14. Defined Benefit Plans

We have a number of pension plans in the United States, covering many of the Company’s employees, however most have been closed to new hires. The plans provide for payment of retirement benefits, mainly commencing between the ages of 55 and 65, and also for payment of certain disability benefits. After meeting certain qualifications, an employee acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length of service and/or earnings. Employer contributions to the plans are made, as necessary, to ensure legal funding requirements are satisfied. Also, from time to time, we may make contributions in excess of the legal funding requirements.

In addition, the Company provides postretirement health care and life insurance benefits to certain retirees.



(In millions)	Pension Benefits						Postretirement Benefits

Obligations and Funded Status at December 31	2015			2014			2015			2014
Change in the Projected Benefit Obligation (PBO):
Projected benefit obligation at beginning of year	$	808.6		$	662.3		$	20.1		$	34.2
Service cost		11.5			10.4			0.1			0.1
Interest cost		33.7			32.9			0.6			0.8
Plan amendments		—			—			0.1			(15.3	)
Actuarial (gain) loss		(54.1	)		133.1			(1.3	)		3.9
Participants’ contributions		—			—			—			0.3
Benefits paid		(31.4	)		(30.1	)		(2.6	)		(4.2	)
Medicare Part D reimbursement		—			—			0.3			0.4
Plan curtailment gain		(0.6	)		—			—			—
Plan settlement gain		—			—			(1.6	)		—
Foreign exchange		—			—			(0.1	)		(0.1	)
Projected benefit obligation at end of year	$	767.7		$	808.6		$	15.6		$	20.1
Accumulated benefit obligation at end of year (excludes the impact of future compensation increases)	$	759.8		$	793.2
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	608.2		$	583.8		$	—		$	—
Actual return on plan assets		(18.2	)		52.0			—			—
Employer contributions		3.3			2.5			2.3			3.5
Participants’ contributions		—			—			—			0.3
Medicare Part D reimbursement		—			—			0.3			0.4
Benefits paid		(31.4	)		(30.1	)		(2.6	)		(4.2	)
Fair value of plan assets at end of year	$	561.9		$	608.2		$	—		$	—
Funded status (Fair value of plan assets less PBO)	$	(205.8	)	$	(200.4	)	$	(15.6	)	$	(20.1	)

The accumulated benefit obligation exceeds the fair value of assets for all pension plans. The 2014 actuarial loss includes $0.9 million related to an acquired business.

Amounts recognized in the consolidated balance sheets consist of:



	Pension Benefits						Postretirement Benefits

(In millions)	2015			2014			2015			2014
Current benefit payment liability	$	(1.1	)	$	(1.0	)	$	(2.0	)	$	(2.6	)
Accrued benefit liability		(204.7	)		(199.4	)		(13.6	)		(17.5	)
Net amount recognized	$	(205.8	)	$	(200.4	)	$	(15.6	)	$	(20.1	)

In the third quarter of 2015, we recognized actuarial losses of $6.1 million related to curtailment accounting due to the sale of the Waterloo tool storage business in discontinued operations in addition to the $2.5 million of actuarial losses reflected below in net periodic benefit cost.

In the first quarter of 2014, we communicated our decision to amend certain postretirement benefit plans to reduce health benefits for certain current and retired employees. The reduction in accrued retiree benefit plan liabilities was $15.3 million and we recorded actuarial losses of $0.6 million and prior service credits of $3.5 million.

In the first half of 2013, we communicated our decision to amend certain postretirement benefit plans to reduce health benefits for certain current and retired employees. The impact of these changes was a reduction in accrued retiree benefit plan liabilities of $34.7 million in 2013, and we recognized actuarial losses of $4.0 million due to a decrease in the discount rate and a resulting lower threshold for loss recognition because of the reduced postretirement obligation. Liability reductions resulting from these benefit reductions are recorded as amortization of prior service credits in net income in accordance with accounting requirements. In addition, in the first quarter of 2013, we communicated to certain employees our decision to freeze an hourly pension plan by December 31, 2016. As a result, we remeasured our pension liability, updating our pension measurement assumptions, and recorded a $20.0 million reduction in the liability. The curtailment charge associated with this pension freeze was insignificant. See Note 12, “Accumulated Other Comprehensive (Loss) Income,” for information on the impact on accumulated other comprehensive income.

