EMPLOYEE BENEFITS

6 Months Ended

Jun. 30, 2016

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

12. EMPLOYEE BENEFITS

We sponsor various defined benefit pension plans, post-retirement medical and life insurance plans for eligible employees and retirees in the U.S. and certain non-U.S. countries. Effective January 1, 2016, the U.S. defined benefit pension plans were frozen for current participants and closed to new hires. Accordingly, compensation-based benefits are no longer credited to the cash balance accounts of plan participants.

Beginning in 2016, interest cost for pension and postretirement benefits for our U.S. plans and largest non-U.S. plans is measured by applying the specific spot rates along the yield curve to the plans’ corresponding discounted cash flows that comprise the obligation (the Spot Rate Approach). This method provides a more precise measurement of interest cost by aligning the timing of the plans’ discounted cash flows to the corresponding spot rates on the yield curve.Previously, we measured interest cost utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligations. 

The following table presents the components of net periodic benefit cost with respect to pensions and other postretirement benefits:

	Pension						Postretirement
		U.S.		Non-U.S.				U.S.		Non-U.S.
(in millions)		Plans		Plans		Total		Plans		Plans		Total
Three Months Ended June 30, 2016
Components of net periodic benefit cost:
Service cost	$	5	$	7	$	12	$	-	$	1	$	1
Interest cost		45		5		50		2		1		3
Expected return on assets		(74)		(6)		(80)		-		-		-
Amortization of prior service credit		-		-		-		(3)		-		(3)
Amortization of net loss		6		2		8		-		-		-
Curtailment gain		-		(1)		(1)		-		-		-
Net periodic benefit (income) cost	$	(18)	$	7	$	(11)	$	(1)	$	2	$	1
Three Months Ended June 30, 2015
Components of net periodic benefit cost:
Service cost	$	51	$	10	$	61	$	1	$	1	$	2
Interest cost		55		6		61		2		-		2
Expected return on assets		(72)		(6)		(78)		-		-		-
Amortization of prior service credit		(8)		-		(8)		(2)		-		(2)
Amortization of net loss		33		2		35		-		-		-
Curtailment gain		-		(1)		(1)		-		-		-
Net periodic benefit cost	$	59	$	11	$	70	$	1	$	1	$	2
Six Months Ended June 30, 2016
Components of net periodic benefit cost:
Service cost	$	9	$	15	$	24	$	1	$	2	$	3
Interest cost		91		10		101		3		2		5
Expected return on assets		(147)		(13)		(160)		-		-		-
Amortization of prior service credit		-		-		-		(5)		-		(5)
Amortization of net loss		12		4		16		-		-		-
Curtailment gain		-		(3)		(3)		-		-		-
Net periodic benefit (income) cost	$	(35)	$	13	$	(22)	$	(1)	$	4	$	3
Six Months Ended June 30, 2015
Components of net periodic benefit cost:
Service cost	$	103	$	21	$	124	$	3	$	2	$	5
Interest cost		110		12		122		4		1		5
Expected return on assets		(144)		(12)		(156)		-		-		-
Amortization of prior service credit		(16)		(1)		(17)		(5)		-		(5)
Amortization of net loss		65		5		70		-		-		-
Curtailment gain		-		(1)		(1)		-		-		-
Net periodic benefit cost	$	118	$	24	$	142	$	2	$	3	$	5