14.PENSION AND POSTRETIREMENT PLANS

The expenses that the Company records for its pension and other postretirement benefit pension plans depend on factors such as changes in market interest rates, the value of plan assets, mortality assumptions and health care trend rates. Significant unfavorable changes in these factors would increase its expenses. The Company’s pension plan assets consist primarily of equity and fixed income securities. If the performance of investments in the plan does not meet the Company’s assumptions, the excess obligation may increase and the Company may have to record additional costs and/or contribute additional funds to the pension plan. An increase in pension expenses and contributions could decrease the Company’s cash available to pay its outstanding obligations as well as impact net income.

The Company’s postretirement plan is unfunded. Expense is recorded as employees render the services necessary to earn the benefits. The expenses are based on estimates including health care cost increases, retirement and mortality. Actual results may vary materially from estimates which could result in an increase to the Company’s expense and a decrease in its net income.

Pension Plan

Motor Products - Owosso has a defined benefit pension plan covering substantially all of its hourly union employees hired prior to April 10, 2002. The benefits are based on years of service, the employee’s compensation during the last three years of employment, and accumulated employee contributions.

Components of net periodic pension expense included in the condensed consolidated statements of operations and comprehensive income for the three and nine months ending September 30, 2015 and 2014 are as follows (in thousands):

	For the three months ended						For the nine months ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Service cost	$	27		$	21		$	80		$	63
Interest cost	68			66			204			199
Expected return on assets	(82		)	(85		)	(245		)	(255		)
Amortization of net loss	48			11			143			33

Net periodic pension expense	$	61		$	13		$	182		$	40

The Company expects to contribute approximately $204 to the Pension Plan during 2015. For the three and nine months ended September 30, 2015, $48 and $156, respectively of cash contributions were made to the plan. Benefits expected to be paid from the Pension Plan during 2015 are $309. For the three and nine months ended September 30, 2015 there were benefit payments paid to participants of $70 and $210, respectively.

Post Retirement Welfare Plan

Motor Products-Owosso provides postretirement medical insurance and life insurance benefits to current and former employees hired before January 1, 1994 who retire from Motor Products. Employees who retire after January 1, 2005 must have twenty or more years of continuous service in order to be eligible for retiree medical benefits. Partial contributions from retirees are required for the medical insurance benefits. The Company’s portion of the medical insurance premiums is funded from the general assets of the Company. The Company recognizes the expected cost of providing such post-retirement benefits during employees’ active service periods.

Components of net periodic postretirement benefit income included in the condensed consolidated statements of operations and comprehensive income for the quarters ending September 30, 2015 and 2014 are as follows (in thousands):

	For the three months ended						For the nine months ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Service cost	$	2		$	2		$	7		$	7
Interest cost	13			14			38			43
Amortization of net gain	(18		)	(19		)	(54		)	(59		)
Amortization of prior service cost	(3		)	(3		)	(9		)	(9		)

Net postretirement benefit	$	(6	)	$	(6	)	$	(18	)	$	(18	)

Benefit payments for the Post Retirement Welfare Plan during 2015 are expected to be $51.