Pension and Postretirement Benefits

Pension Plan

In the United States, we sponsor a defined benefit pension plan that covers approximately 20% of all U.S. employees. 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. As of December 31, 2018, the Crane Currency pension plan has been merged into our U.S. defined benefit pension plan. Additionally, a number of our non-U.S. subsidiaries sponsor defined benefit pension plans that cover approximately 9% 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.

Postretirement Plans

Postretirement health care and life insurance benefits are provided for certain employees hired before January 1, 1990, who meet minimum age and service requirements. As a result of the acquisition of Crane Currency, we also have postretirement medical and Medicare supplement that cover substantially all former full-time U.S. employees of Crane Currency.

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



	Pension Benefits						Postretirement Benefits
(in millions) December 31,	2018			2017			2018			2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,074.7		$	1,004.0		$	7.9		$	9.1
Service cost	5.9			5.4			0.3			—
Interest cost	30.1			29.5			1.1			0.2
Plan participants’ contributions	0.6			0.5			0.3			—
Amendments	4.4			—			(7.3		)	—
Actuarial (gain) loss	(59.5		)	31.6			(3.0		)	(0.5		)
Settlements	(1.9		)	(2.3		)	—			—
Benefits paid	(48.1		)	(40.8		)	(2.6		)	(0.9		)
Foreign currency exchange impact	(23.3		)	41.8			—			—
Acquisitions/curtailments/divestitures	48.4			5.4			32.3			—
Administrative expenses paid	(0.3		)	(0.4		)	—			—
Benefit obligation at end of year	$	1,031.0		$	1,074.7		$	29.0		$	7.9
Change in plan assets:
Fair value of plan assets at beginning of year	$	908.1		$	808.5		$	—		$	—
Actual return on plan assets	(47.6		)	87.4			—			—
Foreign currency exchange impact	(25.4		)	37.8			—			—
Employer contributions	57.5			12.7			1.4			—
Administrative expenses paid	(0.7		)	(0.7		)	—			—
Acquisitions	34.9			5.0			—			—
Plan participants’ contributions	0.6			0.5			0.3			—
Settlements/divestitures	(2.1		)	(2.3		)	—			—
Benefits paid	(48.1		)	(40.8		)	(1.7		)	—
Fair value of plan assets at end of year	$	877.2		$	908.1		$	—		$	—
Funded status	$	(153.8	)	$	(166.6	)	$	(29.0	)	$	(7.9	)

Amounts recognized on our Consolidated Balance Sheets consist of:



	Pension Benefits						Postretirement Benefits
(in millions) December 31,	2018			2017			2018			2017
Other assets	$	60.7		$	66.1		$	—		$	—
Current liabilities	(1.3		)	(1.3		)	(2.6		)	(1.0		)
Accrued pension and postretirement benefits	(213.2		)	(231.4		)	(26.4		)	(6.9		)
Funded status	$	(153.8	)	$	(166.6	)	$	(29.0	)	$	(7.9	)

Amounts recognized in accumulated other comprehensive loss consist of:



	Pension Benefits						Postretirement Benefits
(in millions) December 31,	2018			2017			2018			2017
Net actuarial loss (gain)	$	404.8		$	372.3		$	(4.2	)	$	(2.1	)
Prior service credit	(5.5		)	(10.0		)	(6.3		)	—
Total recognized in accumulated other comprehensive loss	$	399.3		$	362.3		$	(10.5	)	$	(2.1	)

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,	2018		2017		2018		2017		2018		2017
Projected benefit obligation	$	580.6	$	579.8	$	450.4	$	494.9	$	1,031.0	$	1,074.7
Accumulated benefit obligation	580.6		579.8		441.7		486.7		1,022.3		1,066.5
Fair value of plan assets	417.5		407.9		459.7		500.2		877.2		908.1

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



(in millions) December 31,	2018		2017
Projected benefit obligation	$	695.2	$	860.0
Accumulated benefit obligation	687.1		852.2
Fair value of plan assets	480.7		627.3

Components of net periodic (benefit) cost are as follows:



	Pension Benefits									Postretirement Benefits
(in millions) For the year ended December 31,	2018			2017			2016			2018			2017			2016
Net Periodic (Benefit) Cost:
Service cost	$	5.9		$	5.4		$	4.7		$	0.3		$	—		$	—
Interest cost	30.1			29.5			31.8			1.1			0.2			0.3
Expected return on plan assets	(65.6		)	(57.0		)	(56.1		)	—			—			—
Amortization of prior service cost	(0.5		)	(0.6		)	(0.6		)	(1.0		)	(0.2		)	(0.2		)
Amortization of net loss (gain)	14.2			14.3			11.3			(0.2		)	(0.3		)	(0.3		)
Recognized curtailment loss	0.3			(0.3		)	—			—			—			—
Settlement costs	0.3			0.5			—			—			—			—
Net periodic (benefit) cost	$	(15.3	)	$	(8.2	)	$	(8.9	)	$	0.2		$	(0.3	)	$	(0.2	)

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic (benefit) cost over the next fiscal year are $15.2 million and $0.4 million, respectively.

