Benefit Plans:

Subsidiaries of Altria Group, Inc. sponsor noncontributory defined benefit pension plans covering the majority of all employees of Altria Group, Inc. and its subsidiaries. However, employees hired on or after a date specific to their employee group are not eligible to participate in these noncontributory defined benefit pension plans but are instead eligible to participate in a defined contribution plan with enhanced benefits. This transition for new hires occurred from October 1, 2006 to January 1, 2008. In addition, effective January 1, 2010, certain employees of UST’s subsidiaries and Middleton who were participants in noncontributory defined benefit pension plans ceased to earn additional benefit service under those plans and became eligible to participate in a defined contribution plan with enhanced benefits. Altria Group, Inc. and its subsidiaries also provide postretirement health care and other benefits to the majority of retired employees.

Components of Net Periodic Benefit Cost

Net periodic benefit cost (income) consisted of the following:



	For the Six Months Ended June 30,												For the Three Months Ended June 30,
	Pension						Postretirement						Pension						Postretirement
	2016			2015			2016			2015			2016			2015			2016			2015
	(in millions)
Service cost	$	37		$	43		$	8		$	9		$	19		$	22		$	4		$	5
Interest cost	141			168			40			51			70			84			19			25
Expected return on plan assets	(277		)	(270		)	—			—			(139		)	(135		)	—			—
Amortization:
Net loss	87			117			16			23			43			58			9			11
Prior service cost (credit)	2			4			(19		)	(20		)	1			2			(9		)	(10		)
Termination and curtailment	20			—			—			—			—			—			—			—
Net periodic benefit cost (income)	$	10		$	62		$	45		$	63		$	(6	)	$	31		$	23		$	31

Termination and curtailment costs shown in the table above were related to the productivity initiative discussed in Note 2. Asset Impairment, Exit and Implementation Costs. In conjunction with the curtailment, in the first quarter of 2016 Altria Group, Inc. remeasured the pension benefit obligations, pension plan assets and postretirement benefit obligations of its impacted benefit plans. This remeasurement resulted in an increase to the liabilities for accrued pension costs and accrued postretirement health care costs of approximately $250 million and $70 million, respectively, and a corresponding increase to accumulated other comprehensive losses.

Employer Contributions

Altria Group, Inc. makes contributions to the pension plans to the extent that the contributions are tax deductible and pays benefits that relate to plans for salaried employees that cannot be funded under Internal Revenue Service regulations. Employer contributions of $6 million were made to Altria Group, Inc.’s pension plans during the six months ended June 30, 2016. Currently, Altria Group, Inc. anticipates making additional employer contributions to its pension plans during the remainder of 2016 of approximately $25 million to $70 million, based on current tax law. However, this estimate is subject to change as a result of changes in tax and other benefit laws, as well as asset performance significantly above or below the assumed long-term rate of return on pension assets, or changes in interest rates.