Annual report [Section 13 and 15(d), not S-K Item 405]

PENSIONS AND OTHER POSTRETIREMENT BENEFITS

v3.25.4
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2025
Postemployment Benefits [Abstract]  
Pension and Other Post Retirement Benefits
NOTE 9 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS
We offer benefits through defined benefit pension plans, defined contribution pension plans and OPEB plans to a significant portion of our employees and retirees. Benefits are also provided through multiemployer plans for certain union members.
DEFINED BENEFIT PENSION PLANS
The defined benefit pension plans are largely noncontributory and limited in participation. Most plans are closed to new participants with only the legacy iron ore hourly and salaried plans still open. The pension benefit calculations vary by plan but are generally based on employees' years of service and compensation or a fixed rate and years of service. Certain salaried plans calculate benefits using a cash balance formula, which earns interest credits and allocations based on a percent of pay.
OPEB PLANS
We offer postretirement health care and life insurance benefits to retirees through various funded and unfunded plans. The vast majority of our plans are closed to new participants. In lieu of retiree medical coverage, many union-represented employees receive a 401(k) contribution per hour worked to a restricted Retiree Health Care Account. Cost sharing features between the employer and retiree vary by plan and several plans include employer caps. Retiree healthcare coverage is provided through programs administered by insurance companies whose charges are based on benefits paid. Certain labor agreements require the funding of VEBAs, which, depending on funding levels, may be used to reimburse the employer for paid benefits.
OBLIGATIONS AND FUNDED STATUS
The following tables and information provide additional disclosures:
(In millions) Pension Benefits OPEB
Change in benefit obligations: 2025 2024 2025 2024
Benefit obligations — beginning of year $ 4,248  $ 4,571  $ 1,147  $ 1,036 
Service cost 28  28  8  8 
Interest cost 210  218  58  50 
Plan amendments —  —  3  7 
Actuarial loss (gain) 78  (165) 181  162 
Benefits paid (435) (429) (161) (155)
Participant contributions —  —  33  36 
Acquired through business combinations —  35  —  — 
Effect of settlement —  (9) —  — 
Special termination benefits —  —  7  2 
Other 2  (1) 1  1 
Benefit obligations — end of year $ 4,131  $ 4,248  $ 1,277  $ 1,147 
Change in plan assets:
Fair value of plan assets — beginning of year $ 4,237  $ 4,282  $ 742  $ 739 
Actual return on plan assets 475  254  63  46 
Participant contributions —  —  33  36 
Employer contributions 68  119  86  76 
Benefits paid (435) (429) (161) (155)
Acquired through business combinations —  21  —  — 
Effect of settlement —  (9) —  — 
Other 1  (1) —  — 
Fair value of plan assets — end of year $ 4,346  $ 4,237  $ 763  $ 742 
Funded status $ 215  $ (11) $ (514) $ (405)
Amounts recognized in Statements of Financial Position:
Non-current assets $ 287  $ 239  $ 182  $ 188 
Current liabilities1
(14) (7) (99) (85)
Non-current liabilities (58) (243) (597) (508)
Total amount recognized $ 215  $ (11) $ (514) $ (405)
Amounts recognized in accumulated other comprehensive loss (income):
Net actuarial gain $ (472) $ (400) $ (1,426) $ (1,720)
Prior service cost (credit) 72  89  (92) (109)
Net amount recognized $ (400) $ (311) $ (1,518) $ (1,829)
1 Current liabilities are classified within Other current liabilities on the Statements of Consolidated Financial Position.
The accumulated benefit obligation for all defined benefit pension plans was $4,120 million and $4,236 million as of December 31, 2025 and 2024, respectively.
