10. Retirement Plans

Defined Benefit Pension Plans

The defined benefit pension plans impacting the Veoneer financial results include the following:

Existing Veoneer Plans which are comprised of plans in Japan, Canada, and France, Transferred Veoneer Plans which are comprised of plans in Germany, India, Japan, and South Korea, and Autoliv Sponsored Plans which are comprised of plans in Sweden and the U.S.

The combination of the Existing Veoneer Plans, Transferred Veoneer Plans, and Autoliv Sponsored Plans has resulted in a total pension expense of $2 million and $3 million for the three and six months ended June 30, 2018, respectively. For the three and six months ended June 30, 2017 total pension expense was $2 million and $3 million, respectively.

Existing Veoneer Plans

The defined benefit pension plans for eligible participants in Japan, Canada, and France prior to the Spin-Off continue to provide pension retirement benefits to the Company’s employees subsequent to the Spin-Off transaction.

The Company’s net periodic benefit costs for the Existing Veoneer Plans for the three and six months ended June 30, 2017 and 2018 were as follows:

	Three Months Ended June 30					Six Months Ended June 30
	2018		2017			2018			2017
Service cost	$	1	$	1		$	2		$	2
Interest cost		1		1			1			1
Expected return on plan assets		-		(1	)		(1	)		(1	)
Net periodic benefit cost	$	2	$	1		$	2		$	2

The service cost and amortization of prior service cost components are reported among employee compensation costs in the Unaudited Condensed Consolidated Statements of Operations. The remaining components (interest cost, expected return on plan assets and amortization of actuarial loss) are reported as Other non-operating items, net in the Unaudited Condensed Consolidated Statements of Operations.

Transferred Veoneer Plans

Prior to the plan transfers to Veoneer legal entities on April 1, 2018, eligible Veoneer employees participated in the following Autoliv-sponsored plans:


Country		Name of Defined Benefit Pans
Germany		Direct Pension Promises Plan
India		Gratuity Plan
Japan		Retirement Allowances Plan
Japan		Defined Benefit Corporate Plan
South Korea		Severance Pay Plan (statutory plan)

On April 1, 2018, the assets, liabilities, and associated accumulated other comprehensive income (loss) of the pension plans in Germany, India, Japan, and South Korea related to active Veoneer employees were transferred to pension plans sponsored by various Veoneer legal entities. Benefit plan obligations of $6 million were recorded by Veoneer related to these plans in connection with the April 1, 2018 transfer. Plan assets in the transferred plans are immaterial. The amounts recorded for the transfer of the Veoneer plans were based on the assumptions incorporated into the plan measurements as of December 31, 2017; however, management determined that there were no material changes in assumptions from December 31, 2017 to April 1, 2018. The plans will be re-measured in connection with the December 31, 2018 actuarial valuation.

Changes in Benefit Obligations and Plans Assets

	As of
	June 30, 2018
Benefit obligation as of April 1, 2018	$	-
Service cost		-
Interest cost		-
Benefits paid		-
Obligation transferred in		6
Benefit obligation at end of the period	$	6
Fair value of plan assets as of April 1, 2018
Company contributions		-
Benefits paid		-
Plan assets transferred in		-
Fair value of plan assets at end of the period	$	-
Funded status recognized in the balance sheet	$	(6	)

Components of Net Periodic Benefit Cost Associated with the Defined Benefit Retirement Plan

The allocated net periodic benefit costs related to transferred plans from Autoliv to Veoneer were less than $1 million for the three months ended March 31, 2018. The Company’s allocated net periodic benefit costs for these defined benefit plans were less than $1 million for the three and six months ended June 30, 2017. Subsequent to the plan transfer on April 1, 2018, the components of net periodic benefit cost are less than $1 million for the three months ended June 30, 2018.

Components of Accumulated other Comprehensive Income Before Tax

	As of
	June 30, 2018
Net actuarial loss (gain)	$	(1	)
Prior service cost (credit)		-
Total accumulated other comprehensive income recognized in the balance sheet	$	(1	)

The service cost and amortization of prior service cost components are reported among employee compensation costs in the Unaudited Condensed Consolidated Statements of Operations. The remaining components (interest cost, expected return on plan assets and amortization of actuarial loss) are reported as other non-operating items, net in the Unaudited Condensed Consolidated Statements of Operations.

Autoliv Sponsored Plans

Prior to certain legal decisions or plan amendments, Veoneer employees in Sweden and in the U.S. participated in a multiemployer plan with Autoliv. The legal name of the plans are as follow:


Country		Name of Defined Benefit Pans
Sweden		ITP plan
U.S.		Autoliv ASP, Inc. Pension Plan
		Autoliv ASP, Inc. Excess Pension Plan
		Autoliv ASP, Inc. Supplemental Pension Plan

On April 1, 2018, it was determined that the assets, liabilities, and associated accumulated other comprehensive income (loss) of the Sweden plan for all Veoneer employees included in the Sweden plan will remain with Autoliv and benefits will be paid out of that plan in the future upon retirement. The allocation to capture the Company’s specific defined benefit plans expense and contributions prior to the plans amendment for the three months ended March 31, 2018 were less than $1 million and were less than $1 million for the three and six months ended June 30, 2017.

On June 29, 2018, it was also determined that the assets, liabilities, and associated accumulated other comprehensive income (loss) of the U.S. plan for all Veoneer employees included in the U.S. plan will remain with Autoliv and benefits will be paid out of that plan in the future upon retirement. The Veoneer employees were considered to be participating in the Autoliv sponsored plan through June 29, 2018 at which date the plan was amended to freeze the accrual of benefits for any Veoneer employees. The U.S. plan resulted in less than $1 million of defined benefit plan expense and contributions made allocated to Veoneer for the three and six months ended June 30, 2018 and less than $1 million of defined benefit plan expense and contributions made allocated to Veoneer for the three and six months ended June 30, 2017.

Prior to the respective dates above for the Sweden and the U.S. plans, the Veoneer employees were considered to be participating in the Autoliv sponsored plans. Effective April 1, 2018 for the Sweden plan and June 29, 2018 for the U.S. plan the respective parties determined that Veoneer would not have additional expense or liability related to each of the existing plans.

Postretirement Benefits other than Pension

In addition to the existing benefit obligation from the Canadian medical plan as disclosed in the Audited Combined Financial Statements for the year ended December 31, 2017, the Company also assumed less than $1 million in benefit obligations transferred from Autoliv’s U.S. medical plan as of June 29, 2018 in connection with the Spin-Off. The net periodic benefit cost and impact on accumulated other comprehensive income related to the plans were immaterial.