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Employee Benefits
 9 Months Ended
Sep. 30, 2021
Retirement Benefits [Abstract]  
Employee Benefits Employee Benefits
For detailed description of the various defined benefit pension plans (qualified and non-qualified), post-retirement benefits plans and defined contribution plan we sponsor, see Note 10—Employee Benefits to the consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Net periodic pension benefit expense (income) for the Lumen Combined Pension Plan ("Combined Pension Plan" or the "Plan") includes the following components:

 Combined Pension Plan
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (Dollars in millions)
Service cost$14 15 42 44 
Interest cost49 81 148 243 
Expected return on plan assets(138)(147)(414)(445)
Settlements57 — 57 — 
Recognition of prior service credit(2)(3)(7)(7)
Recognition of actuarial loss49 50 147 152 
Net periodic pension benefit expense (income)$29 (4)(27)(13)
Net periodic benefit expense for our post-retirement benefit plans includes the following components:

 Post-Retirement Benefit Plans
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (Dollars in millions)
Service cost$4 4 11 11 
Interest cost12 17 35 57 
Recognition of prior service cost3 4 11 12 
Recognition of actuarial loss2 — 4 — 
Curtailment loss— 7 — 7 
Net periodic post-retirement benefit expense$21 32 61 87 

Service costs are included in the cost of services and products and selling, general and administrative line items on our consolidated statements of operations and all other costs listed above are included in other (expense) income, net on our consolidated statements of operations.

Our pension plan contains provisions that allow us, from time to time, to offer lump sum payment options to certain former employees in settlement of their future retirement benefits. We record an accounting settlement charge, consisting of the recognition of certain deferred costs of the pension plan associated with these lump sum payments only if, in the aggregate, they exceed or are probable to exceed the sum of the annual service and interest costs for the plan’s net periodic pension benefit cost, which represents the settlement accounting threshold. During the third quarter, we determined lump sum pension settlement payments for 2021 are expected to exceed the settlement threshold. As a result, in the third quarter of 2021 we recognized a non-cash settlement charge of $57 million to accelerate the recognition of a portion of the previously unrecognized actuarial losses in the qualified pension plan, which is reflected in other (expense) income, net in our consolidated statement of operations for the three and nine months ended September 30, 2021. This non-cash charge reduced our recorded net income and increased our recorded accumulated deficit, with an offset to accumulated other comprehensive loss in shareholders' equity. We expect to recognize an additional non-cash settlement charge in the fourth quarter of 2021, as further described in Note 20—Subsequent Events. The amount of any future non-cash settlement charges after 2021 will be dependent on several factors, including the total amount of our future lump sum benefit payments.

As a result of our lump sum payments exceeding the settlement threshold, we also remeasured the Combined Pension Plan on September 30, 2021 using the same assumptions as of December 31, 2020, with the exception of increasing the discount rate to 2.79% from 2.43%. The remeasurement resulted in a decrease in the Plan's unfunded status, which we recognized with a corresponding decrease in our net actuarial loss recognized in accumulated other comprehensive loss of $133 million, net of tax effect of $43 million.

In 2020, we recognized a one-time curtailment accounting charge of $7 million upon remeasurement of our medical obligations under our post-retirement benefit plans for the three and nine months ended September 30, 2020.

Benefits paid by the Combined Pension Plan are paid through a trust that holds all of the Plan's assets. The amount of required contributions to the Combined Pension Plan in 2022 and beyond will depend on a variety of factors, most of which are beyond our control, including earnings on plan investments, prevailing interest rates, demographic experience, changes in plan benefits and changes in funding laws and regulations. We occasionally make voluntary contributions in addition to required contributions. Based on current laws and circumstances, we do not believe we are required to make any contributions to the Combined Pension Plan in 2021, but we could make voluntary contributions to the trust for the Combined Pension Plan in the upcoming years.