7. Retirement Plans

The Company provides benefits under defined contribution plans including a savings plan and an employee stock ownership plan (ESOP). The savings plan covers substantially all domestic salaried and certain non-union hourly employees and provides for matching contributions up to 4% of each employee’s salary. The ESOP covers substantially all domestic employees and provides for contributions based on a percentage of each employee’s compensation as determined by the Company’s Board of Directors. Total expense for the Company’s defined contribution plans was $6.0 million in 2018 and 2017, and $6.7 million in 2016.

Although the Company intends for these defined contribution plans to be the primary retirement benefit for most employees, the Company also has several defined benefit plans. The funded status of the defined benefit plans was as follows at December 31:

(in thousands)	2018			2017

Benefit obligation at beginning of year	$	37,757		$	41,691
Service cost		1,465			1,939
Interest cost		1,137			1,222
Foreign currency exchange rate changes		(761	)		1,607
Benefits paid		(2,480	)		(9,633	)
Amendments		145			-
Actuarial (gain) loss		(3,111	)		931
Benefit obligation at end of year		34,152			37,757
Plan assets at beginning of year		31,768			36,141
Company contributions		886			1,195
Foreign currency exchange rate changes		(1,315	)		2,318
Benefits paid		(2,480	)		(9,633	)
Actual (loss) gain on plan assets		(560	)		1,747
Plan assets at end of year		28,299			31,768
Funded status	$	(5,853	)	$	(5,989	)
Accumulated benefit obligation	$	33,562		$	36,951

Amounts recognized in the Consolidated Balance Sheets at December 31:

(in thousands)	2018			2017

Accrued employee and retiree benefits	$	(15,245	)	$	(13,304	)
Other accrued expenses		(779	)		(2,731	)
Other assets		10,171			10,046
Net liability	$	(5,853	)	$	(5,989	)

Components of annual benefit cost:

(In thousands)	2018			2017			2016

Service cost	$	1,465		$	1,939		$	2,091
Interest cost		1,137			1,222			1,669
Expected return on plan assets		(896	)		(892	)		(1,141	)
Recognized actuarial (gain) loss		(141	)		(187	)		193
Settlement (income) expense		(179	)		3,796			543
Defined benefit expense	$	1,386		$	5,878		$	3,355

Weighted average liability assumptions as of December 31:

	2018			2017
Discount rate		3.80	%		3.16	%
Expected return on plan assets		3.21	%		3.03	%
Rate of compensation increase		0.31	%		0.33	%

Weighted average cost assumptions for the year ended December 31:

	2018			2017
Discount rate		3.16	%		3.48	%
Expected return on plan assets		3.03	%		2.85	%
Rate of compensation increase		0.33	%		0.43	%

In 2017, one of the Company’s defined benefit plans was terminated. The plan was associated with two facilities which were closed under the Company’s 2014 Restructuring Plan. As a result, the pension benefit obligation was settled by making lump-sum cash payments to certain participants and also purchasing nonparticipating annuity contracts to cover the remaining vested benefits. As a result of the plan’s termination, the Company recognized $3.8 million of settlement expense in 2017, which has been recorded in the Company’s restructuring and other costs.

The aggregate amounts of benefits expected to be paid from defined benefit plans in each of the next five years subsequent to December 31, 2018, which include employees’ expected future service, are as follows: 2019, $1.5 million; 2020, $ 1.5 million; 2021, $1.6 million; 2022, $3.9 million; 2023, $1.6 million; and $13.6 million in total for the years 2024 through 2028.

The Company expects to contribute $1.1 million to defined benefit plans in 2019.

Amounts in accumulated other comprehensive income at December 31 were as follows:

(In thousands)	2018			2017
Unrecognized net actuarial (gain) loss	$	(901	)	$	1,112
Prior service cost		145			-
Total before tax effects	$	(756	)	$	1,112

The pension adjustments, net of tax, recognized in OCI, were as follows:

(In thousands)	2018			2017		2016

Net actuarial gain arising during the period	$	1,257		$	921	$	1,312
Prior service cost		(127	)		-		-
Amortization of actuarial (gain) loss, included in defined benefit expense		(103	)		1,307		544
Pension adjustment, net of tax	$	1,027		$	2,228	$	1,856

The estimated actuarial gain for the defined benefit plans that will be amortized from accumulated other comprehensive loss into periodic benefit cost during 2019 is $0.1 million.

The investment objectives and target allocations for the Company’s pension plans related to the assets of the plans are reviewed on a regular basis. The investment objectives for the pension assets are to maximize the return on assets while maintaining an overall level of risk appropriate for a retirement fund and ensuring the availability of funds for the payment of retirement benefits. The levels of risk assumed by the pension plans are determined by market conditions, the rate of return expectations, and the liquidity requirements of each pension plan. The actual asset allocations of each pension plan are reviewed on a regular basis to ensure that they are in line with the target allocations.

The following table presents the Company’s pension plan assets by asset category as of December 31, 2018 and 2017:

	Fair Value as of December 31,		Fair Value Measurements at December 31, 2018 Using Fair Value Hierarchy						Fair Value as of December 31,		Fair Value Measurements at December 31, 2017 Using Fair Value Hierarchy
(in thousands)	2018		Level 1		Level 2		Level 3		2017		Level 1		Level 2		Level 3
Equity Funds
Domestic	$	5,385	$	5,385	$	—	$	—	$	6,226	$	6,226	$	—	$	—
International		83		—		83		—		101		—		101		—
International Fixed Income Funds		22,703		1,111		21,592		—		25,340		934		24,406		—
Other investments		128		47		81		—		101		44		57		—
Total assets at fair value	$	28,299	$	6,543	$	21,756	$	—	$	31,768	$	7,204	$	24,564	$	—

The Company is required to categorize pension plan assets based on the following fair value hierarchy:

Level 1:

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2:

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data.

Level 3:

Unobservable inputs that reflect the reporting entity’s own assumptions.