Postretirement Benefit Plans

9 Months Ended

Sep. 30, 2019

The components of net periodic benefit cost for our defined benefit pension plans are as follows:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2019			2018			2019			2018
Domestic defined benefit pension plans:
Service cost	$	1		$	—		$	2		$	2
Interest cost	1			1			3			3
Expected return on plan assets	(2		)	(2		)	(6		)	(5		)
Amortization of net actuarial loss	—			1			1			2
Net periodic benefit cost	$	—		$	—		$	—		$	2
International defined benefit pension plans:
Service cost	$	2		$	3		$	7		$	8
Interest cost	4			5			14			15
Expected return on plan assets	(4		)	(9		)	(22		)	(28		)
Amortization of net actuarial loss	2			2			6			7
Settlement/Curtailment	8			—			8			1
Net periodic benefit cost	$	12		$	1		$	13		$	3
Total net periodic benefit cost	$	12		$	1		$	13		$	5

The components of net periodic benefit cost other than the service cost component are included in the line item "Other non-operating income, net" in the Condensed Consolidated Income Statements.

The total net periodic benefit cost for other postretirement employee benefit plans was less than $1 million for both the three and nine months ended September 30, 2019, including net credits recognized into other comprehensive income ("OCI") of $1 million and $2 million, respectively, for the three and nine months ended September 30, 2019. The total net periodic benefit cost for other postretirement employee benefit plans was less than $1 million for both the three and nine months ended September 30, 2018, including net credits recognized in OCI of $1 million and $2 million, respectively, for the three and nine months ended September 30, 2018.

We contributed $14 million and $37 million to our defined benefit plans during the nine months ended September 30, 2019 and 2018, respectively. Discretionary contributions of $19 million were made to the U.S. Plan in the third quarter of 2018, to increase the funding ratio and reduce regulatory fees. Additional contributions ranging between approximately $4 million and $8 million are expected during the remainder of 2019.

The Company has initiated the process for a full buy-out of its largest defined benefit plan in the UK. In order to prepare for a buy-out, the plan’s assets were converted to cash, cash equivalents or other highly liquid assets as of the third quarter. In addition, the Company completed an enhanced transfer value (“ETV”) exercise for the deferred vested participants of the plan. The ETV offered the participants an enhanced lump sum to transfer their full pension rights out of the plan. Lump sum payments of $21 million were paid out of the plan assets, and the Company recorded a settlement charge of $8 million during the quarter. Prior to the settlement accounting, the plan was re-measured as of July 31, 2019, resulting in an increase in the plan’s projected benefit obligation of $37 million, an increase in plan assets of $26 million and an increase to losses in accumulated other comprehensive income of $11 million. The assumptions used to re-measure the plan were developed in the same manner as at December 31, 2018. However, due to the recent change in the investment assets, the expected rate of return on assets was changed from 7.25% to 0.70%. The discount rate used in the re-measurement was 2.00%, down from 3.00% at December 31, 2018. The Company recorded incremental net periodic benefit cost of $3 million in the third quarter as a result of the re-measurement.