v3.22.2
Pension and Other Postretirement Benefits
 6 Months Ended
Jun. 30, 2022
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
The components of net periodic benefit cost for defined benefit plans were as follows:
Second quarter ended June 30,Six months ended June 30,
2022202120222021
Pension benefits
Service cost$4 $5 $9 $11 
Interest cost17 16 33 33 
Expected return on plan assets(23)(27)(47)(60)
Recognized net actuarial loss19 24 38 56 
Settlements (1)
— 568 1 568 
Net periodic benefit cost(2)
$17 $586 $34 $608 
Other postretirement benefits
Service cost$1 $2 $2 $3 
Interest cost3 2 6 5 
Recognized net actuarial loss2 3 4 5 
Amortization of prior service benefit(2)(2)(4)(3)
Net periodic benefit cost(2)
$4 $5 $8 $10 
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(1)    In the 2021 second quarter and six-month period, Settlements were due to the purchase of a group annuity contract ($549) and the payment of lump-sum benefits ($19).    
(2)    Service cost was included within Cost of goods sold, Settlements were included within Restructuring and other charges, and all other components were included in Other (income) expenses, net on the accompanying Statement of Consolidated Operations.
Pension Funding—In January 2021, the Company contributed a total of $200 to its two funded U.S. defined benefit pension plans, comprised of the estimated minimum required funding for 2021 of $183 and an additional $17. In April 2021, the Company contributed a total of $250 to its two funded U.S. defined benefit pension plans to maintain the funding level of the remaining plan obligations not transferred under a group annuity contract. Arconic had no minimum required funding due in the 2022 first quarter and contributed $7 in the 2022 second quarter to these two plans. The Company expects to contribute a total of $15 to these two plans in the remainder of 2022.
United Steelworkers Labor Agreement—On May 14, 2022, the Company and the United Steelworkers reached a tentative four-year labor agreement covering approximately 3,300 employees at four U.S. locations; the previous labor agreement expired on May 15, 2022. The tentative agreement was ratified by the union employees on June 1, 2022. In the 2022 second quarter, Arconic recognized $19 in Cost of goods sold on the accompanying Statement of Consolidated Operations primarily for a one-time signing bonus for the covered employees. Additionally, the new labor agreement provides for, among other items, established annual wage increases and higher multipliers used to calculate the union employees’ future pension retirement benefits.
The change to pension benefits qualifies as a significant plan amendment to the Company’s U.S. hourly defined benefit pension plan, and, as a result, Arconic was required to complete a remeasurement of this plan (generally completed as of December 31st each year), including an interim actuarial valuation of the plan obligations. Communication of the benefit change to the union employees occurred on May 15, 2022 and the effective date of this amendment was May 16, 2022. For purposes of performing an interim remeasurement of the plan, the Company applied a practical expedient to the remeasurement date and selected May 31, 2022. Accordingly, the discount rate used in calculating the plan obligations increased to 4.66% at May 31, 2022 from 2.96% at December 31, 2021. The remeasurement of this plan, together with the amendment for increased benefits, resulted in a $13 net decrease to Accrued pension benefits and a $10 (after-tax) net decrease to Accumulated other comprehensive loss (see Note K) on the accompany Consolidated Balance Sheet. Additionally, annual net periodic benefit cost to be recognized for this plan in 2022 will increase by $8, comprised of a $2 decrease in service cost and a $10 increase in non-service costs. These amounts will be recognized ratably over the remainder of 2022 (June through December).