P. Pension and Other Postretirement Benefits – The components of net periodic benefit cost were as follows:


	Third quarter ended September 30,						Nine months ended September 30,
Pension benefits	2016			2015			2016			2015
Service cost	$	43		$	44		$	124		$	132
Interest cost		114			144			358			433
Expected return on plan assets		(187	)		(189	)		(558	)		(566	)
Recognized net actuarial loss		104			117			308			352
Amortization of prior service cost		4			4			12			12
Settlements*		13			13			15			14
Curtailments*		—			9			—			9
Special termination benefits*		—			—			1			12

Net periodic benefit cost	$	91		$	142		$	260		$	398

*	Except for Settlements of $2 during the nine months ended September 30, 2016 and $2 in both the third quarter and nine months ended September 30, 2015, these amounts were recorded in Restructuring and other charges on the accompanying Statement of Consolidated Operations (see Note D).


	Third quarter ended September 30,						Nine months ended September 30,
Other postretirement benefits	2016			2015			2016			2015
Service cost	$	3		$	4		$	10		$	11
Interest cost		16			23			53			69
Recognized net actuarial loss		8			4			19			13
Amortization of prior service benefit		(6	)		(9	)		(19	)		(28	)
Curtailments*		—			(5	)		—			(6	)
Special termination benefits*		—			—			—			1

Net periodic benefit cost	$	21		$	17		$	63		$	60

*	These amounts were recorded in Restructuring and other charges on the accompanying Statement of Consolidated Operations (see Note D).

In conjunction with the annual measurement of the funded status of Arconic’s pension and other postretirement benefit plans at December 31, 2015, management elected to change the manner in which the interest cost component of net periodic benefit cost is determined in 2016 and beyond. Previously, the interest cost component was determined by multiplying the single equivalent rate and the aggregate discounted cash flows of the plans’ projected benefit obligations. Under the new methodology, the interest cost component is determined by aggregating the product of the discounted cash flows of the plans’ projected benefit obligations for each year and an individual spot rate (referred to as the “spot rate” approach). In the 2016 third quarter and nine-month period, this change resulted in a lower interest cost component of net periodic benefit cost under the new methodology compared to the previous methodology of $22 and $70, respectively, for pension plans and $4 and $12, respectively, for other postretirement benefit plans. Management believes this new methodology, which represents a change in an accounting estimate, is a better measure of the interest cost as each year’s cash flows are specifically linked to the interest rates of bond payments in the same respective year.

Effective August 1, 2016, certain U.S. pension and postretirement benefit plans were separated, requiring a remeasurement as of this date. Additionally, one pension plan was required to be remeasured as a result of settlement accounting. Together, these remeasurements resulted in an increase to Arconic’s pension liability of $845 and the plans’ unrecognized net actuarial loss (included in Accumulated other comprehensive loss) of $551 (after-tax). The plan remeasurements together also resulted in a $5 decrease to third quarter 2016 net periodic benefit cost.

During the third quarter of 2016, the Pension Benefit Guaranty Corporation approved management’s plan to separate the Arconic Inc. pension plans between Arconic Inc. and Alcoa Corporation. The agreement stipulates that Arconic will make cash contributions over a period of 30 months to its two largest pension funds. Payments are expected to be made in three increments of no less than $50 each ($150 total) over this 30-month period, with the first payment due no later than six months after the separation date of November 1, 2016.