Employee Retirement Plans

The components of net pension and postretirement benefit costs are summarized in the following table:



	Three months ended September 30,						Nine months ended September 30,
(millions)	2018			2017			2018			2017
Pension:
Service cost of benefits earned	$	13		$	11		$	37		$	32
Interest cost on projected benefit obligation	15			15			47			46
Expected return on plan assets	(24		)	(23		)	(72		)	(69		)
Settlement	—			3			—			23
Net amortization	8			6			24			16
Net pension cost ^(a)	$	12		$	12		$	36		$	48
Postretirement:
Service cost of benefits earned	$	1		$	—		$	3		$	2
Interest cost on projected benefit obligation	1			2			3			4
Net amortization	(6		)	(6		)	(18		)	(18		)
Net postretirement benefit	$	(4	)	$	(4	)	$	(12	)	$	(12	)


(a)	Net pension cost, excluding settlement costs, includes amounts allocated to (loss) income from discontinued operations for L&W totaling a benefit of $1 million for the three and nine months ended September 30, 2017.

Service cost of benefits earned is included in "Costs of products sold" and "Selling and administrative expenses" on our condensed consolidated statements of income. The other components of net pension and postretirement costs are included in "Other income, net".

For the three and nine months ended September 30, 2017, we recorded settlement expense of $3 million and $23 million, respectively, as the total lump sum distributions paid by the USG Corporation pension plan to both L&W employees and former USG employees during the first nine months of 2017 exceeded the settlement threshold. Upon termination of their employment from USG, all L&W employees had the option to receive a lump sum benefit payment from the USG Corporation pension plan. For the benefits paid to terminated employees of L&W, we recorded a pre-tax loss of $13 million to "Income (loss) from discontinued operations" for the nine months ended September 30, 2017. For the benefits paid to USG retirees, we recorded a pre-tax loss of $3 million and $10 million to "Other income, net" for the three and nine months ended September 30, 2017.

During the first nine months of 2018, we made cash contributions of $50 million to the USG Corporation Retirement Plan Trust, $1 million to our domestic supplemental pension plan and $4 million to our pension plans in Canada. We expect to make total contributions to our pension plans in 2018 of approximately $60 million.