Employee Benefits

3 Months Ended

Mar. 31, 2013

Employee Benefits

6. Employee Benefits

We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory, and include a limit on our share of the cost for certain recent and future retirees. In accordance with our accounting policy for pension and other postretirement benefits, operating expenses include pension and benefit related charges based on actuarial assumptions, including projected discount rates and an estimated return on plan assets. These estimates are updated in the fourth quarter to reflect actual return on plan assets and updated actuarial assumptions. The adjustment will be 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

The following table summarizes the benefit (income) cost related to our pension and postretirement health care and life insurance plans:

(dollars in millions)                  Pension Health Care and Life  

Three Months Ended March 31,	2013			2012			2013			2012
Service cost	$	99		$	89		$	80		$	92
Amortization of prior service cost (credit)		1			(1	)		(62	)		(9	)
Subtotal		100			88			18			83
Expected return on plan assets		(311	)		(442	)		(36	)		(43	)
Interest cost		250			362			274			327
Net periodic benefit cost	$	39		$	8		$	256		$	367

Severance Payments

During the three months ended March 31, 2013, we paid severance benefits of $0.1 billion. At March 31, 2013, we had a remaining severance liability of $0.9 billion, a portion of which includes future contractual payments to employees separated as of March 31, 2013.

Employer Contributions

During the three months ended March 31, 2013, we contributed $0.4 billion to our other postretirement benefit plans. The contribution to our nonqualified pension plans was not material during the three months ended March 31, 2013. There have been no material changes to the estimated qualified and nonqualified pension contributions in 2013 as previously disclosed in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2012.