PENSION PLANS

We have several noncontributory defined benefit pension plans that together cover selected employees. Benefits under the plans were generally based on salary and years of service. Effective in 2012, substantially all benefits are frozen and no additional benefits are being accrued. Our liability and related expense for benefits under the plans are recorded over the service period of active employees based upon annual actuarial calculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreign corporate equity securities, government and corporate bonds, hedge fund investments and cash.

The net periodic cost (benefit) components of our pension plans are as follows:



(Thousands of Dollars)	2013		2012		2011

Service cost for benefits earned during the year	216		30		169
Interest cost on projected benefit obligation	7,529		7,975		8,354
Expected return on plan assets	(9,838	)	(8,891	)	(9,733	)
Amortization of net loss	2,287		2,370		812
Amortization of prior service benefit	(136	)	(136	)	(137	)
Net periodic pension cost (benefit)	58		1,348		(535	)

Net periodic pension benefit of $56,000 is allocated to TNI in 2013, 2012 and 2011.

Changes in benefit obligations and plan assets are as follows:



(Thousands of Dollars)	2013		2012

Benefit obligation, beginning of year	201,219		186,826
Service cost	216		30
Interest cost	7,529		7,975
Actuarial loss	(22,155	)	17,268
Benefits paid	(11,038	)	(10,880	)
Benefit obligation, end of year	175,771		201,219
Fair value of plan assets, beginning of year:	134,900		115,596
Actual return on plan assets	19,364		24,849
Benefits paid	(11,038	)	(10,880	)
Administrative expenses paid	(1,977	)	(1,472	)
Employer contributions	6,016		6,807
Fair value of plan assets, end of year	147,265		134,900
Funded status - benefit obligation in excess of plan assets	28,506		66,319

Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:



(Thousands of Dollars)	September 29 2013		September 30 2012

Pension obligations	28,506		66,319
Accumulated other comprehensive loss (before income taxes)	(19,091	)	(50,945	)

Amounts recognized in accumulated other comprehensive income (loss) are as follows:



(Thousands of Dollars)	September 29 2013		September 30 2012

Unrecognized net actuarial loss	(19,880	)	(51,871	)
Unrecognized prior service benefit	789		926
	(19,091	)	(50,945	)

We expect to recognize $423,000 and $137,000 of unrecognized net actuarial loss and unrecognized prior service benefit, respectively, in net periodic pension cost in 2014.

The accumulated benefit obligation for the plans total $175,771,000 at September 29, 2013 and $201,219,000 at September 30, 2012. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets are $175,771,000, $175,771,000, and $147,265,000, respectively, at September 29, 2013.

Assumptions

Weighted-average assumptions used to determine benefit obligations are as follows:



(Percent)	September 29 2013	September 30 2012

Discount rate	4.7	3.85

Weighted-average assumptions used to determine net periodic benefit cost are as follows:



(Percent)	2013	2012	2011

Discount rate	3.85	4.4	4.8
Expected long-term return on plan assets	7.5	7.9	8.0
Rate of compensation increase	NA	NA	3.5

For 2014, the expected long-term return on plan assets is 7.0%. The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, current market conditions and composition of assets.

Plan Assets

The primary objective of our investment strategy is to satisfy our pension obligations at a reasonable cost. Assets are actively invested to balance real growth of capital through appreciation and reinvestment of dividend and interest income and safety of invested funds.

An investment policy outlines the governance structure for decision making, sets investment objectives and restrictions and establishes criteria for selecting and evaluating investment managers. The use of derivatives is strictly prohibited, except on a case-by-case basis where the manager has a proven capability, and only to hedge quantifiable risks such as exposure to foreign currencies. An investment committee, consisting of certain of our executives and supported by independent consultants, is responsible for monitoring compliance with the investment policy. Assets are periodically redistributed to maintain the appropriate policy allocation.

The weighted-average asset allocation of our pension assets is as follows:



(Percent)		Actual Allocation
Asset Class	September 29, 2013 Policy Allocation	September 29 2013	September 30 2012

Equity securities	55	60	63
Debt securities	30	30	29
TIPS	5	4	—
Hedge fund investments	10	4	—
Cash and cash equivalents	—	2	2
Receivables, net	—	—	6

Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need to reallocate assets within policy guidelines. At September 29, 2013 and September 30, 2012, certain plan assets were in process of reallocation. In October of 2013 and 2012, plan assets were back within the policy allocation. In 2013, the policy allocation was amended to allow Hedge Fund investments.

New collective bargaining agreements in 2011 resulted in the freezing of certain defined pension benefits in 2011. See Note 7.

Fair Value Measurements

The fair value hierarchy of pension assets at September 29, 2013 is as follows:



(Thousands of Dollars)	Level 1	Level 2	Level 3

Cash and cash equivalents	2,255	—	—
Domestic equity securities	24,133	42,247	—
International equity securities	12,913	8,561	—
TIPS	6,399	—	—
Debt securities	35,422	8,035	—
Hedge fund investments	—	7,300	—

There were no purchases, sales or transfer of assets classified as Level 3 in 2013, 2012 or 2011.

Cash Flows

Based on our forecast at September 29, 2013, we expect to make contributions totaling $1,400,000 to our pension trust in 2014.

We anticipate future benefit payments to be paid from the pension trust as follows:



(Thousands of Dollars)

2014	11,420
2015	11,219
2016	11,275
2017	11,338
2018	11,362
2019-2023	56,827

Other Plans

We are obligated under an unfunded plan to provide fixed retirement payments to certain former employees. The plan is frozen and no additional benefits are being accrued. The accrued liability under the plan is $2,354,000 and $2,595,000 at September 29, 2013 and September 30, 2012, respectively, of which $279,000 is included in compensation and other accrued liabilities in the Consolidated Balance Sheet at September 29, 2013.