Pension Plan and Postretirement Benefits Other Than Pension

6 Months Ended

Jun. 30, 2017

Pension Plan and Postretirement Benefits Other Than Pension

Pension Plan and Postretirement Benefits Other Than Pension

8.Pension Plan and Postretirement Benefits Other Than Pension

We provide a noncontributory retirement plan that covers substantially all employees and certain vested employees of our former parent company (the “Pension Plan”).  Benefits payable under the Pension Plan are based on employees’ years of service and compensation during the final 10 years of employment. On July 26, 2017, the Compensation Committee of the Company’s Board of Directors approved an amendment to freeze the Pension Plan effective September 30, 2017.  After September 30, 2017, participants in the Pension Plan will not accrue additional benefits for future service or compensation. Participants will retain benefits accumulated as of September 30, 2017 in accordance with the terms of the Pension Plan.  During the first six months of 2017, we contributed $10.0 million to the Pension Plan.

We also sponsor an unfunded defined benefit postretirement medical plan that previously covered substantially all employees, as well as financial advisors licensed with Waddell & Reed, Inc.  The medical plan is contributory with participant contributions adjusted annually. The medical plan does not provide for benefits after age 65 with the exception of a small group of employees that were grandfathered when such plan was established. During the third quarter of 2016, the Company amended this plan to discontinue the availability of coverage for any individuals who retire after December 31, 2016.

The components of net periodic pension and other postretirement costs related to these plans were as follows:

				Other					Other
	Pension Benefits			Postretirement Benefits		Pension Benefits			Postretirement Benefits
	Three months ended June 30,			Three months ended June 30,		Six months ended June 30,			Six months ended June 30,
	2017		2016	2017	2016	2017		2016	2017	2016
	(in thousands)					(in thousands)
Components of net periodic benefit cost:
Service cost		2,683	3,106	—	185		5,409	6,099	—	370
Interest cost		1,604	2,277	14	92		3,258	4,716	29	184
Expected return on plan assets		(2,558)	(3,427)	—	—		(5,117)	(6,963)	—	—
Actuarial (gain) loss amortization		1,169	1,469	(45)	(38)		2,434	3,107	(90)	(77)
Prior service cost (credit) amortization		31	93	(1)	1		62	187	(2)	2
Transition obligation amortization		1	1	—	—		2	2	—	—
Total (1)	$	2,930	3,519	(32)	240		6,048	7,148	(63)	479

(1) For the three months ended June 30, 2017, $1.8 million and $1.1 million of net periodic pension and other postretirement benefit costs were included in compensation and related costs and underwriting and distribution expense, respectively.  For the six months ended June 30, 2017, $3.7 million and $2.3 million of net periodic pension and other postretirement benefit costs were included in compensation and related costs and underwriting and distribution expense, respectively.