5. Employee Postretirement Benefits

TEC is a participant in the comprehensive retirement plans of TECO Energy. The following table presents detail related to TECO Energy’s periodic benefit cost for pension and other postretirement benefits. Amounts disclosed for TECO Energy’s pension benefits include the amounts related to its qualified pension plan and non-qualified, non-contributory SERP and Restoration Plan.

TECO Energy Benefit Cost
(millions)	Pension Benefits								Other Postretirement Benefits
Three months ended June 30,	2018				2017				2018			2017
Components of net periodic benefit cost
Service cost	$	6			$	5			$	0		$	0
Interest cost		7				9				2			2
Expected return on assets		(12	)			(12	)			0			0
Amortization of:
Prior service (benefit) cost		0				0				1			1
Actuarial (gain) loss		4				4				(1	)		(1	)
Settlement cost		2		⁽²⁾		0				0			0
Net periodic benefit cost	$	7			$	6			$	2		$	2
Six months ended June 30,
Components of net periodic benefit cost
Service cost	$	11			$	10			$	1		$	1
Interest cost		14				16				4			4
Expected return on assets		(24	)			(24	)			0			0
Amortization of:
Prior service (benefit) cost		0				0				0			0
Actuarial (gain) loss		9				8				(1	)		(1	)
Settlement cost		2		⁽²⁾		7		⁽¹⁾		0			0
Net periodic benefit cost	$	12			$	17			$	4		$	4

(1)

Represents TECO Energy’s SERP settlement charge as a result of retirements that occurred subsequent to the Merger with Emera. The charge did not impact TEC’s financial statements.

(2)

Represents TECO Energy’s SERP and Restoration Plan settlement charges as a result of the retirements of certain executives.

TEC’s portion of the net periodic benefit cost for the three months ended June 30, 2018 and 2017, respectively, was $6 million and $4 million for pension benefits, and $2 million and $2 million for other postretirement benefits. TEC’s portion of the net periodic benefit cost for the six months ended June 30, 2018 and 2017, respectively, was $9 million and $7 million for pension benefits, and $4 million and $3 million for other postretirement benefits

TECO Energy assumed a long-term EROA of 6.85% and a discount rate of 3.63% for pension benefits under its qualified pension plan for 2018. For TECO Energy’s other postretirement benefits, TECO Energy used a discount rate of 3.70% for 2018.

TECO Energy made contributions of $10 million and $25 million to its qualified pension plan in the six months ended June 30, 2018 and 2017, respectively. TEC’s portion of these contributions was $8 million and $20 million, respectively. TECO Energy and TEC do not expect to make additional contributions to the pension plan for the remainder of 2018.

Included in the benefit cost discussed above, for the three and six months ended June 30, 2018, TEC reclassified $4 million and $8 million, respectively, of unamortized prior service benefits and costs and actuarial gains and losses from regulatory assets to net income, compared with $3 million and $5 million for the three and six months ended June 30, 2017, respectively.