Retirement-Related Benefits

9 Months Ended

Sep. 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 September 30:	2020		2019		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	610	$	459	32.9	%
Nonpension postretirement plans — cost		50		53	(5.9)
Total	$	660	$	512	28.9	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the nine months ended September 30:	2020		2019		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	1,789	$	1,337	33.8	%
Nonpension postretirement plans — cost		151		160	(5.2)
Total	$	1,941	$	1,497	29.6	%

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 September 30:	2020		2019		2020		2019
Service cost	$	—	$	—	$	99	$	93
Interest cost (1)		375		470		142		202
Expected return on plan assets (1)		(542)		(650)		(323)		(391)
Amortization of prior service costs/(credits) (1)		4		4		(5)		(7)
Recognized actuarial losses (1)		207		140		360		313
Curtailments and settlements (1)		—		—		21		3
Multi-employer plans		—		—		7		10
Other costs/(credits) (1)		—		—		6		11
Total net periodic pension (income)/cost of defined benefit plans	$	44	$	(36)	$	307	$	235
Cost of defined contribution plans		148		151		111		109
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	192	$	115	$	418	$	344

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the nine months ended September 30:	2020		2019		2020		2019
Service cost	$	—	$	—	$	289	$	279
Interest cost (1)		1,126		1,411		408		616
Expected return on plan assets (1)		(1,627)		(1,949)		(943)		(1,186)
Amortization of prior service costs/(credits) (1)		12		12		(14)		(20)
Recognized actuarial losses (1)		622		419		1,041		939
Curtailments and settlements (1)		—		—		42		7
Multi-employer plans		—		—		22		26
Other costs/(credits) (1)		—		—		20		22
Total net periodic pension (income)/cost of defined benefit plans	$	133	$	(107)	$	865	$	683
Cost of defined contribution plans		457		440		334		321
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	590	$	333	$	1,200	$	1,004

(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 September 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

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

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the nine months ended September 30:	2020		2019		2020		2019
Service cost	$	7	$	8	$	4	$	4
Interest cost (1)		77		109		26		37
Expected return on plan assets (1)		—		—		(3)		(4)
Amortization of prior service costs/(credits) (1)		3		(2)		0		0
Recognized actuarial losses (1)		22		0		16		8
Curtailments and settlements (1)		—		—		0		0
Total nonpension postretirement plans cost recognized in Consolidated Income Statement	$	109	$	115	$	43	$	45

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

The table below includes contributions to the following plans:

	Plan Contributions
	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2020		2019		2020		2019
U.S. nonpension postretirement benefit plan	$	65	$	35	$	265	$	262
Non-U.S. DB and multi-employer plans		16		32		127		159
Total plan contributions	$	80	$	66	$	392	$	421

During the three months ended September 30, 2020 and 2019, $65 million for both periods, was contributed in U.S. Treasury securities (includes the Active Medical Trust). During the nine months ended September 30, 2020 and 2019, $475 million and $421 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.