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 total retirement-related benefit plans’ impact on income before income taxes:

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended June 30:	2013		2012		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	636	$	459	38.5	%
Nonpension postretirement plans — cost	71		89		(21.0	)
Total	$	706	$	548	28.8	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the six months ended June 30:	2013		2012		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	1,310	$	991	32.2	%
Nonpension postretirement plans — cost	151		174		(13.3	)
Total	$	1,460	$	1,164	25.4	%

The following tables provide 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 June 30:	2013			2012			2013			2012
Service cost	$	—		$	—		$	120		$	111
Interest cost	494			548			376			444
Expected return on plan assets	(995		)	(1,011		)	(537		)	(573		)
Amortization of prior service costs/(credits)	2			3			(29		)	(38		)
Recognized actuarial losses	444			330			394			256
Curtailments and settlements	—			—			0			0
Multi-employer plans/other costs	—			—			25			23
Total net periodic pension (income)/cost of defined benefit plans	(55		)	(131		)	349			222
Cost of defined contribution plans	193			212			148			156
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	$	138		$	81		$	497		$	378

(Dollars in millions)	U.S. Plans						Non-U.S. Plans
For the six months ended June 30:	2013			2012			2013			2012
Service cost	$	—		$	—		$	251		$	224
Interest cost	990			1,098			758			894
Expected return on plan assets	(1,991		)	(2,022		)	(1,091		)	(1,153		)
Amortization of prior service costs/(credits)	5			5			(60		)	(77		)
Recognized actuarial losses	895			665			798			515
Curtailments and settlements	—			—			—			1
Multi-employer plan/other costs	—			—			55			46
Total net periodic pension (income)/cost of defined benefit plans	(101		)	(254		)	711			449
Cost of defined contribution plans	399			477			300			319
Total defined benefit and contribution plans cost recognized in the Consolidated Statement of Earnings	$	298		$	223		$	1,011		$	768

In 2013, 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 Japan, the UK and Switzerland. This amount represents the legally mandated minimum contribution. Total net contributions to the non-U.S. plans in the first six months of 2013 were $290 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 June 30:	2013			2012		2013			2012
Service cost	$	9		$	9	$	2		$	2
Interest cost	40			51		15			16
Expected return on plan assets	(0		)	—		(2		)	(2		)
Amortization of prior service costs/(credits)	—			—		(1		)	(1		)
Recognized actuarial losses	2			10		6			4
Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings	$	51		$	70	$	20		$	19

	U.S. Plans					Non-U.S. Plans
For the six months ended June 30:	2013			2012		2013			2012
Service cost	$	17		$	18	$	5		$	5
Interest cost	82			100		31			33
Expected return on plan assets	(1		)	—		(5		)	(5		)
Amortization of prior service credits	—			—		(2		)	(2		)
Recognized actuarial losses	11			16		12			9
Curtailments and settlements	—			—		0			—
Total nonpension postretirement plan cost recognized in Consolidated Statement of Earnings	$	109		$	134	$	41		$	39

The company received a $10.0 million subsidy in the second quarter of 2013 and a $16.2 million subsidy for the first half of 2013 in connection with the Medicare Prescription Drug Improvement and Modernization Act of 2003. A portion of this subsidy is used by the company to reduce its obligation and expense related to the plan, and the remainder is contributed to the plan to reduce contributions required by the participants. For further information related to the Medicare Prescription Drug Act, see page 133 in the company’s 2012 Annual Report.