8. RETIREMENT BENEFITS

For additional information on Citi's retirement benefits, see Note 9 to the Consolidated Financial Statements in the Company's 2012 Annual Report on Form 10-K.

Pension and Postretirement Plans

The Company has several non-contributory defined benefit pension plans covering certain U.S. employees and has various defined benefit pension and termination indemnity plans covering employees outside the United States. The U.S. qualified defined benefit plan was frozen effective January 1, 2008 for most employees. Accordingly, no additional compensation-based contributions were credited to the cash balance portion of the plan for existing plan participants after 2007. However, certain employees covered under the prior final pay plan formula continue to accrue benefits. The Company also offers postretirement health care and life insurance benefits to certain eligible U.S. retired employees, as well as to certain eligible employees outside the United States.

Beginning in the second quarter of 2013, the Company utilizes a quarterly, rather than annual, measurement for the Significant Plans (as defined in Note 1 to the Consolidated Financial Statements). For All Other Plans (as defined in Note 1 to the Consolidated Financial Statements), the Company will continue to utilize an annual measurement approach.

Net (Benefit) Expense

The following table summarizes the components of net (benefit) expense recognized in the Consolidated Statement of Income for the Company's U.S. qualified and nonqualified pension plans, postretirement plans and plans outside the United States.

	Three Months Ended September 30,

	Pension plans												Postretirement benefit plans
	U.S. plans						Non-U.S. plans						U.S. plans						Non-U.S. plans
*In millions of dollars*	2013			2012			2013			2012			2013			2012			2013			2012
Benefits earned during the period	$	—		$	3		$	51		$	50		$	—		$	—		$	6		$	7
Interest cost on benefit obligation		140			141			95			93			8			11			31			29
Expected return on plan assets		(216	)		(224	)		(93	)		(101	)		1			(1	)		(29	)		(27	)
Amortization of unrecognized
Prior service cost (benefit)		(1	)		—			2			1			(1	)		—			—			—
Net actuarial loss		23			24			24			19			—			1			9			6
Curtailment loss		17			—			—			4			—			—			—			—
Special termination benefits		—			—			1			—			—			—			—			—

Net qualified plans (benefit) expense	$	(37	)	$	(56	)	$	80		$	66		$	8		$	11		$	17		$	15

U.S. nonqualified plans expense	$	10		$	11		$	—		$	—		$	—		$	—		$	—		$	—

Total net (benefit) expense	$	(27	)	$	(45	)	$	80		$	66		$	8		$	11		$	17		$	15

Cumulative effect of change in accounting policy(1)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

Total adjusted net (benefit) expense	$	(27	)	$	(45	)	$	80		$	66		$	8		$	11		$	17		$	15

	Nine Months Ended September 30,

	Pension plans												Postretirement benefit plans
	U.S. plans						Non-U.S. plans						U.S. plans						Non-U.S. plans
*In millions of dollars*	2013			2012			2013			2012			2013			2012			2013			2012
Benefits earned during the period	$	6		$	9		$	158		$	150		$	—		$	—		$	31		$	21
Interest cost on benefit obligation		398			423			287			277			25			33			107			87
Expected return on plan assets		(645	)		(672	)		(298	)		(302	)		(1	)		(3	)		(101	)		(81	)
Amortization of unrecognized
Prior service cost (benefit)		(3	)		—			4			3			(1	)		(1	)		—			—
Net actuarial loss		82			72			70			58			—			3			31			19
Curtailment loss		17			—			—			12			—			—			—			—
Special termination benefits		—			—			1			—			—			—			—			—

Net qualified plans (benefit) expense	$	(145	)	$	(168	)	$	222		$	198		$	23		$	32		$	68		$	46

U.S. nonqualified plans expense	$	34		$	31		$	—		$	—		$	—		$	—		$	—		$	—

Total net (benefit) expense	$	(111	)	$	(137	)	$	222		$	198		$	23		$	32		$	68		$	46

Cumulative effect of change in accounting policy(1)	$	(23	)	$	—		$	—		$	—		$	—		$	—		$	3		$	—

Total adjusted net (benefit) expense	$	(134	)	$	(137	)	$	222		$	198		$	23		$	32		$	71		$	46

(1): See Note 1 to the Consolidated Financial Statements for additional information on the change in accounting policy.

Funded Status and Accumulated Other Comprehensive Income

The following table summarizes the funded status and amounts recognized in the Consolidated Balance Sheet for the Company's Significant Plans.

