We sponsor several pension plans for our employees, including our principal plan (the “Retirement Plan”), which is a non-contributory defined benefit pension plan covering substantially all domestic non-union employees. Pension benefits are provided for certain domestic union employees through separate plans. Employees of our foreign subsidiaries receive pension coverage, to the extent deemed appropriate, through plans that are governed by local statutory requirements.

The Retirement Plan provides benefits that are based upon years of service and average compensation with accrued benefits vesting after five years. Benefits for union employees are generally based upon years of service, or a combination of years of service and average compensation. Our pension funding policy considers contributions in an amount on an annual basis that can be deducted for federal income tax purposes, using a different actuarial cost method and different assumptions from those used for financial reporting. For the fiscal year ending May 31, 2021, we are required to contribute approximately $8,000 to the retirement plans in the U.S. and approximately $6.7 million to our foreign plans. During the year, the company will evaluate whether to make additional contributions. During February 2020, we contributed an additional $51.5 million to the RPM International Inc. Retirement Plan in the U.S. than what had been planned at the beginning of the fiscal year.

	U.S. Plans									Non-U.S. Plans
(In thousands)	2020			2019			2018			2020			2019			2018
Service cost	$	39,425		$	37,528		$	37,859		$	5,400		$	4,693		$	4,620
Interest cost		20,415			21,987			17,518			4,842			5,420			5,025
Expected return on plan assets		(34,291	)		(33,867	)		(32,342	)		(7,118	)		(7,907	)		(8,270	)
Amortization of:
Prior service cost		9			118			117			(36	)		(30	)		(31	)
Net actuarial losses recognized		18,516			13,087			14,470			2,029			1,229			1,758
Curtailment/settlement losses		-			-			-			86			89			128
Net Pension Cost	$	44,074		$	38,853		$	37,622		$	5,203		$	3,494		$	3,230

The changes in benefit obligations and plan assets, as well as the funded status of our pension plans at May 31, 2020 and 2019, were as follows:

	U.S. Plans						Non-U.S. Plans
(In thousands)	2020			2019			2020			2019
Benefit obligation at beginning of year	$	660,277		$	617,255		$	205,967		$	194,149
Service cost		39,425			37,528			5,400			4,693
Interest cost		20,415			21,987			4,842			5,420
Benefits paid		(41,186	)		(45,917	)		(6,269	)		(7,488	)
Participant contributions		-			-			1,106			1,003
Plan amendments		-			11			(893	)		(33	)
Plan combination		-			-			922			-
Plan settlements/curtailments		-			-			(288	)		(607	)
Actuarial losses		83,808			29,413			2,718			17,286
Premiums paid		-			-			(99	)		(97	)
Currency exchange rate changes		-			-			(3,128	)		(8,359	)
Benefit Obligation at End of Year	$	762,739		$	660,277		$	210,278		$	205,967
Fair value of plan assets at beginning of year	$	496,865		$	487,233		$	187,112		$	188,960
Actual return on plan assets		8,689			(2,272	)		9,899			6,737
Employer contributions		52,182			57,821			6,331			6,770
Participant contributions		-			-			1,106			1,003
Benefits paid		(41,186	)		(45,917	)		(6,269	)		(7,488	)
Plan combination		-			-			182			-
Premiums paid		-			-			(99	)		(97	)
Plan settlements/curtailments		-			-			(281	)		(580	)
Currency exchange rate changes		-			-			(3,107	)		(8,193	)
Fair Value of Plan Assets at End of Year	$	516,550		$	496,865		$	194,874		$	187,112
(Deficit) of plan assets versus benefit obligations at end of year	$	(246,189	)	$	(163,412	)	$	(15,404	)	$	(18,855	)
Net Amount Recognized	$	(246,189	)	$	(163,412	)	$	(15,404	)	$	(18,855	)
Accumulated Benefit Obligation	$	662,197		$	553,392		$	197,167		$	192,533

The fair value of the assets held by our pension plans has increased at May 31, 2020 since our previous measurement date at May 31, 2019, due to our plan contributions and market returns. Total plan liabilities have increased due to increased benefit accruals and a decrease in the discount rate used to value the liability. We have increased our recorded liability for the net underfunded status of our pension plans. Due to lower discount rates, we expect pension expense in fiscal 2021 to be higher when compared to our fiscal 2020 expense level. Any future declines in the value of our pension plan assets or increases in our plan liabilities could require us to increase our recorded liability for the net underfunded status of our pension plans and could also require accelerated and higher cash contributions to our pension plans.

