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Pension and Postretirement Benefits
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Pension and Postretirement Benefits
PENSION AND POSTRETIREMENT BENEFITS
We sponsor several noncontributory defined benefit pension plans, covering substantially all U.S. employees and certain non-U.S. employees, which provide benefits based on years of service, age, job grade levels and type of compensation. Retirement benefits for all other covered employees are provided through contributory pension plans, cash balance pension plans and government-sponsored retirement programs. All funded defined benefit pension plans receive funding based on independent actuarial valuations to provide for current service and an amount sufficient to amortize unfunded prior service over periods not to exceed 30 years, with funding falling within the legal limits prescribed by prevailing regulation. We also maintain unfunded defined benefit plans that, as permitted by local regulations, receive funding only when benefits become due.
Our defined benefit plan strategy is to ensure that current and future benefit obligations are adequately funded in a cost-effective manner. Additionally, our investing objective is to achieve the highest level of investment performance that is compatible with our risk tolerance and prudent investment practices. Because of the long-term nature of our defined benefit plan liabilities, our funding strategy is based on a long-term perspective for formulating and implementing investment policies and evaluating their investment performance.
The asset allocation of our defined benefit plans reflects our decision about the proportion of the investment in equity and fixed income securities, and, where appropriate, the various sub-asset classes of each. At least annually, we complete a comprehensive review of our asset allocation policy and the underlying assumptions, which includes our long-term capital markets rate of return assumptions and our risk tolerances relative to our defined benefit plan liabilities.
The expected rates of return on defined benefit plan assets are derived from review of the asset allocation strategy, expected long-term performance of asset classes, risks and other factors adjusted for our specific investment strategy. These rates are impacted by changes in general market conditions, but because they are long-term in nature, short-term market changes do not significantly impact the rates.
Our U.S. defined benefit plan assets consist of a balanced portfolio of equity and fixed income securities. Our non-U.S. defined benefit plan assets include a significant concentration of United Kingdom ("U.K.") fixed income securities. We monitor investment allocations and manage plan assets to maintain acceptable levels of risk.
For all periods presented, we used a measurement date of December 31 for each of our U.S. pension plans, non-U.S. pension plans and postretirement medical plans.
U.S. Defined Benefit Plans 
We maintain qualified and non-qualified defined benefit pension plans in the U.S. The qualified plan provides coverage for substantially all full-time U.S. employees who receive benefits, up to an earnings threshold specified by the U.S. Department of Labor. The non-qualified plans primarily cover a small number of employees including current and former members of senior management, providing them with benefit levels equivalent to other participants, but that are otherwise limited by U.S. Department of Labor rules. The U.S. plans are designed to operate as "cash balance" arrangements, under which the employee has the option to take a lump sum payment at the end of their service. The difference between total accumulated benefit obligation and total projected benefit obligation ("Benefit Obligation") is immaterial.
The following are assumptions related to the U.S. defined benefit pension plans:
 
Year Ended December 31,
 
2019
 
2018
 
2017
Weighted average assumptions used to determine Benefit Obligations:
 

 
 

 
 

Discount rate
3.41
%
 
4.34
%
 
3.63
%
Rate of increase in compensation levels
3.50

 
3.50

 
4.01

Weighted average assumptions used to determine net pension expense:
 
 
 
 
 
Long-term rate of return on assets
6.00
%
 
6.00
%
 
6.00
%
Discount rate
4.34

 
3.63

 
4.00

Rate of increase in compensation levels
3.50

 
4.01

 
4.01



At December 31, 2019 as compared with December 31, 2018, we decreased our discount rate from 4.34% to 3.41% based on an analysis of publicly-traded investment grade U.S. corporate bonds, which had a lower yield due to current market conditions. In determining 2019 expense, the expected rate of return on U.S. plan assets remained constant at 6.00%, primarily based on our target allocations and expected long-term asset returns. The long-term rate of return assumption is calculated using a quantitative approach that utilizes unadjusted historical returns and asset allocation as inputs for the calculation. For all U.S. plans, we adopted the Pri-2012 mortality tables and the MP-2019 improvement scale published in October 2019. We applied the Pri-2012 tables based on the constituency of our plan population for union and non-union participants. We adjusted the improvement scale to utilize 75% of the ultimate improvement rate, consistent with assumptions adopted by the Social Security Administration trustees, based on long-term historical experience. Currently, we believe this approach provides the best estimate of our future obligation. Most plan participants elect to receive plan benefits as a lump sum at the end of service, rather than an annuity. As such, the updated mortality tables had an immaterial effect on our pension obligation.
Net pension expense for the U.S. defined benefit pension plans (including both qualified and non-qualified plans) was:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(Amounts in thousands)
Service cost
$
23,245

