Pension and Other Postretirement Benefit Plans

9 Months Ended

Sep. 30, 2012

Pension and Other Postretirement Benefit Plans

13. Pension and Other Postretirement Benefit Plans

The Company has defined benefit pension plans covering eligible employees in the United States and in certain of its international subsidiaries. The net cost of such plans consisted of the following components:

	Three Months Ended       September 30,				Nine Months Ended       September 30,
($ in millions)	2012		2011		2012		2011
Service cost	$	133	$	158	$	416	$	461
Interest cost		162		182		494		541
Expected return on plan assets		(239)		(243)		(727)		(728)
Net amortization		48		58		144		149
Termination benefits		4		15		13		32
Curtailments		(4)		(6)		(5)		(16)
Settlements		-		-		-		(1)
	$	104	$	164	$	335	$	438

The Company provides medical, dental and life insurance benefits, principally to its eligible U.S. retirees and similar benefits to their dependents, through its other postretirement benefit plans. The net cost of such plans consisted of the following components:

	Three Months Ended       September 30,				Nine Months Ended       September 30,
($ in millions)	2012		2011		2012		2011
Service cost	$	22	$	27	$	64	$	83
Interest cost		31		35		93		106
Expected return on plan assets		(34)		(35)		(102)		(106)
Net amortization		(9)		(4)		(25)		(13)
Termination benefits		5		5		10		11
Curtailments		(2)		(1)		(6)		-
	$	13	$	27	$	34	$	81

In connection with restructuring actions (see Note 2), termination charges for the three and nine months ended September 30, 2012 and 2011 were recorded on pension and other postretirement benefit plans related to expanded eligibility for certain employees exiting Merck. Also, in connection with these restructuring actions, curtailments were recorded on pension and other postretirement benefit plans and settlements were recorded on pension plans as reflected in the tables above.

The Company expects to contribute approximately $1.75 billion to its defined benefit pension plans during 2012.