9. Retirement-Related Benefits: The company offers defined benefit pension plans, defined contribution pension plans, as well as nonpension postretirement plans primarily consisting of retiree medical benefits. The following table provides the pre-tax cost for all retirement-related plans.

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended September 30:	2018		2017		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	705	$	592	19.0	%
Nonpension postretirement plans — cost	49		61		(19.5	)

Total	$	754	$	653	15.5	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the nine months ended September 30:	2018		2017		Change
Retirement-related plans — cost
Defined benefit and contribution pension plans — cost	$	2,152	$	1,915	12.3	%
Nonpension postretirement plans — cost	149		182		(18.3	)

Total	$	2,300	$	2,097	9.7	%

The following table provides the components of the cost/(income) for the company’s pension plans.

Cost/(Income) of Pension Plans

(Dollars in millions)	U.S. Plans						Non-U.S. Plans
For the three months ended September 30:	2018			2017			2018			2017
Service cost	$	—		$	—		$	104		$	106
Interest cost (1)	430			478			204			215
Expected return on plan assets (1)	(675		)	(753		)	(330		)	(340		)
Amortization of prior service costs/(credits) (1)	4			4			(20		)	(25		)
Recognized actuarial losses (1)	381			334			346			387
Curtailments and settlements (1)	—			—			2			2
Multi-employer plans	—			—			9			11
Other costs (1)	—			—			5			(85		)

Total net periodic pension (income)/cost of defined benefit plans	$	140		$	63		$	318		$	271
Cost of defined contribution plans	152			156			95			102

Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings	$	292		$	219		$	413		$	373

(1)

These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings.

(Dollars in millions)	U.S. Plans						Non-U.S. Plans
For the nine months ended September 30:	2018			2017			2018			2017
Service cost	$	—		$	—		$	309		$	308
Interest cost (1)	1,289			1,435			630			622
Expected return on plan assets (1)	(2,026		)	(2,260		)	(1,017		)	(985		)
Amortization of prior service costs/(credits) (1)	12			12			(62		)	(73		)
Recognized actuarial losses (1)	1,144			1,003			1,057			1,120
Curtailments and settlements (1)	—			—			7			3
Multi-employer plans	—			—			29			30
Other costs (1)	—			—			16			(76		)

Total net periodic pension (income)/cost of defined benefit plans	$	419		$	190		$	969		$	950
Cost of defined contribution plans	457			475			306			301

Total defined benefit and contribution pension plans cost recognized in the Consolidated Statement of Earnings	$	876		$	665		$	1,276		$	1,250

(1)

These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings.

On October 12, 2012, the High Court in London issued a ruling against IBM United Kingdom Limited and IBM United Kingdom Holdings Limited, both wholly-owned subsidiaries of the company, in litigation involving one of IBM UK’s defined benefit plans. The company recorded a pre-tax charge in SG&A expense of $162 million in the fourth quarter of 2012. The final Court of Appeal ruling was received in August 2017, and as a result the company adjusted its obligation under the plan and recorded a gain of $91 million in SG&A expense in the Consolidated Statement of Earnings for the three and nine months ended September 30, 2017. This gain is reflected in “Non-US Plans - Other costs” in the tables above.

In 2018, the company expects to contribute approximately $400 million to its non-U.S. defined benefit and multi-employer plans, the largest of which will be contributed to the defined benefit pension plans in the UK, Japan and Spain. This amount generally represents the legally mandated minimum contribution. Total net contributions to the non-U.S. plans in the first nine months of 2018 were $275 million, of which $117 million was in cash and $157 million in U.S. Treasury securities. Total contributions to the non-U.S. plans in the first nine months of 2017 were $301 million, of which $124 million was in cash and $176 million in U.S. Treasury securities. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows.

The following table provides the components of the cost for the company’s nonpension postretirement plans.

Cost of Nonpension Postretirement Plans

(Dollars in millions)	U.S. Plan						Non-U.S. Plans
For the three months ended September 30:	2018			2017			2018			2017
Service cost	$	3		$	4		$	1		$	1
Interest cost (1)	33			38			11			14
Expected return on plan assets (1)	—			—			(1		)	(2		)
Amortization of prior service costs/(credits) (1)	(2		)	(2		)	0			0
Recognized actuarial losses (1)	2			5			1			2
Curtailments and settlements (1)	—			—			0			0

Total nonpension postretirement plans cost recognized in Consolidated Statement of Earnings	$	37		$	45		$	12		$	16

(1)

These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings.

(Dollars in millions)	U.S. Plan						Non-U.S. Plans
For the nine months ended September 30:	2018			2017			2018			2017
Service cost	$	10		$	11		$	4		$	4
Interest cost (1)	99			115			34			43
Expected return on plan assets (1)	—			—			(4		)	(6		)
Amortization of prior service costs/(credits) (1)	(6		)	(6		)	0			0
Recognized actuarial losses (1)	7			15			4			5
Curtailments and settlements (1)	—			—			0			0

Total nonpension postretirement plans cost recognized in Consolidated Statement of Earnings	$	111		$	135		$	38		$	47

(1)

These components of net periodic pension cost are included in other (income) and expense in the Consolidated Statement of Earnings.

The company contributed $275 million in U.S. Treasury securities to the U.S. nonpension postretirement benefit plan during the nine months ended September 30, 2018, and $259 million in U.S. Treasury securities during the nine months ended September 30, 2017. The contribution of U.S. Treasury securities is considered a non-cash transaction in the Consolidated Statement of Cash Flows.