Employee Benefits

6 Months Ended

Jun. 30, 2023

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 income (expense), net. These estimates are updated in the fourth quarter or upon a remeasurement event, to reflect actual return on plan assets and updated actuarial assumptions. 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)
	Pension				Health Care and Life
Three Months Ended June 30,	2023		2022		2023		2022
Service cost - Cost of services	$	45	$	58	$	12	$	20
Service cost - Selling, general and administrative expense	7		8		2		4
Service cost	$	52	$	66	$	14	$	24
Amortization of prior service cost (credit)	$	28	$	15	$	(104)	$	(110)
Expected return on plan assets	(253)		(294)		(8)		(7)
Interest cost	188		114		136		83
Remeasurement loss, net	—		198		—		—
Other components	$	(37)	$	33	$	24	$	(34)
Total	$	15	$	99	$	38	$	(10)

	(dollars in millions)
	Pension				Health Care and Life
Six Months Ended June 30,	2023		2022		2023		2022
Service cost - Cost of services	$	91	$	116	$	23	$	40
Service cost - Selling, general and administrative expense	14		16		4		7
Service cost	$	105	$	132	$	27	$	47
Amortization of prior service cost (credit)	$	56	$	30	$	(209)	$	(313)
Expected return on plan assets	(506)		(591)		(15)		(14)
Interest cost	376		224		272		166
Remeasurement loss, net	—		198		—		—
Other components	$	(74)	$	(139)	$	48	$	(161)
Total	$	31	$	(7)	$	75	$	(114)

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 mark-to-market adjustments, if any, are recorded in Other income (expense), net.

Severance Payments

During the three and six months ended June 30, 2023, we paid severance benefits of $86 million and $226 million, respectively. During the three and six months ended June 30, 2023, we recorded pre-tax severance charges of $241 million and $249 million, respectively, related to involuntary separations under our existing plans. At June 30, 2023, we had a remaining severance liability of $623 million, a portion of which includes future contractual payments to separated employees.

Employer Contributions

During both the three and six months ended June 30, 2023, we made a discretionary contribution of $200 million to one of our qualified pension plans and made insignificant contributions to our nonqualified pension plans. No mandatory qualified pension plans contributions are expected or required through December 31, 2023. There have been no significant changes with respect to the nonqualified pension and other postretirement benefit plans contributions in 2023.

Remeasurement loss, net

During both the three and six months ended June 30, 2022, we recorded a net pre-tax remeasurement loss of $198 million in our pension plans triggered by settlements, primarily driven by a $654 million charge resulting from the difference between our estimated and actual return on assets, partially offset by a credit of $456 million mainly due to changes in our discount rate and changes in our lump sum interest rate assumptions used to determine the current year liabilities of our pension plans.