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



	Pension Benefits						Postretirement Benefits
For the year ended December 31,	2018		2017		2016		2018		2017		2016
U.S. Plans:
Discount rate	4.36	%	3.75	%	4.29	%	4.30	%	3.90	%	3.90	%
Rate of compensation increase	N/A		N/A		N/A		N/A		N/A		N/A
Non-U.S. Plans:
Discount rate	2.42	%	2.15	%	2.29	%	3.30	%	3.30	%	3.30	%
Rate of compensation increase	3.06	%	2.80	%	2.85	%	N/A		N/A		N/A

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



For the year ended December 31,	2018		2017		2016
U.S. Plans:
Discount rate	3.75	%	4.29	%	4.41	%
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	2.15	%	2.29	%	3.30	%
Expected rate of return on plan assets	6.49	%	6.45	%	6.77	%
Rate of compensation increase	2.80	%	2.85	%	2.81	%

The long-term expected rate of return on plan assets assumptions were determined with input from independent investment consultants and plan actuaries, utilizing asset pricing models and considering historical returns. The discount rates used by us 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 2018 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, 2018, the actual asset allocation for the U.S. plan was 55% equity securities, 14% fixed income securities, 22% alternative assets and 9% cash and cash equivalents.

For the non-U.S. plans, the 6.49% expected rate of return on assets assumption for 2018 reflected a weighted average of the long-term asset allocation targets for our various non-U.S. plans. As of December 31, 2018, the actual weighted average asset allocation for the non-U.S. plans was 24% equity securities, 34% fixed income securities, 41% alternative assets/other and 1% cash and cash equivalents.

The assumed health care cost trend rates are as follows:



December 31,	2018		2017
Health care cost trend rate assumed for next year	7.00	%	7.25	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%	5.10	%
Year that the rate reaches the ultimate trend rate	2029		2029

Assumed health care cost trend rates have a significant effect on the amounts reported for our health care plans.

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



(in millions)	One Percentage Point Increase		One Percentage Point (Decrease)
Effect on total of service and interest cost components	$	1.2	$	1.1
Effect on postretirement benefit obligation	$	22.7	$	22.2

Plan Assets

Our pension plan target allocations and weighted-average asset allocations by asset category are as follows:



	Target Allocation	Actual Allocation
Asset Category December 31,		2018		2017
Equity securities	35%-75%	39	%	47	%
Fixed income securities	20%-50%	24	%	23	%
Alternative assets/Other	0%-35%	32	%	29	%
Cash and money market	0%-10%	5	%	1	%

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 our pension trusts. These factors include, but are not limited to, investment style, investment risk, investment manager performance and costs. We periodically review investment managers and their performance in relation to our plans’ investment objectives.

The primary investment objective of our 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.

Equity securities include investments in large, mid, and small-capitalization 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. Equity securities include Crane Co. common stock, which represents 5% and 6% of plan assets as of December 31, 2018 and 2017, respectively.

The fair value of our pension plan assets as of December 31, 2018, by asset category are as follows:



(in millions)	Active Markets for Identical Assets Level 1		Other Observable Inputs Level 2		Unobservable Inputs Level 3		Net Asset Value ("NAV") Practical Expedient*		Total Fair Value
Cash and Money Markets	$	44.3	$	—	$	—	$	—	$	44.3
Common Stocks
Actively Managed U.S. Equities	113.3		—		—		—		113.3
Fixed Income Bonds and Notes	—		0.1		—		—		0.1
Commingled and Mutual Funds
U.S. Equity Funds	—		—		—		49.4		49.4
Non-U.S. Equity Funds	—		—		—		175.0		175.0
U.S. Fixed Income, Government and Corporate	—		—		—		59.5		59.5
Non-U.S. Fixed Income, Government and Corporate	—		—		—		155.5		155.5
International Balanced Funds	—		—		—		10.7		10.7
Collective Trust	—		—		20.8		19.0		39.8
Alternative Investments
Hedge Funds and LDI	—		—		—		179.2		179.2
International Property Funds	—		—		—		46.3		46.3
Annuity Contract	—		4.1		—		—		4.1
Total Fair Value	$	157.6	$	4.2	$	20.8	$	694.6	$	877.2

* 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 2018, the pension plan's asset classified as Level 3 constitutes an insurance contract valued annually on an actuarial basis.

The fair value of our 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 following table sets forth a summary of pension plan assets valued using NAV or its equivalent as of December 31, 2018 and 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.


(b)	These funds invest in corporate equity securities outside the U.S.


(c)	These funds invest in U.S. fixed income securities, corporate, government and agency.


(d)	These funds invest in corporate and government fixed income securities outside the U.S.


(e)	These funds invest in a blend of equities, fixed income, cash and property outside the U.S.


(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 while matching the liabilities for retirees.

Cash Flows

We expect, based on current actuarial calculations, to contribute cash of approximately $3.1 million to our defined benefit pension plans during 2019. 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		Postretirement Benefits
2019	$	47.2	$	2.3
2020	48.5		2.3
2021	49.8		1.7
2022	52.2		1.7
2023	53.2		1.7
2024 to 2028	286.0		8.2
Total payments	$	536.9	$	17.9

Supplemental Executive Retirement Plan

As a result of the acquisition of Crane Currency, we also have a non-qualified Supplemental Executive Retirement Plan (“SERP”). The SERP, which is not funded, is intended to provide retirement benefits for certain executive officers who were formerly employees of Crane Currency. Benefit amounts are based upon years of service and compensation of the participating employees. We recorded a pre-tax gain related to the SERP of $0.4 million in 2018. Accrued SERP benefits were $5.2 million as of December 31, 2018.

Defined Contribution Plans

We sponsor savings and investment plans that are available to our eligible employees including employees of our subsidiaries. We made contributions to the plans of $9.9 million, $8.5 million and $8.0 million in 2018, 2017 and 2016, respectively.

In addition to participant deferral contributions and company matching contributions on those deferrals, we provide a 3% non-matching contribution to eligible participants. We made non-matching contributions to these plans of $12.5 million, $11.0 million and $10.7 million in 2018, 2017 and 2016, respectively.