PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The components of net periodic benefit cost are:



	PENSION
	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2018			JUNE 2017			JUNE 2018			JUNE 2017
Service cost	$	8		$	7		$	18		$	17
Interest cost	59			66			119			132
Expected return on plan assets	(100		)	(103		)	(200		)	(205		)
Amortization of actuarial loss	52			42			113			97
Amortization of prior service cost	1			1			2			2
Total net periodic benefit cost - pension	$	20		$	13		$	52		$	43



	OTHER POSTRETIREMENT BENEFITS
	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	JUNE 2018			JUNE 2017			JUNE 2018			JUNE 2017
Interest cost	$	1		$	2		$	3		$	4
Amortization of actuarial loss	2			2			4			4
Amortization of prior service credit	(2		)	(2		)	(4		)	(4		)
Total net periodic benefit cost - other postretirement benefits	$	1		$	2		$	3		$	4

For the periods presented, Service cost is included in "Cost of products sold," "Selling expenses," and "General and administrative expenses". The remaining components are included in "Non-operating pension and other postretirement benefit costs." Refer to the Consolidated Statement of Operations.

FAIR VALUE OF PENSION PLAN ASSETS AND OBLIGATIONS

We estimate the fair value of pension plan assets based upon the information available during the year end reporting process. In some cases, primarily private equity funds, the information available consists of net asset values as of an interim date, cash flows between the interim date and the end of the year and market events. We update the year end estimated fair value of pension plan assets to incorporate year end net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K. During second quarter 2018, we recorded an increase in the beginning of year fair value of the pension assets of $44 million, or less than 1 percent.

During second quarter 2018, we also updated our mortality assumption and census data used to estimate our projected benefit obligation for our US qualified pension plan. We recorded an adjustment to our projected benefit obligation, incorporating updated census data and applying new company-specific mortality data. As a result of these updates, the beginning of year pension projected benefit obligation decreased by $155 million, or approximately 2 percent. The net effect of these updates, including the update to the pension assets, was a $199 million improvement in funded status.

EXPECTED CONTRIBUTIONS AND BENEFIT PAYMENTS

In 2018 we expect to:


•	be required to contribute approximately $23 million for our Canadian registered plan;


•	be required to contribute or make benefit payments for our Canadian nonregistered plans of $2 million;


•	make benefit payments of $19 million for our U.S. nonqualified pension plans; and


•	make benefit payments of $19 million for our U.S. and Canadian other postretirement plans.

We do not anticipate being required to make a contribution to our U.S. qualified pension plans in 2018.