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Retirement Plans
 9 Months Ended
Sep. 27, 2020
Retirement Plans
Q. RETIREMENT PLANS
ASC 715,
“Compensation—Retirement Benefits”
requires an employer with a defined benefit plan or other postretirement benefit plan to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plan. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all of its 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 the U.S. qualified pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has unfunded qualified foreign plans as well as 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”).
In the three months ended September 27, 2020, Teradyne purchased a group annuity contract for its retiree participants in the U.S. qualified pension plan. Under the group annuity, the accrued pension obligations for approximately 115 retiree participants were transferred to an insurance company. The reduction in the pension benefit obligation and pension assets was $24.4 million. In the three and nine months ended September 27, 2020, Teradyne recorded $2.2 million of pension actuarial loss and a settlement loss of $0.5 million from interim remeasurement of U.S. Pension Plan related to the retiree group annuity transaction.
In the nine months ended September 27, 2020, Teradyne contributed $2.2 million to the U.S. supplemental executive defined benefit pension plan and $0.7 million to certain qualified pension plans for
non-U.S.
subsidiaries.
 
For the three and nine months ended September 27, 2020 and September 29, 2019, Teradyne’s net periodic pension cost was comprised of the following:
 
                                                                                                   
    
For the Three Months
Ended
  
    
September 27,

2020
     
September 29,

2019
  
    
United
 
States
     
Foreign
     
United
 
States
     
Foreign
  
    
(in thousands)
  
Service cost
   
$
417
 
   
$
216
 
   
$
402
 
   
$
183
 
Interest cost
   
 
1,460
 
   
 
123
 
   
 
1,797
 
   
 
168
 
Expected return on plan assets
   
 
(1,170
) 
   
 
(16
) 
   
 
(1,510
) 
   
 
(7
) 
Net actuarial loss
   
 
2,238
 
   
 
—
  
 
   
 
—  
 
   
 
—  
 
Settlem
ent loss
 
 
 
450
 
 
  
—  
 
 
 
—  
 
 
 
—  
  
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic pension cost
   
$
3,395
 
   
$
323
 
   
$
689
 
   
$
344
 
  
 
 
     
 
 
     
 
 
     
 
 
  
 
                                                                                                   
    
For the Nine Months
Ended
  
    
September 27,
2020
     
September 29,
2019
  
    
United
 
States
     
Foreign
     
United
 
States
     
Foreign
  
    
(in thousands)
  
Service cost
   
$
1,283
 
   
$
648
 
   
$
1,206
 
   
$
550
 
Interest cost
   
 
4,505
 
   
 
369
 
   
 
5,392
 
   
 
505
 
Expected return on plan assets
   
 
(3,634
) 
   
 
(47
) 
   
 
(4,531
) 
   
 
(21
) 
Net actuarial loss
   
 
2,418
 
   
 
—  
 
   
 
252
 
   
 
—  
 
  
 
 
     
 
 
     
 
 
     
 
 
  
Settlem
ent loss
 
 
 
450
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
  
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic pension cos
t
   
$
5,022
 
   
$
970
 
   
$
2,319
 
   
$
1,034
 
  
 
 
     
 
 
     
 
 
     
 
 
  
Postretirement Benefit Plan
In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes 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.
For the three and nine months ended September 27, 2020 and September 29, 2019, Teradyne’s net periodic postretirement benefit cost
(income)
was comprised of the following:
 
   
For the Three Months

Ended
    
For the Nine Months

Ended
  
   
September 27,
    
September 29,
    
September 27,
    
September 29,
  
   
2020
    
2019
    
2020
    
2019
  
   
(in thousands)
  
Service cost
  
$
14
 
  
$
10
 
  
$
43
 
  
$
31
 
Interest cost
  
 
60
 
  
 
87
 
  
 
180
 
  
 
260
 
Amortization of prior service credit
  
 
(2
) 
  
 
(48
) 
  
 
(7
) 
  
 
(143
) 
Net actuarial (gain) loss
  
 
—  
 
  
 
—  
 
  
 
(279
 )
 
  
 
196
 
 
 
 
    
 
 
    
 
 
    
 
 
  
Total net periodic postretirement benefit cost
 (cre
dit)
  
$
72
 
  
$
49
 
  
$
(63
 )
 
  
$
344