The company offers defined benefit (DB) 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.

*	Includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described below.

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						Yr. to Yr.
(Dollars in millions)						Percent
For the nine months ended September 30:	2022			2021		Change
Retirement-related plans — cost:
Defined benefit and contribution pension plans — cost	$	7,252	*	$	1,816	nm
Nonpension postretirement plans — cost		97			133	(26.7)	%
Total	$	7,350		$	1,949	nm

*	Includes the impact of a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion related to the Qualified PPP, as described below.

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Cost/(Income) of Pension Plans

The following tables provide the components of the cost/(income) for the company’s pension plans.


(Dollars in millions)	U.S. Plans					Non-U.S. Plans
For the three months ended September 30:	2022			2021		2022		2021
Service cost	$	—		$	—	$	57	$	67
Interest cost*		282			277		124		106
Expected return on plan assets*		(432)			(451)		(246)		(274)
Amortization of prior service costs/(credits)*		2			4		3		(2)
Recognized actuarial losses*		132			249		247		347
Curtailments and settlements*		5,894	**		—		19		13
Multi-employer plans		—			—		4		2
Other costs/(credits)*		—			—		8		7
Total net periodic pension (income)/cost of defined benefit plans	$	5,877		$	80	$	216	$	266
Cost of defined contribution plans		134			152		91		100
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	6,012		$	232	$	307	$	366

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

**	Reflects the impact of a one-time, non-cash, pre-tax pension settlement charge related to the Qualified PPP, as described below.


(Dollars in millions)	U.S. Plans					Non-U.S. Plans
For the nine months ended September 30:	2022			2021		2022		2021
Service cost	$	—		$	—	$	180	$	201
Interest cost*		885			832		394		322
Expected return on plan assets*		(1,382)			(1,352)		(778)		(833)
Amortization of prior service costs/(credits)*		6			12		10		(9)
Recognized actuarial losses*		490			747		784		1,055
Curtailments and settlements*		5,894	**		—		38		46
Multi-employer plans		—			—		11		13
Other costs/(credits)*		—			—		24		21
Total net periodic pension (income)/cost of defined benefit plans	$	5,893		$	239	$	663	$	817
Cost of defined contribution plans		416			455		280		306
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	6,309		$	694	$	943	$	1,122

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

**	Reflects the impact of a one-time, non-cash, pre-tax pension settlement charge related to the Qualified PPP, as described below.

Cost of Nonpension Postretirement Plans

The following tables provide the components of the cost for the company’s nonpension postretirement plans.


(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the three months ended September 30:	2022		2021		2022		2021
Service cost	$	1	$	2	$	1	$	1
Interest cost*		21		16		8		8
Expected return on plan assets*		—		—		0		(1)
Amortization of prior service costs/(credits)*		(2)		1		0		0
Recognized actuarial losses*		1		13		1		4
Curtailments and settlements*		—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	21	$	32	$	10	$	12

* 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:	2022		2021		2022		2021
Service cost	$	4	$	5	$	2	$	3
Interest cost*		58		49		26		25
Expected return on plan assets*		—		—		(2)		(2)
Amortization of prior service costs/(credits)*		(1)		3		0		0
Recognized actuarial losses*		6		39		3		11
Curtailments and settlements*		—		—		—		0
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	67	$	96	$	30	$	37

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

IBM U.S. Pension and Nonpension Postretirement Plan Changes

Over the past several years, the company has taken actions to reduce the risk profile of its worldwide retirement-related plans, while at the same time increasing the funded status of the plans. As described in note 1, “Basis of Presentation,” in September 2022, the Qualified PPP irrevocably transferred to the Insurers approximately $16 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, thereby reducing the company’s pension obligations and assets by the same amount. This transaction further de-risks the company’s retirement-related plans by eliminating the potential for the company to make future cash contributions to fund this portion of pension obligations being transferred to the Insurers. After the transaction, the Qualified PPP remained in an overfunded position as of September 30, 2022.