As of December 31 2015, we adopted the new Society of Actuaries MP-2015 mortality tables, resulting in a decrease in our postretirement obligations of approximately $0.5 million, and a corresponding decrease in deferred actuarial losses in accumulated other comprehensive income. As of December 31 2014, we adopted the Society of Actuaries RP-2014 mortality tables, resulting in an increase in our postretirement obligations of approximately $48 million, and a corresponding increase in deferred actuarial losses in accumulated other comprehensive income.

The amounts in accumulated other comprehensive income on the consolidated balance sheets that have not yet been recognized as components of net periodic benefit cost were as follows:



(In millions)	Pension Benefits			Postretirement Benefits
Net actuarial gain at December 31, 2013	$	(34.3	)	$	(0.5	)
Recognition of actuarial loss		(12.5	)		(1.2	)
Current year actuarial gain		123.3			2.9
Net actuarial loss at December 31, 2014	$	76.5		$	1.2
Recognition of actuarial (loss) gain		(9.0	)		0.4
Current year actuarial gain (loss)		4.2			(1.3	)
Net actuarial loss due to curtailment		(0.6	)		—
Net actuarial loss at December 31, 2015	$	71.1		$	0.3
Net prior service cost (credit) at December 31, 2013	$	0.5		$	(33.5	)
Prior service credit recognition due to plan amendments		—			(15.3	)
Amortization		(0.1	)		27.6
Net prior service cost (credit) at December 31, 2014	$	0.4		$	(21.2	)
Prior service cost recognition due to plan amendments		—			0.1
Amortization		(0.1	)		13.5
Prior service cost recognition due to curtailment		(0.2	)		—
Prior service credit recognition due to settlement		—			1.2
Net prior service cost (credit) at December 31, 2015	$	0.1		$	(6.4	)
Total at December 31, 2015	$	71.2		$	(6.1	)

The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year are amortization of net prior service credits related pension benefits of zero and postretirement benefits of $(5.5) million.

Components of net periodic benefit cost were as follows:



Components of Net Periodic Benefit Cost	Pension Benefits									Postretirement Benefits

(In millions)	2015			2014			2013			2015			2014			2013
Service cost	$	11.5		$	10.4		$	11.4		$	0.1		$	0.1		$	0.3
Interest cost		33.7			32.9			30.1			0.6			0.8			1.7
Expected return on plan assets		(40.2	)		(42.2	)		(41.8	)		—			—			—
Recognition of actuarial losses (gains)		2.9			12.5			0.8			(0.4	)		1.2			4.4
Amortization of prior service cost (credits)		0.1			0.1			0.1			(13.5	)		(27.6	)		(27.4	)
Curtailment and settlement losses		—			—			0.1			—			—			0.1
Net periodic benefit cost	$	8.0		$	13.7		$	0.7		$	(13.2	)	$	(25.5	)	$	(20.9	)



Assumptions	Pension Benefits			Postretirement Benefits

	2015	2014	2013	2015	2014	2013
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31:
Discount rate	4.6%	4.2%		4.1%	3.5%
Rate of compensation increase	4.0%	4.0%		—	—
Weighted-Average Assumptions Used to Determine Net Cost for Years Ended December 31:
Discount rate	4.2%	5.0%	4.2%	3.5%	4.3%	3.7%
Expected long-term rate of return on plan assets	6.8%	7.4%	7.8%	—	—	—
Rate of compensation increase	4.0%	4.0%	4.0%	—	—	—



	Postretirement Benefits

	2015			2014
Assumed Health Care Cost Trend Rates Used to Determine Benefit Obligations and Net Cost at December 31:
Health care cost trend rate assumed for next year		7.3/8.2	%^(a)		7.6/7.5	%^(a)
Rate that the cost trend rate is assumed to decline (the ultimate trend rate)		4.5	%		4.5	%
Year that the rate reaches the ultimate trend rate		2024			2022

^(a)	The pre-65 initial health care cost trend rate is shown first / followed by the post-65 rate.

