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Employee Benefits
 3 Months Ended
Mar. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Employee Benefits
Employee Benefits

We have a number of defined benefit pension plans and defined contribution plans covering substantially all employees. Our primary pension plan is a noncontributory plan under which benefits are based on employee career employment compensation. In December 2011, our Board of Directors approved a plan amendment that froze our U.S. Employee Retirement Plan (“U.S. ERP”) effective on April 1, 2012. Our U.S. ERP is a defined benefit plan. Under the amendment, no new employees will be permitted to enter the U.S. ERP and no additional benefits for current participants for future services will be accrued.

We also have unfunded non-U.S. benefit plans and supplemental benefit plans. The supplemental benefit plans provide senior management with supplemental retirement, disability and death benefits. Certain supplemental retirement benefits are based on final monthly earnings. In addition, we sponsor voluntary 401(k) plans under which we may match employee contributions up to certain levels of compensation as well as profit-sharing plans under which we contribute a percentage of eligible employees’ compensation to the employees’ accounts.

We also provide certain medical, dental and life insurance benefits for active and retired employees and eligible dependents. The medical and dental plans are contributory, while the life insurance plan is noncontributory. We currently do not prefund any of these plans.

We recognize the funded status of our retirement and postretirement plans in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income, net of taxes. The amounts in accumulated other comprehensive income represent net unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic pension cost pursuant to our accounting policy for amortizing such amounts.

As part of the sale of MHE to investment funds affiliated with Apollo Global Management, LLC, described further in Note 2 — Acquisitions and Divestitures, we will retain the benefit obligations and plan assets for the defined benefit plans related to MHE, however, the benefit cost for periods presented is bifurcated between continuing and discontinued operations.

The components of net periodic benefit cost for our retirement plans and postretirement plans for the three months ended March 31 are as follows: 
(in millions)
2013
 
2012
Retirement Plans
 
 
 
Service cost
$
4

 
$
19

Interest cost
22

 
23

Expected return on plan assets
(32
)
 
(31
)
Amortization of actuarial loss
6

 
8

Curtailment gain
(2
)
 
—

Net periodic benefit cost 1
$
(2
)
 
$
19

Postretirement Plans
 
 
 
Service cost
$
1

 
$
1

Interest cost
1

 
1

Curtailment gain
(9
)
 
—

Net periodic benefit cost 2
$
(7
)
 
$
2


1 The decrease reflects the reduction in service cost resulting from a freeze of our U.S. ERP in 2012 as discussed above as well as a curtailment gain due to a freeze of pension accruals for MHE employees in the United Kingdom ("U.K.") retirement plan during 2012.
2 The decrease reflects a curtailment gain related to the sale of MHE on March 22, 2013, which was recorded within discontinued operations in our consolidated statement of income.

For the three months ended March 31, 2013 and 2012, our U.K. retirement plan accounted for a benefit of $2 million and a charge of $1 million, respectively, of the net periodic benefit cost attributable to the funded plans. The decrease in net periodic benefit cost for our U.K. retirement plan is due to the curtailment gain discussed above.

As discussed in our Form 10-K, we changed certain discount rate assumptions on our retirement and postretirement plans and our expected return on assets assumption for our retirement plans, which became effective on January 1, 2013. The effect of the assumption changes on retirement and post-retirement expense for the three months ended March 31, 2013 did not have a material impact to our financial position, results of operations or cash flows.

In the first quarter of 2013, we contributed $8 million to our retirement plans and expect to make additional required contributions of approximately $20 million to our retirement plans during the remainder of the year. We may elect to make additional non-required contributions depending on investment performance and the pension plan status in the remaining nine months of 2013.