Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2025

Pensions

Our employees participate in employee pension plans in accordance with legal requirements, customs and the related matters in the respective countries. These are defined benefit pension plans, defined contribution plans and multi-employer plans.

The Company’s employees in The Netherlands participate in a multi-employer plan, implemented for the employees of the Metal and Electrical Engineering Industry ("Bedrijfstakpensioenfonds Metalektro" or "PME") in accordance with the mandatory affiliation to PME effective for the industry in which NXP operates. As this affiliation is a legal requirement for the Metal and Electrical Engineering Industry, it has no expiration date. This PME multi-employer plan (a career average plan) covers 1,566 companies and 629,500 participants. The plan monitors its risk on an aggregate basis, not by company or participant and can therefore not be accounted for as a defined benefit plan. The pension fund rules state that the only obligation for affiliated companies will be to pay the annual plan contributions. There is no obligation for affiliated companies to fund plan deficits. Affiliated companies are also not entitled to any possible surpluses in the pension fund.

Every participating company contributes the same fixed percentage of its total pension base, being pensionable salary minus an individual offset. The Company’s pension cost for any period is the amount of contributions due for that period.

The contribution rate for the mandatory scheme will remain 27.98% in 2026, same as 2025.


PME multi-employer plan	2025	2024	2023
NXP’s contributions to the plan	40	38	33
(including employees’ contributions)	8	7	8
Average number of NXP’s active employees participating in the plan	2,323	2,351	2,338
NXP’s contribution to the plan exceeded more than 5 percent of the total contribution (as of December 31 of the plan’s year end)	No	No	No

The amount for pension costs included in the statement of operations for the year 2025 was $123 million (2024: $125 million; 2023: $123 million) of which $61 million (2024: $67 million; 2023: $69 million) represents defined contribution plans and $32 million (2024: $31 million; 2023: $30 million) represents the PME multi-employer plans.

Defined benefit plans

The benefits provided by defined benefit plans are based on employees’ years of service and compensation levels. Contributions are made by the Company, as necessary, to provide assets sufficient to meet the benefits payable to defined benefit pension plan participants.

These contributions are determined based upon various factors, including funded status, legal and tax considerations as well as local customs. The Company funds certain defined benefit pension plans as claims are incurred.

The total ongoing cost of defined benefit plans amounted to $30 million in 2025 (2024: a cost of $27 million; 2023: a cost of $24 million).

The table below provides a summary of the changes in the pension benefit obligations and defined benefit pension plan assets for 2025 and 2024, associated with the Company’s dedicated plans, and a reconciliation of the funded status of these plans to the amounts recognized in the balance sheets.


	2025	2024
Projected benefit obligation
Projected benefit obligation at beginning of year	561	605
Service cost	15	14
Interest cost	19	18
Actuarial (gains) and losses	(45)	(11)
Curtailments and settlements	(5)	—
Benefits paid	(27)	(30)
Exchange rate differences	54	(35)
Projected benefit obligation at end of year	572	561
Plan assets
Fair value of plan assets at beginning of year	201	213
Actual return on plan assets	13	6
Employer contributions	26	26
Curtailments and settlements	(1)	—
Benefits paid	(26)	(29)
Exchange rate differences	17	(15)
Fair value of plan assets at end of year	230	201
Funded status	(342)	(360)
Classification of the funded status is as follows
– Prepaid pension cost within non-current assets	26	8
– Accrued pension cost within other non-current liabilities	(354)	(356)
– Accrued pension cost within accrued liabilities	(14)	(12)
Total	(342)	(360)
Accumulated benefit obligation
Accumulated benefit obligation for all Company-dedicated benefit pension plans	545	535
Plans with assets less than accumulated benefit obligation (including unfunded plans)
– Fair value of plan assets	58	88
– Accumulated benefit obligations	400	431
Amounts recognized in accumulated other comprehensive income (before tax)
Total AOCI at beginning of year	46	60
– Net actuarial loss (gain)	(58)	(11)
– Exchange rate differences	1	(3)
Total AOCI at end of year	(11)	46

The net amount of projected benefit obligation and plan assets for all underfunded (including unfunded) pension plans was $342 million and $360 million at December 31, 2025, and 2024, respectively, and was classified as liabilities and non-current assets in the balance sheets.

