7. EMPLOYEE BENEFITS

We have a qualified defined benefit pension plan (“Pension Plan”) covering substantially all of our employees who began their employment prior to March 31, 2009. Effective March 31, 2009, the Pension Plan was frozen such that no new participants may enter the Pension Plan and no further benefits will accrue. However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned.

We also have a limited number of supplemental retirement plans to provide key employees hired prior to March 31, 2009, with additional retirement benefits. These plans are funded on a pay‑as‑you‑go basis and the accrued pension obligation is largely included in other long‑term obligations. We paid $8.5 million, $8.5 million and $8.3 million in 2015, 2014 and 2013, respectively, for these plans. We also provide or subsidize certain life insurance benefits for employees.

The following tables provide reconciliations of the pension and post‑ retirement benefit plans’ benefit obligations, fair value of assets and funded status as of December 27, 2015, and December 28, 2014:


	Pension Benefits				Post-retirement Benefits
(in thousands)	2015		2014		2015		2014
Change in Benefit Obligation
Benefit obligation, beginning of year	$	2,051,907	$	1,849,321	$	10,602	$	12,586
Service cost		11,680		8,030		—		—
Interest cost		84,994		91,004		368		514
Plan participants’ contributions		—		—		35		267
Actuarial (gain)/loss		(101,952)		213,176		(87)		467
Gross benefits paid		(103,062)		(101,441)		(1,035)		(1,611)
Plan amendment		—		—		—		(1,621)
Administrative expenses		(12,247)		(8,183)		—		—
Benefit obligation, end of year	$	1,931,320	$	2,051,907	$	9,883	$	10,602


	Pension Benefits				Post-retirement Benefits
(in thousands)	2015		2014		2015		2014
Change in Plan Assets
Fair value of plan assets, beginning of year	$	1,478,686	$	1,432,695	$	—	$	—
Actual return on plan assets		(22,307)		122,133		—		—
Employer contribution		8,533		33,482		1,000		1,344
Plan participants’ contributions		—		—		35		267
Gross benefits paid		(103,062)		(101,441)		(1,035)		(1,611)
Administrative expenses		(12,247)		(8,183)		—		—
Fair value of plan assets, end of year	$	1,349,603	$	1,478,686	$	—	$	—


	Pension Benefits				Post-retirement Benefits
(in thousands)	2015		2014		2015		2014
Funded Status
Fair value of plan assets	$	1,349,603	$	1,478,686	$	—	$	—
Benefit obligations		(1,931,320)		(2,051,907)		(9,883)		(10,602)
Funded status and amount recognized, end of year	$	(581,717)	$	(573,221)	$	(9,883)	$	(10,602)

Amounts recognized in the consolidated balance sheets at December 27, 2015, and December 28, 2014, consists of:


	Pension Benefits				Post-retirement Benefits
(in thousands)	2015		2014		2015		2014
Current liability	$	(8,450)	$	(8,529)	$	(1,298)	$	(1,270)
Noncurrent liability		(573,267)		(564,692)		(8,585)		(9,332)
	$	(581,717)	$	(573,221)	$	(9,883)	$	(10,602)

Amounts recognized in accumulated other comprehensive income for the years ended December 27, 2015, and December 28, 2014, consist of:


	Pension Benefits				Post-retirement Benefits
(in thousands)	2015		2014		2015		2014
Net actuarial loss/(gain)	$	705,853	$	701,408	$	(8,568)	$	(9,385)
Prior service cost/(credit)		—		—		(10,690)		(12,768)
	$	705,853	$	701,408	$	(19,258)	$	(22,153)

The elements of retirement and post‑retirement costs are as follows:


	Years Ended
	December 27,		December 28,		December 29,
(in thousands)	2015		2014		2013
Pension plans:
Service Cost	$	11,680	$	8,030	$	5,545
Interest Cost		84,994		91,004		84,596
Expected return on plan assets		(106,283)		(107,460)		(101,053)
Prior service cost amortization		—		12		14
Actuarial loss		22,194		16,009		25,557
Net pension expense		12,585		7,595		14,659
Net post-retirement benefit credit		(2,614)		(2,963)		(2,497)
Net retirement expenses	$	9,971	$	4,632	$	12,162

Our discount rate was determined by matching a portfolio of long‑term, non‑callable, high-quality bonds to the plans’ projected cash flows.

