EMPLOYEE BENEFITS

3 Months Ended

Mar. 31, 2016

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

12. EMPLOYEE BENEFITS

We sponsor various defined benefit pension plans, post-retirement medical and life insurance plans for eligible employees and retirees in the U.S. and certain non-U.S. countries. Effective January 1, 2016, the U.S. defined benefit pension plans were frozen for current participants and closed to new hires. Accordingly, compensation-based benefits are no longer credited to the cash balance accounts of plan participants.

In addition, we changed the method used to measure interest cost for pension and postretirement benefits for our U.S. plans and largest non-U.S. plans in the fourth quarter of 2015. Previously, we measured interest cost utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligations. For 2016, interest cost is measured by applying the specific spot rates along the yield curve to the plans’ corresponding discounted cash flows that comprise the obligation (the Spot Rate Approach). The new method provides a more precise measurement of interest cost by aligning the timing of the plans’ discounted cash flows to the corresponding spot rates on the yield curve. We accounted for this change as a change in accounting estimate, which is applied prospectively. The measurement of our pension and postretirement benefit obligations was not affected.

The following table presents the components of net periodic benefit cost with respect to pensions and other postretirement benefits:

	Pension						Postretirement
		U.S.		Non-U.S.				U.S.		Non-U.S.
(in millions)		Plans		Plans		Total		Plans		Plans		Total
Three Months Ended March 31, 2016
Components of net periodic benefit (income) cost:
Service cost	$	4	$	8	$	12	$	1	$	1	$	2
Interest cost		46		5		51		1		1		2
Expected return on assets		(73)		(7)		(80)		-		-		-
Amortization of prior service credit		-		-		-		(2)		-		(2)
Amortization of net loss		6		2		8		-		-		-
Curtailment gain		-		(2)		(2)		-		-		-
Net periodic benefit (income) cost	$	(17)	$	6	$	(11)	$	-	$	2	$	2
Three Months Ended March 31, 2015
Components of net periodic benefit cost:
Service cost	$	52	$	11	$	63	$	2	$	1	$	3
Interest cost		55		6		61		2		1		3
Expected return on assets		(72)		(6)		(78)		-		-		-
Amortization of prior service credit		(8)		(1)		(9)		(3)		-		(3)
Amortization of net loss		32		3		35		-		-		-
Net periodic benefit cost	$	59	$	13	$	72	$	1	$	2	$	3