Net Amount Recognized

	Nine Months Ended September 30,

	Pension plans						Postretirement plans
*In millions of dollars*	U.S. plans			Non-U.S. plans			U.S. plans			Non-U.S. plans
Change in projected benefit obligation (PBO)
Projected benefit obligation at the beginning of the period(1)	$	12,198		$	3,687		$	784		$	1,468
Benefits earned during the period		1			12			—			5
Interest cost on benefit obligation		140			57			9			26
Actuarial (gain) loss		(109	)		(66	)		25			(151	)
Benefits paid net participant contributions		(179	)		(44	)		(23	)		(13	)
Foreign exchange impact and other		—			114			—			(15	)
Curtailment		19			—			—			—

Projected benefit obligation at period end for Significant Plans	$	12,070		$	3,760		$	795		$	1,320

Change in plan assets
Plan assets at fair value at the beginning of the period for Significant Plans(1)	$	12,551		$	3,979		$	42		$	1,386
Actual return on plan assets		(31	)		86			—			37
Company contributions		—			129			20			78
Benefits paid		(179	)		(44	)		(23	)		(13	)
Foreign exchange impact and other		—			139			—			(16	)

Plan assets at fair value at period end for Significant Plans	$	12,341		$	4,289		$	39		$	1,472

Funded status of Significant Plans at period end	$	271		$	529		$	(756	)	$	152

Net amount recognized
Benefit asset	$	271		$	529		$	—		$	152
Benefit liability		—			—			(756	)		—

Net amount recognized on the balance sheet	$	271		$	529		$	(756	)	$	152

Amounts recognized in *Accumulated other comprehensive income (loss)*
Prior service benefit	$	(8	)	$	(2	)	$	(1	)	$	(3	)
Net actuarial loss (gain)		4,185			1,188			(114	)		530

Net amount recognized in equity—pretax	$	4,177		$	1,186		$	(115	)	$	527

Accumulated benefit obligation at period end	$	12,054		$	3,275		$	N/A		$	N/A

(1): Only Significant Plans are measured quarterly. All Other Plans are only measured annually.

The following table shows the change in Accumulated other comprehensive income (loss) for the three months and nine months ended September 30, 2013.

*In millions of dollars(1)*	Three Months Ended Sept. 30, 2013			Nine Months Ended Sept. 30, 2013

Beginning of period balance, net of tax	$	(4,615	)	$	(5,270	)

Cumulative effect of change in accounting policy		—			(22	)
Actuarial assumptions changes and plan experience		315			1,911
Net asset gain due to actual returns exceeding expected returns		(204	)		(1,141	)
Net amortizations		64			209
Prior service credit(2)		161			161
Curtailment/settlement impact		(2	)		(2	)
Foreign exchange impact and other		(8	)		207
Change in deferred taxes, net		(28	)		(370	)

Change, net of tax	$	298		$	953

End of period balance, net of tax(1)	$	(4,317	)	$	(4,317	)

(1): See Note 17 to the Consolidated Financial Statements for further discussion of net Accumulated other comprehensive income (loss) balance.
(2): Relates to the modification to health continuation benefits for employees on long-term disability.

Plan Assumptions

The Company utilizes a number of assumptions to determine plan obligations and expenses. Changes in one or a combination of these assumptions will have an impact on the Company's pension and postretirement benefit obligation, funded status and (benefit) expense. Changes in the plans' funded status resulting from unexpected changes in the projected benefit obligation and fair value of plan assets will have a corresponding impact on Accumulated other comprehensive income (loss).

As a result of the quarterly measurement of the Company's Significant Plans beginning in the second quarter of 2013, the obligations and assets of these plans are measured based on end-of-period discount rates and asset values, while benefit expense is measured based on beginning-of-period discount rates. Any material changes to all other assumptions for the Significant Plans during the quarterly period are updated during the period as necessary. If no material changes occur, these assumptions will remain the same as at the preceding period-end. All assumptions including discount rates for All Other Plans will continue to be the same as at the preceding year-end.

The discount rates used in determining the pension and postretirement benefit obligations at September 30, 2013, June 30, 2013 and December 31, 2012, and the net benefit expenses for the Company's Significant Plans for the three months ended September 30, 2013 and June 30, 2013, and the year ended December 31, 2012, are shown in the table below. Discount rates at period end are utilized to value the period end benefit obligations and compute the benefit expense in the subsequent quarter.

