Pension, Savings and Other Postretirement Benefit Plans

9 Months Ended

Sep. 30, 2012

Compensation and Retirement Disclosure [Abstract]

PENSION, SAVINGS AND OTHER POSTRETIREMENT BENEFIT PLANS

PENSION, SAVINGS AND OTHER POSTRETIREMENT BENEFIT PLANS

We provide employees with defined benefit pension or defined contribution savings plans.

Defined benefit pension cost follows:

	U.S.						U.S.
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2012			2011			2012			2011
Service cost — benefits earned during the period	$	10		$	10		$	30		$	31
Interest cost on projected benefit obligation	65			71			196			212
Expected return on plan assets	(75		)	(76		)	(225		)	(229		)
Amortization of: — prior service cost	5			5			17			17
— net losses	45			33			134			100
Net periodic pension cost	50			43			152			131
Curtailments/settlements/termination benefits	—			4			—			15
Total defined benefit pension cost	$	50		$	47		$	152		$	146

	Non-U.S.						Non-U.S.
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2012			2011			2012			2011
Service cost — benefits earned during the period	$	8		$	8		$	23		$	24
Interest cost on projected benefit obligation	36			37			106			113
Expected return on plan assets	(28		)	(33		)	(87		)	(99		)
Amortization of: — prior service cost	—			1			1			2
— net losses	11			10			34			29
Net periodic pension cost	27			23			77			69
Curtailments/settlements/termination benefits	11			—			11			—
Total defined benefit pension cost	$	38		$	23		$	88		$	69

For the three months ended September 30, 2012, curtailments/settlements/termination benefits of $11 million include a settlement charge of $9 million related to the purchase of annuities from existing plan assets to settle obligations of one of our U.K. pension plans.

During the three and nine months ended September 30, 2011, we recognized settlement charges of $4 million and $15 million, respectively, related to one of our U.S. pension plans. These settlement charges resulted from total lump sum payments through September 30, 2011 exceeding estimated annual service and interest cost for the plan.

We expect to contribute approximately $550 million to $600 million to our funded U.S. and non-U.S. pension plans in 2012. For the three and nine months ended September 30, 2012, we contributed $28 million and $109 million, respectively, to our non-U.S. plans and for the three and nine months ended September 30, 2012, we contributed $225 million and $354 million, respectively, to our U.S. plans.

The expense recognized for our contributions to defined contribution savings plans for the three months ended September 30, 2012 and 2011 was $22 million and $24 million, respectively, and for the nine months ended September 30, 2012 and 2011 was $72 million and $75 million, respectively.

We provide certain U.S. employees and employees at certain non-U.S. subsidiaries with health care benefits or life insurance benefits upon retirement. Postretirement benefit cost for the three months ended September 30, 2012 and 2011 was $0 million and $2 million, respectively, and for the nine months ended September 30, 2012 and 2011 was $3 million and $7 million, respectively.

During the third quarter of 2012, we announced changes to our U.S. and Canadian salaried other postretirement benefit plans, effective January 1, 2013. The changes consist primarily of eliminating coverage for participants who are or become at least age 65 and eligible for government subsidized programs. As a result of these actions, we were required to remeasure the benefit obligations of the affected plans which resulted in the reduction of our U.S. other postretirement benefit obligation by $56 million and our Canadian other postretirement benefit obligation by $18 million. The discount rate used to measure the benefit obligation of our U.S. salaried other postretirement benefit plans at August 31, 2012 was 3.0%, compared to 4.0% at December 31, 2011. The discount rate used to measure the benefit obligation of our Canadian salaried other postretirement benefit plan at August 31, 2012 was 4.0%, compared to 4.25% at December 31, 2011.

As a result of the changes described above, the estimated prior service credit for the other postretirement benefit plans that will be amortized from AOCL into other postretirement benefit cost in 2012 is a benefit of $40 million, compared to our previous estimate of $37 million at December 31, 2011, and estimated future benefit payments, net of retiree contributions, for other postretirement benefit plans are expected to be reduced by approximately $5 million to $10 million on an annual basis over the next 10 years.