Defined Benefit Pension Plans

9 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Compensation and Employee Benefit Plans

DEFINED BENEFIT PENSION PLANS

The following table summarizes our net periodic pension cost for our defined benefit pension and postretirement plans during the three and nine months ended September 30, 2022 and 2021 (dollar amounts in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Service cost	$	1	$	—	$	3	$	1
Other components of net periodic pension cost1:
Interest cost	2		2		5		5
Expected return on plan assets	(2)		(3)		(5)		(10)
Amortization of prior service cost	—		—		—		—
Amortization of net loss	1		1		4		4
Loss due to settlement	4		—		4		—
Net periodic pension cost	$	7	$	1	$	11	$	2

1Other components of net periodic pension cost are included in Other non-operating items on our Condensed Consolidated Statements of Income.

In November 2021, the Company initiated the termination of our frozen U.S. and Canadian defined benefit pension plans (collectively, the Plan), which would result in the full settlement of the Company's Plan obligations.

During the three months ended September 30, 2022, we made lump-sum pension distributions and purchased non-participating group annuity contracts totaling $33 million which triggered partial settlement accounting for the Plan. Accordingly, reflected in the table above is a non-cash pre-tax loss due to settlement of $4 million for the three and nine months ended September 30, 2022 representing the recognition of a pro rata portion of the unrecognized loss recorded within Accumulated comprehensive loss.

The changes recognized in Other comprehensive loss were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net actuarial gain (loss) and prior service (cost) arising during the period, net of tax	$	(1)	$	—	$	(1)	$	—
Amortization of actuarial loss, prior service cost and settlements, net of tax	$	4	$	2	$	7	$	3
Total amounts recognized in Other comprehensive income	$	3	$	2	$	6	$	3

Remaining Plan participants will receive their full accrued benefits from Plan assets by electing either lump-sum distributions or annuity contracts with a qualifying third-party annuity provider. The remaining distribution of Plan assets pursuant to the termination will not be made until the Plan termination satisfies all regulatory requirements. The remaining Plan termination is expected to be substantially complete in the fourth quarter of 2022 and result in pension settlement expense, which will be determined based on prevailing market conditions, the actual lump-sum distributions, and annuity purchase rates at the date of distribution. Upon final settlement, we expect to recognize pre-tax pension settlement charges that will include (1) a non-cash charge for the recognition of all pre-tax actuarial losses in Accumulated comprehensive loss ($93 million as of September 30, 2022) and (2) any cash contributions to settle the Plan’s obligations ($9 million net projected benefit obligation as of September 30, 2022). The actual amount of the settlement charges and any potential cash contribution will depend on various factors, including interest rates, Plan asset returns, and the lump-sum election rate.