v3.26.1
Employee Benefits
 6 Months Ended
Jun. 30, 2026
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, 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)
PensionHealth Care and Life
Three Months Ended June 30,2026202520262025
Service cost - Cost of services$53 $35 $5 $7 
Service cost - Selling, general and administrative expense— 6 — 1 
Service cost$53 $41 $5 $8 
Amortization of prior service cost (credit)$49 $28 $(31)$(32)
Expected return on plan assets(184)(134)(7)(7)
Interest cost129 101 135 137 
Remeasurement loss, net— 45 — — 
Other components$(6)$40 $97 $98 
Total$47 $81 $102 $106 
(dollars in millions)
PensionHealth Care and Life
Six Months Ended June 30,
2026202520262025
Service cost - Cost of services$101 $69 $11 $14 
Service cost - Selling, general and administrative expense
— 11 — 3 
Service cost$101 $80 $11 $17 
Amortization of prior service cost (credit)$82 $56 $(62)$(64)
Expected return on plan assets(361)(268)(14)(14)
Interest cost248 204 264 273 
Remeasurement loss (gain), net(18)45 (219)— 
Other components$(49)$37 $(31)$195 
Total$52 $117 $(20)$212 
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, net.

Severance Payments
During the three and six months ended June 30, 2026, we paid severance benefits of $142 million and $1.1 billion, respectively, primarily related to separations in connection with the workforce reduction initiatives from the prior year. At June 30, 2026, we had a remaining severance liability of $959 million, a portion of which includes future contractual payments to employees separated as part of our workforce reduction initiatives.

Employer Contributions
During the three and six months ended June 30, 2026, we made an insignificant contribution to one of our qualified pension plans. During the three and six months ended June 30, 2025, we made a discretionary non-cash contribution to our qualified pension plans in the principal amount of $563 million.

During the three and six months ended June 30, 2026 and June 30, 2025, we made insignificant contributions to our nonqualified pension plans.

An additional insignificant required qualified pension plan contribution is expected through December 31, 2026. No significant changes are expected with respect to the nonqualified pension and other postretirement benefit plans contributions in 2026.

2026 Collective Bargaining Negotiations
In March 2026, union members ratified the extension of our East collective bargaining agreements with the Communications Workers of America and the International Brotherhood of Electrical Workers for four years until August 3, 2030.

During the three months ended March 31, 2026, amendments were made to certain pension and other postretirement benefit plans for certain union represented employees as a result of the collective bargaining negotiations. The plan amendments resulted in an increase in our defined benefit pension plan obligations of $546 million and an increase in our other postretirement benefit plan obligations of $56 million, which have been recorded as a decrease to Accumulated other comprehensive income of $451 million (net of taxes of $151 million).

Remeasurement Gain, net
During the three months ended March 31, 2026, we recorded a net pre-tax pension and benefits credit of $237 million in certain pension and postretirement benefit plans resulting from amendments to our collective bargaining agreements. This was primarily driven by a credit of $412 million due to an increase in our discount rate assumption used to determine the current year liabilities of certain plans from a weighted-average of 5.7% for the pension plans and 5.4% for the postretirement plans at December 31, 2025 to a weighted-average of 5.9% for the pension plans and 5.7% for the postretirement plans at March 31, 2026, partially offset by a charge of $175 million primarily resulting from the difference between our estimated and our actual return on certain pension plan assets. The net credit was recorded in Other income, net, in our condensed consolidated statements of income.