We sponsor two qualified, noncontributory defined benefit pension plans, the Vulcan Materials Company Pension Plan (VMC Pension Plan) and the CMG Hourly Pension Plan (CMG Pension Plan). The VMC Pension Plan has been closed to new entrants since 2007 and benefit accruals, based on salaries or wages and years of service, ceased in 2005 for hourly participants and 2013 for salaried participants. The CMG Pension Plan is closed to new entrants other than through one small union and benefits continue to accrue equal to a flat dollar amount for each year of service.

In addition to these qualified plans, we sponsor three unfunded, nonqualified pension plans. The projected benefit obligation presented in the table below includes $67,241,000 and $70,298,000 related to these unfunded, nonqualified pension plans for 2020 and 2019, respectively.

At November 30, 2020, the plans were remeasured to reflect settlement accounting for the CMG Pension Plan and the VMC Pension Plan as a result of voluntary lump sum distributions to certain fully vested plan participants.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at December 31:



in thousands	2020	2019
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 1,090,893	$ 958,936
Service cost	4,899	4,995
Interest cost	29,335	37,640
Actuarial loss	89,109	141,922
Benefits paid	(154,691)	(52,600)
Projected benefit obligation at end of year	$ 1,059,545	$ 1,090,893
Change in Fair Value of Plan Assets
Fair value of assets at beginning of year	$ 949,007	$ 836,770
Actual return on plan assets	141,155	155,955
Employer contribution	8,819	8,882
Benefits paid	(154,691)	(52,600)
Fair value of assets at end of year	$ 944,290	$ 949,007
Funded status	(115,255)	(141,886)
Net amount recognized	$ (115,255)	$ (141,886)
Amounts Recognized in the Consolidated
Balance Sheets
Noncurrent assets	$ 0	$ 9,056
Current liabilities	(8,060)	(8,579)
Noncurrent liabilities	(107,195)	(142,363)
Net amount recognized	$ (115,255)	$ (141,886)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial loss	$ 230,452	$ 268,483
Prior service cost	5,148	6,488
Total amount recognized	$ 235,600	$ 274,971

The following table sets forth the pension plans for which their accumulated benefit obligation (ABO) or projected benefit obligation (PBO) exceeds the fair value of their respective plan assets at December 31:



in thousands	2020	2019
Pension plans with ABO in excess of plan assets
Accumulated benefit obligation	$ 1,058,645	$ 1,009,224
Fair value of assets	944,290	858,936
Pension plans with PBO in excess of plan assets
Projected benefit obligation	$ 1,059,545	$ 1,009,877
Fair value of assets	944,290	858,936

The following table sets forth the components of net periodic benefit cost, amounts recognized in other comprehensive income and weighted-average assumptions of the plans at December 31:



dollars in thousands	2020	2019	2018
Components of Net Periodic Pension
Benefit Cost
Service cost	$ 4,899	$ 4,995	$ 5,716
Interest cost	29,335	37,640	35,503
Expected return on plan assets	(48,599)	(47,751)	(59,188)
Settlement charge	22,740	0	0
Amortization of prior service cost	1,340	1,340	1,340
Amortization of actuarial loss	11,845	5,433	9,826
Net periodic pension benefit cost (credit)	$ 21,560	$ 1,657	$ (6,803)
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial loss (gain)	$ (3,446)	$ 33,717	$ (555)
Prior service cost	0	0	0
Reclassification of prior service cost	(1,340)	(1,340)	(1,340)
Reclassification of actuarial loss	(34,585)	(5,433)	(9,826)
Amount recognized in other comprehensive
income	$ (39,371)	$ 26,944	$ (11,721)
Amount recognized in net periodic pension
benefit cost and other comprehensive
income	$ (17,811)	$ 28,601	$ (18,524)
Assumptions
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate — PBO	3.22%	4.39%	3.72%
Discount rate — service cost (12/31/19 / 11/30/20)	3.49% / 2.89%	4.59%	3.90%
Discount rate — interest cost	2.78%	4.02%	3.35%
Expected return on plan assets (12/31/19 / 11/30/20)	5.75% / 5.25%	5.75%	7.00%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	2.57%	3.28%	4.39%

Plan assets are invested according to an investment policy that allocates investments to return seeking assets and liability hedging assets based on the plans’ funded ratio (fair value of assets/PBO). At December 31, 2020 and 2019, the total pension asset allocation was approximately 50% return seeking and 50% liability hedging. Return seeking assets include index and actively managed mutual funds and collective investment trusts that hold public equity securities (less than 1% of the plans’ assets are in private equity and debt securities via private partnerships). Liability hedging assets include money market securities, inflation linked debt securities, public corporate debt securities, and government debt securities that are actively managed to match the duration of the plans’ liabilities.