 
$
22,195

 
$
22,257

Interest cost
17,584

 
15,789

 
16,878

Expected return on plan assets
(25,645
)
 
(25,704
)
 
(24,505
)
Settlement gain
—

 
(462
)
 
(216
)
Amortization of unrecognized prior service cost
164

 
164

 
112

Amortization of unrecognized net loss
3,675

 
5,514

 
6,021

U.S. net pension expense
$
19,023

 
$
17,496

 
$
20,547



The estimated prior service cost and the estimated net loss for the U.S. defined benefit pension plans that will be amortized from accumulated other comprehensive loss into pension expense in 2020 is $0.2 million and $6.6 million, respectively. We amortize estimated prior service costs and estimated net losses over the remaining expected service period.
The following summarizes the net pension (liability) asset for U.S. plans:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Plan assets, at fair value
$
482,553

 
$
425,792

Benefit Obligation
(471,462
)
 
(432,595
)
Funded status
$
11,091

 
$
(6,803
)


The following summarizes amounts recognized in the balance sheet for U.S. plans:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Noncurrent assets
$
16,396

 
$
—

Current liabilities
(348
)
 
(232
)
Noncurrent liabilities
(4,957
)
 
(6,571
)
Funded status
$
11,091

 
$
(6,803
)


The following is a summary of the changes in the U.S. defined benefit plans’ pension obligations:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
432,595

 
$
461,355

Service cost
23,245

 
22,195

Interest cost
17,584

 
15,789

Plan amendments and settlements
276

 
(3,016
)
Actuarial loss (gain) (1)
31,214

 
(25,908
)
Benefits paid
(33,452
)
 
(37,820
)
Balance — December 31
$
471,462

 
$
432,595

Accumulated benefit obligations at December 31
$
470,643

 
$
431,973


_______________________________________
(1)
The actuarial losses (gain) in 2019 and 2018 primarily reflect the impact of changes in the discount rate.

The following table summarizes the expected cash benefit payments for the U.S. defined benefit pension plans in the future (amounts in millions):
2020
$
42.8

2021
44.0

2022
41.9

2023
42.9

2024
42.1

2025-2029
196.8



The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for U.S. plans, net of tax:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
(62,018
)
 
$
(49,790
)
Amortization of net loss
2,809

 
4,216

Amortization of prior service cost
125

 
125

Net gain (loss) arising during the year
9,785

 
(16,216
)
Settlement gain
—

 
(353
)
Prior service cost arising during the year
(211
)
 
—

Balance — December 31
$
(49,510
)
 
$
(62,018
)


Amounts recorded in accumulated other comprehensive loss consist of:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Unrecognized net loss
$
(48,578
)
 
$
(61,129
)
Unrecognized prior service cost
(932
)
 
(889
)
Accumulated other comprehensive loss, net of tax
$
(49,510
)
 
$
(62,018
)


The following is a reconciliation of the U.S. defined benefit pension plans’ assets:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
425,792

 
$
464,779

Return on plan assets
69,663

 
(21,414
)
Company contributions
20,552

 
23,263

Benefits paid
(33,454
)
 
(37,820
)
Settlements
—

 
(3,016
)
Balance — December 31
$
482,553

 
$
425,792



We contributed $20.6 million and $23.3 million to the U.S. defined benefit pension plans during 2019 and 2018, respectively. These payments exceeded the minimum funding requirements mandated by the U.S. Department of Labor rules. Our estimated contribution in 2020 is expected to be approximately $20 million, excluding direct benefits paid.
All U.S. defined benefit plan assets are held by the qualified plan. The asset allocations for the qualified plan at the end of 2019 and 2018 by asset category, are as follows:
 
