Retirement Plans

9 Months Ended

Sep. 30, 2016

Retirement Plans [Abstract]

Retirement Plans

(14)  Retirement Plans: 

The following tables provide the components of net periodic benefit cost:

	Pension Benefits
	For the three months ended				For the nine months ended
	September 30,				September 30,
($ in millions)	2016		2015		2016		2015
Components of net periodic pension benefit cost
Service cost	$	16	$	14	$	63	$	41
Interest cost on projected benefit obligation		24		22		89		66
Expected return on plan assets		(30)		(32)		(122)		(96)
Amortization of unrecognized loss		9		9		30		22
Net periodic pension benefit cost	$	19	$	13	$	60	$	33

	Postretirement Benefits
	Other Than Pensions (OPEB)
	For the three months ended				For the nine months ended
	September 30,				September 30,
($ in millions)	2016		2015		2016		2015
Components of net periodic postretirement benefit cost
Service cost	$	6	$	5	$	14	$	14
Interest cost on projected benefit obligation		10		7		27		22
Amortization of prior service cost/(credit)		(2)		(1)		(7)		(3)
Amortization of unrecognized loss		-		1		1		6
Net periodic postretirement benefit cost	$	14	$	12	$	35	$	39

During the first nine months of 2016 and 2015, we capitalized $18 million and $15 million, respectively, of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities.

In connection with the completion of the Verizon Acquisition, certain employees were transferred to the Plan effective April 1, 2016. Our pension plan assets increased from $1,572 million at December 31, 2015 to $2,858 million at September 30, 2016, an increase of $1,286 million, or 82%. This increase was a result of cash transfers and accounts receivable from Verizon and the Verizon pension plan trusts of $1,127 million related to the Verizon Acquisition, positive investment returns of $235 million, net of investment management and administrative fees, and Frontier contributions of $25 million, partially offset by benefit payments of $101 million during the first nine months of 2016.

During the third quarter of 2016, Frontier contributed a real estate property with an aggregate fair value of $15million for the purpose of funding a portion of its contribution obligations to the Plan. We have entered into a long-term lease arrangement with the Plan. The property is managed on behalf of the Plan by an independent fiduciary, and the terms of the lease were negotiated with the fiduciary on an arm’s-length basis. 

We made total contributions to our pension plan during the nine months ended September 30, 2016 of $25 million, consisting of cash payments of $10 million and the contribution of real property with a fair value of $15million.  An additional cash contribution of $3 million was made on October 15, 2016, for total contributions of $28 million in 2016. Frontier estimates that there are no further contributions required for 2016.