Note 9 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Cleco does not expect to make any contributions to the pension plan in 2019. Cleco Power is the plan sponsor and Support Group is the plan administrator. The plan was amended on February 4, 2019, to include certain former NRG Energy employees, who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan amendment reflect an employee’s years of service, age at retirement, and accrued benefit at retirement.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits.

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of net periodic pension and other benefits cost for the three and six months ended June 30, 2019, and 2018 were as follows:



	PENSION BENEFITS						OTHER BENEFITS
	FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE THREE MONTHS ENDED JUNE 30,
(THOUSANDS)	2019			2018			2019			2018
Components of periodic benefit costs
Service cost	$	2,140		$	2,361		$	280		$	338
Interest cost	5,593			5,472			400			357
Expected return on plan assets	(6,629		)	(5,938		)	—			—
Amortizations
Prior period service credit	(18		)	(18		)	—			—
Net loss (gain)	2,050			2,960			(35		)	5
Net periodic benefit cost	$	3,136		$	4,837		$	645		$	700



	PENSION BENEFITS						OTHER BENEFITS
	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2018			2017			2018			2017
Components of periodic benefit costs
Service cost	$	4,207		$	4,753		$	568		$	675
Interest cost	11,243			10,654			800			715
Expected return on plan assets	(13,251		)	(11,875		)	—			—
Amortizations
Prior period service credit	(36		)	(36		)	—			—
Net loss (gain)	3,925			5,921			(80		)	10
Net periodic benefit cost	$	6,088		$	9,417		$	1,288		$	1,400

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the three and six months ended June 30, 2019, was $0.6 million and $1.1 million, respectively. The expense of the pension plan related to Cleco’s other subsidiaries for the three and six months ended June 30, 2018, was $0.5 million and $1.0 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019, was $0.7 million and $1.5 million, respectively. The expense related to other benefits reflected in Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2018, was $0.8 million and $1.6 million, respectively. The current and non-current portions of the other benefits liability for Cleco and Cleco Power at June 30, 2019, and December 31, 2018, were as follows:



Cleco
(THOUSANDS)	AT JUNE 30, 2019		AT DEC. 31, 2018
Current	$	4,130	$	4,130
Non-current	$	35,690	$	36,325



Cleco Power
(THOUSANDS)	AT JUNE 30, 2019		AT DEC. 31, 2018
Current	$	3,584	$	3,584
Non-current	$	31,300	$	31,694

SERP

Certain Cleco officers are covered by SERP. Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a rabbi trust. The life insurance policies issued on SERP participants designate the rabbi trust as the beneficiary. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies that employed the officer. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco and Cleco Power’s Condensed Consolidated Statements of Income. The components of the net SERP for the three and six months ended June 30, 2019, and 2018 were as follows:



	FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2019			2018			2019			2018
Components of periodic benefit costs
Service cost	$	52		$	166		$	165		$	271
Interest cost	838			1,004			1,663			1,764
Amortizations
Prior period service credit	(35		)	(47		)	(70		)	(81		)
Net loss	370			647			762			1,232
Net periodic benefit cost	$	1,225		$	1,770		$	2,520		$	3,186

The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019, was $0.1 million and $0.4 million, respectively. The expense related to SERP reflected on Cleco Power’s Condensed Consolidated Statements of Income for the three and six months ended June 30, 2018, was $0.4 million and $0.7 million, respectively.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at June 30, 2019, and December 31, 2018, were as follows:



Cleco
(THOUSANDS)	AT JUNE 30, 2019		AT DEC. 31, 2018
Current	$	4,478	$	4,478
Non-current	$	73,479	$	73,936



Cleco Power
(THOUSANDS)	AT JUNE 30, 2019		AT DEC. 31, 2018
Current	$	930	$	930
Non-current	$	11,844	$	12,025

401(k) Plan

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary, and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan was amended upon the close of the Cleco Cajun Transaction to include Cleco Cajun employees. Cleco’s 401(k) Plan expense for the three and six months ended June 30, 2019, and 2018 was as follows:



	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	1,792	$	1,229	$	4,059	$	3,292

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the three and six months ended June 30, 2019, and 2018 was as follows:



	FOR THE THREE MONTHS ENDED JUNE 30,				FOR THE SIX MONTHS ENDED JUNE 30,
(THOUSANDS)	2019		2018		2019		2018
401(k) Plan expense	$	821	$	209	$	1,752	$	611