Target Allocation
at December 31,
 
Percentage of Actual Plan Assets at December 31,
Asset category
2019
 
2018
 
2019
 
2018
Cash and cash equivalents
—
%
 
—
%
 
1
%
 
1
%
Cash and cash equivalents
—
%
 
—
%
 
1
%
 
1
%
Global Equity
31
%
 
30
%
 
28
%
 
30
%
Global Real Assets
12
%
 
13
%
 
12
%
 
13
%
Equity securities
43
%
 
43
%
 
40
%
 
43
%
Diversified Credit
12
%
 
12
%
 
12
%
 
13
%
Liability-Driven Investment
45
%
 
45
%
 
47
%
 
43
%
Fixed income
57
%
 
57
%
 
59
%
 
56
%

None of our common stock is directly held by our qualified plan. Our investment strategy is to earn a long-term rate of return consistent with an acceptable degree of risk and minimize our cash contributions over the life of the plan, while taking into account the liquidity needs of the plan. We preserve capital through diversified investments in high quality securities. Our current allocation target is to invest approximately 43% of plan assets in equity securities and 57% in fixed income securities. Within each investment category, assets are allocated to various investment strategies. Professional money management firms manage our assets, and we engage a consultant to assist in evaluating these activities. We periodically review the allocation target, generally in conjunction with an asset and liability study and in consideration of our future cash flow needs. We regularly rebalance the actual allocation to our target investment allocation.
Plan assets are invested in commingled funds. Our "Pension and Investment Committee" is responsible for setting the investment strategy and the target asset allocation for the plan's assets. As the qualified plan approached fully funded status, we implemented a Liability-Driven Investing ("LDI") strategy, which more closely aligns the duration of the plan's assets with the duration of its liabilities. The LDI strategy results in an asset portfolio that more closely matches the behavior of the liability, thereby reducing the volatility of the plan's funded status.
The plan’s financial instruments, shown below, are presented at fair value. See Note 1 for further discussion on how the hierarchical levels of the fair values of the Plan’s investments are determined. The fair values of our U.S. defined benefit plan assets were:
 
At December 31, 2019
 
At December 31, 2018
 
 
 
Hierarchical Levels
 
 
 
Hierarchical Levels
 
Total
 
I
 
II
 
III
 
Total
 
I
 
II
 
III
 
(Amounts in thousands)
 
(Amounts in thousands)
Cash and cash equivalents
$
4,994

 
$
4,994

 
$
—

 
$
—

 
$
4,778

 
$
4,778

 
$
—

 
$
—

Commingled Funds:
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
Equity securities
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
Global Equity(a)
135,350

 
—

 
135,350

 
—

 
126,165

 
—

 
126,165

 
—

Global Real Assets(b)
60,523

 
—

 
60,523

 
—

 
55,046

 
—

 
55,046

 
—

Fixed income securities
 

 
 
 
 
 
 
 


 
 
 
 
 
 
Diversified Credit(c)
56,375

 
—

 
56,375

 
—

 
55,039

 
—

 
55,039

 
—

Liability-Driven Investment(d)
225,311

 
—

 
225,311

 
—

 
184,764

 
—

 
184,764

 
—

 
$
482,553

 
$
4,994

 
$
477,559

 
$
—

 
$
425,792

 
$
4,778

 
$
421,014

 
$
—

_______________________________________
(a)
Global Equity fund seeks to closely track the performance of the MSCI All Country World Index.
(b)
Global Real Asset funds seek to provide exposure to the listed global real estate investment trusts (REITs) and infrastructure markets.
(c)
Diversified Credit funds seek to provide exposure to the high yield, emerging markets, bank loans and securitized credit markets.
(d)
Liability-Driven Investment ("LDI") funds seek to invest in high quality fixed income securities that collectively closely match those found in discount curves used to value the plan's liabilities.
Non-U.S. Defined Benefit Plans

