Employee Benefit Plans

The Company sponsors noncontributory qualified defined benefit pension plans ("qualified pension plans") and post-employment benefit plans which provide certain cash payments and medical, dental and life insurance benefits to eligible retired employees and their beneficiaries and covered dependents. The qualified pension plans and certain post-employment benefit plans were created as part of the acquisition of the Northern New England operations from Verizon and mirrored the prior Verizon plans.

The qualified pension plan available to represented employees was closed to new participants and benefits under the prior formula were frozen as of October 14, 2014. For existing participants, future benefit accruals for service on and after February 22, 2015 are at 50% of prior rates and are capped at 30 years of total credited service. The qualified pension plan available to non-represented employees remains frozen.

The post-employment benefit plan provides medical, dental and life insurance benefits to eligible non-represented employees and former represented employees and, in some instances, to their spouses and families. Effective August 28, 2014, active represented employees are no longer eligible for this post-employment benefit plan. Upon ratification of the collective bargaining agreements on February 22, 2015 and for 30 months thereafter, active represented employees who retire and meet the eligibility requirements and their spouses are eligible to receive certain monthly reimbursements of medical insurance premiums until the retired employee reaches age 65 or dies, at which time the benefit will cease for the spouse as well.

The Company makes contributions to the qualified pension plans to meet minimum funding requirements under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and has the ability to elect to make additional discretionary contributions. The other post-employment benefit plans are unfunded and the Company funds the benefits that are paid. Annually, and as necessary, the Company remeasures the net liabilities of its qualified pension and other post-employment benefit plans.

Net Periodic Benefit Cost. The Company capitalizes a portion of net periodic benefit cost in conjunction with its use of internal labor resources utilized on capital projects. During the three months ended March 31, 2017, the Company recognized settlement charges in the qualified pension plan that covers non-represented employees of $0.4 million. The settlements were incurred when the cumulative amount of lump sums paid to participants in the respective years exceeded the expected service and interest cost for the respective years. Components of the net periodic benefit cost related to the Company's qualified pension plans and other post-employment benefit plans for the three months ended March 31, 2017 and 2016 are as follows (in thousands):



	Three Months Ended March 31, 2017						Three Months Ended March 31, 2016
	Qualified Pension Plans			Post- employment Benefit Plans			Qualified Pension Plans			Post- employment Benefit Plans
Service cost	$	1,787		$	31		$	1,593		$	41
Interest cost	3,946			959			3,821			1,008
Expected return on plan assets	(4,178		)	—			(3,834		)	—
Amortization of actuarial loss	1,190			271			1,349			31,704
Amortization of prior service cost	(761		)	(455		)	(761		)	(88,017		)
Plan settlement	441			—			—			—
Net periodic benefit cost	2,425			806			2,168			(55,264		)
Less capitalized portion	(134		)	—			(132		)	—
Other post-employment benefit and pension expense/(benefit)	$	2,291		$	806		$	2,036		$	(55,264	)

Return on Plan Assets. For the three months ended March 31, 2017 and 2016, the actual return on the pension plan assets were annualized gains/(losses) of approximately 16.6% and 3.5%, respectively. Net periodic benefit cost for 2017 assumes a weighted average annualized expected return on plan assets of approximately 7.5%.

Contributions and Benefit Payments. During the three months ended March 31, 2017, contributions of $3.6 million were made to the Company-sponsored qualified defined benefit pension plans and the Company funded benefit payments of $1.2 million under its post-employment benefit plans.