NOTE 9. Pension and Postretirement Benefit Plans

Net periodic benefit cost is recorded in cost of sales; selling, general and administrative expenses; and research, development and related expenses. Components of net periodic benefit cost and other supplemental information for the three and nine months ended September 30, 2017 and 2016 follow:

Benefit Plan Information


	Three months ended September 30,
	Qualified and Non-qualified
	Pension Benefits								Postretirement
	United States				International				Benefits
(Millions)	2017		2016		2017		2016		2017		2016
Net periodic benefit cost (benefit)
Service cost	$	67	$	64	$	33	$	35	$	13	$	13
Interest cost		141		144		38		45		20		20
Expected return on plan assets		(259)		(261)		(69)		(78)		(21)		(23)
Amortization of transition (asset) obligation		—		—		—		—		—		—
Amortization of prior service cost (benefit)		(5)		(6)		(3)		(3)		(13)		(13)
Amortization of net actuarial (gain) loss		97		89		29		21		14		15
Settlements, curtailments, special termination benefits and other		—		—		—		—		—		—
Net periodic benefit cost (benefit) after settlements, curtailments, special termination benefits and other	$	41	$	30	$	28	$	20	$	13	$	12


	Nine months ended September 30,
	Qualified and Non-qualified
	Pension Benefits								Postretirement
	United States				International				Benefits
(Millions)	2017		2016		2017		2016		2017		2016
Net periodic benefit cost (benefit)
Service cost	$	201	$	194	$	100	$	102	$	38	$	40
Interest cost		425		431		112		131		59		59
Expected return on plan assets		(777)		(782)		(208)		(234)		(63)		(68)
Amortization of transition (asset) obligation		—		—		—		(1)		—		—
Amortization of prior service cost (benefit)		(17)		(18)		(9)		(10)		(39)		(41)
Amortization of net actuarial (gain) loss		291		265		89		66		42		46
Settlements, curtailments, special termination benefits and other		—		—		—		—		—		—
Net periodic benefit cost (benefit) after settlements, curtailments, special termination benefits and other	$	123	$	90	$	84	$	54	$	37	$	36

For the nine months ended September 30, 2017, contributions totaling $311 million were made to the Company’s U.S. and international pension plans and $3 million to its postretirement plans. For total year 2017, the Company expects to contribute approximately $300 million to $500 million of cash to its global defined benefit pension and postretirement plans. The Company does not have a required minimum cash pension contribution obligation for its U.S. plans in 2017. Future contributions will depend on market conditions, interest rates and other factors. 3M’s annual measurement date for pension and postretirement assets and liabilities is December 31 each year, which is also the date used for the related annual measurement assumptions.

3M was informed in 2009, that the general partners of WG Trading Company, in which 3M’s benefit plans hold limited partnership interests, are the subject of a criminal investigation as well as civil proceedings by the SEC and CFTC (Commodity Futures Trading Commission). In March 2011, over the objections of 3M and six other limited partners of WG Trading Company, the district court judge ruled in favor of the court appointed receiver’s proposed distribution plan (and in April 2013, the United States Court of Appeals for the Second Circuit affirmed the district court’s ruling). The benefit plan trustee holdings of WG Trading Company interests were adjusted to reflect the decreased estimated fair market value, inclusive of estimated insurance proceeds, as of the annual measurement dates. In the first quarter of 2014, 3M and certain 3M benefit plans filed a lawsuit that was removed by the insurers to the U.S. District Court for the District of Minnesota against five insurers seeking insurance coverage for the WG Trading Company claim. In September 2015, the court ruled in favor of the defendant insurance companies on a motion for summary judgment and dismissed the lawsuit. In October 2015, 3M and the 3M benefit plans filed a notice of appeal to the United States Court of Appeals for the Eighth Circuit. In May 2017, the appellate court affirmed the lower court’s decision. The decision will reduce U.S. pension and postretirement plan assets by $73 million at the December 31, 2017 measurement date and will not have a material adverse effect on the consolidated financial position of the Company.

As part of a diversified investment strategy, the U.S. pension and postretirement benefit plans made investments in the natural gas fired power generation industry during the period 2011 through 2013. In April 2017, one of these entities, Panda Temple Power, LLC, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. This investment represented less than one percent of the fair value of the U.S. pension and postretirement plans’ assets as of their 2016 measurement date.