RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

6 Months Ended

Jun. 30, 2020

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure

RETIREMENT BENEFITS AND ASSETS HELD IN TRUST

Pension Plan Benefits

We have a qualified defined benefit pension plan (“retirement plan”) for eligible employees, comprised of a traditional final average pay plan and a cash balance plan. The traditional final average pay plan is noncontributory, covers select employees, and provides retirement benefits based on years of benefit service, average final compensation and age at retirement. The cash balance plan is also noncontributory, covers substantially all employees and provides retirement benefits based on eligible compensation and interest credits. Our funding practice for the retirement plan is generally to fund the annual net pension cost, though we may contribute additional amounts as necessary to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 or as we deem appropriate. During the second quarter of 2020, we contributed $4 million to the retirement plan. We do not expect to make any additional contributions to this plan in 2020.

We also have two supplemental nonqualified, noncontributory, defined benefit pension plans for selected management employees (the “supplemental benefit plans” and, collectively with the retirement plan, the “pension plans”). The supplemental benefit plans provide for benefits that supplement those provided by the retirement plan. During the second quarter of 2020, we contributed $3 million to the supplemental benefit plans. We do not expect to make any additional contributions to these plans in 2020.

Net periodic benefit cost for the pension plans, by component, was as follows:

	Three months ended				Six months ended
	June 30,				June 30,
(in millions)	2020		2019		2020		2019
Service cost	$	2	$	2	$	4	$	4
Interest cost	1		1		2		2
Expected return on plan assets	(1)		(1)		(2)		(2)
Net pension cost	$	2	$	2	$	4	$	4

The components of net pension cost other than the service cost component are included in Other (income) and expenses, net in the condensed consolidated statements of comprehensive income.

Other Postretirement Benefits

We provide certain postretirement health care, dental and life insurance benefits for eligible employees. During the second quarter of 2020, we contributed $5 million to the postretirement benefit plan. We expect to make additional contributions of $5 million to the postretirement benefit plan during the second half of 2020.

Net postretirement benefit plan cost, by component, was as follows:

	Three months ended				Six months ended
	June 30,				June 30,
(in millions)	2020		2019		2020		2019
Service cost	$	2	$	3	$	5	$	5
Interest cost	1		1		2		2
Expected return on plan assets	(1)		(1)		(2)		(2)
Net postretirement cost	$	2	$	3	$	5	$	5

The components of net postretirement cost other than the service cost component are included in Other (income) and expenses, net in the condensed consolidated statements of comprehensive income.

Defined Contribution Plan

We also sponsor a defined contribution retirement savings plan. Participation in this plan is available to substantially all employees. We match employee contributions up to certain predefined limits based upon eligible compensation and the employee’s contribution rate. The cost of this plan was $1 million for each of the three months ended June 30, 2020 and 2019, and $4 million and $3 million for the six months ended June 30, 2020 and 2019, respectively.