*At period ended(1)*	Sept. 30, 2013	Jun. 30, 2013	Dec. 31, 2012

U.S. plans(2)
Pension	4.80%	4.75%	3.90%
Postretirement	4.30%	4.40	3.60
Non-U.S. plans
Pension	4.50% to 8.90%	4.70 to 8.40	4.50 to 7.70
Weighted average	6.49%	6.52	6.21
Postretirement	8.90%	8.40	7.70

	Three months ended

*During the period(1)*	Sept. 30, 2013	Jun. 30, 2013	Year ended Dec. 31, 2012
U.S. plans(2)
Pension	4.75%	4.20%	4.70%
Postretirement	4.40	3.60	4.30
Non-U.S. plans
Pension	4.70% to 8.40%	4.40 to 7.40	5.20 to 8.50
Weighted average	6.52%	6.09	6.79
Postretirement	8.40%	7.40	8.50

(1): Per the quarterly remeasurement process, only discount rates for the Significant Plans are listed above. For plan assumptions for All Other Plans, please refer to Note 9 to the Consolidated Financial Statements in the Company's 2012 Annual Report on Form 10-K.
(2): Weighted-average rates for the U.S. plans equal the stated rates.

Sensitivities of Certain Key Assumptions

The following tables summarize the effect on the Company's Significant Plans pension expense of a one-percentage-point change in the discount rate:

	One-percentage- point increase

*In millions of dollars*	2013			2012
U.S. plans	$	16		$	18
Non-U.S. plans		(26	)		(19	)

	One-percentage- point decrease

*In millions of dollars*	2013			2012
U.S. plans	$	(56	)	$	(36	)
Non-U.S. plans		34			25

Since the Company's U.S. qualified pension plan was frozen, the majority of the prospective service cost has been eliminated and the gain/loss amortization period was changed to the life expectancy for inactive participants. As a result, pension expense for the Company's U.S. qualified pension plan is driven more by interest costs than service costs, and an increase in the discount rate would increase pension expense, while a decrease in the discount rate would decrease pension expense.

Contributions

The Company's funding practice for U.S. and non-U.S. pension plans is generally to fund to minimum funding requirements in accordance with applicable local laws and regulations. The Company may increase its contributions above the minimum required contribution, if deemed appropriate. In addition, management has the ability to change its funding practices. For the U.S. pension plans, there were no minimum required cash contributions during the third quarter of 2013.

The following table summarizes the actual company contributions for the nine months ended September 30, 2013 and 2012, as well as estimated expected company contributions for the remainder of 2013. Expected contributions are subject to change since contribution decisions are affected by various factors, such as market performance and regulatory requirements.

Summary of Company Contributions

	Pension plans								Postretirement benefit plans

	U.S. plans(1)				Non-U.S. plans				U.S. plans				Non-U.S. plans
*In millions of dollars*	2013		2012		2013		2012		2013		2012		2013		2012
Company contributions(2) for the nine months ended September 30	$	32	$	35	$	282	$	213	$	49	$	41	$	244	$	4

Company contributions expected for the remainder of the year	$	11	$	11	$	57	$	100	$	16	$	14	$	1	$	86

(1): The U.S. pension plans include qualified and nonqualified plans.
(2): Company contributions are composed of cash contributions made to the plans and benefits paid directly to participants by the Company.

Defined Contribution Plans

The Company sponsors defined contribution plans in the U.S. and in certain non-U.S. locations, all of which are administered in accordance with local laws. The most significant defined contribution plan is the Citigroup 401(k) Plan sponsored by the Company in the U.S.

Under the Citigroup 401(k) Plan, eligible U.S. employees receive matching contributions of up to 6% of their eligible compensation for 2013 and 2012, subject to statutory limits. Additionally, for eligible employees whose eligible compensation is $100,000 or less, a fixed contribution of up to 2% of eligible compensation is provided. All company contributions are invested according to participants' individual elections. The pretax expense associated with this plan amounted to approximately $96 million and $98 million in the three months ended September 30, 2013 and 2012, and $298 million and $294 million in the nine months ended September 30, 2013 and 2012, respectively.

Postemployment Plans

The Company sponsors U.S. postemployment plans that provide income continuation and health and welfare benefits to certain eligible U.S. employees on long-term disability.

The following table summarizes the components of net expense recognized in the Consolidated Statement of Income for the Company's U.S. postemployment plans.

	Three Months Ended September 30,				Nine Months Ended September 30,

*In millions of dollars*	2013		2012		2013		2012
Service related expense
Benefits earned during the year		6		5		19		17
Interest cost on benefit obligation		3		4		9		11
Amortization of unrecognized
Prior service cost		1		2		5		6
Net actuarial loss		4		3		10		9

Total service related expense		14		14		43		43

Non-service related expense		7		7		20		19

Total net expense		21		21		63		62