Retirement-Related Benefits

3 Months Ended

Mar. 31, 2015

Retirement-Related Benefits:

Retirement-Related Benefits:

8.Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following table provides the pre-tax cost for all retirement-related plans

						Yr. to Yr.
(Dollars in millions)						Percent
For the three months ended March 31:		2015		2014		Change
Retirement-related plans – cost
	Defined benefit and contribution pension plans – cost	$	749	$	474		58.0	%
	Nonpension postretirement plans – cost		71		67		6.2
	Total	$	820	$	541		51.6	%

The following table provides the components of the cost/(income) for the company’s pension plans

Cost/(Income) of Pension Plans
(Dollars in millions)		U.S. Plans				Non-U.S. Plans
For the three months ended March 31:		2015		2014		2015		2014
Service cost		$	—	$	—	$	108	$	116
Interest cost			508		555		271		390
Expected return on plan assets			(989)		(1,024)		(483)		(572)
Amortization of prior service costs/(credits)			2		2		(25)		(29)
Recognized actuarial losses			415		269		401		360
Curtailments and settlements			—		—		4		4
Multi-employer plans/other costs			—		—		248		79
Total net periodic pension (income)/cost of defined
	benefit plans		(64)		(198)		524		348
Cost of defined contribution plans			173		191		115		133
Total defined benefit and contribution plans cost recognized
	in the Consolidated Statement of Earnings	$	109	$	(7)	$	640	$	481

In March 2014, the Supreme Court of Spain issued a ruling in litigation involving IBM Spain’s defined benefit (DB) and defined contribution (DC) plans. As a result of this ruling, the company recorded a pre-tax retirement-related obligation of $148 million in 2014 ($55 million in the first quarter of 2014) in selling, general and administrative (SG&A) expense in the Consolidated Statement of Earnings. The Constitutional Court denied IBM Spain’s requested leave to appeal the decision. In March 2015, the National Audience Court issued a ruling that, in part, required IBM to stop making DC contributions and also ruled that the company should promptly reinstate the DB plan. As a result of this ruling, in the first quarter of 2015, the company recorded an additional pre-tax retirement obligation of $230 million in SG&A in the Consolidated Statement of Earnings. This obligation is reflected in "Non-U.S. Plans - Multi-employer plans/other costs" in the table above. See note 12, "Contingencies" for additional information.IBM Spain has appealed that ruling.

In 2015, the company expects to contribute to its non-U.S. defined benefit and multi-employer plans approximately $600 million, which will be mainly contributed to the defined benefit pension plans in the UK, Japan, the Netherlands and Spain. This amount represents the legally mandated minimum contribution. Total net contributions to the non-U.S. plans in the first three months of 2015 were $90 million.

The following table provides the components of the cost/(income) for the company's nonpension postretirement plans.
Cost of Nonpension Postretirement Plans
(Dollars in millions)		U.S. Plan				Non-U.S. Plans
For the three months ended March 31:		2015		2014		2015		2014
Service cost		$	6	$	7	$	2	$	2
Interest cost			41		45		14		16
Expected return on plan assets			0		0		(2)		(2)
Amortization of prior service costs/(credits)			(2)		(2)		(1)		(1)
Recognized actuarial losses			11		0		3		3
Total nonpension postretirement plan cost recognized in
	Consolidated Statement of Earnings	$	56	$	50	$	15	$	17