We maintain defined benefit pension plans, which cover some or all of our employees in the following countries: Austria, Belgium, Canada, France, Germany, India, Italy, Japan, Mexico, The Netherlands, Sweden, Switzerland and the U.K. The assets of the plans in the U.K. (two plans), The Netherlands and Canada represent 94% of the total non-U.S. plan assets ("non-U.S. assets"). Details of other countries’ plan assets have not been provided due to immateriality.
The following are assumptions related to the non-U.S. defined benefit pension plans:
 
Year Ended December 31,
 
2019
 
2018
 
2017
Weighted average assumptions used to determine Benefit Obligations:
 

 
 

 
 

Discount rate
1.61
%
 
2.42
%
 
2.25
%
Rate of increase in compensation levels
3.12

 
3.28

 
3.25

Weighted average assumptions used to determine net pension expense:
 
 
 
 
 
Long-term rate of return on assets
3.37
%
 
3.62
%
 
3.88
%
Discount rate
2.42

 
2.25

 
2.34

Rate of increase in compensation levels
3.28

 
3.25

 
3.22



At December 31, 2019, as compared with December 31, 2018, we decreased our average discount rate for non-U.S. plans from 2.42% to 1.61% based on analysis of bonds and other publicly-traded instruments, by country, which had lower yields due to market conditions. To determine 2019 pension expense, we decreased our average expected rate of return on plan assets from 3.62% at December 31, 2018 to 3.37% at December 31, 2019, primarily based on our target allocations and expected long-term asset returns. As the expected rate of return on plan assets is long-term in nature, short-term market fluctuations do not significantly impact the rate.
Many of our non-U.S. defined benefit plans are unfunded, as permitted by local regulation. The expected long-term rate of return on assets for funded plans was determined by assessing the rates of return for each asset class and is calculated using a
quantitative approach that utilizes unadjusted historical returns and asset allocation as inputs for the calculation. We work with our actuaries to determine the reasonableness of our long-term rate of return assumptions by looking at several factors including historical returns, expected future returns, asset allocation, risks by asset class and other items.
Net pension expense for non-U.S. defined benefit pension plans was:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(Amounts in thousands)
Service cost
$
5,728

 
$
7,208

 
$
7,247

Interest cost
8,867

 
8,970

 
9,320

Expected return on plan assets
(7,535
)
 
(8,747
)
 
(8,834
)
Amortization of unrecognized net loss
2,933

 
3,626

 
3,741

Amortization of unrecognized prior service cost (benefit)
265

 
33

 
(4
)
Settlement loss (gain) and other
859

 
(521
)
 
2,434

Non-U.S. net pension expense
$
11,117

 
$
10,569

 
$
13,904


The estimated net loss and prior service cost for the non-U.S. defined benefit pension plans that will be amortized from accumulated other comprehensive loss into pension expense in 2020 is $4.3 million and $0.3 million, respectively. We amortize estimated net losses over the remaining expected service period or over the remaining expected lifetime of inactive participants for plans with only inactive participants.
The following summarizes the net pension liability for non-U.S. plans:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Plan assets, at fair value
$
262,559

 
$
232,175

Benefit Obligation
(425,617
)
 
(376,649
)
Funded status
$
(163,058
)
 
$
(144,474
)


The following summarizes amounts recognized in the balance sheet for non-U.S. plans:
 
December 31,
 
2019
 
2018
\
(Amounts in thousands)
Noncurrent assets
$
16,379

 
$
17,864

Current liabilities
(7,609
)
 
(7,782
)
Noncurrent liabilities
(171,828
)
 
(154,556
)
Funded status
$
(163,058
)
 
$
(144,474
)
The following is a reconciliation of the non-U.S. plans’ defined benefit pension obligations:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
376,649

 
$
413,960

Service cost
5,728

 
7,208

Interest cost
8,867

 
8,970

Employee contributions
78

 
238

Settlements and other
(3,713
)
 
(7,896
)
Actuarial loss (gain)(1)
48,888

 
(8,839
)
Net benefits and expenses paid
(14,526
)
 