For the year ended December 31, 2025, actuarial gains were primarily related to increases in discount rates of approximately 60 basis points on a weighted basis offset by experience losses related to salary and pension indexation adjustments being higher than our long-term assumptions. For the year ended December 31, 2024, actuarial gains were primarily related to increases in discount rates of approximately 10 basis points on a weighted basis offset by experience losses related to salary and pension indexation adjustments being higher than our long-term assumptions.

The weighted average assumptions used to calculate the projected benefit obligations were as follows:


	2025		2024
Discount rate	3.9	%	3.3	%
Rate of compensation increase	2.2	%	2.2	%

The weighted average assumptions used to calculate the net periodic pension cost were as follows:


	2025		2024		2023
Discount rate	3.3	%	3.2	%	3.3	%
Expected returns on plan assets	3.1	%	3.4	%	2.9	%
Rate of compensation increase	2.2	%	2.2	%	2.2	%

For the Company’s major plans, the discount rate used is based on high quality corporate bonds (iBoxx Corporate Euro AA 10+).

Plans in certain Asian countries without a deep corporate bond market use a discount rate based on the local sovereign rate and the plans' maturities (Bloomberg Government Bond Yields).

Expected returns per asset class are based on the assumption that asset valuations tend to return to their respective long-term equilibria. The expected return on assets for any funded plan equals the average of the expected returns per asset class weighted by their portfolio weights in accordance with the fund’s strategic asset allocation.

The components of net periodic pension costs were as follows:


	2025	2024	2023
Service cost	15	14	12
Interest cost on the projected benefit obligation	19	18	18
Expected return on plan assets	(7)	(7)	(6)
Amortization of net (gain) loss	3	2	0

Net periodic cost	30	27	24

The components of net periodic pension cost other than the service cost component are included in Other financial income (expense) in the statements of operations.

Plan assets

The actual pension plan asset allocation at December 31, 2025, and 2024 is as follows:


	2025		2024
Asset category:
Equity securities	30	%	27	%
Debt securities	34	%	35	%
Insurance contracts	7	%	7	%
Other	29	%	31	%
	100	%	100	%

We met our target plan asset allocation. The investment objectives for the pension plan assets are designed to generate returns that, along with the future contributions, will enable the pension plans to meet their future obligations. The investments in our major defined benefit plans largely consist of government bonds, “Level 2” Corporate Bonds and cash to mitigate the risk of interest fluctuations. The asset mix of equity, bonds, cash and other categories is evaluated by an asset-liability modeling study for our largest plan. The assets of funded plans in other countries mostly have a large proportion of fixed income securities with return characteristics that are aligned with changes in the liabilities caused by discount rate volatility. Total pension plan assets of $230 million include $182 million related to the German and Japanese pension funds.

The following table summarizes the classification of these assets.


	2025			2024
	Level I	Level II	Level III	Level I	Level II	Level III
Equity securities	—	56	—	—	48	—
Debt securities	16	34	—	11	33	—
Insurance contracts	—	15	—	—	13	—
Other	6	28	27	7	26	23
	22	133	27	18	120	23

The Company currently expects to make $8 million of employer contributions to defined benefit pension plans and $13 million of expected cash payments in relation to unfunded pension plans in 2026.

Estimated future pension benefit payments

The following benefit payments are expected to be made (including those for funded plans):


2026			30
2027			30
2028			32
2029			35
2030			37
Years 2031-2035			203

Postretirement health care benefits

In addition to providing pension benefits, NXP provides retiree healthcare benefits in the U.S. which are accounted for as defined benefit plans.

The accumulated postretirement benefit obligation at the end of 2025 equals $1 million (2024: $1 million).

- Definition

The entire disclosure for retirement benefits.

+ References

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+ Details

NXP Semiconductors N.V. 10-K