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Employee Benefits
 9 Months Ended
Sep. 30, 2020
Retirement Benefits [Abstract]  
Employee Benefits
Note 8. Employee Benefits
We maintain non-contributory defined benefit pension plans for certain employees. In addition, we maintain postretirement health care and life insurance plans for certain retirees and their dependents, which are both contributory and non-contributory, and include a limit on our share of the cost for certain current and future retirees. In accordance with our accounting policy for pension and other postretirement benefits, operating expenses include service costs associated with pension and other postretirement benefits while other credits and/or charges based on actuarial assumptions, including projected discount rates, an estimated return on plan assets, and impact from health care trend rates are reported in Other expense, net. These estimates are updated in the fourth quarter to reflect actual return on plan assets and updated actuarial assumptions or upon a remeasurement event. The adjustment is recognized in the income statement during the fourth quarter or upon a remeasurement event pursuant to our accounting policy for the recognition of actuarial gains and losses.
Net Periodic Benefit Cost (Income)
The following table summarizes the components of net periodic benefit cost (income) related to our pension and postretirement health care and life insurance plans:
(dollars in millions)
PensionHealth Care and Life
Three Months Ended September 30,2020201920202019
Service cost - Cost of services$61 $51 $22 $20 
Service cost - Selling, general and administrative expense15 11 5 4 
Service cost$76 $62 $27 $24 
Amortization of prior service cost (credit)$16 $15 $(242)$(242)
Expected return on plan assets(295)(282)(7)(9)
Interest cost124 173 108 157 
Remeasurement loss, net1,092 291 — — 
Other components$937 $197 $(141)$(94)
Total$1,013 $259 $(114)$(70)

(dollars in millions)
PensionHealth Care and Life
Nine Months Ended September 30,2020201920202019
Service cost - Cost of services$179 $151 $67 $59 
Service cost - Selling, general and administrative expense43 34 15 13 
Service cost$222 $185 $82 $72 
Amortization of prior service cost (credit)$46 $46 $(725)$(728)
Expected return on plan assets(888)(846)(20)(28)
Interest cost401 527 322 472 
Remeasurement loss, net1,427 195 — — 
Other components$986 $(78)$(423)$(284)
Total$1,208 $107 $(341)$(212)

The service cost component of net periodic benefit cost (income) is recorded in Cost of services and Selling, general and administrative expense in the condensed consolidated statements of income while the other components, including remeasurement adjustments, if any, are recorded in Other expense, net.

Severance Payments
During the three and nine months ended September 30, 2020, we paid severance benefits of an insignificant amount and $209 million, respectively. During the nine months ended September 30, 2020, we recorded net pre-tax severance charges of an insignificant amount. At September 30, 2020, we had a remaining severance liability of $430 million, a portion of which includes future contractual payments to separated employees.

Employer Contributions
During the nine months ended September 30, 2020, we made no contributions to our qualified pension plans. During both the three and nine months ended September 30, 2020, we made insignificant contributions to our nonqualified pension plans. During the nine months ended September 30, 2019, we made a discretionary pension contribution of $300 million to our qualified pension plans. We do not expect mandatory pension funding through December 31, 2020. There have been no significant changes with respect to the nonqualified pension and other postretirement benefit plans contributions in 2020.

Remeasurement loss, net
During the three and nine months ended September 30, 2020, we recorded net pre-tax remeasurement losses of $1.1 billion and $1.4 billion in our pension plans, respectively, triggered by settlements.

During the three months ended September 30, 2020, we recorded a net pre-tax remeasurement loss of $1.1 billion primarily driven by a $1.8 billion charge due to changes in our discount rate and lump sum interest rate assumptions used to determine the current year liabilities of our pension plans, offset by a $689 million credit due to the difference between our estimated return on assets and our actual return on assets.
During the three months ended June 30, 2020, we recorded a net pre-tax remeasurement loss of $153 million primarily driven by a $163 million charge mainly due to the difference between our estimated return on assets and our actual return on assets and changes in our lump sum interest rate assumptions used to determine the current year liabilities of our pension plans, offset by a credit due to changes in our discount rate.

During the three months ended March 31, 2020, we recorded a net pre-tax remeasurement loss of $182 million primarily driven by a $196 million charge mainly due to changes in our discount rate and lump sum interest rate assumptions used to determine the current year liabilities of our pension plans, offset by a credit due to the difference between our estimated return on assets and our actual return on assets.

During the three and nine months ended September 30, 2019, we recorded a net pre-tax remeasurement loss of $291 million and $195 million in our pension plans, respectively, triggered by the Voluntary Separation Program for select U.S.-based management employees and other headcount reduction initiatives. The Voluntary Separation Program began in December 2018 and finished at the end of June 2019. For the three months ended September 30, 2019, the net pre-tax remeasurement loss was primarily driven by a $589 million charge due to changes in our discount rate and lump sum interest rate assumptions used to determine the current year liabilities of our pension plans, offset by a $298 million credit due to the difference between our estimated return on assets and our actual return on assets. For the nine months ended September 30, 2019, the net pre-tax remeasurement loss of $195 million includes a pre-tax remeasurement loss of $291 million recorded during the three months ended September 30, 2019 offset by a $96 million gain recorded during the three months ended March 31, 2019.