Weighted average assumptions used for valuing benefit obligations were:


	Pension Benefit				Post-retirement
	Obligations				Obligations
	2015		2014		2015		2014
Discount rate	4.71	%	4.24	%	4.21	%	3.69	%

Weighted average assumptions used in calculating expense:


	Pension Benefit Expense						Post-retirement Expense
	December 27,		December 28,		December 29,		December 27,		December 28,		December 29,
	2015		2014		2013		2015		2014		2013
Expected long-term return on plan assets	7.75	%	8.00	%	8.00	%	N/A		N/A		N/A
Discount rate	4.24	%	5.01	%	4.17	%	3.69	%	4.36	%	3.39	%

Contributions and Cash Flows

We did not have a required cash minimum contribution to the Pension Plan in 2015 and made no voluntary contributions. In 2014 and 2013, we contributed $25 million and $7.6 million, respectively, of cash to the Pension Plan.

In February 2016, we contributed certain of our real property appraised at $47.1 million to our Pension Plan and we entered into leases for the contributed properties. We expected our required pension contribution under the Employee Retirement Income Security Act to be approximately $2.0 million in 2016, and the contribution of real property will exceed our required pension contribution for 2016. The contribution and leaseback of these properties in 2016 will be treated as a financing transaction and, accordingly, we will continue to depreciate the carrying value of the properties in our financial statements. No gain or loss will be recognized on the contributions until the termination of the individual leases on those properties. At the time of our contribution, our pension obligation was reduced and a financing obligation will be recorded. The financing obligation will be reduced by a portion of the lease payments made to the Pension Plan each month. The balance of this obligation at December 27, 2015, was $32.4 million and relates to certain real properties that were contributed to the Pension Plan in 2011.

Expected benefit payments to retirees under our retirement and post‑retirement plans over the next 10 years are summarized below:


	Retirement		Post-retirement
(in thousands)	Plans (1)		Plans
2016	$	101,524	$	1,297
2017		104,592		1,198
2018		107,158		1,105
2019		112,402		1,026
2020		113,173		942
2021-2025		612,003		3,567
Total	$	1,150,852	$	9,135

⁽¹⁾

Largely to be paid from the qualified defined benefit pension plan

Pension Plan Assets

Our investment policies are designed to maximize Pension Plan returns within reasonable and prudent levels of risk, with an investment horizon of greater than 10 years so that interim investment returns and fluctuations are viewed with appropriate perspective. The policy also aims to maintain sufficient liquid assets to provide for the payment of retirement benefits and plan expenses, hence, small portions of the equity and debt investments are held in marketable mutual funds.

Our policy seeks to provide an appropriate level of diversification of assets, as reflected in its target allocations, as well as limits placed on concentrations of equities in specific sectors or industries. It uses a mix of active managers and passive index funds and a mix of separate accounts, mutual funds, common collective trusts and other investment vehicles.

Our assumed long‑term return on assets was developed using a weighted average return based upon the Pension Plan’s portfolio of assets and expected returns for each asset class, taking into account projected inflation, interest rates and market returns. The assumed return was also reviewed in light of historical and recent returns in total and by asset class.

As of December 27, 2015, and December 28, 2014, the target allocations for the Pension Plan assets were 61% equity securities, 33% debt securities and 6% real estate securities.

