PENSION AND POSTRETIREMENT PLANS

6 Months Ended

Jun. 30, 2017

PENSION AND POSTRETIREMENT PLANS

PENSION AND POSTRETIREMENT PLANS

13. PENSION AND POSTRETIREMENT PLANS

The Company has a non-contributory qualified defined benefit pension plan covering the majority of its U.S. employees. The Company also has U.S. non-contributory non-qualified defined benefit plans, which provide for benefits to employees in excess of limits permitted under its U.S. pension plans. Various international subsidiaries also have defined benefit pension plans. The Company provides postretirement health care benefits to certain U.S. employees and retirees.

The components of net periodic pension and postretirement health care benefit costs for the second quarter ended June 30 are as follows:

	U.S.				International				U.S. Postretirement
	Pension				Pension				Health Care
(millions)	2017		2016		2017		2016		2017		2016
Service cost		$ 17.5		$ 16.8		$ 7.6		$ 7.0		$ 0.7		$ 0.8
Interest cost on benefit obligation		20.9		20.4		6.9		8.1		1.5		2.0
Expected return on plan assets		(37.4)		(35.9)		(13.7)		(13.5)		(0.1)		(0.2)
Recognition of net actuarial (gain) loss		7.2		7.7		4.5		3.6		(0.6)		(0.4)
Amortization of prior service
cost (benefit)		(1.7)		(1.7)		(0.2)		(0.2)		(4.2)		(0.1)
Total expense		$ 6.5		$ 7.3		$ 5.1		$ 5.0		$ (2.7)		$ 2.1

The components of net periodic pension and postretirement health care benefit costs for the six months ended June 30 are as follows:

	U.S.				International				U.S. Postretirement
	Pension				Pension				Health Care
(millions)	2017		2016		2017		2016		2017		2016
Service cost		$ 35.1		$ 33.5		$ 15.1		$ 13.9		$ 1.3		$ 1.5
Interest cost on benefit obligation		41.7		40.8		13.8		16.2		2.9		4.1
Expected return on plan assets		(74.9)		(71.8)		(27.4)		(27.0)		(0.3)		(0.4)
Recognition of net actuarial (gain) loss		14.3		15.4		8.9		7.2		(1.2)		(0.8)
Amortization of prior service
cost (benefit)		(3.4)		(3.5)		(0.3)		(0.4)		(8.3)		(0.1)
Total expense		$ 12.8		$ 14.4		$ 10.1		$ 9.9		$ (5.6)		$ 4.3

As of June 30, 2017, the Company is in compliance with all funding requirements of its U.S. pension and postretirement health care plans. During the first six months of 2017, the Company made payments of $4 million to its U.S. non-contributory non-qualified defined benefit plans and estimates it will make additional payments of approximately $3 million to such plans during the remainder of 2017.

The Company contributed $25 million to its international pension benefit plans during the first six months of 2017. The Company estimates it will contribute approximately an additional $17 million to such plans during the remainder of 2017.

During the first six months of 2017, the Company made payments of $8 million to its U.S. postretirement health care benefit plans and estimates it will make additional payments of approximately $8 million to such plans during the remainder of 2017.

The Company’s U.S. postretirement health care costs decreased in 2017 relative to the costs incurred in the comparable period of the prior year as a result of moving the U.S. postretirement healthcare plans to a Retiree Exchange approach for post-65 retiree medical coverage beginning in 2018 and the merger of Nalco U.S. postretirement health care plan with the Ecolab U.S. postretirement plan.