M. Retirement Plans

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of these plans consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“IRC”), as well as unfunded foreign plans.

Net periodic pension cost was comprised of the following:


	For the Three Months Ended						For the Nine Months Ended
	September 29, 2013			September 30, 2012			September 29, 2013			September 30, 2012
	(in thousands)
Service cost	$	871		$	685		$	2,557		$	2,054
Interest cost		3,350			4,111			10,001			12,333
Expected return on plan assets		(3,664	)		(4,090	)		(10,925	)		(12,269	)
Amortization of unrecognized prior service cost		41			58			123			174
Actuarial loss (gain)		—			1,937			(1,122	)		5,083

Total net periodic pension cost	$	598		$	2,701		$	634		$	7,375

In the nine months ended September 29, 2013, Teradyne contributed $1.3 million to the U.S. supplemental executive defined benefit pension plan and $1.3 million to certain qualified plans for non-U.S. subsidiaries.

During the three months ended September 30, 2012, Teradyne offered to certain former U.S. employees the option to receive their vested pension benefit as a one-time lump sum payment. Approximately 2,000 former employees selected to receive a one-time lump sum payment. Total one-time lump sum payments were approximately $52.0 million.

Postretirement Benefit Plan

In addition to receiving pension benefits, U.S. Teradyne employees who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes death, and medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

Net periodic postretirement benefit was comprised of the following:


	For the Three Months Ended						For the Nine Months Ended
	September 29, 2013			September 30, 2012			September 29, 2013			September 30, 2012
	(in thousands)
Service cost	$	19		$	17		$	56		$	50
Interest cost		86			109			257			328
Amortization of unrecognized prior service benefit		(150	)		(150	)		(449	)		(449	)
Actuarial gain		—			—			(236	)		(92	)

Total net periodic post-retirement benefit	$	(45	)	$	(24	)	$	(372	)	$	(163	)