A one-percentage-point change in assumed health care cost trend rates would have the following effects:



(In millions)	1-Percentage- Point Increase		1-Percentage- Point Decrease
Effect on total of service and interest cost	$	—	$	(0.1	)
Effect on postretirement benefit obligation		1.2		(1.3	)

Plan Assets

Pension assets by major category of plan assets and the type of fair value measurement as of December 31, 2015 were as follows:


(In millions)	Total as of balance sheet date		Level 2 – Significant other observable inputs		Level 3 – Significant unobservable inputs
Group annuity/insurance contracts	$	22.3	$	—	$	22.3
Commingled funds:
Cash and cash equivalents		5.8		5.8		—
Equity		249.1		249.1		—
Fixed income		233.8		233.8		—
Multi-strategy hedge funds		22.3		—		22.3
Real estate		28.6		—		28.6
Total	$	561.9	$	488.7	$	73.2

A reconciliation of Level 3 measurements as of December 31, 2015 was as follows:



			Commingled Funds

(In millions)	Group annuity/ insurance contracts		Multi-strategy hedge funds		Real estate		Total
January 1, 2015	$	21.8	$	21.6	$	25.1	$	68.5
Actual return on assets related to assets still held		0.5		0.7		3.5		4.7
December 31, 2015	$	22.3	$	22.3	$	28.6	$	73.2

Pension assets by major category of plan assets and the type of fair value measurement as of December 31, 2014 were as follows:



(In millions)	Total as of balance sheet date		Level 2 – Significant other observable inputs		Level 3 – Significant unobservable inputs
Group annuity/insurance contracts	$	21.8	$	—	$	21.8
Commingled funds:
Cash and cash equivalents		9.1		9.1		—
Equity		282.6		282.6		—
Fixed income		248.0		248.0		—
Multi-strategy hedge funds		21.6		—		21.6
Real estate		25.1		—		25.1
Total	$	608.2	$	539.7	$	68.5

A reconciliation of Level 3 measurements as of December 31, 2014 was as follows:



			Commingled Funds
(In millions)	Group annuity/ insurance contracts		Multi-strategy hedge funds		Real estate		Total
January 1, 2014	$	21.2	$	20.5	$	22.8	$	64.5
Actual return on assets related to assets still held		0.6		1.1		2.3		4.0
December 31, 2014	$	21.8	$	21.6	$	25.1	$	68.5

Our defined benefit plans owns a variety of investment assets. Level 2 assets include primarily pooled funds, involving investments in fixed income and equity securities valued using net asset values of participation units held in common collective trusts, as reported by the managers of the trusts and as supported by the unit prices of actual purchase and sale transactions. Level 2 plan assets also include an unregistered money market fund that invests in a variety of cash and cash equivalents. Level 3 plan assets include a hedge fund-of-funds and a real estate fund that invests primarily in direct and indirect equity and debt investments in improved real properties, both of which are valued using the net asset value. Level 3 assets also include group annuity/insurance contracts valued at institutional evaluation prices consistent with industry practices. Our investment strategy is to optimize investment returns through a diversified portfolio of investments, taking into consideration underlying plan liabilities and asset volatility. A Master Trust was established to hold the assets of our domestic defined benefit plans. The defined benefit asset allocation policy of the trust allows for an equity allocation of 0% to 75%, a fixed income allocation of 25% to 100%, a cash allocation of up to 25% and other investments up to 20%. Asset allocations are based on the underlying liability structure. All retirement asset allocations are reviewed periodically to ensure the allocation meets the needs of the liability structure.

Our 2016 expected blended long-term rate of return on plan assets of 6.8% was determined based on the nature of the plans’ investments, our current asset allocation and projected long-term rates of return from pension investment consultants.

Estimated Future Retirement Benefit Payments

The following retirement benefit payments are expected to be paid:



(In millions)	Pension Benefits		Postretirement Benefits
2016	$	34.6	$	1.8
2017		36.2		1.1
2018		37.6		1.1
2019		39.5		1.0
2020		41.0		1.0
Years 2021-2025		226.4		4.6

Estimated future retirement benefit payments above are estimates and could change significantly based on differences between actuarial assumptions and actual events and decisions related to lump sum distribution options that are available to participants in certain plans.

Defined Contribution Plan Contributions

We sponsor a number of defined contribution plans. Contributions are determined under various formulas. Cash contributions by the Company related to these plans amounted to $18.3 million, $21.5 million and $18.7 million in 2015, 2014 and 2013, respectively.