Upon issuance of the group annuity contracts, the Qualified PPP’s benefit obligations and administration for approximately 100,000 of the company’s retirees and beneficiaries (the Transferred Participants) were transferred to the Insurers. Under the group annuity contracts, each Insurer has made an irrevocable commitment, and will be solely responsible, to pay 50 percent of the pension benefits of each Transferred Participant that are due on and after January 1, 2023. The transaction resulted in no changes to the benefits to be received by the Transferred Participants. The company recognized a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022 primarily related to the accelerated recognition of actuarial losses included within AOCI in the Consolidated Statement of Equity. As a result of this transaction, the company was required to remeasure the benefit obligations and plan assets of the Qualified PPP. The remeasurement reflects the use of an updated discount rate and actual return on plan assets as of August 31, 2022, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.

In September 2022, the company amended its U.S. Nonpension Postretirement Plan to transition coverage for Medicare-eligible participants to a new IBM-sponsored group Medicare Advantage program administered by UnitedHealthcare, starting January 1, 2023. The changes are intended to provide an enhanced member experience, better value and more comprehensive benefits to IBM participants. As a result of this amendment, the company was required to remeasure the benefit obligation of this plan. The amendment and remeasurement resulted in a decrease in nonpension postretirement benefit obligations and a corresponding decrease in accumulated other comprehensive loss, which is reflected in the changes in benefit obligations from actuarial losses/(gains) in the table below. The remeasurement reflects the use of an updated discount rate and actual return on plan assets as of July 31, 2022, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.

The following table presents the changes in benefit obligations and plan assets of the company’s retirement related benefit plans affected by the interim remeasurements described above for the nine months ended September 30, 2022.


				Nonpension
	Qualified PPP			Postretirement Plan
(Dollars in millions)	U.S. Plan			U.S. Plan
Change in benefit obligation:
Benefit obligation at January 1, 2022	$	46,457		$	3,404
Service cost		—			4
Interest cost		853			58
Plan participants' contributions		—			33
Actuarial losses/(gains)*		(6,973)			(624)
Benefits paid from trust		(2,376)			(285)
Direct benefit payments		—			(2)
Amendments/curtailments/settlements/other		(16,644)	**		—
Benefit obligation at September 30, 2022	$	21,316		$	2,588
Change in plan assets:
Fair value of plan assets at January 1, 2022	$	51,851		$	8
Actual return on plan assets		(5,746)			—
Employer contributions		—			272
Plan participants' contributions		—			33
Benefits paid from trust		(2,376)			(285)
Amendments/curtailments/settlements/other		(16,644)	**		—
Fair value of plan assets at September 30, 2022	$	27,085		$	28
Funded status at September 30, 2022	$	5,769		$	(2,560)
Accumulated benefit obligation+	$	21,316			N/A

*	Reflects an increase in the discount rate from 2.60 percent at December 31, 2021 to 4.70 percent at the remeasurement date for the Qualified PPP and from 2.30 percent at December 31, 2021 to 4.10 percent at the remeasurement date for the nonpension postretirement plan.

** Primarily represents the transfer of Qualified PPP pension obligations and related plan assets to the Insurers pursuant to group annuity contracts and lump sum payments to plan participants.

+	Represents the benefit obligation assuming no future participant compensation increases.

Plan Contributions

The table below includes contributions to the following plans:


(Dollars in millions)	Plan Contributions
For the nine months ended September 30:		2022	2021
U.S. and non-U.S. nonpension postretirement benefit plans	$	272	$	263
Non-U.S. DB and multi-employer plans*		85		43
Total plan contributions	$	357	$	306

* Amounts reported net of refunds.

During the nine months ended September 30, 2022 and 2021, the company contributed $247 million and $307 million of U.S. Treasury Securities, respectively, to the non-U.S. DB plans and nonpension postretirement benefit plans. Additionally, during the nine months ended September 30, 2022 and 2021, the company contributed $366 million and $311 million in U.S. Treasury securities, respectively, to the Active Medical Trust. Contributions made with U.S. Treasury securities are considered a non-cash transaction.

The company does not anticipate any significant changes to the expected plan contributions in 2022 from the amounts disclosed in the 2021 Annual Report.