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Retirement Plans
 6 Months Ended
Jul. 04, 2021
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 six months ended July 4, 2021, and June 28, 2020, Teradyne contributed $1.7 million and $1.4 million, respectively, to the U.S. supplemental executive defined benefit pension plan and $0.5 million and $0.4 million, respectively to certain qualified pension plans for non-U.S. subsidiaries.
For the three and six months ended July 4, 2021 and June 28, 2020, Teradyne’s net periodic pension cost was comprised of the following:
 
    
For the Three Months Ended
  
    
July 4, 2021
     
June 28, 2020
  
    
United

States
     
Foreign
     
United

States
     
Foreign
  
    
(in thousands)
  
Service cost
    $ 452      $ 245      $ 433      $ 208  
Interest cost
      1,096        88        1,523        119  
Expected return on plan assets
      (936 )       (17 )       (1,232 )       (15 ) 
Net actuarial (gain) loss
      (400 )       —           180        —     
    
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic pension cost
    $ 212      $ 316      $ 904      $ 312  
    
 
 
     
 
 
     
 
 
     
 
 
  
   
    
For the Six Months Ended
  
    
July 4, 2021
     
June 28, 2020
  
    
UnitedStates
     
Foreign
     
UnitedStates
     
Foreign
  
    
(in thousands)
  
Service cost
    $ 905      $ 491      $ 866      $ 417  
Interest cost
      2,196        175        3,045        238  
Expected return on plan assets
      (1,872 )       (33 )       (2,464 )       (31 ) 
Net actuarial (gain) loss
      (400 )       —           180        —     
    
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic pension cost
    $ 829      $ 633      $ 1,627      $ 624  
    
 
 
     
 
 
     
 
 
     
 
 
  
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 six months ended July 4, 2021 and June 28, 2020, Teradyne’s net periodic postretirement benefit credit was comprised of the following:
 
    
For the Three
Months

Ended
     
For the Six Months

Ended
  
    
July 4,

2021
     
June 28,

2020
     
July 4,

2021
     
June 28,

2020
  
    
(in thousands)
  
Service cost
    $ 17      $ 17      $ 33      $ 28  
Interest cost
      41        58        85        120  
Amortization of prior service credit
      (2 )       (2 )       (4 )       (4 ) 
Net actuarial gain
      (228 )       (279 )       (228 )       (279 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic postretirement benefit credit
    $ (172 )     $ (206 )     $ (114 )     $ (135 )