Pension and Postretirement Benefits

In the United States, the Company sponsors a defined benefit pension plan that covers approximately 17% 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. Additionally, a number of the Company’s non-U.S. subsidiaries sponsor defined benefit pension plans that cover approximately 12% 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 pre-tax gain related to postretirement benefits of $0.2 million in both 2017 and 2016. Accrued postretirement benefits were $7.8 million and $8.1 million as of December 31, 2017 and 2016, respectively.

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



(in millions) December 31,	2017			2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,004.0		$	988.0
Service cost	5.4			4.7
Interest cost	29.5			31.8
Plan participants’ contributions	0.5			0.5
Amendments	—			0.4
Actuarial loss	31.6			88.4
Settlement	(2.3		)	(1.7		)
Benefits paid	(40.8		)	(42.4		)
Foreign currency exchange impact	41.8			(65.1		)
Acquisitions/curtailments	5.4			—
Adjustment for expenses/tax contained in service cost	(0.4		)	(0.6		)
Benefit obligation at end of year	$	1,074.7		$	1,004.0
Change in plan assets:
Fair value of plan assets at beginning of year	$	808.5		$	816.5
Actual return on plan assets	87.4			87.4
Foreign currency exchange impact	37.8			(59.1		)
Employer contributions	12.7			8.3
Administrative expenses paid	(0.7		)	(1.0		)
Acquisitions	5.0			—
Plan participants’ contributions	0.5			0.5
Settlement	(2.3		)	(1.7		)
Benefits paid	(40.8		)	(42.4		)
Fair value of plan assets at end of year	$	908.1		$	808.5
Funded status	$	(166.6	)	$	(195.5	)

Amounts recognized in the Consolidated Balance Sheets consist of:



(in millions) December 31,	2017			2016
Other assets	$	66.1		$	46.0
Current liabilities	(1.3		)	(1.2		)
Accrued pension and postretirement benefits	(231.4		)	(240.3		)
Funded status	$	(166.6	)	$	(195.5	)

Amounts recognized in accumulated other comprehensive loss consist of:



(in millions) December 31,	2017			2016
Net actuarial loss	$	372.3		$	373.2
Prior service credit	(10.0		)	(10.1		)
Total recognized in accumulated other comprehensive loss	$	362.3		$	363.1

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,	2017		2016		2017		2016		2017		2016
Projected benefit obligation	$	579.8	$	545.8	$	494.9	$	458.2	$	1,074.7	$	1,004.0
Accumulated benefit obligation	579.8		545.8		486.7		450.9		1,066.5		996.7
Fair value of plan assets	407.9		379.8		500.2		428.7		908.1		808.5

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



(in millions) December 31,	2017		2016
Projected benefit obligation	$	860.0	$	834.8
Accumulated benefit obligation	852.2		827.8
Fair value of plan assets	627.3		593.3

Components of net periodic benefit are as follows:



(in millions) For the year ended December 31,	2017			2016			2015
Net Periodic (Benefit) Cost:
Service cost	$	5.4		$	4.7		$	5.2
Interest cost	29.5			31.8			37.9
Expected return on plan assets	(57.0		)	(56.1		)	(62.0		)
Amortization of prior service cost	(0.6		)	(0.6		)	(0.4		)
Amortization of net loss	14.3			11.3			12.3
Recognized curtailment loss	(0.3		)	—			(5.2		)
Settlement costs	0.5			—			0.8
Net periodic benefit	$	(8.2	)	$	(8.9	)	$	(11.4	)

The estimated net loss and prior service benefit for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit over the next fiscal year are $14.2 million and $0.6 million, respectively.

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



For the year ended December 31,	2017		2016		2015
U.S. Plans:
Discount rate	3.75	%	4.29	%	4.41	%
Rate of compensation increase	N/A		N/A		N/A
Non-U.S. Plans:
Discount rate	2.15	%	2.29	%	3.30	%
Rate of compensation increase	2.80	%	2.85	%	2.81	%

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



For the year ended December 31,	2017		2016		2015
U.S. Plans:
Discount rate	4.29	%	4.41	%	4.10	%
Expected rate of return on plan assets	7.75	%	7.75	%	7.75	%
Rate of compensation increase	N/A		N/A		N/A
Non-U.S. Plans:
Discount rate	2.29	%	3.30	%	3.01	%
Expected rate of return on plan assets	6.45	%	6.77	%	6.94	%
Rate of compensation increase	2.85	%	2.81	%	2.40	%

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 2017 reflected a long-term 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, 2017, the actual asset allocation for the U.S. plan was 61% equity securities, 15% fixed income securities, 22% alternative assets and 2% cash and cash equivalents.

For the non-U.S. Plans, the 6.45% expected rate of return on assets assumption for 2017 reflected a weighted average of the long-term asset allocation targets for the Company's various international plans. As of December 31, 2017, the actual weighted average asset allocation for the non-U.S. plans was 35% equity securities, 30% fixed income securities, 34% 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:



	Target Allocation	Actual Allocation
Asset Category December 31,		2017		2016
Equity securities	35%-75%	47	%	47	%
Fixed income securities	20%-50%	23	%	23	%
Alternative assets/Other	0%-35%	29	%	28	%
Money market	0%-10%	1	%	2	%

The Company’s pension investment committee 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%-35% 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 real estate and hedge funds employing 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 6% and 5% of plan assets as of December 31, 2017 and 2016, respectively.

