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Employee Benefit Plans
 9 Months Ended
Sep. 30, 2020
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Disclosure [Text Block] Employee Benefit Plans
Pension and Postretirement Plans. We sponsor both funded and unfunded domestic and foreign defined benefit pension and postretirement benefit (PRB) plans, and defined contribution plans.
On April 3, 2020, UTC completed the Separation Transactions, which included the transfer of certain defined benefit plans from UTC to Otis and Carrier. The plans transferred were primarily international plans with the majority of the UTC defined benefit liability remaining with Raytheon Technologies. Upon separation, the employees within Otis and Carrier were effectively terminated from Raytheon Technologies. The terminations of approximately 3,400 domestic pension plan participants triggered a mid-year remeasurement of the UTC domestic plans. The remeasurement, which was calculated using discount rates and asset values as of April 3, 2020, resulted in a $2.4 billion increase to our pension liability, primarily due to a decrease in the fair market value of the plans’ assets since December 31, 2019. Historical amounts have been restated for discontinued operations. All service cost previously associated with Otis and Carrier is included in discontinued operations. For non-service pension (income) expense and the pension liability, only the portion related to the defined benefit plans transferred to Otis and Carrier as part of the Separation Transactions was reclassified to discontinued operations.
Raytheon Company has both funded and unfunded domestic and foreign defined benefit pension and PRB plans. As of the merger date, the Raytheon Company plans were remeasured at fair value using accounting policies consistent with the UTC plans. The deferred pension and PRB plan losses included in Raytheon Company’s accumulated other comprehensive income (loss) as of the merger date were eliminated and are no longer subject to amortization in net periodic benefit (income) cost and postretirement benefit costs. Amounts prior to the merger date of April 3, 2020, do not include the Raytheon Company pension plan results.
Contributions to our plans were as follows:
 Quarter Ended September 30,Nine Months Ended September 30,
(dollars in millions)2020201920202019
US qualified and international defined benefit and PRB plans$22 $4 $64 $41 
Defined contribution plans(1)
228 117 668 369 
(1)     Increase in contributions to our defined contribution plans is primarily due to contributions related to the Raytheon Company plans.
Included in the contributions to employer sponsored defined contribution plans for the quarter and nine months ended September 30, 2020 is $24 million and $101 million, respectively, of additional contributions resulting from the 2019 amendment to the UTC domestic pension plans whereby plan participants ceased accrual of additional benefits for future service effective December 31, 2019 and began receiving additional employer contributions effective January 1, 2020 under the UTC domestic defined contribution plan.
Future pension and postretirement benefit obligations on the Condensed Consolidated Balance Sheet consisted of the following:
(dollars in millions)September 30, 2020December 31, 2019
Long-term pension liabilities$13,499 $1,770 
Long-term PRB liabilities1,059 696 
Other pension and PRB related items
130 21 
Total long-term pension and PRB liabilities(1)
$14,688 $2,487 
(1)    Increase in long-term pension and PRB liabilities is primarily due to liabilities acquired as part of the Raytheon Merger and the remeasurement of the UTC domestic defined benefit plans as a result of the Separation Transactions.
The following table illustrates the components of net periodic benefit (income) expense for our defined pension and PRB plans:
 
Pension Benefits
Quarter Ended September 30,
PRB
Quarter Ended September 30,
(dollars in millions)2020201920202019
Operating expense
Service cost
$149 $62 $2 $— 
Non-operating expense
Interest cost
465 300 10 7 
Expected return on plan assets
(827)(551)(4)— 
Amortization of prior service cost (credit)
13 4 (1)(10)
Recognized actuarial net loss (gain)
86 60 (3)(3)
Net settlement and curtailment loss (gain)8 (96)— — 
Non-service pension (income) expense(255)(283)2 (6)
Total net periodic benefit (income) expense$(106)$(221)$4 $(6)

 
Pension Benefits
Nine Months Ended September 30,
PRB
Nine Months Ended September 30,
(dollars in millions)2020201920202019
Operating expense
Service cost
$328 $208 $5 $2 
Non-operating expense
Interest cost
1,170 942 26 23 
Expected return on plan assets
(2,162)(1,687)(9)(1)
Amortization of prior service cost (credit)
39 13 (3)(32)
Recognized actuarial net loss (gain)
255 158 (9)(9)
Net settlement and curtailment loss (gain)35 (88)— — 
Non-service pension (income) expense
(663)(662)5 (19)
Total net periodic benefit (income) expense$(335)$(454)$10 $(17)
In the quarter ended September 30, 2019, we amended the UTC domestic defined benefit plans to cease accrual of additional benefits for future service and compensation for non-union participants effective December 31, 2019. Beginning January 1, 2020, these participants began receiving additional employer contributions under the UTC domestic defined contribution plan. We utilized the practical expedient and remeasured plan assets and pension benefit obligations for the affected pension plans as of the nearest month-end, August 31, 2019, resulting in a net actuarial loss of $425 million. This reflects a benefit obligation gain of $180 million resulting from the benefit plan change that was offset by remeasurement losses of $605 million. Additionally, as a result of the remeasurement, net periodic benefit income (excluding curtailment) decreased by approximately $10 million in the quarter ended September 30, 2019.
In the quarter ended September 30, 2019, we recorded a curtailment gain of $98 million in the Condensed Consolidated Statement of Operations due to the recognition of previously unrecognized prior service credits for the affected pension plans.
We have set aside assets in separate trusts, which we expect to be used to pay for certain nonqualified defined benefit and defined contribution plan obligations in excess of qualified plan limits. These assets are included in Other assets, current in our Condensed Consolidated Balance Sheet. The fair value of marketable securities held in trusts consisted of the following:
(dollars in millions)September 30, 2020December 31, 2019
Marketable securities held in trusts$847 $—