RETIREMENT PLANS

We provide defined-contribution benefits to eligible employees, as well as some remaining defined-benefit pension and other post-retirement benefits.

Net periodic defined-benefit pension and other post-retirement benefit cost for the three- and six-month periods ended July 2, 2017, and July 3, 2016, consisted of the following:



	Pension Benefits						Other Post-retirement Benefits
Three Months Ended	July 2, 2017			July 3, 2016			July 2, 2017			July 3, 2016
Service cost	$	42		$	44		$	3		$	2
Interest cost	113			114			9			9
Expected return on plan assets	(170		)	(178		)	(9		)	(8		)
Recognized net actuarial loss (gain)	86			84			(1		)	(1		)
Amortization of prior service credit	(16		)	(17		)	(1		)	(1		)
Net periodic benefit cost	$	55		$	47		$	1		$	1
Six Months Ended
Service cost	$	84		$	88		$	6		$	5
Interest cost	226			228			17			17
Expected return on plan assets	(339		)	(356		)	(17		)	(16		)
Recognized net actuarial loss (gain)	172			168			(2		)	(2		)
Amortization of prior service credit	(33		)	(34		)	(2		)	(3		)
Net periodic benefit cost	$	110		$	94		$	2		$	1

In 2017, we decreased the expected long-term rate of return on assets in our primary U.S. government and commercial pension plans by 75 basis points following an assessment of the historical and expected long-term returns of our various asset classes.

Our contractual arrangements with the U.S. government provide for the recovery of contributions to our pension and other post-retirement benefit plans covering employees working in our defense business groups. For non-funded plans, our government contracts allow us to recover claims paid. Following payment, these recoverable amounts are allocated to contracts and billed to the customer in accordance with the Cost Accounting Standards (CAS) and specific contractual terms. For some of these plans, the cumulative pension and other post-retirement benefit cost exceeds the amount currently allocable to contracts. To the extent recovery of the cost is considered probable based on our backlog and probable follow-on contracts, we defer the excess in other contract costs in inventory on the Consolidated Balance Sheet until the cost is allocable to contracts. See Note H for discussion of our other contract costs. For other plans, the amount allocated to contracts and included in revenue has exceeded the plans’ cumulative benefit cost. We have deferred recognition of these excess earnings, classifying these deferrals against the plan assets on the Consolidated Balance Sheet.