Estimated Litigation Liability

[Table of Contents](#i43d04c9d26874e33802bdf64c458414a_7)NOTE 9.  OTHER LIABILITIES, INCLUDING EMPLOYEE BENEFITS The components of other liabilities follow:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | December 31, |
|   | 2021 |  | 2020 |
| Pension, postretirement, postemployment and other employment benefitsa | $ | 845  |  |  | $ | 1,213  |  |
| Leasesb | 281  |  |  | 190  |  |
| Provision for tax positions | 232  |  |  | 261  |  |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
| Litigation accruals | 131  |  |  | 110  |  |
| Indemnification of PT Inalumb | 78  |  |  | 42  |  |
| Cerro Verde royalty disputec | —  |  |  | 376  |  |
| Other | 116  |  |  | 77  |  |
| Total other liabilities | $ | 1,683  |  |  | $ | 2,269  |  |

a.Refer to Note 7 for current portion.b.Refer to Note 13 for further discussion. c.Refer to Note 12 for further discussion.Pension Plans.  Following is a discussion of FCX’s pension plans.  
FMC Plans. FMC has U.S. trusteed, non-contributory pension plans covering some U.S. employees and some employees of its international subsidiaries hired before 2007. The applicable FMC plan design determines the manner in which benefits are calculated for any particular group of employees. Benefits are calculated based on final average monthly compensation and years of service or based on a fixed amount for each year of service. Non-bargained FMC employees hired after December 31, 2006, are not eligible to participate in the FMC U.S. pension plan. See below for discussion of a 2020 plan amendment.  
FCX’s funding policy for these plans provides that contributions to pension trusts shall be at least equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended, for U.S. plans; or, in the case of international plans, the minimum legal requirements that may be applicable in the various countries. Additional contributions also may be made from time to time.  
FCX’s primary investment objectives for the FMC plan assets held in a master trust (Master Trust) are to maintain funds sufficient to pay all benefit and expense obligations when due, minimize the volatility of the plan’s funded status to the extent practical, and to maintain prudent levels of risk consistent with the plan’s investment policy. Historically, FMC plan assets have been invested in a balanced portfolio of return-seeking assets and risk-mitigating assets, with the allocation between these portfolios dependent on the funded status of the plan. During 2021, FCX reallocated essentially all of the portfolio to risk-mitigating assets with the objective of minimizing funded-status volatility. The risk-mitigating assets are allocated among multiple fixed income managers. The current target allocation of the portfolio is long-duration credit (50 percent); long-duration U.S. government/credit (20 percent); core fixed income (16 percent); long-term U.S. Treasury Separate Trading of Registered Interest and Principal Securities (STRIPS) (13 percent); and cash equivalents (1 percent).  
The expected rate of return on plan assets is evaluated at least annually, taking into consideration asset allocation, historical and expected future performance on the types of assets held in the Master Trust, and the current economic environment. Based on these factors, FCX expects the pension assets will earn an average of 3.00 percent per annum beginning January 1, 2022, which was based on the target asset allocation and long-term capital market return expectations.  
For estimation purposes, FCX assumes the long-term asset mix for these plans generally will be consistent with the current mix. Changes in the asset mix could impact the amount of recorded pension costs, the funded status of the plans and the need for future cash contributions. A lower-than-expected return on assets also would decrease plan assets and increase the amount of recorded pension costs in future years. When calculating the expected return on plan assets, FCX uses the market value of assets.  
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