PENSION AND POSTRETIREMENT BENEFIT PLANS

The net periodic benefit cost/(credit) of defined benefit pension and postretirement benefit plans includes:



	Three Months Ended September 30,												Nine Months Ended September 30,
	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
Dollars in Millions	2014			2013			2014			2013			2014			2013			2014			2013
Service cost – benefits earned during the year	$	10		$	10		$	1		$	1		$	30		$	29		$	3		$	4
Interest cost on projected benefit obligation	76			76			3			3			231			225			10			10
Expected return on plan assets	(131		)	(128		)	(7		)	(7		)	(395		)	(391		)	(21		)	(20		)
Amortization of prior service credits	(1		)	(1		)	—			—			(3		)	(3		)	(1		)	(1		)
Amortization of net actuarial (gain)/loss	29			30			(2		)	—			85			105			(2		)	—
Curtailments and settlements	28			37			—			—			127			138			(3		)	—
Special termination benefits	—			—			—			—			13			—			—			—
Net periodic cost/(credit)	$	11		$	24		$	(5	)	$	(3	)	$	88		$	103		$	(14	)	$	(7	)

Pension settlement charges were recognized after determining that the annual lump sum payments will likely exceed the annual interest and service costs for certain pension plans, including the primary U.S. pension plan. The charges included the acceleration of a portion of unrecognized actuarial losses. The applicable pension benefit obligation and pension plan assets were remeasured during 2014 resulting in a decrease to other assets and a corresponding increase in accumulated other comprehensive loss of $978 million. The changes resulted from revised mortality rates and a lower weighted average discount rate assumed in remeasuring the pension benefit obligations (4.1% at September 30, 2014 and 4.6% at December 31, 2013) partially offset by higher actual return on plan assets than expected. Contributions to the pension plans are expected to approximate $120 million during 2014, of which $100 million were incurred in the nine months ended September 30, 2014.

The expense attributed to defined contribution plans in the U.S. was $45 million and $50 million for the three months ended September 30, 2014 and 2013, respectively, and $141 million and $140 million for the nine months ended September 30, 2014, and 2013, respectively.

On September 29, 2014, BMS and Fiduciary Counselors Inc., as an independent fiduciary of the Bristol-Myers Squibb Company Retirement Income Plan, entered into a definitive agreement to transfer certain U.S. pension assets to The Prudential Insurance Company of America (Prudential) to settle approximately $1.4 billion of pension obligations. Pursuant to the agreement, BMS will purchase a group annuity contract from Prudential, which will then irrevocably assume the obligation to make future annuity payments to certain BMS retirees. The transaction will not change the amount of the monthly pension benefit received by affected retirees and surviving beneficiaries or any rights to future payments that are currently offered by the plan. The transaction is expected to close during the fourth quarter of 2014 subject to certain closing conditions and result in a pre-tax settlement charge of approximately $600 million to $700 million subject to final valuations at the date of closing.