Pension and Postretirement Benefits

In the United States, the Company sponsors a defined benefit pension plan that covers approximately 19% of all U.S. employees. In the fourth quarter of 2012, the Company announced that pension eligible employees will no longer earn future benefits in the domestic defined benefit pension plan effective January 1, 2013. The benefits are based on years of service and compensation on a final average pay basis, except for certain hourly employees where benefits are fixed per year of service. This plan is funded with a trustee in respect of past and current service. Charges to expense are based upon costs computed by an independent actuary. Contributions are intended to provide for future benefits earned to date. A number of the Company’s non-U.S. subsidiaries sponsor defined benefit pension plans that cover approximately 11% of all non-U.S. employees. The benefits are typically based upon years of service and compensation. These plans are funded with trustees in respect of past and current service.

Non-union employees hired after December 31, 2005 are no longer eligible for participation in the ELDEC Corporation (“ELDEC”) and Interpoint Corporation (“Interpoint”) money purchase plan. Qualifying employees receive an additional 3% Company contribution to their 401(K) plan accounts. Certain of the Company’s non-U.S. defined benefit pension plans were also amended whereby eligibility for new participants will cease.

Postretirement health care and life insurance benefits are provided for certain employees hired before January 1, 1990, who meet minimum age and service requirements. The Company does not pre-fund these benefits and has the right to modify or terminate the plan. The Company recorded a pretax gain related to postretirement benefits of $0.3 million and $0.0 million in 2015 and 2014, respectively. Accrued postretirement benefits were $8.7 million and $8.6 million as of December 31, 2015 and 2014, respectively.

A summary of benefit obligations, fair value of plan assets and funded status is as follows:



	Pension Benefits
(in millions) December 31,	2015			2014
Change in benefit obligation:
Beginning of year	$	1,093.2		$	934.3
Service cost	5.2			4.9
Interest cost	37.9			40.9
Plan participants’ contributions	0.5			0.7
Amendments	(18.2		)	—
Actuarial (gain) loss	(60.3		)	192.7
Settlement	(2.8		)	—
Benefits paid	(41.4		)	(41.7		)
Foreign currency exchange impact	(25.5		)	(38.0		)
Acquisition/divestitures/curtailment	(0.3		)	—
Adjustment for expenses/tax contained in service cost	(0.3		)	(0.6		)
Benefit obligation at end of year	$	988.0		$	1,093.2
Change in plan assets:
Fair value of plan assets at beginning of year	$	874.6		$	870.7
Actual return on plan assets	(2.0		)	54.7
Foreign currency exchange impact	(28.5		)	(33.2		)
Employer contributions	17.0			24.5
Administrative expenses paid	(0.9		)	(1.1		)
Plan participants’ contributions	0.5			0.7
Settlement	(2.8		)	—
Benefits paid	(41.4		)	(41.7		)
Fair value of plan assets at end of year	$	816.5		$	874.6
Funded status	$	(171.5	)	$	(218.6	)

Amounts recognized in the Consolidated Balance Sheets consist of:



	Pension Benefits
(in millions) December 31,	2015			2014
Other assets	$	56.3		$	53.0
Current liabilities	(1.1		)	(1.0		)
Accrued pension	(226.7		)	(270.6		)
Funded status	$	(171.5	)	$	(218.6	)

Amounts recognized in accumulated other comprehensive loss consist of:



	Pension Benefits
(in millions) December 31,	2015			2014
Net actuarial loss (gain)	$	347.4		$	363.5
Prior service cost (credit)	(11.6		)	0.9
	$	335.8		$	364.4

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the U.S. and Non-U.S. plans, are as follows:



	Pension Obligations/Assets
	U.S.				Non-U.S.				Total
(in millions) December 31,	2015		2014		2015		2014		2015		2014
Projected benefit obligation	$	548.5	$	581.8	$	439.5	$	511.4	$	988.0	$	1,093.2
Accumulated benefit obligation	548.4		581.8		432.5		496.7		980.9		1,078.5
Fair value of plan assets	380.2		414.2		436.3		460.4		816.5		874.6

Information for pension plans with an accumulated benefit obligation in excess of plan assets is as follows:



	Pension Benefits
(in millions) December 31,	2015		2014
Projected benefit obligation	$	791.5	$	910.3
Accumulated benefit obligation	785.0		896.4
Fair value of plan assets	563.9		638.8

Components of net periodic benefit cost are as follows:



	Pension Benefits
(in millions) December 31,	2015			2014			2013
Net Periodic Benefit Cost:
Service cost	$	5.2		$	4.9		$	6.4
Interest cost	37.9			40.9			36.8
Expected return on plan assets	(62.0		)	(62.5		)	(52.2		)
Amortization of prior service cost	(0.4		)	0.1			—
Amortization of net loss	12.3			5.1			13.9
Recognized curtailment loss	(5.2		)	—			(0.3		)
Settlement costs	0.8			—			—
Special termination benefits	—			—			—
Net periodic (benefit) cost	$	(11.4	)	$	(11.5	)	$	4.6

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $11.7 million and $(0.6) million, respectively.

The weighted average assumptions used to determine benefit obligations are as follows:



	Pension Benefits
December 31,	2015		2014		2013
U.S. Plans:
Discount rate	4.41	%	4.10	%	4.90	%
Rate of compensation increase	N/A		N/A		3.50	%
Non-U.S. Plans:
Discount rate	3.30	%	3.01	%	4.05	%
Rate of compensation increase	2.81	%	2.40	%	2.56	%

The weighted-average assumptions used to determine net periodic benefit cost are as follows:



	Pension Benefits
December 31,	2015		2014		2013
U.S. Plans:
Discount rate	4.10	%	4.90	%	4.20	%
Expected rate of return on plan assets	7.75	%	7.75	%	7.75	%
Rate of compensation increase	N/A		N/A		3.50	%
Non-U.S. Plans:
Discount rate	3.01	%	4.05	%	3.93	%
Expected rate of return on plan assets	6.94	%	7.01	%	7.01	%
Rate of compensation increase	2.40	%	2.56	%	3.14	%

The long-term expected rate of return on plan assets assumptions were determined by the Company with input from independent investment consultants and plan actuaries, utilizing asset pricing models and considering historical returns. The discount rates used by the Company for valuing pension liabilities are based on a review of high quality corporate bond yields with maturities approximating the remaining life of the projected benefit obligations.

In the U.S. Plan, the 7.75% expected rate of return on assets assumption for 2015 reflected a long-term asset allocation target comprised of an asset allocation range of 25%-75% equity securities, 15%-35% fixed income securities, 10%-35% alternative assets, and 0%-10% cash. As of December 31, 2015, the actual asset allocation for the U.S. plan was 62% equity securities, 15% fixed income securities, 22% alternative assets, and 1% cash and cash equivalents.

For the non-U.S. Plans, the 6.94% expected rate of return on assets assumption for 2015 reflected a weighted average of the long-term asset allocation targets for our various international plans. As of December 31, 2015, the actual weighted average asset allocation for the non-U.S. plans was 38% equity securities, 36% fixed income securities, 25% alternative assets/other, and 1% cash and cash equivalents.

Plan Assets

The Company’s pension plan target allocations and weighted-average asset allocations by asset category are as follows:



		Actual Allocation
Asset Category December 31,		2015		2014
Equity securities	35%-75%	49	%	51	%
Fixed income securities	20%-50%	26	%	27	%
Alternative assets/Other	0%-20%	24	%	20	%
Money market	0%-10%	1	%	2	%

The Company’s pension investment committees and trustees, as applicable, exercise reasonable care, skill and caution in making investment decisions. Independent investment consultants are retained to assist in executing the plans’ investment strategies. A number of factors are evaluated in determining if an investment strategy will be implemented in the Company’s pension trusts. These factors include, but are not limited to, investment style, investment risk, investment manager performance

and costs.

The primary investment objective of the Company’s various pension trusts is to maximize the value of plan assets, focusing on capital preservation, current income and long-term growth of capital and income. The plans’ assets are typically invested in a broad range of equity securities, fixed income securities, alternative assets and cash instruments. The Company’s investment strategies across its pension plans worldwide results in a global target asset allocation range of 35%-75% equity securities, 20%-50% fixed income securities, 0%-20% alternative assets, and 0%-10% money market, as noted in the table above.

Equity securities include investments in large-cap, mid-cap, and small-cap companies located in both developed countries and emerging markets around the world. Fixed income securities include government bonds of various countries, corporate bonds that are primarily investment-grade, and mortgage-backed securities. Alternative assets include investments in hedge funds with a wide variety of strategies.

