The Company provides defined benefit pension and other postretirement benefits (including health care and life insurance benefits) to qualified retired employees. The Company uses a December 31 measurement date for all of its plans.

Net periodic pension expense for defined benefit plans consisted of the following:

	Year Ended December 31
	2019			2018			2017
	(In thousands)

Service cost	$	17,294		$	20,346		$	20,193
Interest cost on benefit obligation		81,579			74,704			79,270
Expected return on plan assets		(122,139	)		(123,127	)		(108,524	)
Amortization of prior service cost		557			557			557
Recognized net actuarial loss		21,992			43,793			29,263
Net periodic pension cost (benefit)	$	(717	)	$	16,273		$	20,759

Net other postretirement benefits expense for defined benefit plans consisted of the following:

	Year Ended December 31
	2019			2018			2017
	(In thousands)

Service cost	$	859		$	938		$	1,172
Interest cost on benefit obligation		2,344			2,293			3,716
Amortization of prior service credit		(4,730	)		(4,729	)		(1,359	)
Recognized net actuarial gain		(1,247	)		(826	)		(988	)
Net other postretirement benefits cost (benefit)	$	(2,774	)	$	(2,324	)	$	2,541

Service cost is reflected in salaries and employee benefits expense. The other components of net periodic benefit expense are reflected in other costs of operations.

Data relating to the funding position of the defined benefit plans were as follows:

	Pension Benefits						Other Postretirement Benefits
	2019			2018			2019			2018
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,949,613		$	2,188,736		$	59,991		$	68,637
Service cost		17,294			20,346			859			938
Interest cost		81,579			74,704			2,344			2,293
Plan participants’ contributions		—			—			2,749			2,974
Actuarial (gain) loss		298,713			(228,897	)		(687	)		(4,758	)
Medicare Part D reimbursement		—			—			370			508
Benefits paid		(99,870	)		(105,276	)		(9,134	)		(10,601	)
Benefit obligation at end of year		2,247,329			1,949,613			56,492			59,991
Change in plan assets:
Fair value of plan assets at beginning of year		1,833,833			2,014,891			—			—
Actual return on plan assets		293,546			(90,657	)		—			—
Employer contributions		10,431			14,875			6,015			7,119
Plan participants’ contributions		—			—			2,749			2,974
Medicare Part D reimbursement		—			—			370			508
Benefits paid		(99,870	)		(105,276	)		(9,134	)		(10,601	)
Fair value of plan assets at end of year		2,037,940			1,833,833			—			—
Funded status	$	(209,389	)	$	(115,780	)	$	(56,492	)	$	(59,991	)
Accrued liabilities recognized in the consolidated balance sheet	$	(209,389	)	$	(115,780	)	$	(56,492	)	$	(59,991	)
Amounts recognized in accumulated other comprehensive income (“AOCI”) were:
Net loss (gain)	$	507,029		$	401,716		$	(17,308	)	$	(17,868	)
Net prior service cost (credit)		1,834			2,391			(27,007	)		(31,737	)
Pre-tax adjustment to AOCI		508,863			404,107			(44,315	)		(49,605	)
Taxes		(133,779	)		(106,240	)		11,650			13,041
Net adjustment to AOCI	$	375,084		$	297,867		$	(32,665	)	$	(36,564	)

The Company has an unfunded supplemental pension plan for certain key executives and others. The projected benefit obligation and accumulated benefit obligation included in the preceding data related to such plan were $154 million as of December 31, 2019 and $143 million as of December 31, 2018.

The accumulated benefit obligation for all defined benefit pension plans was $2.2 billion and $1.9 billion at December 31, 2019 and 2018, respectively.

GAAP requires an employer to recognize in its balance sheet as an asset or liability the overfunded or underfunded status of a defined benefit postretirement plan, measured as the difference between the fair value of plan assets and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation. Gains or losses and prior service costs or credits that arise during the period, but are not included as components of net periodic benefit expense, are recognized as a component of other comprehensive income. Amortization of net gains and losses is included in annual net periodic benefit expense if, as of the beginning of the year, the net gain or loss exceeds 10% of the greater of the benefit obligation or the fair value of the plan assets. As indicated in the preceding table, as of December 31, 2019 the Company recorded a minimum liability adjustment of $465 million ($509 million related to pension plans and $(44) million related to other postretirement benefits) with a corresponding reduction of shareholders’ equity, net of applicable deferred taxes, of $342 million. In aggregate, the benefit plans realized a net loss during 2019 that resulted in an increase to the minimum liability adjustment from that which was recorded at December 31, 2018 of $110 million. The net loss in 2019 was mainly the result of lowering the discount rate used to measure the benefit obligation of all plans to 3.25% at December 31, 2019 from 4.25% used at the prior year-end, offset, in part, by the amortization of actuarial losses and a return on plan assets that exceeded the assumed expected return. The table below reflects the changes in plan assets and benefit obligations recognized in other comprehensive income related to the Company’s postretirement benefit plans.