COMPONENTS OF NET PERIODIC BENEFIT COST (CREDIT)
Pension Benefits OPEB
(In millions) 2025 2024 2023 2025 2024 2023
Service cost $ 28  $ 28  $ 31  $ 8  $ 8  $ 10 
Interest cost 210  218  235  58  50  64 
Expected return on plan assets (317) (320) (315) (43) (43) (43)
Amortization:
Net actuarial loss (gain) (8) (1) 3  (134) (154) (145)
Prior service costs (credits) 17  18  18  (13) (15) (17)
Settlements and special termination benefits —  (2) (4) 7  2  — 
Net periodic benefit cost (credit) $ (70) $ (59) $ (32) $ (117) $ (152) $ (131)
For 2026, we estimate net periodic benefit cost (credit) as follows:
(In millions)
Defined benefit pension plans $ (118)
OPEB plans (104)
Total $ (222)
COMPONENTS OF OTHER COMPREHENSIVE LOSS (INCOME)
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) 2025 2024 2025 2024
Discount rates $ 109  $ (146) $ 34  $ (43)
Demographic updates 22  (14) 23  26 
Mortality (50) —  —  — 
Per capita healthcare costs and healthcare trend1
—  —  124  179 
Other (3) (5) —  — 
Actuarial loss (gain) on benefit obligation 78  (165) 181  162 
Actual returns on assets under (over) expected (158) 67  (20) (3)
Amortization of net actuarial gain (loss) 8  1  134  154 
Amortization of prior service credits (costs) (17) (18) 13  15 
Settlements —  2  —  — 
Plan amendments —  —  3  7 
Total recognized in other comprehensive loss (income) $ (89) $ (113) $ 311  $ 335 
1 The loss in per capita healthcare costs relating to our OPEB plans is primarily due to unfavorable Medicare Advantage Prescription Drug healthcare rates, which are effective January for each year. Additionally, we increased our short-term Medicare Advantage Prescription Drug trend rate assumption.
CONTRIBUTIONS
We make both required and discretionary pension contributions. Required contributions are based on minimum funding requirements pursuant to ERISA regulations. Funded OPEB plans are not subject to minimum regulatory funding requirements, but rather amounts are contributed pursuant to bargaining agreements. Contributions toward unfunded OPEB plans are payments made directly from corporate assets and are displayed net of participant contributions and other reimbursements. Company contributions and payments we expect to make in 2026, and made in 2025 and 2024 are as follows:
Pension Benefits OPEB
(In millions)
VEBA1
Direct Payments Total
2024 $ 119  $ —  $ 76  $ 76 
2025 68  —  86  86 
2026 (Expected) 43  —  83  83 
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 as of December 31, 2025). 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 2026.
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions) Pension Benefits
OPEB1
2026 $ 466  $ 128 
2027 420  124 
2028 403  120 
2029 380  114 
2030 364  110 
2031-2035 1,577  492 
1 OPEB benefit payments are displayed net of participant contributions.
ASSUMPTIONS
The discount rates used to measure plan liabilities as of the December 31 measurement date are determined individually for each plan. The discount rates are determined by matching the projected cash flows used to determine the plan liabilities to a projected yield curve of high-quality corporate bonds available at the measurement date. Discount rates for expense are calculated using the granular approach for each plan.
We use company-specific base mortality tables for healthy annuitants in qualified pension plans. We use tables issued by the Society of Actuaries for non-annuitants in qualified pension plans, all nonqualified pension participants and OPEB participants. For tables issued by the Society of Actuaries, we use Pri-2012 mortality tables with adjustments for blue collar, white collar or no collar depending on the plan. Mortality is projected for all plans using Scale MP-2021 with generational projection for both years. In 2025, no changes have been made to the plans' mortality tables.
The following represents weighted-average assumptions used to determine benefit obligations:
Pension Benefits OPEB
December 31, December 31,
2025 2024 2025 2024
Discount rate 5.18 % 5.55 % 5.22 % 5.59 %
Interest crediting rate 5.61 5.58 N/A N/A
Compensation rate increase 3.00 3.00 N/A N/A
The following represents weighted-average assumptions used to determine net benefit cost:
Pension Benefits OPEB
December 31, December 31,
2025 2024 2023 2025 2024 2023
Obligation discount rate 5.56  % 5.08  % 5.47  % 5.59  % 5.15  % 5.52  %
Service cost discount rate 5.80  5.29  5.61  5.83  5.28  5.65 
Interest cost discount rate 5.26  5.05  5.34  5.28  5.08  5.38 
Interest crediting rate 5.58  5.46  5.46  N/A N/A N/A
Expected return on plan assets 7.85  7.85  7.66  5.89  5.95  5.87 
Compensation rate increase 3.00  3.00  3.00  N/A N/A N/A
The following represents assumed weighted-average health care cost trend rates:
December 31,
2025 2024
Health care cost trend rate assumed for next year1
7.00  % 11.43  %
Ultimate health care cost trend rate 4.50  % 4.50  %
Year that the ultimate rate is reached 2036 2032
1 The health care trend rate is weighted for all of our OPEB plans and factors in our Medicare Advantage Prescription Drug pricing arrangements. As of December 31, 2025, we reset our initial trend rate to 7.00% grading down by 0.25% per year to an ultimate rate of 4.50% in 2036. While the risk scoring and third-party funding changes associated with the Inflation Reduction Act may potentially impact costs and trends in future years, the impact is expected to be minimal or unmeasurable at this time.