Amounts recognized in the Consolidated Balance Sheets for the years ended May 31, 2020 and 2019 are as follows:

The following table summarizes the relationship between our plans' benefit obligations and assets:

	U.S. Plans
	2020				2019
(In thousands)	Benefit Obligation		Plan Assets		Benefit Obligation		Plan Assets
Plans with projected benefit obligations in excess of plan assets	$	762,739	$	516,550	$	660,277	$	496,865
Plans with accumulated benefit obligations in excess of plan assets		662,197		516,550		553,392		496,865
Plans with assets in excess of projected benefit obligations		-		-		-		-
Plans with assets in excess of accumulated benefit obligations		-		-		-		-

	Non-U.S. Plans
	2020				2019
(In thousands)	Benefit Obligation		Plan Assets		Benefit Obligation		Plan Assets
Plans with projected benefit obligations in excess of plan assets	$	163,589	$	134,791	$	162,824	$	134,921
Plans with accumulated benefit obligations in excess of plan assets		150,478		134,598		149,390		134,921
Plans with assets in excess of projected benefit obligations		46,689		60,083		43,143		52,191
Plans with assets in excess of accumulated benefit obligations		46,689		60,276		43,143		52,191

The following table presents the pretax net actuarial loss and prior service (costs) recognized in accumulated other comprehensive income (loss) not affecting retained earnings:

The following table includes the changes recognized in other comprehensive income:

		U.S. Plans						Non-U.S. Plans
(In thousands)		2020			2019			2020			2019
Changes in plan assets and benefit obligations recognized in other comprehensive income:
	Prior service cost	$	-		$	11		$	(893	)	$	(33	)
	Net loss (gain) arising during the year		109,409			65,552			(70	)		18,456
	Effect of exchange rates on amounts included in AOCI		-			-			(922	)		(1,593	)
Amounts recognized as a component of net periodic benefit cost:
	Amortization or curtailment recognition of prior service (cost) benefit		(9	)		(118	)		36			30
	Amortization or settlement recognition of net (loss)		(18,516	)		(13,087	)		(2,115	)		(1,345	)
	Total recognized in other comprehensive loss (income)	$	90,884		$	52,358		$	(3,964	)	$	15,515

The following table presents the amounts in accumulated other comprehensive income (loss) as of May 31, 2020 that have not yet been recognized in net periodic pension cost, but are expected to be recognized in our Consolidated Statements of Income during the fiscal year ending May 31, 2021:

In measuring the projected benefit obligation and net periodic pension cost for our plans, we utilize actuarial valuations. These valuations include specific information pertaining to individual plan participants, such as salary, age and years of service, along with certain assumptions. The most significant assumptions applied include discount rates, expected return on plan assets and rate of compensation increases. We evaluate these assumptions, at a minimum, on an annual basis, and make required changes, as applicable. In developing our expected long-term rate of return on pension plan assets, we consider the current and expected target asset allocations of the pension portfolio, as well as historical returns and future expectations for returns on various categories of plan assets. Expected return on assets is determined by using the weighted-average return on asset classes based on expected return for the target asset allocations of the principal asset categories held by each plan. In determining expected return, we consider both historical performance and an estimate of future long-term rates of return. Actual experience is used to develop the assumption for compensation increases.

The following weighted-average assumptions were used to determine our year-end benefit obligations and net periodic pension cost under the plans:

	U.S. Plans									Non-U.S. Plans
Net Periodic Pension Cost	2020			2019			2018			2020			2019			2018
Discount rate		3.65	%		4.12	%		3.81	%		2.61	%		3.09	%		2.79	%
Expected return on plan assets		7.40	%		7.40	%		7.89	%		3.91	%		4.30	%		4.37	%
Rate of compensation increase		3.80	%		3.80	%		3.80	%		2.86	%		2.85	%		3.00	%

The following tables illustrate the weighted-average actual and target allocation of plan assets:

	U.S. Plans
	Target Allocation			Actual Asset Allocation
(Dollars in millions)	as of May 31, 2020			2020		2019
Equity securities		55	%	$	261.0	$	295.1
Fixed income securities		25	%		106.4		83.8
Multi-class		20	%		118.2		78.1
Cash (1)					30.8		39.7
Other					0.2		0.2
Total assets		100	%	$	516.6	$	496.9

	Non-U.S. Plans
	Target Allocation			Actual Asset Allocation
(Dollars in millions)	as of May 31, 2020			2020		2019
Equity securities		33	%	$	79.3	$	79.9
Fixed income securities		48	%		88.2		79.3
Cash					0.1		0.1
Property and other		19	%		27.3		27.8
Total assets		100	%	$	194.9	$	187.1

The following tables present our pension plan assets as categorized using the fair value hierarchy at May 31, 2020 and 2019:

U.S. Plans
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at May 31, 2020
U.S. Treasury and other government	$	-	$	12,973	$	-	$	12,973
State and municipal bonds		-		508		-		508
Foreign bonds		-		715		-		715
Mortgage-backed securities		-		23,824		-		23,824
Corporate bonds		-		34,317		-		34,317
Stocks - large cap		19,589		-		-		19,589
Mutual funds - equity		-		241,426		-		241,426
Mutual funds - multi-class		-		118,205		-		118,205
Mutual funds - fixed		-		33,993		-		33,993
Cash and cash equivalents		30,830		-		-		30,830
Limited partnerships		-		-		170		170
Total	$	50,419	$	465,961	$	170	$	516,550

