Quarterly report pursuant to Section 13 or 15(d)

PENSIONS AND OTHER POSTRETIREMENT BENEFITS

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PENSIONS AND OTHER POSTRETIREMENT BENEFITS
 3 Months Ended
Mar. 31, 2016
Postemployment Benefits [Abstract]  
PENSIONS AND OTHER POSTRETIREMENT BENEFITS
NOTE 7 - PENSIONS AND OTHER POSTRETIREMENT BENEFITS
We offer defined benefit pension plans, defined contribution pension plans and other postretirement benefit plans, primarily consisting of retiree healthcare benefits, to most employees in the United States as part of a total compensation and benefits program. We do not have employee retirement benefit obligations at our Asia Pacific Iron Ore operations. The defined benefit pension plans largely are noncontributory and benefits generally are based on employees’ years of service and average earnings for a defined period prior to retirement or a minimum formula.
Historically, we selected a single-weighted discount rate to be used for all pension and other postretirement benefit plans based on the 10th to 90th percentile results. Beginning January 1, 2016, we elected to select a separate discount rate for each plan, based on 40th to 90th percentile results. The discount rates are determined by matching the projected cash flows used to determine the projected benefit obligation and accumulated postretirement benefit obligation to a projected yield curve of 688 Aa graded bonds. These bonds are either noncallable or callable with make-whole provisions. We made this change in order to more precisely measure our service and interest costs, by improving the correlation between projected benefit cash flows and the corresponding spot yield curve rates.  As this change is treated as a change in estimate, the impact is reflected in the first quarter of the current fiscal year and prospectively, and historical measurements of service and interest cost were not affected.
This change in estimate is anticipated to reduce our current year annual net periodic benefit expense by approximately $8.4 million for our pension plans and by approximately $2.3 million for our other postretirement benefit plans. Accordingly, for the quarter ended March 31, 2016, total service cost and interest cost for the defined benefit pension and other postretirement benefit plans were $12.0 million and $2.7 million, respectively, a reduction of $2.1 million and $0.6 million, respectively, as a result of implementing the new approach.
The following are the components of defined benefit pension and OPEB expense for the three months ended March 31, 2016 and 2015:
Defined Benefit Pension Expense
 
(In Millions)
 
 
Three Months Ended
March 31,
 
 
2016
 
2015
Service cost
 
$
4.5

 
$
6.3

Interest cost
 
7.5

 
9.4

Expected return on plan assets
 
(13.7
)
 
(14.9
)
Amortization:
 
 
 
 
Prior service costs
 
0.5

 
0.6

Net actuarial loss
 
5.3

 
5.4

    Curtailments/settlements
 
—

 
0.3

Net periodic benefit cost to continuing operations
 
$
4.1

 
$
7.1


Other Postretirement Benefits Expense
 
(In Millions)
 
Three Months Ended
March 31,
 
2016
 
2015
Service cost
$
0.4

 
$
1.5

Interest cost
2.3

 
3.3

Expected return on plan assets
(4.3
)
 
(4.6
)
Amortization:
 
 
 
Prior service credits
(0.9
)
 
(0.9
)
Net actuarial loss
1.4

 
3.1

Net periodic benefit cost to continuing operations
$
(1.1
)
 
$
2.4


We made pension contributions of $0.3 million for the three months ended March 31, 2016, compared to pension contributions of $3.9 million for the three months ended March 31, 2015. OPEB contributions are typically made on an annual basis in the first quarter of each year, but due to plan funding requirements being met, no OPEB contributions were required or made for the three months ended March 31, 2016 and March 31, 2015.