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	SEPTEMBER 2018			SEPTEMBER 2017			SEPTEMBER 2018			SEPTEMBER 2017
Service cost	$	10		$	9		$	28		$	26
Interest cost	58			66			177			198
Expected return on plan assets	(100		)	(101		)	(300		)	(306		)
Amortization of actuarial loss	56			48			169			145
Amortization of prior service cost	1			1			3			3
Total net periodic benefit cost - pension	$	25		$	23		$	77		$	66



	OTHER POSTRETIREMENT BENEFITS
	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2018			SEPTEMBER 2017			SEPTEMBER 2018			SEPTEMBER 2017
Interest cost	$	2		$	2		$	5		$	6
Amortization of actuarial loss	2			2			6			6
Amortization of prior service credit	(2		)	(2		)	(6		)	(6		)
Total net periodic benefit cost - other postretirement benefits	$	2		$	2		$	5		$	6

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 U.S. 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.

ACTIONS TO REDUCE PENSION PLAN OBLIGATIONS

On August 23, 2018, we announced actions intended to reduce the liabilities of our U.S. qualified pension plan while maintaining the plan's current funded status. We offered certain U.S. terminated vested plan participants the opportunity to elect an immediate lump sum distribution of their pension benefits. Based on qualifying participant elections received by the company, we expect to make distributions from plan assets to those who elect to receive a lump sum in fourth quarter 2018. We also intend to transfer a portion of U.S. qualified pension plan liabilities to an insurance company through the purchase of a group annuity contract. This transaction would also be funded with the pension plan assets and is expected to close in 2019. We expect to record one-time noncash settlement charges for the lump sum offer and the annuity purchase upon the respective completion dates, with the amounts of each charge to be determined at that time.

To maintain the U.S. qualified pension plan's current funded status in connection with these transactions, we contributed $300 million to the plan during third quarter 2018. Refer to Note 18: Income Taxes for details on the tax effects of this transaction.

Additionally, Weyerhaeuser’s pension plan assets are in the process of being transitioned to an allocation that will more closely match the plan’s liability profile going forward.

EXPECTED FUNDING AND BENEFIT PAYMENTS

In 2018, we expect to:


•	be required to contribute approximately $24 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 expect any contributions to our U.S. qualified pension plan in 2018 in addition to the $300 million contribution referenced above.