(16,632
)
Currency translation impact(2)
3,646

 
(20,360
)
Balance — December 31
$
425,617

 
$
376,649

Accumulated benefit obligations at December 31
$
404,035

 
$
356,989

_______________________________________
(1)
The 2019 actuarial loss primarily reflects the decrease in the discount rates for all plans.
(2)
In 2019, the currency translation loss reflects the weakening of the U.S. dollar against the British pound, partially offset by the strengthening of the U.S. dollar against the Euro, while in 2018 the currency translation gain reflected the strengthening of the U.S. dollar against our significant currencies, primarily the Euro and British pound.
The following table summarizes the expected cash benefit payments for the non-U.S. defined benefit plans in the future (amounts in millions):
2020
$
16.5

2021
17.0

2022
17.8

2023
17.9

2024
18.7

2025-2029
97.3


The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for non-U.S. plans, net of tax:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
(62,088
)
 
$
(67,872
)
Amortization of net loss
2,946

 
3,260

Net (loss) gain arising during the year
(29,910
)
 
2,458

Settlement loss (gain)
746

 
(386
)
Prior service cost arising during the year
—

 
(3,080
)
Currency translation impact and other
(1,031
)
 
3,532

Balance — December 31
$
(89,337
)
 
$
(62,088
)

Amounts recorded in accumulated other comprehensive loss consist of:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Unrecognized net loss
$
(85,891
)
 
$
(58,697
)
Unrecognized prior service cost
(3,446
)
 
(3,391
)
Accumulated other comprehensive loss, net of tax
$
(89,337
)
 
$
(62,088
)


The following is a reconciliation of the non-U.S. plans’ defined benefit pension assets:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
232,175

 
$
248,733

Return (loss) on plan assets
23,793

 
(580
)
Employee contributions
78

 
238

Company contributions
16,782

 
21,696

Settlements
(3,688
)
 
(7,776
)
Currency translation impact and other
7,945

 
(13,504
)
Net benefits and expenses paid
(14,526
)
 
(16,632
)
Balance — December 31
$
262,559

 
$
232,175

Our contributions to non-U.S. defined benefit pension plans in 2020 are expected to be approximately $2 million, excluding direct benefits paid.
The asset allocations for the non-U.S. defined benefit pension plans at the end of 2019 and 2018 are as follows:
 
 
Target Allocation at
December 31,
 
Percentage of Actual Plan
Assets at December 31,
Asset category
 
2019
 
2018
 
2019
 
2018
Cash and cash equivalents
 
2
%
 
7
%
 
2
%
 
7
%
Cash and cash equivalents
 
2
%
 
7
%
 
2
%
 
7
%
North American Companies
 
1
%
 
3
%
 
1
%
 
3
%
Global Equity
 
1
%
 
2
%
 
1
%
 
2
%
Equity securities
 
2
%
 
5
%
 
2
%
 
5
%
U.K. Government Gilt Index
 
43
%
 
43
%
 
43
%
 
43
%
Global Fixed Income Bond
 
—
%
 
2
%
 
—
%
 
2
%
Liability-Driven Investment
 
7
%
 
9
%
 
7
%
 
9
%
Fixed income
 
50
%
 
54
%
 
50
%
 
54
%
Multi-asset
 
19
%
 
19
%
 
19
%
 
19
%
Buy-in Contracts
 
21
%
 
10
%
 
21
%
 
10
%
Other
 
6
%
 
5
%
 
6
%
 
5
%
Other types
 
46
%
 
34
%
 
46
%
 
34
%

None of our common stock is held directly by these plans. In all cases, our investment strategy for these plans is to earn a long-term rate of return consistent with an acceptable degree of risk and minimize our cash contributions over the life of the plan, while taking into account the liquidity needs of the plan and the legal requirements of the particular country. We preserve capital through diversified investments in high quality securities.
Asset allocation differs by plan based upon the plan’s benefit obligation to participants, as well as the results of asset and liability studies that are conducted for each plan and in consideration of our future cash flow needs. Professional money management firms manage plan assets and we engage a consultant in the U.K. to assist in evaluation of these activities. The assets of the U.K. plans are overseen by a group of Trustees who review the investment strategy, asset allocation and fund selection. These assets are passively managed as they are invested in index funds that attempt to match the performance of the specified benchmark index.
The fair values of the non-U.S. assets were:
 