	Pension Plans			Other Postretirement Benefit Plans			Total
	(In thousands)
2019
Net loss (gain)	$	127,305		$	(687	)	$	126,618
Amortization of prior service (cost) credit		(557	)		4,730			4,173
Amortization of actuarial (loss) gain		(21,992	)		1,247			(20,745	)
Total recognized in other comprehensive income, pre-tax	$	104,756		$	5,290		$	110,046
2018
Net gain	$	(15,113	)	$	(4,758	)	$	(19,871	)
Amortization of prior service (cost) credit		(557	)		4,729			4,172
Amortization of actuarial (loss) gain		(43,793	)		826			(42,967	)
Total recognized in other comprehensive income, pre-tax	$	(59,463	)	$	797		$	(58,666	)

The following table reflects the amortization of amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit expense during 2020:

The Company also provides a qualified defined contribution pension plan to eligible employees who were not participants in the defined benefit pension plan as of December 31, 2005 and to other employees who have elected to participate in the defined contribution plan. The Company makes contributions to the defined contribution plan each year in an amount that is based on an individual participant’s total compensation (generally defined as total wages, incentive compensation, commissions and bonuses) and years of service. Participants do not contribute to the defined contribution pension plan. Pension expense recorded in 2019, 2018 and 2017 associated with the defined contribution pension plan was approximately $32 million, $29 million and $30 million, respectively.

The assumed weighted-average rates used to determine benefit obligations at December 31 were:

The assumed weighted-average rates used to determine net benefit expense for the years ended December 31 were:

	Pension Benefits									Other Postretirement Benefits
	2019			2018			2017			2019			2018			2017

Discount rate		4.25	%		3.50	%		4.00	%		4.25	%		3.50	%		4.00	%
Long-term rate of return on plan assets		6.50	%		6.50	%		6.50	%		—			—			—
Rate of increase in future compensation levels		4.31	%		4.33	%		4.39	%		—			—			—

The discount rate used by the Company to determine the present value of the Company’s future benefit obligations reflects specific market yields for a hypothetical portfolio of highly rated corporate bonds that would produce cash flows similar to the Company’s benefit plan obligations and the level of market interest rates in general as of the year-end.

The expected long-term rate of return assumption as of each measurement date was developed through analysis of historical market returns, current market conditions, anticipated future asset allocations, the funds’ past experience, and expectations on potential future market returns. The expected rate of return assumption represents a long-term average view of the performance of the plan assets, a return that may or may not be achieved during any one calendar year.

The Company’s defined benefit pension plan is sensitive to the long-term rate of return on plan assets and the discount rate. To demonstrate the sensitivity of pension expense to changes in these assumptions, with all other assumptions held constant, 25 basis point increases in: the rate of return on plan assets would have resulted in a decrease in pension expense of approximately $5 million; and the discount rate would have resulted in a decrease in pension expense of approximately $8 million. Decreases of 25 basis points in those assumptions would have resulted in similar changes in amount, but in the opposite direction from the changes presented in the preceding sentence. Additionally, an increase of 25 basis points in the discount rate would have decreased the benefit obligation by

$75 million and a decrease of 25 basis points in the discount rate would have increased the benefit obligation by $79 million at December 31, 2019.

For measurement of other postretirement benefits, a 6.25% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2020. The rate was assumed to decrease to 5.00% over nine years. A one-percentage point change in assumed health care cost trend rates would have had the following effects:

The Company’s policy is to invest the pension plan assets in a prudent manner for the purpose of providing benefit payments to participants and mitigating reasonable expenses of administration. The Company’s investment strategy is designed to provide a total return that, over the long-term, places an emphasis on the preservation of capital. The strategy attempts to maximize investment returns on assets at a level of risk deemed appropriate by the Company while complying with applicable regulations and laws. The investment strategy utilizes asset diversification as a principal determinant for establishing an appropriate risk profile while emphasizing total return realized from capital appreciation, dividends and interest income. The target allocations for plan assets are generally 25 to 60 percent equity securities, 10 to 65 percent debt securities, and 5 to 60 percent money-market investments/cash equivalents and other investments, although holdings could be more or less than these general guidelines based on market conditions at the time and actions taken or recommended by the investment managers providing advice to the Company. Assets are managed by a combination of internal and external investment managers. Equity securities may include investments in domestic and international equities, through individual securities, mutual funds and exchange-traded funds. Debt securities may include investments in corporate bonds of companies from diversified industries, mortgage-backed securities guaranteed by government agencies and U.S. Treasury securities, through individual securities and mutual funds. Additionally, the Company’s defined benefit pension plan held $439 million (22% of total assets) of real estate funds, private investments, hedge funds and other investments at December 31, 2019. Returns on invested assets are periodically compared with target market indices for each asset type to aid management in evaluating such returns. Furthermore, management regularly reviews the investment policy and may, if deemed appropriate, make changes to the target allocations noted above.