At each measurement date, we estimate the net asset values and fair values of our pension assets using various valuation techniques. For certain investments, we use the net asset value (NAV) as a practical expedient to estimating fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as described below:

Level 1: Quoted prices in active markets for identical assets or liabilities
‎Level 2: Inputs that are derived principally from or corroborated by observable market data
‎Level 3: Inputs that are unobservable and significant to the overall fair value measurement

The fair values and net asset values of our pension plan assets at December 31, 2020 and 2019 are in the tables below. The assets in the common/collective trusts and in the private partnerships consist of both return seeking and liability hedging investments.

Fair Value Measurements at December 31, 2020



in thousands	Level 1	Level 2	Level 3	Total
Asset Category
Debt funds	$ 0	$ 456,238	$ 0	$ 456,238
Equity funds	16	115,779	0	115,795
Investments in the fair value hierarchy	$ 16	$ 572,017	$ 0	$ 572,033
Interest in common/collective trusts (at NAV)				367,105
Private partnerships (at NAV)				5,152
Total pension plan assets				$ 944,290

Fair Value Measurements at December 31, 2019



in thousands	Level 1	Level 2	Level 3	Total
Asset Category
Debt funds	$ 0	$ 435,692	$ 0	$ 435,692
Equity funds	549	120,253	0	120,802
Investments in the fair value hierarchy	$ 549	$ 555,945	$ 0	$ 556,494
Interest in common/collective trusts (at NAV)				387,785
Private partnerships (at NAV)				4,728
Total pension plan assets				$ 949,007

The following describes the types of investments included in each asset category listed in the tables above and the valuation techniques we used to determine the fair values or net asset values as of December 31, 2020 and 2019.

The debt funds category consists of U.S. federal, state and local government debt securities, corporate debt securities, foreign government debt securities, and asset-backed securities. The fair values of U.S. government and corporate debt securities are based on current market rates and credit spreads for debt securities with similar maturities. The fair values of debt securities issued by foreign governments are based on prices obtained from broker/dealers and international indices. The fair values of asset-backed securities are priced using prepayment speed and spread inputs that are sourced from the new issue market.

The equity funds category consists of a mutual fund investing in domestic equities. For investment funds publicly traded on a national securities exchange, the fair value is based on quoted market prices. For investment funds not traded on an exchange, the total fair value of the underlying securities is used to determine the net asset value for each unit of the fund held by the pension fund. The estimated fair values of the underlying securities are generally valued based on quoted market prices. For securities without quoted market prices, other observable market inputs are used to determine the fair value.

Common/collective trust fund investments consist of index funds for domestic equities, an actively managed fund for international equities, and a short-term investment fund for highly liquid, short-term debt securities. Investments are valued at the net asset value (NAV) of units of a bank collective trust. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV.

The private partnerships category consists of various venture capital funds, mezzanine debt funds and leveraged buyout funds. The NAV of these investments has been estimated based on methods employed by the general partners, including reference to third-party transactions and valuations of comparable companies.

Total employer contributions to the pension plans are presented below:



in thousands			Pension
Employer Contributions
2018			$ 109,631
2019			8,882
2020			8,819
2021 (estimated)			8,060

For our qualified pension plans, we made discretionary contributions of $100,000,000 during 2018, and made no contributions during 2020 and 2019. We do not anticipate making contributions to our qualified pension plans in 2021. For our nonqualified pension plans, we contributed $8,819,000, $8,882,000 and $9,631,000 during 2020, 2019 and 2018, respectively, and expect to contribute $8,060,000 during 2021.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



in thousands			Pension
Estimated Future Benefit Payments
2021			$ 55,333
2022			56,968
2023			57,558
2024			58,019
2025			56,217
2026-2030			279,537

We contribute to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements for union-represented employees. The risks of participating in multiemployer plans differ from single employer plans as follows:

assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers

if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers

if we cease to have an obligation to contribute to one or more of the multiemployer plans to which we contribute, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability

None of the multiemployer pension plans that we participate in are individually significant. Our contributions to individual multiemployer pension plans did not exceed 5% of the plans’ total contributions in the three years ended December 31, 2020, 2019 and 2018. Total contributions to multiemployer pension plans were $10,277,000 in 2020, $10,385,000 in 2019 and $10,081,000 in 2018.

As of December 31, 2020, a total of 8.2% of our domestic hourly labor force was covered by collective-bargaining agreements. Of such employees covered by collective-bargaining agreements, 14.0% were covered by agreements that expire in 2021. We also employed 339 union employees in Mexico who are covered by a collective-bargaining agreement that will expire in 2021. None of our union employees in Mexico participate in multiemployer pension plans.

In addition to the pension plans noted above, we had one unfunded supplemental retirement plan as of December 31, 2020 and 2019. The accrued costs for the supplemental retirement plan were $2,525,000 at December 31, 2020 and $1,069,000 at December 31, 2019.

POSTRETIREMENT PLANS

In addition to pension benefits, we provide certain healthcare and life insurance benefits for some retired employees. In 2012, we amended our postretirement healthcare plan to cap our portion of the medical coverage cost at the 2015 level (as a result, the accumulated benefit obligation equals the projected benefit obligation). Substantially all our salaried employees and, where applicable, certain of our hourly employees may become eligible for these benefits if they reach a qualifying age and meet certain service requirements. Generally, Company-provided healthcare benefits end when covered individuals become eligible for Medicare benefits, become eligible for other group insurance coverage or reach age 65, whichever occurs first.

