PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

9 Months Ended

Sep. 30, 2020

Pension And Other Postretirement Benefit Expense [Abstract]

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

NOTE 7: 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 2020			SEPTEMBER 2019			SEPTEMBER 2020			SEPTEMBER 2019
Service cost	$	9		$	8		$	27		$	24
Interest cost		35			39			104			122
Expected return on plan assets		(59	)		(54	)		(175	)		(170	)
Amortization of actuarial loss		31			27			92			85
Amortization of prior service cost		1			1			3			3
Settlement charge		—			—			—			449
Total net periodic benefit cost - pension	$	17		$	21		$	51		$	513

	OTHER POSTRETIREMENT BENEFITS
	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2020			SEPTEMBER 2019			SEPTEMBER 2020			SEPTEMBER 2019
Interest cost	$	1		$	2		$	3		$	5
Amortization of actuarial loss		1			1			2			5
Amortization of prior service credit		(1	)		(1	)		(1	)		(4	)
Total net periodic benefit cost - other postretirement benefits	$	1		$	2		$	4		$	6

For the periods presented, service cost is included in “Costs of sales,” “Selling expenses,” and “General and administrative expenses” with the remaining components included in “Non-operating pension and other postretirement benefit costs” in the Consolidated Statement of Operations.

Actions to Reduce Pension Plan Obligations

As a part of our continued efforts to reduce pension plan obligations, we transferred approximately $1.5 billion of U.S. qualified pension plan assets and liabilities to an insurance company through the purchase of a group annuity contract in January 2019. In connection with this transaction, we recorded a preliminary noncash pretax settlement charge of $455 million during first quarter 2019, accelerating the recognition of previously unrecognized losses in “Accumulated other comprehensive loss”, that would have been recognized in subsequent periods. In second quarter 2019, we finalized the prior year-end fair value of pension plan assets and obligations, which reduced the settlement charge by $6 million for a final settlement charge of $449 million.

Fair Value of Pension Plan Assets and Obligations

In our year-end reporting process, we estimate the fair value of pension plan assets based upon the information available at that time. For certain assets, 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 in the second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K.

During second quarter 2020, we recorded an increase to the beginning of the year fair value of the pension assets of $25 million, or less than 1 percent. We also updated our census data that is used to estimate our beginning of the year projected benefit obligation for our pension plans, which resulted in a projected benefit obligation increase of $11 million, or less than 1 percent. The net effect of these updates was a $14 million improvement in funded status as of December 31, 2019. This change in funded status was reflected on our second quarter 2020 Consolidated Balance Sheet.