Retirement-Related Benefits

9 Months Ended

Sep. 30, 2021

Retirement-Related Benefits

Retirement-Related Benefits

12. Retirement-Related Benefits:

The following tables present the components of net periodic benefit cost for the retirement-related benefit plans recognized in the Combined Income Statement, excluding defined contribution plans.

	Defined Benefit				Nonpension Postretirement
(Dollars in millions)	Pension Plans				Benefit Plans
For the three months ended September 30:	2021		2020		2021		2020
Service cost	$	20	$	26	$	1	$	1
Interest cost *		2		2		—		—
Expected return on plan assets *		(7)		(6)		—		—
Recognized actuarial losses (gains) *		12		9		—		—
Multi-employer plans/other costs **		1		4		—		—
Net periodic benefit cost	$	27	$	35	$	1	$	1

	Defined Benefit				Nonpension Postretirement
(Dollars in millions)	Pension Plans				Benefit Plans
For the nine months ended September 30:	2021		2020		2021		2020
Service cost	$	65	$	79	$	2	$	2
Interest cost *		5		7		1		1
Expected return on plan assets *		(18)		(18)		(1)		(1)
Recognized actuarial losses (gains) *		32		27		—		—
Multi-employer plans/other costs **		6		10		—		—
Net periodic benefit cost	$	90	$	105	$	2	$	2

*These components of net periodic benefit cost are included in other (income) and expense in the Combined Income Statement.

** Multi-employer plan costs represent required contributions for the period to multi-employer plans, which are plans sponsored by third parties. The Company recognizes expense in connection with these plans as contributions are funded.

During the nine months ended September 30, 2021 and 2020, the Company contributed $7 million and $3 million, respectively, to the non-U.S. defined benefit pension plans and nonpension postretirement benefit plans. The Company expects additional contributions paid to these plans in the remainder of the current fiscal year to be $2 million.

The Company’s defined contribution plan expense for the three months ended September 30, 2021 and 2020 was $39 million and $49 million, respectively and for the nine months ended September 30, 2021 and 2020 was $129 million and $144 million, respectively.

In connection with establishment of certain Kyndryl legal entities, the Company was required to assume pension assets and liabilities, along with the associated deferred costs, in accumulated other comprehensive income (loss). As a result, the noncurrent liability for retirement and nonpension postretirement benefit obligations increased from $516 million at June 30, 2021 to $995 million at September 30, 2021. In addition, the impact to accumulated other comprehensive income (loss) was a loss of $338 million, net of tax benefit of $128 million.