The table below summarizes the Pension Plan’s financial instruments that are carried at fair value on a recurring basis by the fair value hierarchy levels discussed above, as of the year ended December 27, 2015:


	2015
	Plan Assets
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	844	$	—	$	—	$	844
Mutual funds		436,316		—		—		436,316
Corporate debt instruments		—		112		—		112
Common collective trusts		—		845,686		—		845,686
Real estate		—		—		50,360		50,360
Private equity funds		—		—		7,282		7,282
Total	$	437,160	$	845,798	$	57,642	$	1,340,600
Pending trades								9,003
							$	1,349,603

The table below summarizes changes in the fair value of the Pension Plan’s Level 3 investment assets held for the year ended December 27, 2015:


(in thousands)	Real Estate		Private Equity		Total
Beginning Balance, December 28, 2014	$	47,579	$	6,636	$	54,215
Purchases, issuances, sales, settlements		—		—		—
Realized gains (losses)		2,479		—		2,479
Transfer in or out of level 3		(3,936)		—		(3,936)
Unrealized gains (losses)		4,238		646		4,884
Ending Balance, December 27, 2015	$	50,360	$	7,282	$	57,642


	2014
	Plan Assets
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1,068	$	—	$	—	$	1,068
Mutual funds		485,488		—		—		485,488
Corporate debt instruments		—		106		—		106
Common collective trusts		—		937,809		—		937,809
Real estate		—		—		47,579		47,579
Private equity funds		—		—		6,636		6,636
Total	$	486,556	$	937,915	$	54,215	$	1,478,686

The table below summarizes changes in the fair value of the Pension Plan’s Level 3 investment assets held for the year ended December 28, 2014:


(in thousands)	Real Estate		Private Equity (1)		Total
Beginning Balance, December 29, 2013	$	52,265	$	7,167	$	59,432
Purchases, issuances, sales, settlements		(3,312)		—		(3,312)
Realized gains		3,973		(16,153)		(12,180)
Transfer in or out of level 3		(3,973)		(483)		(4,456)
Unrealized gains		(1,374)		16,105		14,731
Ending Balance, December 28, 2014	$	47,579	$	6,636	$	54,215

⁽¹⁾

The activity within the unrealized gains (losses) and the realized gains (losses) relates to closing out two funds within the private equity funds. There was no impact to the total asset value of the private equity funds as a result of these transactions.

Cash and cash equivalents. The carrying value of these items approximates fair value.

Mutual funds. These investments are publicly traded investments, which are valued using the Net Asset Value (NAV). The NAV of the mutual funds is a quoted price in an active market. The NAV is determined once a day after the closing of the exchange based upon the underlying assets in the fund, less the fund’s liabilities, expressed on a per‑share basis.

Corporate debt instruments. The fair value of corporate debt instruments is based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar debt instruments, the fair value is based upon an industry valuation model, which maximizes observable inputs.

Common collective trusts. These investments are valued based on the NAV of the underlying investments and are provided by the fund issuers. NAV for these funds represent the quoted price in a non‑market environment. There are no restrictions on participants’ ability to withdraw funds from the common collective trusts.

Real estate. On January 13, 2011, we contributed Company‑owned real property from seven locations to our Pension Plan. The Pension Plan obtained independent appraisals of the property, and based on these appraisals, the Pension Plan recorded the contribution at fair value on January 13, 2011. The properties are leased by us for our newspaper operations. The properties are managed on behalf of the Pension Plan by an independent fiduciary, and the terms of the leases between us and the Pension Plan were negotiated with the fiduciary. The property was valued by independent appraisals conducted under the direction of the independent fiduciary. Certain properties have been sold by the Pension Plan and others may be sold by the Pension Plan in the future.

Private equity funds. Private equity funds represent investments in limited partnerships, which invest in start‑up or other private companies. Fair value was estimated based on valuations of comparable public companies, recent sales of comparable private and public companies and discounted cash flow analysis of portfolio companies.

401(k) Plan

We have a deferred compensation plan (“401(k) plan”), which enables qualified employees to voluntarily defer compensation. The 401(k) plan includes a matching company contribution and a supplemental contribution that is tied to our performance. We suspended our matching contributions to the 401(k) plan in 2009 and as of December 27, 2015, we have not reinstated that benefit.