Postretirement Benefits

9 Months Ended

Jul. 31, 2020

Retirement Benefits [Abstract]

Postretirement Benefits

Postretirement Benefits

Defined Benefit Plans

We provide postretirement benefits to a substantial portion of our employees and retirees. Costs associated with postretirement benefits include pension and postretirement health care expenses for employees, retirees, surviving spouses and dependents.

Generally, the pension plans are non-contributory. Our policy is to fund the pension plans in accordance with applicable U.S. and Canadian government regulations and to make additional contributions from time to time. For the nine months ended July 31, 2020 and 2019, we contributed $30 million and $140 million, respectively, to our pension plans to meet regulatory funding requirements. During the first quarter of 2019, we accelerated the payment of a substantial portion of our 2019 minimum required funding. We expect to contribute $5 million to our pension plans during the remainder of 2020 and defer $157 million of previously expected remaining 2020 contributions until the first quarter of 2021 under provisions of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act").

We primarily fund other post-employment benefits ("OPEB") obligations, such as retiree medical, in accordance with the 1993 Settlement Agreement (the "1993 Settlement Agreement"), which requires us to fund a portion of the plans' annual service cost to a retiree benefit trust (the "Base Trust"). The 1993 Settlement Agreement resolved a class action lawsuit originally filed in 1992 regarding the restructuring of our then applicable retiree health care and life insurance benefits. Contributions for the nine months ended July 31, 2020, as well as anticipated contributions for the remainder of 2020, are not material.

Components of Net Periodic Benefit Expense

Net periodic benefit expense included in our Consolidated Statements of Operations for the three and nine months ended July 31, 2020 and 2019 are comprised of the following:

	Three Months Ended July 31,												Nine Months Ended July 31,
	Pension Benefits						Health and Life Insurance Benefits						Pension Benefits						Health and Life Insurance Benefits
(in millions)	2020			2019			2020			2019			2020			2019			2020			2019
Service cost for benefits earned during the period	$	2		$	1		$	1		$	1		$	6		$	5		$	3		$	3
Interest on obligation	21			30			7			12			63			92			21			36
Amortization of cumulative loss	24			23			—			—			73			70			—			—
Settlements	7			—			—			—			7			142			—			—
Premiums on pension insurance	3			3			—			—			9			7			—			—
Expected return on assets	(36		)	(35		)	(5		)	(5		)	(108		)	(108		)	(15		)	(16		)
Net periodic benefit expense	$	21		$	22		$	3		$	8		$	50		$	208		$	9		$	23

Components of net periodic benefit cost other than service cost are included in Other expense, net in our Consolidated Statements of Operations.

In the third quarter of 2020 and in the first quarter of 2019, we purchased group annuity contracts for certain retired pension plan participants resulting in plan remeasurements. The purchase of the group annuity contracts was funded directly by the assets of our pension plans. As a result, in the third quarter of 2020 and first quarter of 2019, net actuarial gains of $2 million and net actuarial losses of $11 million, respectively, were recognized as components of Accumulated other comprehensive loss and non-cash pension settlement accounting expenses of $7 million, and $142 million, respectively, were recognized in Other expense, net in our Consolidated Statements of Operations.

Defined Contribution Plans and Other Contractual Arrangements

Our defined contribution plans cover a substantial portion of domestic salaried employees and certain domestic represented employees. The defined contribution plans contain a 401(k) feature and provide most participants with a matching contribution from the Company. In light of recent developments relating to the COVID-19 pandemic, we have implemented cash conservation initiatives including a delay in certain 401(k) company matching contributions until 2021. The matching contribution delay was effective March 1, 2020. Prior to this, the matching contributions for non-represented employees were deposited monthly. Many participants covered by the plans receive annual Company contributions to their retirement accounts based on an age-weighted percentage of the participant's eligible compensation for the calendar year. Defined contribution expense pursuant to these plans was $7 million and $26 million for the three and nine months ended July 31, 2020, respectively, and $8 million and $28 million for the three and nine months ended July 31, 2019, respectively.

In accordance with the 1993 Settlement Agreement, an independent Retiree Supplemental Benefit Trust (the "Supplemental Trust") was established. The Supplemental Trust, and the benefits it provides to certain retirees pursuant to a certain Retiree Supplemental Benefit Program ("Supplemental Benefit Program") under the 1993 Settlement Agreement, is not part of our consolidated financial statements.

Our contingent profit sharing obligations under a certain Supplemental Benefit Trust Profit Sharing Plan will continue until certain funding targets defined by the 1993 Settlement Agreement are met. We record profit sharing accruals based on the operating performance of the entities that are included in the determination of qualifying profits. For more information on pending arbitration regarding the Supplemental Benefit Trust Profit Sharing Plan, see Note 12, Commitments and Contingencies.