At December 31, 2019
 
At December 31, 2018
 
 
 
Hierarchical Levels
 
 
 
Hierarchical Levels
 
Total
 
I
 
II
 
III
 
Total
 
I
 
II
 
III
 
(Amounts in thousands)
 
(Amounts in thousands)
Cash
$
5,026

 
$
5,026

 
$
—

 
—

 
$
15,105

 
$
15,105

 
$
—

 
$
—

Commingled Funds:
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
Equity securities
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
North American Companies(a)
2,501

 
—

 
2,501

 
—

 
6,603

 
—

 
6,603

 
—

Global Equity(b)
2,411

 
—

 
2,411

 
—

 
4,648

 
—

 
4,648

 
—

Fixed income securities
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
U.K. Government Gilt Index(c)
113,855

 
—

 
113,855

 
—

 
99,482

 
—

 
99,482

 
—

U.K. Corporate Bond Index
—

 
—

 
—

 
—

 
1,192

 
—

 
1,192

 
—

Global Fixed Income Bond
—

 
—

 
—

 
—

 
4,110

 
—

 
4,110

 
—

Liability-Driven Investment(d)
20,011

 
—

 
20,011

 
—

 
20,004

 
—

 
20,004

 
—

Other Types of Investments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-asset(e)
48,964

 
—

 
48,964

 
—

 
44,147

 
—

 
44,147

 
—

Buy-in Contracts(f)
54,544

 
—

 
—

 
54,544

 
23,616

 
—

 
—

 
23,616

Other(g)
15,247

 
—

 
—

 
15,247

 
13,268

 
—

 
—

 
13,268

 
$
262,559

 
$
5,026

 
$
187,742

 
$
69,791

 
$
232,175

 
$
15,105

 
$
180,186

 
$
36,884

_______________________________________
(a)
North American Companies represents U.S. and Canadian large cap equity funds, which are managed to track their respective benchmarks (FTSE All-World USA Index and FTSE All-World Canada Index).
(b)
Global Equity represents actively managed global equity funds, taking a top-down strategic view on the different regions by analyzing companies based on fundamentals, market-driven, thematic and quantitative factors to generate alpha.
(c)
U.K. Government Gilt Index represents U.K. government issued fixed income investments which are passively managed to track their respective benchmarks.
(d)
LDI seeks to invest in fixed income securities that collectively closely match those found in discount curves used to value the plan's liabilities.
(e)
Multi-asset seeks an attractive risk-adjusted return by investing in a diversified portfolio of strategies, including equities and fixed income.
(f)
The Buy-in Contracts ("Contract" or "Contracts") represent assets held by plans, whereby the cost of providing benefits to plan participants is funded by the Contract. The Contracts are held by the plans for the benefit of plan participants in the Netherlands and U.K. The fair value of these assets are based on the current present value of accrued benefits and will fluctuate based on changes in the obligations associated with covered plan members as well as the assumptions used in the present value calculation. The fair value of asset held in the Netherlands Contract as of January 1, 2019 was $23.6 million, with contributions and currency adjustments resulting in a fair value of $25.9 million at December 31, 2019. On August 29, 2019, we established a Contract for our U.K. plan participants with initial investment of $27.4 million, with contributions and currency adjustments resulting in a fair value of $28.6 million at December 31, 2019.
(g)
Includes assets held by plans outside the United Kingdom, the Netherlands and Canada. Details have not been provided due to immateriality.
Defined Benefit Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets
The following summarizes key pension plan information regarding U.S. and non-U.S. plans whose accumulated benefit obligations exceed the fair value of their respective plan assets.
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Benefit Obligation
$
229,793

 
$
613,441

Accumulated benefit obligation
212,906

 
596,584

Fair value of plan assets
46,718

 
444,929



Postretirement Medical Plans
We sponsor several defined benefit postretirement medical plans covering certain current retirees and a limited number of future retirees in the U.S. These plans provide for medical and dental benefits and are administered through insurance companies and health maintenance organizations. The plans include participant contributions, deductibles, co-insurance provisions and other limitations and are integrated with Medicare and other group plans. We fund the plans as benefits and health maintenance organization premiums are paid, such that the plans hold no assets in any period presented. Accordingly, we have no investment strategy or targeted allocations for plan assets. Benefits under our postretirement medical plans are not available to new employees or most existing employees.
The following are assumptions related to postretirement benefits:
 
