Keurig Dr Pepper Inc.

12. Employee Benefit Plans

DEFINED BENEFIT PENSION PLANS

Overview

We have several non-contributory defined benefit plans, each having a measurement date of December 31. To participate in the defined benefit plans, eligible employees must have been employed for at least one year. Employee benefit plan obligations and expenses included in the consolidated financial statements are determined using actuarial analyses based on plan assumptions including employee demographic data such as years of service and compensation, benefits and claims paid, and employer contributions, among others. We also participate in various multi-employer defined benefit plans.

One of our U.S. defined benefit pension plans, which is a cash balance plan, was suspended and the accrued benefit was frozen effective December 31, 2008. Participants in this plan no longer earn additional benefits for future services or salary increases. The cash balance plans maintain individual record-keeping accounts for each participant, which are annually credited with interest credits equal to the 12-month average of one-year U.S. Treasury Bill rates, plus 1%, with a required minimum rate of 5%. Additionally, accrued benefits for non-union employees in another of our U.S. defined benefit pension plans were frozen effective November 1, 2025. No additional benefits related to future services or salary increases were accrued for these certain non-union participants after October 31, 2025. This freeze resulted inno curtailment gain or loss.

Financial Statement Impact

The following table sets forth amounts recognized in our financial statements and the pension plans' funded status:

The accumulated benefit obligations for all defined benefit pension plans were $161 million and $156 million as of December 31, 2025 and 2024, respectively. The following table summarizes key pension plan information regarding plans whose accumulated benefit obligations exceed the fair value of their respective plan assets:

The following table summarizes the components of our net periodic benefit cost:

We use the corridor approach for amortization of actuarial gains or losses. The corridor is calculated as 10% of the greater of the plans' projected benefit obligation or assets. The amortization period for plans with active participants is the average future service of covered active employees, and the amortization period for plans with no active participants is the average future lifetime of plan participants. The estimated service costs or net actuarial losses for the defined benefit pension plans amortized from AOCI into periodic benefit cost in 2026 are expected to be insignificant.

The following table summarizes amounts included in AOCI for our defined benefit plans:

Contributions and Expected Benefit Payments

The following table summarizes the contributions made to our defined benefit plans for the years ended December 31, 2025, 2024, and 2023, as well as our projected contributions for the year ended December 31, 2026:

The following table summarizes the estimated future benefit payments for our defined benefit plans:

Actuarial Assumptions

Our pension expense was calculated based upon a number of actuarial assumptions including discount rates, retirement age, mortality rates, and expected long-term rate of return on plan assets for pension benefits.

The following information is provided for our U.S. defined benefit pension plans, as our foreign defined benefit pension plans are not material to our consolidated financial statements.

The discount rate that was utilized for determining our projected benefit obligations as of December 31, 2025 and 2024, as well as projected 2026 net periodic benefit cost, for U.S. plans was selected based upon an interest rate yield curve. The yield curve is constructed based on the yields of a large number of U.S. AA rated bonds as of December 31, 2025. The population of bonds utilized to calculate the discount rate includes those having an average yield between the 10th and 90th percentiles. Projected cash flows from the U.S. plans are then matched to spot rates along that yield curve in order to determine their present value and a single equivalent discount rate is calculated that produces the same present value as the spot rates.

Expected mortality is a key assumption in the measurement for pension benefit obligations. For our U.S. plans, we used the Pri-2012 mortality tables and the Mortality Improvement Scale MP-2021, published by the Society of Actuaries' Retirement Plans Experience Committee, for the years ended December 31, 2025 and 2024.

The following table summarizes the weighted-average actuarial assumption used to determine benefit obligations at the plan measurement dates for U.S. plans:

The following table summarizes the weighted-average actuarial assumptions used to determine the net periodic benefit costs for U.S. plans:

For the years ended December 31, 2025, 2024, and 2023, the expected long-term rate of return on U.S. pension fund assets held by our pension trusts was determined based on several factors, including the impact of active portfolio management and projected long-term returns of broad equity and bond indices. The plans' historical returns were also considered.

