The Company has three retirement plans that cover its hourly and salaried employees in the United States: one defined benefit plan, which is frozen, and two defined contribution plans. Employees are eligible to participate in the appropriate plan based on employment classification. The Company’s contributions to the defined benefit and defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Company’s policy and investment guidelines of the applicable plan. The Company’s policy is to contribute at least the required minimum in accordance with the funding standards of ERISA.

The Company maintains two defined contribution plans for its employees in Canada, as well as a post-retirement benefit plan. In the United Kingdom, the Company maintains two defined contribution plans and a defined benefit plan, which is frozen. These plans are discussed in further detail below.

The following tables present a reconciliation of the changes in the benefit obligation, the fair market value of the assets, and the funded status of the plan, as of December 31, 2019 and 2018:


	December 31,
	2019		2018
Changes in benefit obligation:
Benefit obligation at beginning of year	$	16,717	$	18,783

Interest cost	648		622
Actuarial loss (gain)	400		(1,249)
Benefits paid	(840)		(1,439)
Settlements	$	(9,116)	$	—
Benefit obligation at end of year	$	7,809	$	16,717
Change to plan assets:
Fair value of assets at beginning of year	$	12,468	$	14,892
Actual gain (loss) on plan assets	1,298		(985)
Employer contribution	550		—
Benefits paid	(840)		(1,439)
Settlements	(9,116)		—
Fair value of assets at end of year	4,360		12,468
Funded status at end of year	$	(3,449)	$	(4,249)
Amounts recognized in the consolidated balance sheet consist of:
Other long-term liabilities	$	(3,449)	$	(4,249)
Amounts recognized in accumulated other comprehensive loss consist of:
Net loss	$	1,893	$	4,406


	Year Ended December 31,
	2019		2018
Components of net periodic benefit cost:

Interest cost	648		622
Expected return on plan assets	(719)		(853)

Recognized net actuarial loss	125		96
Net periodic pension cost (income)	54		(135)
Settlement charge	2,210		—
Total pension expense (income)	$	2,264	$	(135)

The weighted average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.

The expected long-term rate of return is based on numerous factors, including the target asset allocation for plan assets, historical rate of return, long-term inflation assumptions, and current and projected market conditions.

Plan assets consist primarily of various fixed income and equity investments. The Company’s primary investment objective is to provide long-term growth of capital while accepting a moderate level of risk. The investments are limited to cash and cash equivalents, bonds, preferred stocks, and common stocks. The investment target ranges and actual allocation of pension plan assets by major category as of December 31, 2019 and 2018 were as follows:


		December 31,
	Target	2019		2018
Asset Category
Cash and cash equivalents	0 - 20%	19	%	3	%
Total fixed income funds	25 - 50%	30		28
Total mutual funds and equities	35 - 70%	51		69
Total		100	%	100	%

In accordance with the fair value disclosure requirements of ASC 820, “Fair Value Measurements and Disclosures,” the following assets were measured at fair value on a recurring basis as of December 31, 2019 and 2018. Additional information regarding ASC 820 and the fair value hierarchy can be found in Note 18.


	December 31,
	2019		2018
Asset Category
Cash and cash equivalents	$	817	$	355
Fixed income funds
Corporate bonds	1,336		3,521
Total fixed income funds	1,336		3,521
Equity funds and equities
Mutual funds	694		1,881
Exchange-traded funds	1,513		6,711
Total mutual funds and equities	2,207		8,592
Total	$	4,360	$	12,468

Cash equivalents: The Company uses quoted market prices to determine the fair value of these investments in interest-bearing cash accounts and they are classified as Level 1 of the fair value hierarchy. The carrying amounts approximate fair value because of the short maturity of the instruments.

Fixed income funds: Investments within the fixed income funds category consist of fixed income corporate debt. The Company uses quoted market prices to determine the fair values of these fixed income funds. These instruments consist of exchange-traded government and corporate bonds and are classified as Level 1 of the fair value hierarchy.

Equity funds and equities: The valuation of investments in registered investment companies is based on the underlying investments in securities. Securities traded on security exchanges are valued at the latest quoted sales price. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and ask quotations. These investments are classified as Level 1 of the fair value hierarchy.

The Company’s U.K. defined benefit plan (“Portec Rail Plan”) covers certain current employees, former employees, and retirees. The plan has been frozen to new entrants since April 1, 1997 and also covers the former employees of a merged plan after January 2002. Benefits under the plan were based on years of service and eligible compensation during defined periods of service. Our funding policy for the plan is to make minimum annual contributions required by applicable regulations.


	December 31,
	2019		2018
Changes in benefit obligation:
Benefit obligation at beginning of year	$	7,750	$	8,335
Interest cost	221		194
Actuarial loss (gain)	1,142		(201)
Benefits paid	(326)		(292)
Foreign currency exchange rate changes	314		(475)
Benefit obligation at end of year	$	9,101	$	7,750
Change to plan assets:
Fair value of assets at beginning of year	$	6,347	$	6,904
Actual gain (loss) on plan assets	697		(144)
Employer contribution	314		271
Benefits paid	(326)		(292)
Foreign currency exchange rate changes	258		(392)
Fair value of assets at end of year	7,290		6,347
Funded status at end of year	$	(1,811)	$	(1,403)
Amounts recognized in the consolidated balance sheet consist of:
Other long-term liabilities	$	(1,811)	$	(1,403)
Amounts recognized in accumulated other comprehensive loss consist of:
Net loss	$	1,641	$	1,116
Prior service cost	172		208
	$	1,813	$	1,324


	Year Ended December 31,
	2019		2018
Components of net periodic benefit cost:
Interest cost	$	221	$	194
Expected return on plan assets	(252)		(260)

Amortization of prior service cost	25		42
Recognized net actuarial loss	263		208
Net periodic pension cost	$	257	$	184

The Company has estimated the long-term rate of return on plan assets based primarily on historical returns on plan assets, adjusted for changes in target portfolio allocations, and recent changes in long-term interest rates based on publicly available information.

Plan assets are invested by the trustees in accordance with a written statement of investment principles. This statement permits investment in equities, corporate bonds, United Kingdom government securities, commercial property, and cash, based on certain target allocation percentages. Asset allocation is primarily based on a strategy to provide steady growth without undue fluctuations. The target asset allocation percentages for 2019 were as follows:

Plan assets held within the United Kingdom defined benefit plan consist of cash and equity securities that have been classified as Level 1 of the fair value hierarchy. All other plan assets have been classified as Level 2 of the fair value hierarchy.

United Kingdom regulations require trustees to adopt a prudent approach to funding required contributions to defined benefit pension plans. The Company anticipates making contributions of $318 to the United Kingdom defined benefit plan during 2020.

The Company’s operation near Montreal, Quebec, Canada, maintains a post-retirement benefit plan, which provides retiree life insurance, health care benefits, and, for a closed group of employees, dental care. Retiring employees with a minimum of 10 years of

service are eligible for the plan benefits. The plan is not funded. Cost of benefits earned by employees is charged to expense as services are rendered. The expense related to this plan was not material for 2019 or 2018. The accrued benefit obligation was $840 and $724 as of December 31, 2019 and 2018, respectively. This obligation is recognized within “Other long-term liabilities” on the Consolidated Balance Sheets. During 2018, the plan recognized a curtailment gain of $113. Benefit payments anticipated for 2020 are not material.

The Company sponsors six defined contribution plans for hourly and salaried employees across our domestic and international facilities. The following table summarizes the expense associated with the contributions made to these plans.