The Company periodically reviews investment managers and their performance in relation to the plans’ investment objectives. The Company expects its pension trust investments to meet or exceed their predetermined benchmark indices, net of fees. Generally, however, the Company realizes that investment strategies should be given a full market cycle, normally over a three to five year time period, to achieve stated objectives.

Equity securities include Crane Co. common stock, which represents 4% of plan assets at both December 31, 2015 and 2014.

The fair value of the Company’s pension plan assets at December 31, 2015, by asset category are as follows:



(in millions)	Active Markets for Identical Assets Level 1		Other Observable Inputs Level 2		Unobservable Inputs Level 3		Total Fair Value
Cash and Money Markets	$	4.9	$	—	$	—	$	4.9
Common Stocks
Actively Managed U.S. Equities	134.5		—		—		134.5
Fixed Income Bonds and Notes	—		46.1		—		46.1
Commingled and Mutual Funds
U.S. Equity Funds	—		49.9		—		49.9
Non-U.S. Equity Funds	—		218.6		—		218.6
U.S. Fixed Income, Government and Corporate	—		11.5		—		11.5
Non-U.S. Fixed Income, Government and Corporate	—		157.2		—		157.2
International Balanced Funds	—		10.1		—		10.1
Collective Trust	—		17.1		19.0		36.1
Alternative Investments
Hedge Funds	—		102.3		—		102.3
International Property Funds	—		44.3		—		44.3
Annuity Contract	—		1.0		—		1.0
Total Fair Value	$	139.4	$	658.1	$	19.0	$	816.5

In 2015, the Pension Plan's asset classified as Level 3 constitutes an insurance contract valued annually on an actuarial basis.

The fair value of the Company’s pension plan assets at December 31, 2014, by asset category are as follows:



(in millions)	Active Markets for Identical Assets Level 1		Other Observable Inputs Level 2		Unobservable Inputs Level 3		Total Fair Value
Cash and Money Markets	$	18.8	$	—	$	—	$	18.8
Common Stocks
Actively Managed U.S. Equities	145.1		—		—		145.1
Fixed Income Bonds and Notes	—		46.1		—		46.1
Commingled and Mutual Funds
U.S. Equity Funds	—		100.8		—		100.8
Non-U.S. Equity Funds	—		202.6		—		202.6
U.S. Fixed Income, Government and Corporate	—		11.5		—		11.5
U.S. Tactical Allocation Balanced Fund	—		16.0		—		16.0
Non-U.S. Fixed Income, Government and Corporate	—		177.5		—		177.5
International Balanced Funds	—		10.1		—		10.1
Alternative Investments
Hedge Funds	—		90.3		—		90.3
International Property Funds	—		53.4		—		53.4
Commodities Funds	—		1.4		—		1.4
Annuity Contract	—		1.0		—		1.0
Total Fair Value	$	163.9	$	710.7	$	—	$	874.6

The following table sets forth a summary of pension plan assets valued using Net Asset Value (NAV) or its equivalent as of December 31, 2015:

(in millions)

Fair
Value*

Redemption
Frequency

Unfunded
Commitment

Other
Redemption
Restrictions

Redemption Notice Period

Archstone Offshore Fund, Ltd (a)

34.9

12 Months

None

90 days written

Evanston Capital Management (a)

31.8

12 Months

None

65 days written

Strategic Value Fund (b)

0.8

12 Months

None

90 days written

Paloma International (c)

8.0

Quarterly

None

65 days written

Graham Absolute Return (d)

8.0

Quarterly

None

30 days written

U.S. Equity Funds (e)

49.9

immediate

None

Non-US Equity Funds (f)

218.6

immediate

None

Non US Fixed Income, Gov't and Corp. (g)

157.2

immediate

None

International Property Funds (h)

44.3

immediate

None

International Balanced Funds (i)

10.1

immediate

None

US Government and Corporate Fixed Income (j)

11.5

immediate

None

Collective Trust Fund (k)

36.1

immediate

None

Non-US Tactical/Diversified Alternative Funds (l)

18.8

immediate

None

* The fair values of the investments have been estimated using the net asset value of the investment


(a)	These funds are alternative assets which seeks to outperform equities while maintaining a lower risk profile than equities


(b)	This fund is an alternative investment that invests in distressed debt instruments seeking price appreciation


(c)	This fund is a direct investment hedge fund that deploys a multi-strategy approach to investing (e.g. long/short, event driven)


(d)	This fund is a direct investment hedge fund that deploys a multi-manager, a multi-strategy macro approach to investing (e.g. long/short, event driven)


(e)	These funds invest in Corporate equity securities within the US markets and seek to meet or exceed relative benchmarks


(f)	These funds invest in Corporate equity securities within the Non-US markets and seek to meet or exceed relative benchmarks


(g)	These funds invest in Corporate and Governments fixed income securities outside the U.S. and seek to meet or exceed relative benchmarks


(h)	These funds invest in real property outside the U.S.


