Retirement Benefits

6 Months Ended

Mar. 31, 2016

12. RETIREMENT BENEFITS

The components of net periodic benefit cost for the defined benefit pension and other postretirement benefit plans for the three and six months ended 31 March 2016 and 2015 were as follows:

	Pension Benefits								Other Benefits
	2016				2015				2016		2015
Three Months Ended 31 March	U.S.		International		U.S.		International
Service cost	$	9.3	$	6.1	$	10.6	$	7.9	$	.6	$	.7
Interest cost		27.7		11.1		31.3		14.2		.5		.5
Expected return on plan assets		(50.5)		(19.6)		(50.5)		(19.1)		-		-
Prior service cost amortization		.8		(.1)		.7		.1		-		-
Actuarial loss amortization		21.5		9.1		19.6		10.1		.1		.2
Settlements		2.6		-		12.6		-		-		-
Curtailments		-		-		3.1		-		-		-
Special termination benefits		.6		-		2.1		.9		-		-
Other		-		.5		-		.5		-		-
Net periodic benefit cost	$	12.0	$	7.1	$	29.5	$	14.6	$	1.2	$	1.4


	Pension Benefits								Other Benefits
	2016				2015				2016		2015
Six Months Ended 31 March	U.S.		International		U.S.		International
Service cost	$	18.3	$	12.3	$	21.2	$	16.1	$	1.1	$	1.4
Interest cost		55.4		22.7		62.5		29.2		1.0		1.1
Expected return on plan assets		(101.0)		(40.3)		(101.0)		(40.2)		-		-
Prior service cost amortization		1.5		(.1)		1.4		.1		-		-
Actuarial loss amortization		42.6		18.3		39.4		20.6		.3		.4
Settlements		2.6		-		12.5		(.1)		-		-
Curtailments		-		-		3.1		-		-		-
Special termination benefits		.6		-		4.8		.9		-		-
Other		-		1.0		1.1		1.0		-		-
Net periodic benefit cost	$	20.0	$	13.9	$	45.0	$	27.6	$	2.4	$	2.9

Net periodic benefit cost is primarily included in cost of sales and selling and administrative expense on our consolidated income statements. The amount of net periodic benefit cost capitalized in 2016 and 2015 was not material.

Certain of our pension plans provide for a lump sum benefit payment option at the time of retirement, or for corporate officers, six months after their retirement date. A participant’s vested benefit is considered settled upon cash payment of the lump sum. We recognize pension settlement losses when cash payments exceed the sum of the service and interest cost components of net periodic pension cost of the plan for the fiscal year. For the six months ended 31 March 2016 and 2015, we recognized $2.6 and $12.6 of settlement losses, respectively, related to our U.S. supplemental pension plan. These settlement losses accelerated the recognition of a portion of actuarial losses deferred in accumulated other comprehensive loss. Special termination benefits for 2016 and 2015 are primarily related to the business restructuring and cost reduction actions initiated.

In fiscal 2016, we changed our method to estimate the service cost and interest cost components of net periodic benefit costs for our major defined benefit pension plans. Historically, we estimated the service cost and interest cost components using a single weighted average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. We have elected to use a spot rate approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve to the relevant projected cash flows, as we believe this provides a better estimate of service and interest costs. We consider this change in rate assumption to be a change in estimate and, accordingly, are accounting for it prospectively starting in 2016. We expect that adoption of the spot rate approach will reduce our fiscal 2016 net periodic benefit cost by approximately $30. This change does not affect the measurement of our total benefit obligation.

The decrease in pension expense primarily resulted from the adoption of the spot rate approach to estimate service cost and interest cost and reduced plan participation due to severance actions, partially offset by the adoption of new mortality tables for our major plans.

For the six months ended 31 March 2016 and 2015, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were $60.2 and $95.4, respectively. Total contributions for fiscal 2016 are expected to be approximately $100 to $120. During fiscal 2015, total contributions were $137.5.