Retirement benefits

3 Months Ended

Nov. 30, 2017

Compensation and Retirement Disclosure [Abstract]

Retirement benefits

Retirement benefits

The Company sponsors several retirement plans, including defined benefit plans, defined contribution plans and a postretirement health plan.

Defined benefit pension plans (non-U.S. plans)

The Company has various defined benefit pension plans outside the United States. The principal defined benefit pension plan is the Boots Pension Plan, which covers certain employees in the United Kingdom (the “Boots Plan”). The Boots Plan is a funded final salary defined benefit plan providing pensions and death benefits to members. The Boots Plan was closed to future accrual effective July 1, 2010, with pensions calculated based on salaries up until that date. The Boots Plan is governed by a trustee board, which is independent of the Company. The plan is subject to a full funding actuarial valuation on a triennial basis.

Components of net periodic pension costs for the defined benefit pension plans (in millions):

	Three months ended November 30,
	2017			2016
Service costs	$	2		$	2
Interest costs	47			43
Expected returns on plan assets	(51		)	(37		)
Total net periodic pension costs	$	(2	)	$	8

The Company made cash contributions to its defined benefit pension plans of $9 million for the three months ended November 30, 2017, which primarily related to committed funded payments. The Company plans to contribute an additional $50 million to its defined benefit pension plans in fiscal 2018.

Defined contribution plans

The principal retirement plan for U.S. employees is the Walgreen Profit-Sharing Retirement Trust, to which both the Company and participating employees contribute. The Company’s contribution is in the form of a guaranteed match which is approved annually by the Walgreen Co. Board of Directors and reviewed by the Compensation Committee and Finance Committee of the Walgreens Boots Alliance Board of Directors. The profit-sharing provision was an expense of $57 million for the three months ended November 30, 2017 and November 30, 2016.

The Company also has certain contract based defined contribution arrangements. The principal one is the Alliance Healthcare & Boots Retirement Savings Plan, which is United Kingdom based and to which both the Company and participating employees contribute. The cost recognized in the Consolidated Condensed Statements of Earnings for the three months ended November 30, 2017 was $30 million compared to a cost of $28 million in the three months ended November 30, 2016.