Year Ended December 31,
 
2019
 
2018
 
2017
Weighted average assumptions used to determine Benefit Obligation:
 

 
 

 
 

Discount rate
3.27
%
 
4.20
%
 
3.48
%
Weighted average assumptions used to determine net expense:
 
 
 
 
 
Discount rate
4.20
%
 
3.48
%
 
3.75
%


The assumed ranges for the annual rates of increase in medical costs used to determine net expense were 7.5% for 2019, 7.0% for 2018 and 7% for 2017, with a gradual decrease to 5.0% for 2029 and future years. At December 31, 2019, a one-percentage point change in assumed medical cost trend rates would not have a material effect on reported amounts.
Net postretirement benefit cost for postretirement medical plans was:
 
Year Ended December 31,
 
2019
 
2018
 
2017
 
(Amounts in thousands)
Interest cost
$
754

 
$
779

 
$
919

Amortization of unrecognized prior service cost
122

 
122

 
122

Amortization of unrecognized net gain
(215
)
 
(764
)
 
(275
)
Net postretirement benefit expense
$
661

 
$
137

 
$
766



The estimated actuarial net gain and the estimated prior service cost for the defined benefit postretirement medical plans that are expected to be amortized from accumulated other comprehensive loss into net pension expense in 2020 are immaterial.

The following summarizes the accrued postretirement benefits liability for the postretirement medical plans:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Postretirement Benefit Obligation
$
18,862

 
$
18,810

Funded status
$
(18,862
)
 
$
(18,810
)

The following summarizes amounts recognized in the balance sheet for postretirement Benefit Obligation:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Current liabilities
$
(2,370
)
 
$
(2,500
)
Noncurrent liabilities
(16,492
)
 
(16,310
)
Funded status
$
(18,862
)
 
$
(18,810
)


The following is a reconciliation of the postretirement Benefit Obligation:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
18,810

 
$
23,882

Interest cost
754

 
779

Employee contributions
964

 
883

Medicare subsidies receivable
14

 
127

Actuarial loss (gain)
2,222

 
(2,662
)
Net benefits and expenses paid
(3,902
)
 
(4,199
)
Balance — December 31
$
18,862

 
$
18,810



The following presents expected benefit payments for future periods (amounts in millions):
 
Expected
Payments
2020
$
2.4

2021
2.3

2022
2.1

2023
1.9

2024
1.7

2025-2029
6.6



The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for postretirement benefits, net of tax:
 
2019
 
2018
 
(Amounts in thousands)
Balance — January 1
$
2,425

 
$
880

Amortization of net gain
(164
)
 
(584
)
Amortization of prior service cost
94

 
93

Net (loss) gain arising during the year
(1,699
)
 
2,036

Balance — December 31
$
656

 
$
2,425


Amounts recorded in accumulated other comprehensive loss consist of:
 
December 31,
 
2019
 
2018
 
(Amounts in thousands)
Unrecognized net gain
$
1,512

 
$
3,365

Unrecognized prior service cost
(856
)
 
(940
)
Accumulated other comprehensive income, net of tax
$
656

 
$
2,425



We made contributions to the postretirement medical plans to pay benefits of $2.9 million in 2019, $3.2 million in 2018 and $2.5 million in 2017. Because the postretirement medical plans are unfunded, we make contributions as the covered individuals’ claims are approved for payment. Accordingly, contributions during any period are directly correlated to the benefits paid.
 


Defined Contribution Plans
We sponsor several defined contribution plans covering substantially all U.S. and Canadian employees and certain other non-U.S. employees. Employees may contribute to these plans, and these contributions are matched in varying amounts by us, including opportunities for discretionary matching contributions by us. Defined contribution plan expense was $20.4 million in 2019, $18.7 million in 2018 and $17.7 million in 2017.