The fair values of the Company’s pension plan assets at December 31, 2019 and 2018, by asset category, were as follows:

	Fair Value Measurement of Plan Assets At December 31, 2019
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Asset category:
Money-market investments	$	38,461	$	33,870	$	4,591	$	—
Equity securities:
M&T		148,603		148,603		—		—
Domestic(a)		219,663		219,663		—		—
International(b)		10,476		10,476		—		—
Mutual funds:
Domestic(a)		238,872		238,872		—		—
International(b)		381,433		381,433		—		—
		999,047		999,047		—		—
Debt securities:
Corporate(c)		112,783		—		112,783		—
Government		190,679		—		190,679		—
International		6,648		—		6,648		—
Mutual funds:
Domestic(d)		249,075		249,075		—		—
		559,185		249,075		310,110		—
Other:
Diversified mutual fund		86,980		86,980		—		—
Real estate partnerships		21,905		3,939		—		17,966
Private equity / debt		87,966		—		—		87,966
Hedge funds		231,807		116,029		—		115,778
Guaranteed deposit fund		10,527		—		—		10,527
		439,185		206,948		—		232,237
Total(e)	$	2,035,878	$	1,488,940	$	314,701	$	232,237

	Fair Value Measurement of Plan Assets At December 31, 2018
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Asset category:
Money-market investments	$	23,049	$	10,794	$	12,255	$	—
Equity securities:
M&T		125,299		125,299		—		—
Domestic(a)		191,640		191,640		—		—
International(b)		7,752		7,752		—		—
Mutual funds:
Domestic(a)		216,523		216,523		—		—
International(b)		316,923		316,923		—		—
		858,137		858,137		—		—
Debt securities:
Corporate(c)		103,672		—		103,672		—
Government		182,034		—		182,034		—
International		2,140		—		2,140		—
Mutual funds:
Domestic(d)		280,902		280,902		—		—
International		20,661		20,661		—		—
		589,409		301,563		287,846		—
Other:
Diversified mutual fund		74,446		74,446		—		—
Real estate partnerships		11,807		2,791		—		9,016
Private equity / debt		63,699		—		—		63,699
Hedge funds		200,811		125,309		—		75,502
Guaranteed deposit fund		10,415		—		—		10,415
		361,178		202,546		—		158,632
Total(e)	$	1,831,773	$	1,373,040	$	300,101	$	158,632

Pension plan assets included common stock of M&T with a fair value of $149 million (7% of total plan assets) at December 31, 2019 and $125 million (7% of total plan assets) at December 31, 2018. No investment in securities of a non-U.S. Government or government agency issuer exceeded ten percent of plan assets at December 31, 2019.

The changes in Level 3 pension plan assets measured at estimated fair value on a recurring basis during the year ended December 31, 2019 were as follows:

	Balance – January 1, 2019		Purchases (Sales)		Total Realized/ Unrealized Gains (Losses)		Balance – December 31, 2019
	(In thousands)
Other
Real estate partnerships	$	9,016	$	7,623	$	1,327	$	17,966
Private equity/debt		63,699		9,531		14,736		87,966
Hedge funds		75,502		27,000		13,276		115,778
Guaranteed deposit fund		10,415		—		112		10,527
Total	$	158,632	$	44,154	$	29,451	$	232,237

The Company makes contributions to its funded qualified defined benefit pension plan as required by government regulation or as deemed appropriate by management after considering factors such as the fair value of plan assets, expected returns on such assets, and the present value of benefit obligations of the plan. The Company made voluntary contributions of $200 million to the qualified defined benefit pension plan in 2017. The Company did not make any contributions to the plan in 2019 or 2018. The Company is not required to make contributions to the qualified defined benefit plan in 2020, however, subject to the impact of actual events and circumstances that may occur in 2020, the Company may make contributions, but the amount of any such contributions has not been determined. The Company regularly funds the payment of benefit obligations for the supplemental defined benefit pension and postretirement benefit plans because such plans do not hold assets for investment. Payments made by the Company for supplemental pension benefits were $10 million and $15 million in 2019 and 2018, respectively. Payments made by the Company for postretirement benefits were $6 million and $7 million in 2019 and 2018, respectively. Payments for supplemental pension and other postretirement benefits for 2020 are not expected to differ from those made in 2019 by an amount that will be material to the Company’s consolidated financial position.

Estimated benefits expected to be paid in future years related to the Company’s defined benefit pension and other postretirement benefits plans are as follows:

The Company has a retirement savings plan (“RSP”) that is a defined contribution plan in which eligible employees of the Company may defer up to 50% of qualified compensation via contributions to the plan. The Company makes an employer matching contribution in an amount equal to 75% of an employee’s contribution, up to 4.5% of the employee’s qualified compensation. Employees’ accounts, including employee contributions, employer matching contributions and accumulated earnings thereon, are at all times fully vested and nonforfeitable. Employee benefits expense resulting from the Company’s contributions to the RSP totaled $48 million, $43 million and $38 million in 2019, 2018 and 2017, respectively.