Compensation and Benefit Plans

Pension Plans

Edison International made contributions of $76 million during the six months ended June 30, 2014, which includes contributions of $63 million by SCE. Edison International expects to make contributions of $136 million during the remainder of 2014, which includes $123 million from SCE. Annual contributions made to most of SCE's pension plans are anticipated to be recovered through CPUC-approved regulatory mechanisms. Annual contributions to these plans are expected to be, at a minimum, equal to the related annual expense.

Pension expense components for continuing operations are:



	Three months ended June 30,						Six months ended June 30,
(in millions)	2014			2013			2014			2013
Edison International:
Service cost	$	29		$	38		$	59		$	76
Interest cost	48			42			93			84
Expected return on plan assets	(60		)	(57		)	(117		)	(114		)
Settlement costs¹	—			49			—			49
Amortization of prior service cost	2			1			3			2
Amortization of net loss²	1			15			2			30
Expense under accounting standards	$	20		$	88		$	40		$	127
Regulatory adjustment (deferred)	30			(31		)	61			(14		)
Total expense recognized	$	50		$	57		$	101		$	113
SCE:
Service cost	$	29		$	37		$	58		$	74
Interest cost	44			41			88			82
Expected return on plan assets	(56		)	(57		)	(112		)	(114		)
Settlement costs¹	—			48			—			48
Amortization of prior service cost	1			1			2			2
Amortization of net loss²	1			14			1			28
Expense under accounting standards	$	19		$	84		$	37		$	120
Regulatory adjustment (deferred)	30			(31		)	61			(14		)
Total expense recognized	$	49		$	53		$	98		$	106


¹	Relates to lump-sum payments made to employees who retired in 2013 from the SCE Retirement Plan (primarily due to workforce reductions described below).

Includes the amount of net loss reclassified from other comprehensive loss. The amount reclassified for Edison International and SCE was $1 million and $1 million, respectively, for the three months ended June 30, 2014, and $3 million and $2 million, respectively, for the six months ended June 30, 2014. The amount reclassified for Edison International and SCE was $4 million and $3 million, respectively, for the three months ended June 30, 2013, and $7 million and $5 million, respectively, for the six months ended June 30, 2013.

Postretirement Benefits Other Than Pensions

Edison International made contributions of $7 million during the six months ended June 30, 2014 and expects to make contributions of $8 million during the remainder of 2014, substantially all of which are expected to be made by SCE. Annual contributions made to SCE plans are anticipated to be recovered through CPUC-approved regulatory mechanisms and are expected to be, at a minimum, equal to the total annual expense for these plans. Benefits under these plans, with some exceptions, are generally unvested and subject to change. Under the terms of the Edison International Health and Welfare Plan ("PBOP Plan") each participating employer (Edison International or its participating subsidiaries) is responsible for the costs and expenses of all PBOP benefits with respect to its employees and former employees. A participating employer may terminate the PBOP benefits with respect to its employees and former employees, as may SCE (as Plan sponsor), and, accordingly, the participants' PBOP benefits are not vested benefits.

PBOP expense components for continuing operations are:



	Three months ended June 30,						Six months ended June 30,
(in millions)	2014			2013			2014			2013
Edison International:
Service cost	$	11		$	14		$	22		$	28
Interest cost	27			26			54			52
Expected return on plan assets	(28		)	(30		)	(56		)	(60		)
Special termination benefits¹	—			10			—			10
Amortization of prior service credit	(9		)	(9		)	(18		)	(18		)
Amortization of net loss	—			7			—			14
Total expense	$	1		$	18		$	2		$	26
SCE:
Service cost	$	11		$	14		$	22		$	27
Interest cost	27			26			54			52
Expected return on plan assets	(28		)	(30		)	(56		)	(60		)
Special termination benefits¹	—			10			—			10
Amortization of prior service credit	(9		)	(9		)	(18		)	(18		)
Amortization of net loss	—			7			—			14
Total expense	$	1		$	18		$	2		$	25


¹	Due to the reduction in workforce, SCE has incurred costs for extended retiree health care coverage.

Workforce Reductions

In 2012, SCE commenced multiple efforts to reduce its workforce in order to reflect SCE's strategic direction to optimize its cost structure, moderate customer rate increases and align its cost structure with its peers. In addition, in June 2013, SCE announced plans to permanently retire San Onofre, which resulted in additional workforce reductions. See Note 9 for further information. During the second quarter of 2014, SCE increased the estimated impact for workforce reductions related to transferring certain information technology activities to third parties. Through June 30, 2014, SCE's share of estimated cash severance for these efforts totaled $222 million. The following table provides a summary of changes in the accrued severance liability associated with these reductions:



(in millions)
Balance at January 1, 2014	$	54
Additions	9
Payments	(13		)
Balance at June 30, 2014	$	50

The liability presented in the table above is reflected in "Other current liabilities" on the consolidated balance sheets. The severance costs are included in "Operation and maintenance" on the consolidated income statements.