11. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS

The following tables summarize the components of net periodic benefit cost for the Company’s pension and postretirement benefit plans recognized in the consolidated statement of income.

	Pension Plans						Postretirement Benefit Plans
(for the three months ended June 30, in millions)	2016			2015			2016			2015

Net Periodic Benefit Cost:
Service cost	$	30		$	32		$	—		$	—
Interest cost on benefit obligation	31			36			2			2
Expected return on plan assets	(58		)	(57		)	—			—
Settlement	1			—			—			—
Amortization of unrecognized:
Prior service benefit	—			—			(1		)	—
Net actuarial loss	16			24			—			—
Net periodic benefit cost	$	20		$	35		$	1		$	2

	Pension Plans						Postretirement Benefit Plans
(for the six months ended June 30, in millions)	2016			2015			2016			2015

Net Periodic Benefit Cost:
Service cost	$	59		$	65		$	—		$	—
Interest cost on benefit obligation	61			72			4			5
Expected return on plan assets	(115		)	(115		)	—			—
Settlement	1			—			—			—
Amortization of unrecognized:
Prior service benefit	—			—			(2		)	(1		)
Net actuarial loss	33			48			—			—
Net periodic benefit cost	$	39		$	70		$	2		$	4

In first quarter 2016, the Company began to use a full yield curve approach in the estimation of the service and interest cost components of net periodic benefit costs for its qualified and nonqualified domestic pension plans and its domestic postretirement benefit plans. The full yield curve approach applies the specific spot rates along the yield curve that the Company used to determine its projected benefit obligation at the beginning of the year to the projected cash flows related to service and interest costs. Previously, the Company estimated these service and interest cost components by applying a single weighted-average discount rate derived from this yield curve. This change was made to provide a better estimate of the service and interest cost components of net periodic benefit costs, consistent with the methodology used to estimate the projected benefit obligation for each of the benefit plans.

This change did not affect the measurement of the Company’s total benefit obligations, as the change in service cost and interest cost is completely offset in the actuarial (gain) loss reported for the period. The change reduced the service and interest cost components of net periodic benefit costs by $2 million and $7 million, respectively, for the three months ended June 30, 2016, and by $3 million and $15 million, respectively, for the six months ended June 30, 2016. The weighted average discount rates that are being used to measure service and interest costs during 2016 are 4.77% and 3.64%, respectively, for the domestic qualified pension plan, 4.53% and 3.47%, respectively, for the domestic nonqualified pension plan and 0.00% and 3.53%, respectively, for the domestic postretirement benefit plan. The discount rate associated with the service cost component of the domestic postretirement benefit plan is zero as it is a closed plan and all participants are fully vested. Under the Company’s prior estimation approach, the weighted average discount rate for both the service and interest cost components would have been 4.50% for the domestic qualified pension plan, 4.37% for the domestic nonqualified pension plan and 4.35% for the domestic postretirement benefit plan. The Company accounted for this change as a change in estimate, and accordingly, is recognizing the effect prospectively beginning in 2016.