The fair value of the Company’s pension plan assets as of December 31, 2017, by asset category are as follows:



(in millions)	Active Markets for Identical Assets Level 1		Other Observable Inputs Level 2		Unobservable Inputs Level 3		NAV Practical Expedient*		Total Fair Value
Cash and Money Markets	$	13.2	$	—	$	—	$	—	$	13.2
Common Stocks
Actively Managed U.S. Equities	134.4		—		—		—		134.4
Fixed Income Bonds and Notes	—		0.3		—		—		0.3
Commingled and Mutual Funds
U.S. Equity Funds	—		—		—		39.1		39.1
Non-U.S. Equity Funds	—		—		—		249.6		249.6
U.S. Fixed Income, Government and Corporate	—		—		—		59.6		59.6
Non-U.S. Fixed Income, Government and Corporate	—		—		—		190.7		190.7
International Balanced Funds	—		—		—		11.8		11.8
Collective Trust	—		—		21.8		19.4		41.2
Alternative Investments
Hedge Funds	—		—		—		116.2		116.2
International Property Funds	—		—		—		47.1		47.1
Annuity Contract	—		4.9		—		—		4.9
Total Fair Value	$	147.6	$	5.2	$	21.8	$	733.5	$	908.1

* Investments are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.

In 2017, 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 as of December 31, 2016, by asset category are as follows:



(in millions)	Active Markets for Identical Assets Level 1		Other Observable Inputs Level 2		Unobservable Inputs Level 3		NAV Practical Expedient*		Total Fair Value
Cash and Money Markets	$	16.1	$	—	$	—	$	—	$	16.1
Common Stocks
Actively Managed U.S. Equities	112.0		—		—		—		112.0
Fixed Income Bonds and Notes	—		44.3		—		—		44.3
Commingled and Mutual Funds
U.S. Equity Funds	—		—		—		62.3		62.3
Non-U.S. Equity Funds	—		—		—		201.9		201.9
U.S. Fixed Income, Government and Corporate	—		—		—		12.4		12.4
Non-U.S. Fixed Income, Government and Corporate	—		—		—		165.3		165.3
International Balanced Funds	—		—		—		10.1		10.1
Collective Trust	—		—		21.7		17.4		39.1
Alternative Investments
Hedge Funds	—		—		—		106.4		106.4
International Property Funds	—		—		—		37.6		37.6
Annuity Contract	—		1.0		—		—		1.0
Total Fair Value	$	128.1	$	45.3	$	21.7	$	613.4	$	808.5

* Investments are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.

In 2016, the Pension Plan's asset classified as Level 3 constitutes an insurance contract valued annually on an actuarial basis.

The following table sets forth a summary of pension plan assets valued using Net Asset Value ("NAV") or its equivalent as of December 31, 2017:



	Redemption Frequency	Unfunded Commitment	Other Redemption Restrictions	Redemption Notice Period
U.S. Equity Funds (a)	Immediate	None	None	None
Non-U.S. Equity Funds (b)	Immediate	None	None	None
U.S. Fixed Income, Government and Corporate (c)	Immediate	None	None	None
Non-U.S. Fixed Income, Government and Corporate (d)	Immediate	None	None	None
International Balanced Funds (e)	Immediate	None	None	None
Collective Trust Fund (f)	Immediate	None	None	None
Hedge Funds (g)	Quarterly	None	None	65 days written
Hedge Funds (g)	Quarterly	None	None	30 days written
Hedge Funds (g)	Immediate	None	None	None
International Property Funds (h)	Immediate	None	None	None
Non-US Tactical/Diversified Alternative Funds (i)	Immediate	None	None	None


(a)	These funds invest in Corporate equity securities within the U.S. markets and seek to meet or exceed relative benchmarks


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


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


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


(e)	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


(f)	This fund invests in a combination of U.S. and non-U.S. stocks and bonds and is managed by a third party to track liability


(g)	These funds are direct investment alternative investments/hedge funds that deploy a multi-strategy approach to investing (e.g. long/short/event-driven, credit)


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


(i)	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, 2016:



	Redemption Frequency	Unfunded Commitment	Other Redemption Restrictions	Redemption Notice Period
U.S. Equity Funds (a)	Immediate	None	None	None
Non-U.S. Equity Funds (b)	Immediate	None	None	None
U.S. Fixed Income, Government and Corporate (c)	Immediate	None	None	None
Non-U.S. Fixed Income, Gov't and Corp. (d)	Immediate	None	None	None
International Balanced Funds (e)	Immediate	None	None	None
Collective Trust Fund (f)	Immediate	None	None	None
Hedge Funds (g)	12 Months	None	None	65 days written
Hedge Funds (h)	Quarterly	None	None	65 days written
Hedge Funds (h)	Quarterly	None	None	30 days written
Hedge Funds (h)	Immediate	None	None	None
International Property Funds (i)	Immediate	None	None	None
Non-US Tactical/Diversified Alternative Funds (j)	Immediate	None	None	None


(a)	These funds invest in Corporate equity securities within the U.S. markets and seek to meet or exceed relative benchmarks


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


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


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


(e)	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


(f)	This fund invests in a combination of U.S. and non-U.S. stocks and bonds and is managed by a third party to track liability


(g)	This fund is alternative asset in process of liquidation. Amounts included represent funds hold back expected to be distributed in early 2017


(h)	These funds are direct investment alternative investments/hedge funds that deploy a multi-strategy approach to investing (e.g. long/short/event-driven, credit)


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


(j)	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 $25 million to its defined benefit pension plans during 2018. 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
2018	$	42.7
2019	43.1
2020	45.1
2021	46.7
2022	49.1
2023-2027	266.4
Total payments	$	493.1

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 $8.5 million, $8.0 million and $7.9 million in 2017, 2016 and 2015, respectively.

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 $11.0 million, $10.7 million and $8.7 million in 2017, 2016 and 2015, respectively.