Pension and Other Postretirement Benefits

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The components of net periodic benefit cost were as follows:

	First quarter ended
	March 31,
	2021		2020
Pension benefits
Service cost	$	1	$	7
Interest cost	12		47
Expected return on plan assets	(23)		(70)
Recognized net actuarial loss	14		42
Settlements	3		—
Net periodic benefit cost(1)	7		26
Discontinued operations	—		20
Net amount recognized in continuing operations in Statement of Consolidated Operations	$	7	$	6
Other postretirement benefits
Service cost	$	—	$	1
Interest cost	1		6
Recognized net actuarial loss	—		2
Amortization of prior service benefit	(1)		(2)
Net periodic benefit cost(1)	—		7
Discontinued operations	—		6
Net amount recognized in continuing operations in Statement of Consolidated Operations	$	—	$	1

(1)Service cost for continuing operations was included within Cost of goods sold, Selling, general administrative, and other expenses, and Research and development expenses; settlements and curtailments were included in Restructuring and other charges; and all other cost components were recorded in Other expense (income), net in the Statement of Consolidated Operations. The amounts included in Net periodic benefit cost include costs related to both continuing and discontinued operations for the first quarter ended March 31, 2020.

Pension benefits

In the first quarter ended March 31, 2021, the Company applied settlement accounting to certain U.S. pension plans due to lump sum payments made to participants, which resulted in settlement charges of $3 that were recorded in Restructuring and other charges.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARPA 2021”) was signed into law in the United States. ARPA 2021, in part, provides temporary relief for employers who sponsor defined benefit pension plans related to funding contributions under the Employee Retirement Income Security Act of 1974. As a result, management expects Howmet’s estimated minimum required pension funding to decline. Management is currently evaluating the impact.

Other postretirement benefits

In the first quarter of 2021, the Company announced a plan administration change of certain of its Medicare-eligible prescription drug benefits to an Employer Group Waiver Plan with wrap-around secondary plan effective July 1, 2021. The administration change is expected to reduce costs to the Company through the usage of Medicare Part D and drug manufacturer subsidies. Due to this amendment, along with the associated plan remeasurements, the Company recorded a decrease to its Accrued other postretirement benefits liability of $39, which was offset in Accumulated other comprehensive loss in the Consolidated Balance Sheet.