(i)	These funds invest in a blend of equities, fixed income, cash and property outside the U.S. and seek to outperform a similarly weighted index


(j)	These funds invest in U.S. fixed income securities, corporate, government and agency, and seek to outperform the Barclays Capital Aggregate Index


(k)	These funds invest a combination of US and non-US stocks and bonds and are managed by a third party to track liability


(l)	These funds invest in traditional and alternative strategies and seek to add diversification while adding returns greater than equity in a non-correlated approach

The following table sets forth a summary of pension plan assets valued using Net Asset Value (NAV) or its equivalent as of December 31, 2014:

(in millions)

Fair
Value*

Redemption
Frequency

Unfunded
Commitment

Other
Redemption
Restrictions

Redemption Notice Period

Archstone Offshore Fund, Ltd (a)

36.3

12 Months

None

90 days written

Evanston Capital Management (a)

30.9

12 Months

None

60 days written

Strategic Value Fund (b)

7.7

12 Months

None

90 days written

U.S. Equity Funds (c)

100.8

immediate

None

Non-U.S. Equity Funds (d)

202.6

immediate

None

Non-U.S. Fixed Income, Government and Corporate (e)

177.5

immediate

None

International Property Funds (f)

53.4

immediate

None

International Balanced Funds (g)

10.1

immediate

None

U.S. Government and Corporate Fixed Income (h)

11.5

immediate

None

U.S. Tactical Allocation Balanced Fund (i)

16.0

immediate

None

Commodities & Metals Fund (j)

1.4

immediate

None

Non-US Tactical/Alternative Fund (k)

15.4

immediate

None

* The fair values of the investments have been estimated using the net asset value of the investment


(a)	These funds are alternative assets which seeks to outperform equities while maintaining a lower risk profile than equities.


(b)	This fund is an alternative investment that invests in distressed debt instruments seeking price appreciation.


(c)	These funds invest in U.S. equity securities and seeks to meet or exceed relative benchmarks.


(d)	These funds invest in equity securities outside the U.S. and seek to meet or exceed relative benchmarks.


(e)	These funds invest in Corporate and Governments fixed income securities outside the U.S. and seek to meet or exceed relative benchmarks.


(f)	These funds invest in real property outside the U.S.


(g)	These funds invest in a pre defined mix of non-U.S. equity and non-U.S. fixed income securities and seek to meet or exceed the performance of a passive/local benchmark of similar mixes.


(h)	These funds invest in U.S. fixed income securities, corporate, government and agency, and seek to outperform the Barclays Capital Aggregate Index.


(i)	These funds invest in a blend of equities, fixed income, cash and property in the U.S. and seek to outperform a similarly weighted index.


(j)	These funds invest in various commodities and precious metals


(k)	These funds invest in traditional and alternative strategies and seek to add diversification while adding returns greater than equity in a non-correlated approach

Cash Flows

The Company expects, based on current actuarial calculations, to contribute cash of approximately $8 million to its defined benefit pension plans during 2016. Cash contributions in subsequent years will depend on a number of factors including the investment performance of plan assets.

Estimated Future Benefit Payments

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



Estimated future payments (in millions)	Pension Benefits
2016	$	42.1
2017	41.6
2018	43.9
2019	44.9
2020	47.5
2021-2025	264.6
Total payments	$	484.6

The Company’s subsidiaries ELDEC and Interpoint have a money purchase plan to provide retirement benefits for all eligible employees which was frozen effective January 1, 2014. The contributions to this plan were $0.0 million in 2015, $1.1 million in 2014 and $2.2 million in 2013.

The Company and its subsidiaries sponsor savings and investment plans that are available to eligible employees of the Company and its subsidiaries. The Company made contributions to the plans of $7.9 million in 2015, $6.9 million in 2014 and $6.7 million in 2013.

In addition to participant deferral contributions and Company matching contributions on those deferrals, the Company provides a 3% non-matching contribution to eligible participants. The Company made non-matching contributions to these plans of $8.7 million in 2015, $3.5 million in 2014 and $3.3 million in 2013.