Retirement Benefits

6 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

RETIREMENT BENEFITS

RETIREMENT BENEFITS

We provide pension benefits and OPEB, such as health care and life insurance, to employees in many of our operations around the world.

The pre-tax expense for our defined benefit pension and OPEB plans for the periods ended June 30 was as follows (in millions):

	Second Quarter
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Worldwide OPEB
	2013			2012			2013			2012			2013			2012
Service cost	$	151		$	130		$	119		$	93		$	16		$	17
Interest cost	477			552			280			298			64			72
Expected return on assets	(724		)	(718		)	(341		)	(335		)	—			—
Amortization of
Prior service costs/(credits)	44			55			16			18			(71		)	(136		)
(Gains)/Losses	195			106			170			103			40			32
Separation programs/other	3			(2		)	142			11			—			—
(Gains)/Losses from curtailments and settlements	294			—			—			—			—			—
Net expense/(income)	$	440		$	123		$	386		$	188		$	49		$	(15	)

	First Half
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Worldwide OPEB
	2013			2012			2013			2012			2013			2012
Service cost	$	303		$	260		$	241		$	186		$	32		$	34
Interest cost	955			1,104			567			596			129			144
Expected return on assets	(1,448		)	(1,436		)	(690		)	(669		)	—			—
Amortization of
Prior service costs/(credits)	87			110			33			36			(142		)	(272		)
(Gains)/Losses	390			212			343			206			80			64
Separation programs/other	4			5			151			45			—			1
(Gains)/Losses from curtailments and settlements	294			—			—			—			—			(10		)
Net expense/(income)	$	585		$	255		$	645		$	400		$	99		$	(39	)

U.S. Salaried Retiree Lump-Sum Program

In April 2012, we announced a program to offer voluntary lump-sum pension payout options to eligible salaried U.S. retirees and former salaried employees that, if accepted, would settle our obligation to them. The program provides participants with a one-time choice of electing to receive a lump-sum settlement of their remaining pension benefit. In 2012, as part of this voluntary lump-sum program, the Company settled $1.2 billion of its pension obligations for U.S. salaried retirees and recorded a $250 million settlement loss.

As the program continues in 2013, the Company settled an additional $1.5 billion of its U.S. salaried retiree pension obligations in the second quarter and paid an equal amount from plan assets to those participants accepting the offer. As a result of this settlement, the U.S. salaried pension plan was remeasured at the end of the second quarter. As a result of this remeasurement, which reflected an increase in the discount rate for our U.S. salaried pension plan of 80 basis points from the end of last year, the weighted average discount rate used to determine the benefit obligation for all U.S. plans at June 30, 2013 was 4.15%, and the weighted average expected long-term rate of return on assets was 7.15%.

A settlement loss of $294 million has been recorded in Automotive cost of sales and Selling, administrative, and other expenses and is shown in the table above. The settlement loss reflects the accelerated recognition of unamortized losses in the salaried plan proportionate to the obligation that was settled.

NOTE 10.  RETIREMENT BENEFITS (Continued)

Europe Business Restructuring - Pension Impacts

In October 2012, we announced a plan to restructure our European manufacturing operations as discussed in

Note 16. In the second quarter of 2013, we recognized pension-related employee separation costs of $132 million (of an estimated total pension-related cost of $200 million), which are recorded in Automotive cost of sales and Selling, administrative, and other expenses and are included in the table above.

Pension Plan Contributions

We expect to contribute about $5 billion to our worldwide funded pension plans in 2013 (including discretionary contributions of about $3.4 billion, largely to our U.S. plans). In the first half of 2013, we contributed $2.8 billion to our worldwide funded pension plans (including $2 billion in discretionary contributions to our U.S. plans), and made about $200 million of benefit payments to participants in unfunded plans. We expect to contribute from Automotive cash and cash equivalents an additional $2.2 billion to our worldwide funded plans in 2013 (including discretionary contributions of about $1.4 billion, largely to our U.S. plans), and to make about $200 million in additional benefit payments to participants in unfunded plans, for a total of about $5.4 billion this year.

Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. pension plans in 2013.