Retirement benefits

6 Months Ended

Feb. 29, 2020

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 (the “Boots Plan”), which covers certain employees in the United Kingdom. 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						Six months ended
	Location in Consolidated Condensed Statements of Earnings	February 29, 2020		February 28, 2019		February 29, 2020		February 28, 2019
Service costs	Selling, general and administrative expenses	$	1	$	1	$	2	$	2
Interest costs	Other income	37		50		72		99
Expected returns on plan assets/other	Other income	(73)		(64)		(144)		(124)
Total net periodic pension costs (income)		$	(35)	$	(13)	$	(69)	$	(23)

The Company made cash contributions to its defined benefit pension plans of $10 million for the six months ended February 29, 2020, which primarily related to committed funded payments. The Company plans to contribute an additional $22 million to its defined benefit pension plans in fiscal 2020.

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 made pursuant to the applicable plan document approved by the Walgreen Co. Board of Directors. Plan activity is reviewed periodically by certain Committees of the Walgreens Boots Alliance Board of Directors. The profit-sharing provision was an expense of $55 million and $113 million for the three and six months ended February 29, 2020, respectively, compared to an expense of $64 million and $125 million for the three and six months ended February 28, 2019, respectively.

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 for the three and six months ended February 29, 2020 was $29 million and $67 million, respectively, compared to a cost of $33 million and $64 million in the three and six months ended February 28, 2019, respectively.