Investment Policy and Strategy

We have established formal investment policies for the assets associated with our U.S. defined benefit pension plans. Our investment policy and strategy are mandated by our Investment Committee. The overriding investment objective is to provide for the availability of funds for pension obligations as they become due, to maintain an overall level of financial asset adequacy, and to maximize long-term investment return consistent with a reasonable level of risk. We actively manage the investments in our portfolio, with periodic review of investment performance both by investment manager and asset class, as well as review of overall market conditions and consideration of our long-term investment objectives. The investments under our sponsored pension plan assets are currently well diversified. The plans' asset allocation policy is reviewed at least annually. Factors considered when determining the appropriate asset allocation include changes in plan liabilities, an evaluation of market conditions, tolerance for risk and cash requirements for benefit payments.

As of December 31, 2025 and 2024, we were in compliance with the investment policy for our U.S. defined benefit pension, which allows for a varying asset allocation dependent on each plan's funded status, as follows:

(1)Return-seeking assets generally consist of common collective trust funds comprised of equity securities, liquid alternatives, and fixed income securities.

(2)Liability-hedging assets consist of common collective trust funds comprised of a mix of fixed income securities and hedging instruments aimed to achieve a target interest rate.

FAIR VALUE OF THE PENSION ASSETS

Assets contributed by us to our pension plans become the property of the individual plans. Even though we no longer have control over these assets, we are indirectly impacted by subsequent fair value adjustments to these assets. The actual return on these assets impacts our future net periodic benefit cost, as well as amounts recognized in the Consolidated Balance Sheets. As such, we use a variety of valuation techniques depending on the type of instrument in order to measure the fair value of assets held by our pension plans.

The following table presents the total fair value of major categories of the pension plan assets for the years ended December 31, 2025 and 2024:

(1)Primarily consists of common collective trust funds, which are valued using NAV as a practical expedient.

PRMB PLANS

We have several non-contributory defined benefit PRMB plans, each having a measurement date of December 31. The majority of these PRMB plans have been frozen. To participate in the defined benefit plans, eligible employees must have been employed by KDP for at least one year. The PRMB plans are limited to qualified expenses and are subject to deductibles, co-payment provisions, and other provisions. Our PRMB plans are not significant to the consolidated financial statements as of December 31, 2025 and 2024.

MULTI-EMPLOYER PLANS

We participate in several multi-employer plans, which are trustee-managed multi-employer defined benefit pension plans for union-represented employees under certain collective bargaining agreements. The risks of participating in these multi-employer plans are different from single-employer plans, as assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. Additionally, if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

Contributions paid into the multi-employer plans are expensed as incurred. Multi-employer plan expenses were $8 million, $11 million, and $6 million for each of the years ended December 31, 2025, 2024, and 2023, respectively.

Individually Significant Multi-Employer Plan

We participate in one multi-employer plan, Central States, which is considered to be individually significant. The following table presents information about Central States as of December 31, 2025:

(1)Central States includes six collective bargaining agreements as of December 31, 2025. The largest agreement, which is set to expire February 28, 2027, covers approximately 59% of the employees included in Central States. One of the collective bargaining agreements is set to expire during 2026, covering approximately 10% of the employees included in Central States.

The most recent Pension Protection Act zone status available as of December 31, 2025 is for the plan's year-end as of December 31, 2024. Central States has not utilized any extended amortization provisions that affect the calculation of the zone status.

Our contributions to Central States did not exceed 5% of the total contributions made to Central States for the years ended December 31, 2025, 2024, and 2023.

Future estimated contributions to Central States based on the number of covered employees and the terms of the collective bargaining agreements are as follows:

DEFINED CONTRIBUTION PLANS

We sponsor various qualified defined contribution plans that cover U.S. and foreign based employees who meet certain eligibility requirements. The U.S. plans permit both pre-tax and after-tax contributions, which are subject to limitations imposed by IRS regulations. We make matching contributions and discretionary profit sharing contributions to these plans. We incurred contribution expense of $69 million, $67 million, and $64 million to the defined contribution plans for the years ended December 31, 2025, 2024, and 2023, respectively.

We also sponsor a non-qualified defined contribution plan for certain employees which is maintained in a rabbi trust and is not readily available to us. The fair value of the securities within this plan was $33 million as of both December 31, 2025 and 2024. There were $4 million, $4 million, and $6 million in gains associated with these trading securities during the years ended December 31, 2025, 2024, and 2023, respectively.