Held
at
December 31		Attributable
to
Assets
Sold		Net Purchases/
(Settlements)		Transfers Into/(Out of) Level 3Fair
Value
at
December 31
U.S. Plans$29 $6 $— $9 $(9)$35 
Non-U.S. Plans (a)3,565 6,278 8 (33)37 9,855 
__________
(a)Includes insurance contracts, primarily in the U.K. and Germany, valued at $2.7 billion and $9.0 billion at year-end 2024 and 2025, respectively.