Retirement-Related Benefits

6 Months Ended

Jun. 30, 2020

Retirement-Related Benefits

Retirement-Related Benefits

17. 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 tables provide the pre-tax cost for all retirement-related plans.

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended June 30:	2020		2019		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	596	$	441	34.9	%
Nonpension postretirement plans — cost		50		53	(5.6)
Total	$	645	$	494	30.6	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the six months ended June 30:	2020		2019		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	1,179	$	878	34.3	%
Nonpension postretirement plans — cost		102		107	(4.8)
Total	$	1,281	$	985	30.0	%

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:	2020		2019		2020		2019
Service cost	$	—	$	—	$	95	$	93
Interest cost (1)		375		469		137		206
Expected return on plan assets (1)		(542)		(650)		(311)		(396)
Amortization of prior service costs/(credits) (1)		4		4		(5)		(7)
Recognized actuarial losses (1)		207		139		340		312
Curtailments and settlements (1)		—		—		13		3
Multi-employer plans		—		—		7		8
Other costs/(credits) (1)		—		—		9		6
Total net periodic pension (income)/cost of defined benefit plans	$	44	$	(37)	$	284	$	225
Cost of defined contribution plans		154		140		113		114
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	198	$	103	$	397	$	339

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the six months ended June 30:	2020		2019		2020		2019
Service cost	$	—	$	—	$	190	$	185
Interest cost (1)		750		941		266		413
Expected return on plan assets (1)		(1,084)		(1,300)		(620)		(795)
Amortization of prior service costs/(credits) (1)		8		8		(9)		(13)
Recognized actuarial losses (1)		415		279		682		626
Curtailments and settlements (1)		—		—		21		4
Multi-employer plans		—		—		14		17
Other costs/(credits) (1)		—		—		14		11
Total net periodic pension (income)/cost of defined benefit plans	$	89	$	(71)	$	559	$	449
Cost of defined contribution plans		309		289		223		212
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	398	$	218	$	782	$	661

(1) These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

The following tables provide the components of the cost 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:	2020		2019		2020		2019
Service cost	$	2	$	3	$	1	$	1
Interest cost (1)		26		36		8		12
Expected return on plan assets (1)		—		—		(1)		(1)
Amortization of prior service costs/(credits) (1)		1		(1)		0		0
Recognized actuarial losses (1)		7		0		5		3
Curtailments and settlements (1)		—		—		—		—
Total nonpension postretirement plans cost recognized in Consolidated Income Statement	$	36	$	38	$	14	$	15

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the six months ended June 30:	2020		2019		2020		2019
Service cost	$	4	$	5	$	3	$	3
Interest cost (1)		51		73		18		25
Expected return on plan assets (1)		—		—		(2)		(3)
Amortization of prior service costs/(credits) (1)		2		(1)		0		0
Recognized actuarial losses (1)		15		0		11		5
Curtailments and settlements (1)		—		—		0		0
Total nonpension postretirement plans cost recognized in Consolidated Income Statement	$	72	$	77	$	29	$	30

(1) These components of net periodic pension cost are included in other (income) and expense in the Consolidated Income Statement.

The company does not anticipate any significant changes to the expected plan contributions in 2020 from the amounts disclosed in the 2019 Annual Report.

The table below includes contributions to the following plans:

-
	Plan Contributions
	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2020		2019		2020		2019
U.S. nonpension postretirement benefit plan	$	65	$	33	$	200	$	227
Non-U.S. DB and multi-employer plans		29		34		111		128
Total plan contributions	$	94	$	66	$	311	$	355

During the three months ended June 30, 2020 and 2019, $155 million and $101 million, respectively, was contributed in U.S. Treasury securities (includes the Active Medical Trust). During the six months ended June 30, 2020 and 2019, $410 million and $357 million, respectively, was contributed in U.S. Treasury securities (includes the Active Medical Trust). The contribution of U.S. Treasury securities is considered a non-cash transaction.