PLAN ASSETS
Our investment objectives with respect to our pension and OPEB assets are to maximize investment returns within reasonable and prudent levels of risk and maintain sufficient liquidity to meet benefit obligations over the life of each plan. The asset allocations are tailored to each individual plan and are determined by analyzing each plan's duration of benefit obligations, funded status and risk profile. Our investment strategy utilizes a broad mix of equity, fixed income and alternative investments to generate returns and manage risk. Equity investments are diversified across large-cap, mid-cap and small-cap companies located in the U.S. and worldwide, with a bias towards U.S. companies. Fixed income investments primarily include corporate bonds and government debt securities, which are generally customized based on a plan's obligation duration. Certain plans have strategies that invest in fixed income funds that hold hedging investment products which are designed to protect the fund's funded status. To enhance our diversification, we also invest in hedge funds, private equity, structured credit and real estate. We review investment performance, asset allocations and policy compliance on a quarterly basis.
The expected return on plan assets is calculated on a plan-by-plan basis and take into account each plan's strategic asset allocation. The calculation of rates by asset class are based primarily on our future expected returns and take into consideration the duration of the cash flows, active management and fees.
Assets for OPEB plans include VEBA trusts pursuant to bargaining agreements that are available to fund retired employees’ life insurance obligations and medical benefits. The following table reflects the actual asset allocations for pension and VEBA assets as of December 31, 2025 and 2024, as well as the 2026 weighted average target asset allocations:
Pension Assets VEBA Assets
Asset Category 2026
Target
Allocation		 Actual Asset Allocation as of December 31, 2026
Target
Allocation		 Actual Asset Allocation as of December 31,
2025 2024 2025 2024
Equity securities 34.2  % 34.5  % 32.7  % 17.2  % 18.9  % 17.6  %
Fixed income 40.6  39.0  38.9  78.4  76.0  76.6 
Hedge funds 9.4  9.8  9.6  1.0  1.4  1.2 
Private equity 3.3  3.3  3.6  —  —  — 
Structured credit 2.5  3.2  4.0  0.3  0.3  0.5 
Real estate 10.0  10.2  11.2  3.1  3.4  4.1 
Total 100.0  % 100.0  % 100.0  % 100.0  % 100.0  % 100.0  %
FAIR VALUE MEASUREMENTS
Investments classified as Level 1 primarily include equity investments and fixed income mutual funds that are based on observable quoted market prices on an active exchange. Fixed income investments classified as Level 2 include U.S. Treasury Separate Trading of Registered Interest and Principal of Securities (“STRIPS”) which are priced daily through a bond pricing vendor as well as corporate bonds, mortgage-backed securities and non-U.S. bonds which have valuations based on their bid-ask spreads or quoted prices of securities with similar characteristics.
Certain investments in hedge funds, private equity, structured credit and real estate are classified as Level 3 due to the absence of quoted market prices and inherent lack of liquidity. These investments are generally valued at estimated fair value based on financial inputs from our investment advisors, investment managers or third party appraisers. Certain Level 3 investments may be lagged up to three months if there are no financial inputs available.
Investment commitments are made in private equity funds and capital calls are made over the life of the funds to fund the commitments. As of December 31, 2025, remaining commitments for our private equity investments total $47 million for our pension and OPEB plans. Committed amounts are funded from plan assets when capital calls are made.
