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Employee Benefits | 6 Months Ended
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Jun. 30, 2024
Retirement Benefits [Abstract] |
Employee Benefits |
Note 8. Employee Benefits
We maintain non-contributory defined benefit pension plans for certain employees. In addition, we maintain postretirement health care and life insurance plans for certain retirees and their dependents, which are both contributory and non-contributory, and include a limit on our share of the cost for certain current and future retirees. In accordance with our accounting policy for pension and other postretirement benefits, operating expenses include service costs associated with pension and other postretirement benefits while other credits and/or charges based on actuarial assumptions, including projected discount rates, an estimated return on plan assets, and impact from health care trend rates are reported in Other income (expense), net. These estimates are updated in the fourth quarter or upon a remeasurement event, to reflect actual return on plan assets and updated actuarial assumptions. The adjustment is recognized in the income statement during the fourth quarter and upon a remeasurement event pursuant to our accounting policy for the recognition of actuarial gains and losses. Net Periodic Benefit Cost (Income) The following table summarizes the components of net periodic benefit cost (income) related to our pension and postretirement health care and life insurance plans:
| (dollars in millions)
| Pension |  | Health Care and Life
Three Months Ended June 30, | 2024 |  | 2023 |  | 2024 |  | 2023
Service cost - Cost of services | $ | 39 |  |  | $ | 45 |  |  | $ | 11 |  |  | $ | 12 |
Service cost - Selling, general and administrative expense | 6 |  |  | 7 |  |  | 2 |  |  | 2 |
Service cost | $ | 45 |  |  | $ | 52 |  |  | $ | 13 |  |  | $ | 14 |
Amortization of prior service cost (credit) | $ | 28 |  |  | $ | 28 |  |  | $ | (32) |  |  | $ | (104) |
Expected return on plan assets | (140) |  |  | (253) |  |  | (7) |  |  | (8) |
Interest cost | 112 |  |  | 188 |  |  | 136 |  |  | 136 |
Remeasurement loss, net | 136 |  |  | — |  |  | — |  |  | — |
Other components | $ | 136 |  |  | $ | (37) |  |  | $ | 97 |  |  | $ | 24 |
Total | $ | 181 |  |  | $ | 15 |  |  | $ | 110 |  |  | $ | 38 |
| (dollars in millions)
| Pension |  | Health Care and Life
Six Months Ended June 30, | 2024 |  | 2023 |  | 2024 |  | 2023
Service cost - Cost of services | $ | 80 |  |  | $ | 91 |  |  | $ | 22 |  |  | $ | 23 |
Service cost - Selling, general and administrative expense | 13 |  |  | 14 |  |  | 4 |  |  | 4 |
Service cost | $ | 93 |  |  | $ | 105 |  |  | $ | 26 |  |  | $ | 27 |
Amortization of prior service cost (credit) | $ | 56 |  |  | $ | 56 |  |  | $ | (64) |  |  | $ | (209) |
Expected return on plan assets | (348) |  |  | (506) |  |  | (14) |  |  | (15) |
Interest cost | 269 |  |  | 376 |  |  | 271 |  |  | 272 |
Remeasurement loss, net | 63 |  |  | — |  |  | — |  |  | — |
Other components | $ | 40 |  |  | $ | (74) |  |  | $ | 193 |  |  | $ | 48 |
Total | $ | 133 |  |  | $ | 31 |  |  | $ | 219 |  |  | $ | 75 |
The service cost component of net periodic benefit cost (income) is recorded in Cost of services and Selling, general and administrative expense in the condensed consolidated statements of income while the other components, including mark-to-market adjustments, if any, are recorded in Other income (expense), net. During the six months ended June 30, 2024, we updated the expected return on plan assets assumption for our pension plans from 7.50% at December 31, 2023 to 8.00% based upon the expected market returns from the March 31, 2024 asset allocation. Pension Annuitization On February 29, 2024, we entered into two separate commitment agreements, one by and between the Company, State Street Global Advisors Trust Company ("State Street"), as independent fiduciary of the Verizon Management Pension Plan and Verizon Pension Plan for Associates (the "Pension Plans"), and The Prudential Insurance Company of America ("Prudential"), and one by and between the Company, State Street and RGA Reinsurance Company ("RGA"), under which the Pension Plans purchased nonparticipating single premium group annuity contracts from Prudential and RGA, respectively, to settle approximately $5.9 billion of benefit liabilities of the Pension Plans. The purchase of the group annuity contracts closed on March 6, 2024. The group annuity contracts primarily cover a population that includes 56,000 retirees who commenced benefit payments from the Pension Plans prior to January 1, 2023 ("Transferred Participants"). Prudential and RGA each irrevocably guarantee and assume the sole obligation to make future payments to the Transferred Participants as provided under their respective group annuity contracts, with direct payments beginning July 1, 2024. The aggregate amount of each Transferred Participant's payment under the group annuity contracts will be equal to the amount of each individual’s payment under the Pension Plans. The purchase of the group annuity contracts was funded directly by transferring $5.7 billion of assets of the Pension Plans. The Company made additional contributions to the Pension Plans prior to the closing date of the transaction, as discussed below. With these contributions, the funded ratio of each of the Pension Plans does not change as a result of this transaction. During the three months ended March 31, 2024, we recorded a net pre-tax settlement gain as a result of this transaction, as discussed below. Pension plan assets and liabilities are primarily presented within Employee benefit obligations in our condensed consolidated balance sheets. Severance Payments During the three and six months ended June 30, 2024, we paid severance benefits of $60 million and $178 million, respectively. At June 30, 2024, we had a remaining severance liability of $402 million, a portion of which includes future contractual payments to separated employees. Employer Contributions During the six months ended June 30, 2024, we made discretionary contributions to the Pension Plans in the aggregate amount of $365 million. During the six months ended June 30, 2023, we made a discretionary contribution to one of our qualified pension plans in the amount of $200 million. During both the three and six months ended June 30, 2024 and June 30, 2023, we made insignificant contributions to our nonqualified pension plans. No mandatory qualified pension plans contributions are expected or required through December 31, 2024. No significant changes are expected with respect to the nonqualified pension and other postretirement benefit plans contributions in 2024. Remeasurement loss, net During the three and six months ended June 30, 2024, we recorded a net pre-tax remeasurement loss of $136 million and $63 million, respectively, in our pension plans triggered by settlements. During the three months ended June 30, 2024, we recorded a net pre-tax remeasurement loss of $136 million in our pension plans triggered by settlements. The remeasurement loss was primarily driven by a $245 million charge resulting from the difference between our estimated and actual return on assets, partially offset by a credit of $109 million due to changes in our discount rate assumption used to determine the current year liabilities of our pension plans. During the three months ended March 31, 2024, we recorded a net pre-tax remeasurement gain of $73 million in our pension plans due to a net pre-tax settlement gain of $200 million resulting from the pension annuitization transaction discussed above, partially offset by a net pre-tax remeasurement loss of $127 million triggered by settlements. The net pre-tax remeasurement loss recorded for the three months ended March 31, 2024, was primarily driven by a $613 million charge resulting from the difference between our estimated and actual return on assets, partially offset by a credit of $486 million due to changes in our discount rate assumption used to determine the current year liabilities of our pension plans. 2024 Voluntary Separation Program In June 2024, we announced and opened a Voluntary Separation Program for select U.S.-based management employees. Management at its discretion will accept volunteers for separation based on the needs of the business, and these employees will be notified in August 2024. We expect to record a severance charge related to the program in the third quarter of 2024, which could be significant. The ultimate financial statement impact will be based on the number of volunteers accepted.

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