The following table sets forth the combined funded status of the plans and their reconciliation with the related amounts recognized in our consolidated financial statements at December 31:



in thousands	2020	2019
Change in Benefit Obligation
Projected benefit obligation at beginning of year	$ 41,187	$ 40,834
Service cost	1,520	1,317
Interest cost	969	1,388
Actuarial (gain) loss	(5,111)	2,677
Benefits paid	(4,682)	(5,029)
Projected benefit obligation at end of year	$ 33,883	$ 41,187
Change in Fair Value of Plan Assets
Fair value of assets at beginning of year	$ 0	$ 0
Actual return on plan assets	0	0
Fair value of assets at end of year	$ 0	$ 0
Funded status	$ (33,883)	$ (41,187)
Net amount recognized	$ (33,883)	$ (41,187)
Amounts Recognized in the Consolidated
Balance Sheets
Current liabilities	$ (4,471)	$ (5,339)
Noncurrent liabilities	(29,412)	(35,848)
Net amount recognized	$ (33,883)	$ (41,187)
Amounts Recognized in Accumulated
Other Comprehensive Income
Net actuarial gain	$ (19,003)	$ (14,642)
Prior service credit	(3,656)	(7,575)
Total amount recognized	$ (22,659)	$ (22,217)

The following table sets forth the components of net periodic benefit cost, amounts recognized in other comprehensive income, weighted-average assumptions and assumed trend rates of the plans at December 31:



dollars in thousands	2020	2019	2018
Components of Net Periodic Postretirement
Benefit Cost
Service cost	$ 1,521	$ 1,317	$ 1,358
Interest cost	969	1,388	1,240
Amortization of prior service credit	(3,919)	(3,919)	(3,962)
Amortization of actuarial gain	(806)	(1,309)	(1,298)
Net periodic postretirement benefit credit	$ (2,235)	$ (2,523)	$ (2,662)
Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income
Net actuarial (gain) loss	$ (5,168)	$ 2,673	$ 835
Reclassification of prior service credit	3,919	3,919	3,962
Reclassification of actuarial gain	806	1,309	1,298
Amount recognized in other comprehensive
income	$ (443)	$ 7,901	$ 6,095
Amount recognized in net periodic
postretirement benefit cost and other
comprehensive income	$ (2,678)	$ 5,378	$ 3,433
Assumptions
Weighted-average assumptions used to
determine net periodic benefit cost for
years ended December 31
Discount rate — PBO	2.84%	4.01%	3.34%
Discount rate — service cost	3.09%	4.23%	3.56%
Discount rate — interest cost	2.42%	3.63%	2.90%
Weighted-average assumptions used to
determine benefit obligation at
December 31
Discount rate	2.09%	2.84%	4.01%

Total employer contributions to the postretirement plans are presented below:



in thousands			Postretirement
Employer Contributions
2018			$ 6,099
2019			5,029
2020			4,682
2021 (estimated)			4,471

The employer contributions shown above are equal to the cost of benefits during the year. The plans are not funded and are not subject to any regulatory funding requirements.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Contributions by participants to the postretirement benefit plans for the years ended December 31 are as follows:

Each year, we review our assumptions for discount rates (used for PBO, service cost, and interest cost calculations) and the expected return on plan assets. Due to plan changes made in 2012 and 2013, annual pay increases and the per capita cost of healthcare benefits do not materially impact plan obligations.

We use a high-quality bond full yield curve approach (specific spot rates for each annual expected cash flow) to establish the discount rates at each measurement date. At December 31, 2020, the discount rates used were as follows:

PBO for various plans – ranged from 1.55% to 2.72% (December 31, 2019 ranged from 2.67% to 3.37%)

Service cost – weighted average of 2.92% and 3.09%, respectively, for our pension plans and our other postretirement plans (2019 figures were 4.59% and 4.23%, respectively)

Interest cost – weighted average of 2.78% and 2.42%, respectively, for our pension plans and our other postretirement plans (2019 figures were 4.02% and 3.63%, respectively)

Our expected return on plan assets is: (1) a long-term view based on our current asset allocation, and (2) a judgment informed by consultation with our retirement plans’ consultant and our pension plans’ actuary. The expected return on plan assets used to measure plan benefit costs was 5.75% for the period January 1, 2020 – November 30, 2020 and 5.25% for the period December 1, 2020 – December 31, 2020 (5.75% in 2019). For 2021, we set the expected return on plan assets to 5.25%.

In addition to our pension and postretirement plans, we sponsor two defined contribution plans. Substantially all salaried and nonunion hourly employees are eligible to be covered by one of these plans. Under these plans, we match employees’ eligible contributions at established rates. Expense recognized in connection with these matching obligations totaled $50,772,000 in 2020, $53,853,000 in 2019 and $40,718,000 in 2018.