Pensions and Other Postretirement Benefits

Net periodic benefit cost is included in "Cost of sales, exclusive of depreciation and amortization", "Selling, general and administrative" and "Research and development" in the accompanying condensed consolidated statement of income. The net periodic benefit costs for the three and nine months ended September 30, 2014 and 2013 were as follows:



	Pensions
	Three Months Ended September 30						Nine Months Ended September 30
	2014			2013			2014			2013
($ in millions)
Service cost	$	11		$	16		$	38		$	45
Interest cost	54			56			172			162
Expected return on plan assets	(76		)	(72		)	(224		)	(211		)
Amortization of actuarial losses	18			16			58			76
Amortization of prior service credit	(1		)	—			(2		)	—
Settlement losses	2			—			7			18
Net periodic pension cost	$	8		$	16		$	49		$	90

PPG does not have a mandatory contribution to make to its U.S. defined benefit pension plans in 2014. PPG expects to make mandatory contributions to its non-U.S. plans in the range of $15 million to $25 million in 2014, of which $11 million was made as of September 30, 2014. PPG expects the net periodic benefit cost, excluding settlement losses, for the full year 2014 to be approximately $120 million for pension and other postretirement benefits, with each representing approximately $60 million.

The net periodic other postretirement benefit costs for the three and nine months ended September 30, 2014 and 2013 were as follows:



	Other Postretirement Benefits
	Three Months Ended September 30						Nine Months Ended September 30
	2014			2013			2014			2013
($ in millions)
Service cost	$	3		$	5		$	12		$	15
Interest cost	10			12			35			37
Amortization of prior service credit	(2		)	(2		)	(7		)	(7		)
Amortization of actuarial losses	1			7			8			21
Net periodic other postretirement benefit cost	$	12		$	22		$	48		$	66

Separation and Merger

In January 2013, PPG completed the separation of its commodity chemicals business and the merger of the subsidiary holding the PPG commodity chemicals business with a subsidiary of Georgia Gulf (see Note 4). PPG transferred the defined benefit pension plan and other postretirement benefit liabilities for the affected employees in the U.S., Canada, and Taiwan resulting in a net partial settlement loss of $33 million that was recorded in the first quarter of 2013 in "Income from discontinued operations". This transaction lowered the projected benefit obligation of PPG's defined benefit pension plans by approximately $550 million and the accumulated benefit obligation of the other postretirement benefit plans by approximately $165 million. In conjunction with the transaction, PPG transferred $507 million of pension assets to Axiall.

Plan Termination

As part of the separation activities related to the separation and merger transaction of the former commodity chemicals business, PPG reorganized two of its U.S. defined benefit pension plans in January of 2013 into multiple plans. During the second quarter of 2014, PPG terminated one of the defined benefit pension plans containing only participants who are no longer accruing benefits, which lowered the projected benefit obligation and plan assets of PPG’s defined benefit pension plans by approximately $40 million. Additionally, PPG recorded a settlement loss of $5 million related to the termination of the plan.

Legacy Canadian settlement charges

As part of a restructuring plan announced by PPG in September 2008, PPG closed its glass manufacturing facility in Owen Sound, Ont., Canada. Under Canadian pension regulations, this plant closure resulted in a full windup of the pension plan for the former hourly employees of this plant. The settlement charge is recorded following the approval of the windup by the Canadian pension authorities and when all of the related cash contributions are completed. Cash contributions are made to plans based on estimated cash requirements and must be completed by the end of the five year period from the effective date of the windup. The full windup of the Owen Sound plan was previously approved by the Canadian pension authorities, and the Company made the final contributions to this plan in the first quarter of 2013. As a result, the Company recorded a settlement charge in the amount of $16 million related to the net unrecognized actuarial losses associated with the pension plan. In the third quarter of 2014, the Company recorded a $2 million settlement charge for the partial windups of two Canadian defined benefit pension plans covering former employees of a closed Canadian plant for which PPG has retained certain liability for pension and other postretirement benefits.

There will be additional windup charges of $55-$70 million related to the Owen Sound plant closure, another Canadian location closed by PPG in 2009, and Canadian plant closures for which PPG has retained certain liabilities for pension and post-employment benefits which are expected to be incurred in 2015 and 2016. The cash contributions related to these windups is expected to total $10-$20 million in the 2014 to 2016 period.