Non-U.S. Plans
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at May 31, 2020
Pooled equities	$	-	$	78,472	$	-	$	78,472
Pooled fixed income		-		87,610		-		87,610
Foreign bonds		-		603		-		603
Insurance contracts		-		-		27,267		27,267
Mutual funds		-		855		-		855
Cash and cash equivalents		67		-		-		67
Total	$	67	$	167,540	$	27,267	$	194,874

U.S. Plans
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at May 31, 2019
U.S. Treasury and other government	$	-	$	13,854	$	-	$	13,854
State and municipal bonds		-		386		-		386
Foreign bonds		-		1,031		-		1,031
Mortgage-backed securities		-		20,075		-		20,075
Corporate bonds		-		26,204		-		26,204
Stocks - mid cap		13,392		-		-		13,392
Stocks - small cap		15,720		-		-		15,720
Mutual funds - equity		-		265,969		-		265,969
Mutual funds - multi-class		-		78,143		-		78,143
Mutual funds - fixed		-		22,215		-		22,215
Cash and cash equivalents		39,704		-		-		39,704
Limited partnerships		-		-		172		172
Total	$	68,816	$	427,877	$	172	$	496,865

Non-U.S. Plans
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at May 31, 2019
Pooled equities	$	-	$	78,733	$	-	$	78,733
Pooled fixed income		-		79,061		-		79,061
Foreign bonds		-		227		-		227
Insurance contracts		-		-		27,843		27,843
Mutual funds		-		1,125		-		1,125
Cash and cash equivalents		123		-		-		123
Total	$	123	$	159,146	$	27,843	$	187,112

The following table includes the activity that occurred during the years ended May 31, 2020 and 2019 for our Level 3 assets:

			Actual Return on Plan Assets For:
	Balance at		Assets Still Held			Assets Sold		Purchases, Sales and			Balance at
(In thousands)	Beginning of Period		at Reporting Date			During Year		Settlements, net ⁽¹⁾			End of Period
Year ended May 31, 2020	$	28,015		(691	)		-		113		$	27,437
Year ended May 31, 2019		28,448		1,228			-		(1,661	)		28,015

The primary objective for the investments of the Retirement Plan is to provide for long-term growth of capital without undue exposure to risk. This objective is accomplished by utilizing a strategy of equities, fixed-income securities and cash equivalents in a mix that is conducive to participation in a rising market, while allowing for adequate protection in a falling market. Our Investment Committee oversees the investment allocation process, which includes the selection and evaluation of investment managers, the determination of investment objectives and risk guidelines, and the monitoring of actual investment performance. In order to manage investment risk properly, Plan policy prohibits short selling, securities lending, financial futures, options and other specialized investments, except for certain alternative investments specifically approved by the Investment Committee. The Investment Committee reviews, on a quarterly basis, reports of actual Plan investment performance provided by independent third parties, in addition to its review of the Plan investment policy on an annual basis. The investment objectives are similar for our plans outside of the U.S., subject to local regulations.

The goals of the investment strategy for pension assets include: the total return of the funds shall, over an extended period of time, surpass an index composed of the MSCI World Stock Index (equity), the Barclays Aggregate Bond Index (fixed income), and 30-day Treasury Bills (cash), weighted appropriately to match the asset allocation of the plans. The equity portion of the funds shall surpass the MSCI World Stock Index over a full market cycle, while the fixed-income portion shall surpass Barclays Aggregate Bond Index over a full market cycle. The purpose of the core fixed-income fund is to increase return in the form of cash flow, provide a hedge against inflation and to reduce the volatility of the fund overall. Therefore, the primary objective of the core fixed-income portion is to match the Barclays Aggregate Bond Index. The purpose of including opportunistic fixed-income assets such as, but not limited to, global and high-yield securities in the portfolio is to enhance the overall risk-return characteristics of the Fund.

In addition to the defined benefit pension plans discussed above, we also sponsor employee savings plans under Section 401(k) of the Internal Revenue Code, which cover most of our employees in the U.S. We record expense for defined contribution plans for any employer-matching contributions made in conjunction with services rendered by employees. The majority of our plans provide for matching contributions made in conjunction with services rendered by employees. Matching contributions are invested in the same manner that the participants invest their own contributions. Matching contributions charged to income were $21.1 million, $19.4 million and $18.7 million for the years ending May 31, 2020, 2019 and 2018, respectively.

We expect to pay the following estimated pension benefit payments in the next five years (in millions): $71.0 in 2021, $71.0 in 2022, $70.6 in 2023, $70.1 in 2024 and $67.3 in 2025. In the five years thereafter (2026-2030), we expect to pay $339.2 million.