Retirement-Related Benefits

9 Months Ended

Sep. 30, 2021

Retirement-Related Benefits

Retirement-Related Benefits

17. 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 tables provide the pre-tax cost for all retirement-related plans.

					Yr. to Yr.
(Dollars in millions)					Percent
For the three months ended September 30:	2021		2020		Change
Retirement-related plans — cost:
Defined benefit and contribution pension plans — cost	$	647	$	610	6.0	%
Nonpension postretirement plans — cost		45		50	(10.5)
Total	$	692	$	660	4.8	%

					Yr. to Yr.
(Dollars in millions)					Percent
For the nine months ended September 30:	2021		2020		Change
Retirement-related plans — cost:
Defined benefit and contribution pension plans — cost	$	1,972	$	1,789	10.2	%
Nonpension postretirement plans — cost		134		151	(11.8)
Total	$	2,106	$	1,941	8.5	%

The following tables provide 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:	2021		2020		2021		2020
Service cost	$	—	$	—	$	94	$	99
Interest cost (1)		277		375		109		142
Expected return on plan assets (1)		(451)		(542)		(286)		(323)
Amortization of prior service costs/(credits) (1)		4		4		(2)		(5)
Recognized actuarial losses (1)		249		207		365		360
Curtailments and settlements (1)		—		—		13		21
Multi-employer plans		—		—		3		7
Other costs/(credits) (1)		—		—		7		6
Total net periodic pension (income)/cost of defined benefit plans	$	80	$	44	$	303	$	307
Cost of defined contribution plans		152		148		112		111
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	232	$	192	$	415	$	418

(Dollars in millions)	U.S. Plans				Non-U.S. Plans
For the nine months ended September 30:	2021		2020		2021		2020
Service cost	$	—	$	—	$	281	$	289
Interest cost (1)		832		1,126		332		408
Expected return on plan assets (1)		(1,352)		(1,627)		(867)		(943)
Amortization of prior service costs/(credits) (1)		12		12		(8)		(14)
Recognized actuarial losses (1)		747		622		1,110		1,041
Curtailments and settlements (1)		—		—		46		42
Multi-employer plans		—		—		17		22
Other costs/(credits) (1)		—		—		21		20
Total net periodic pension (income)/cost of defined benefit plans	$	239	$	133	$	933	$	865
Cost of defined contribution plans		455		457		345		334
Total defined benefit and contribution pension plans cost recognized in the Consolidated Income Statement	$	694	$	590	$	1,278	$	1,200

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

The following tables provide 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:	2021		2020		2021		2020
Service cost	$	2	$	2	$	1	$	1
Interest cost (1)		16		26		8		8
Expected return on plan assets (1)		—		—		(1)		(1)
Amortization of prior service costs/(credits) (1)		1		1		0		0
Recognized actuarial losses (1)		13		7		4		5
Curtailments and settlements (1)		—		—		—		—
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	32	$	36	$	13	$	14

(Dollars in millions)	U.S. Plan				Non-U.S. Plans
For the nine months ended September 30:	2021		2020		2021		2020
Service cost	$	5	$	7	$	4	$	4
Interest cost (1)		49		77		25		26
Expected return on plan assets (1)		—		—		(2)		(3)
Amortization of prior service costs/(credits) (1)		3		3		0		0
Recognized actuarial losses (1)		39		22		12		16
Curtailments and settlements (1)		—		—		0		0
Total nonpension postretirement plans cost recognized in the Consolidated Income Statement	$	96	$	109	$	38	$	43

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

The company does not anticipate any significant changes to the expected plan contributions in 2021 from the amounts disclosed in the 2020 Annual Report.

The table below includes contributions to the following plans:

(Dollars in millions)	Plan Contributions
For the nine months ended September 30:		2021	2020
U.S. and non-U.S. nonpension postretirement benefit plans	$	269	$	265
Non-U.S. DB and multi-employer plans *		48		127
Total plan contributions	$	317	$	392

* Amounts reported net of refunds.

During the nine months ended September 30, 2021 and 2020, the company contributed $307 million and $315 million of U.S. Treasury Securities, respectively, to the non-U.S. DB plans and U.S. nonpension postretirement benefit plan. Additionally, during the nine months ended September 30, 2021 and 2020, the company contributed $311 million and $160 million in U.S. Treasury securities, respectively, to the Active Medical Trust. Contributions made with U.S. Treasury securities are considered a non-cash transaction.