As a practical expedient, in accordance with ASC 820-10, certain investments that are measured at fair value using the NAV per share have not been classified in the fair value hierarchy below. NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by its number of shares outstanding.
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 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
Equity securities:
U.S. equities $ 861  $ 816  $ —  $ —  $ —  $ —  $ —  $ —  $ 861  $ 816 
Global equities 555  501  —  —  —  —  85  69  640  570 
Fixed income:
U.S. government securities1
41  32  526  577  —  —  212  146  779  755 
U.S. corporate bonds 616  583  —  —  —  —  110  115  726  698 
Non U.S. and other bonds 10  9  —  —  —  —  179  185  189  194 
Hedge funds —  —  —  —  144  128  282  280  426  408 
Private equity —  —  —  —  145  151  —  —  145  151 
Structured credit —  —  —  —  139  171  —  —  139  171 
Real estate —  —  —  —  191  242  250  232  441  474 
Total $ 2,083  $ 1,941  $ 526  $ 577  $ 619  $ 692  $ 1,118  $ 1,027  $ 4,346  $ 4,237 
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 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
Equity securities:
U.S. equities $ 108  $ 99  $ —  $ —  $ —  $ —  $ —  $ —  $ 108  $ 99 
Global equities 3  3  —  —  —  —  33  28  36  31 
Fixed income:
U.S. government securities1
134  130  26  50  —  —  76  44  236  224 
U.S. corporate bonds 98  216  71  74  —  —  34  52  203  342 
Non U.S. and other bonds 66  2  —  —  —  —  75  —  141  2 
Hedge funds —  —  —  —  11  10  —  —  11  10 
Structured credit —  —  —  —  2  4  —  —  2  4 
Real estate —  —  —  —  2  5  24  25  26  30 
Total $ 409  $ 450  $ 97  $ 124  $ 15  $ 19  $ 242  $ 149  $ 763  $ 742 
1 Includes cash equivalents.
The following represents the fair value measurements of changes in plan assets using significant unobservable inputs (Level 3):
Pension Assets VEBA Assets
(In millions) 2025 2024 2025 2024
Beginning balance — January 1 $ 692  $ 770  $ 19  $ 27 
Actual return on plan assets:
Relating to assets still held at the reporting date 18  18  1  1 
Relating to assets sold during the period 12  7  1  — 
Purchases 13  31  —  — 
Sales (116) (134) (6) (9)
Ending balance — December 31 $ 619  $ 692  $ 15  $ 19 
DEFINED CONTRIBUTION PLANS
Most employees are eligible to participate in various defined contribution plans. Certain of these plans have features with matching contributions or other Company contributions based on our financial results. Company contributions to these plans are expensed as incurred. Total expense from these plans was $59 million, $63 million and $59 million in 2025, 2024 and 2023, respectively.
MULTlEMPLOYER PLANS
We contribute to multiemployer pension plans according to collective bargaining agreements that cover certain union-represented employees. The risks of participating in these multiemployer plans are different from the risks of participating in single-employer pension plans in the following respects:
•Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
•If a participating employer stops contributing to a multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
•If the multiemployer plan becomes significantly underfunded or is unable to pay its benefits, we may be required to contribute additional amounts in excess of the rate required by the collective bargaining agreements.
•If we choose to stop participating in a multiemployer plan, we may be required to pay that plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
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
2025 2024 2025 2024 2023
Steelworkers Pension Trust
23-6648508/499
 Green Green No $ 112  $ 117  $ 119  No 9/1/2026 to 7/31/2029
IAM National Pension Fund’s National Pension Plan
51-6031295/002
 Red Red Yes 22  22  23  Yes 5/15/2027 to 6/30/2028
Other Plans5
1  1  1 
Total $ 135  $ 140  $ 143 
1 The most recent Pension Protection Act zone status available in 2025 and 2024 is for each plan's year-end as of December 31, 2024 and 2023. 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 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.
We are one of the largest contributors to the Steelworkers Pension Trust. Our contributions exceeded 5% of total combined contributions in 2025 and 2024. As of January 1, 2025 (the last date for which we have information), the Steelworkers Pension Trust had a total actuarial liability of $6,815 million and assets with a market value of $6,868 million, for a funded ratio of about 101%.