Pension and Other Postretirement Benefits

6 Months Ended

Jun. 30, 2014

Compensation And Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits

N. Pension and Other Postretirement Benefits – The components of net periodic benefit cost were as follows:

	Second quarter ended June 30,						Six months ended June 30,
Pension benefits	2014			2013			2014			2013
Service cost	$	42		$	48		$	83		$	99
Interest cost		159			151			319			303
Expected return on plan assets		(195	)		(198	)		(388	)		(396	)
Recognized net actuarial loss		98			124			195			247
Amortization of prior service cost		5			5			9			10
Settlement*		—			—			—			2
Net periodic benefit cost	$	109		$	130		$	218		$	265

* This amount was recorded in Restructuring and other charges on the accompanying Statement of Consolidated Operations (see Note D).

	Second quarter ended June 30,						Six months ended June 30,
Other postretirement benefits	2014			2013			2014			2013
Service cost	$	4		$	5		$	8		$	9
Interest cost		29			29			58			57
Recognized net actuarial loss		3			8			6			17
Amortization of prior service benefit		(4	)		(5	)		(9	)		(9	)
Net periodic benefit cost	$	32		$	37		$	63		$	74

On June 6, 2014, the United Steelworkers ratified a new five-year labor agreement covering approximately 6,100 employees at 10 U.S. locations; the previous labor agreement expired on May 15, 2014. In the 2014 second quarter and six-month period, as a result of the preparation for and ratification of the new agreement, Alcoa recognized $17 ($11 after-tax) and $18 ($12 after-tax), respectively, in Cost of goods sold on the accompanying Statement of Consolidated Operations for, among other items, business contingency costs and a one-time signing bonus for employees. Additionally, as a result of the provisions of the new labor agreement, a significant plan amendment was adopted by one of Alcoa’s U.S. pension plans. Accordingly, this plan was required to be remeasured, and through this process, the discount rate was updated from 4.80% at December 31, 2013 to 4.25% at May 31, 2014. The plan remeasurement resulted in an increase to both Alcoa’s pension liability of $100 and a combination of the plan’s unrecognized net actuarial loss and prior service cost (included in Accumulated other comprehensive loss) of $65 (after-tax). The plan remeasurement also resulted in a decrease to 2014 annual net periodic benefit cost of $13, of which $2 was recognized in the 2014 second quarter. The remaining $11 decrease will be recognized ratably over the second half of 2014.