Pension and Retiree Medical Benefits

Effective January 1, 2017, the U.S. qualified defined benefit pension plans were reorganized into the PepsiCo Employees Retirement Plan A, or active plan, and the PepsiCo Employees Retirement Plan I, or inactive plan. Actuarial gains and losses associated with the active plan are amortized over the average remaining service life of the active participants (approximately 11 years beginning in 2017), while the actuarial gains and losses associated with the inactive plan are amortized over the remaining life expectancy of the inactive participants (approximately 27 years beginning in 2017). The pre-tax reduction in net periodic benefit cost associated with this change was $9 million ($6 million after-tax with a nominal amount per share) in the 12 weeks ended June 17, 2017, and $19 million ($12 million after-tax or $0.01 per share) in the 24 weeks ended June 17, 2017 and will approximate $40 million in 2017, primarily impacting corporate unallocated.

The components of net periodic benefit cost for pension and retiree medical plans are as follows:



	12 Weeks Ended
	Pension												Retiree Medical
	6/17/2017			6/11/2016			6/17/2017			6/11/2016			6/17/2017			6/11/2016
	U.S.						International
Service cost	$	92		$	90		$	21		$	21		$	7		$	7
Interest cost	108			112			21			24			8			10
Expected return on plan assets	(196		)	(192		)	(40		)	(42		)	(5		)	(6		)
Amortization of prior service cost/(credits)	1			—			—			—			(6		)	(8		)
Amortization of net losses/(gains)	28			39			12			10			(3		)	(1		)
	33			49			14			13			1			2
Settlement/curtailment loss	—			—			—			6			—			—
Special termination benefits	1			1			—			—			—			—
Total expense	$	34		$	50		$	14		$	19		$	1		$	2



	24 Weeks Ended
	Pension												Retiree Medical
	6/17/2017			6/11/2016			6/17/2017			6/11/2016			6/17/2017			6/11/2016
	U.S.						International
Service cost	$	185		$	181		$	37		$	36		$	13		$	14
Interest cost	216			223			36			42			17			19
Expected return on plan assets	(392		)	(384		)	(70		)	(73		)	(10		)	(11		)
Amortization of prior service cost/(credits)	1			—			—			—			(12		)	(17		)
Amortization of net losses/(gains)	56			77			21			18			(6		)	(1		)
	66			97			24			23			2			4
Settlement/curtailment loss	—			—			—			6			—			—
Special termination benefits	2			1			—			—			—			—
Total expense	$	68		$	98		$	24		$	29		$	2		$	4

We regularly evaluate different opportunities to reduce risk and volatility associated with our pension and retiree medical plans. We made discretionary contributions to our international pension plans of $6 million in the second quarter of 2017 and $7 million in the first quarter of 2016. There were no discretionary contributions made in the first quarter of 2017 or the second quarter of 2016.