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Pension Plans and Other Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2018
Compensation and Retirement Disclosure [Abstract]  
Schedule of Benefit Obligations and Change in Plan Assets
(In thousands)Pension BenefitsOther Postretirement Benefits
Change in Benefit Obligations:2018201720182017
Net benefit obligation at beginning of year$391,269$349,556$82,290$78,842
Service cost5,7235,3831,2831,231
Interest cost12,85912,6252,6122,666
Plan participants' contributions--950894
Actuarial (gain) loss(a)(34,439)37,689(7,555)2,749
Gross benefits paid(15,124)(13,984)(4,623)(4,262)
Less: federal subsidy on benefits paid(b)--204170
Benefit obligation at end of year$360,288$391,269$75,161$82,290
Change in Plan Assets:
Fair value of plan assets at beginning of year$361,651$311,933$48,470$43,177
Actual return on plan assets(24,485)56,987(2,780)7,104
Employer contributions1,7386,7155041,557
Plan participants' contributions--950894
Gross benefits paid(15,124)(13,984)(4,623)(4,262)
Fair value of plan assets at end of year$323,780$361,651$42,521$48,470
Funded Status as of December 31$(36,508)$(29,618)$(32,640)$(33,820)

(a) In 2018, higher discount rates were the main driver of the actuarial gain. However, in 2017, lower discount rates were the main driver of the actuarial loss.

(b) In 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law authorizing Medicare to provide prescription drug benefits to retirees. For the years ended December 31, 2018 and 2017, the subsidy due to MGE was $0.2 million.
Schedule of Amounts Recognized in the Consolidated Balance Sheet

The amounts recognized in the consolidated balance sheets to reflect the funded status of the plans as of December 31 are as follows:

Pension BenefitsOther Postretirement Benefits
(In thousands)2018201720182017
Long-term asset$-$7,336$-$-
Current liability(1,732)(1,726)--
Long-term liability(34,776)(35,228)(32,640)(33,820)
Net liability$(36,508)$(29,618)$(32,640)$(33,820)
Amounts Recognized in Regulatory Asset

The following table shows the amounts that have not yet been recognized in our net periodic benefit cost as of December 31 and are recorded as regulatory assets in the consolidated balance sheets:

Pension BenefitsOther Postretirement Benefits
(In thousands)2018201720182017
Net actuarial loss$92,978$81,969$10,569$12,600
Prior service benefit(385)(429)(7,153)(9,821)
Transition obligation--2123
Total$92,593$81,540$3,437$2,802
Scehdule of Projected Benefit Obligations in Excess of Plan Assets

The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets were as follows:

(In thousands)Pension Benefits
Projected Benefit Obligation in Excess of Plan Assets20182017
Projected benefit obligation, end of year$360,288$36,954
Fair value of plan assets, end of year323,780-
Schedule of Accumulated Benefit Obligations in Excess of Plan Assets

The accumulated benefit obligation and fair value of plan assets for pension plans with an accumulated benefit obligation in excess of plan assets were as follows:

(In thousands)Pension Benefits
Accumulated Benefit Obligation in Excess of Plan Assets20182017
Accumulated benefit obligation, end of year$31,200$32,813
Fair value of plan assets, end of year--
Net Periodic Benefit Costs
(In thousands)Pension BenefitsOther Postretirement Benefits
Components of Net Periodic Benefit Cost:201820172016201820172016
Service cost$5,723$5,383$5,365$1,283$1,231$1,271
Interest cost12,85912,62512,3932,6122,6662,681
Expected return on assets(26,241)(22,963)(22,365)(3,232)(2,887)(2,829)
Amortization of:
Transition obligation---333
Prior service (credit) cost(44)(17)10(2,669)(2,669)(2,669)
Actuarial loss5,2786,3525,600488660589
Net periodic benefit cost (credit)$(2,425)$1,380$1,003$(1,515)$(996)$(954)
Plan Assumptions

The weighted-average assumptions used to determine the benefit obligations were as follows for the years ended December 31:

Pension BenefitsOther Postretirement Benefits
2018201720182017
Discount rate4.32%3.73%4.24%3.58%
Rate of compensation increase3.20%3.67%N/AN/A
Assumed health care cost trend rates:
Health care cost trend rate assumed for next year N/AN/A6.25%6.00%
Rate to which the cost trend rate is assumed to
decline (the ultimate trend rate) N/AN/A5.00%5.00%
Year that the rate reaches the ultimate trend rate N/AN/A20242022

The weighted-average assumptions used to determine the net periodic cost were as follows for the years ended December 31:

Pension BenefitsOther Postretirement Benefits
201820172016201820172016
Discount rate3.73%4.30%4.51%3.60%4.09%4.32%
Expected rate of return on plan assets7.40%7.40%7.65%6.94%6.80%6.96%
Rate of compensation increase3.72%3.76%3.76%N/AN/AN/A
Effect of 1% Increase or Decrease in Health Care Costs

The following table shows how an assumed 1% increase or 1% decrease in health care cost trends could impact postretirement benefits in 2018 dollars:

(In thousands)1% Increase1% Decrease
Effect on other postretirement benefit obligation$754$(980)
Effect on total service and interest cost components21(30)
Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans as of December 31, 2018 and 2017, and the target allocation for 2019, by asset category, follows:

Target AllocationPercentage of Plan Assets at Year End
20182017
Equity securities(a)63.0 %60.0 %65.0 %
Fixed income securities30.0 %33.0 %29.0 %
Real estate7.0 %7.0 %6.0 %
Total100.0 %100.0 %100.0 %

(a) Target allocations for equity securities are broken out as follows: 45.5% United States equity,

17.5% non-United States equity.

All of the fair values of MGE's plan assets are measured using net asset value, except for cash and cash equivalents which are considered level 1 investments. The fair values of MGE's plan assets by asset category as of December 31 are as follows:

(In thousands)20182017
Cash and Cash Equivalents$701$488
Equity Securities:
U.S. Large Cap102,984124,594
U.S. Mid Cap23,68329,138
U.S. Small Cap28,57337,782
International Blend61,29971,514
Fixed Income Securities:
Short-Term Fund4,0534,641
High Yield Bond19,43719,400
Long Duration Bond93,21691,678
Real Estate27,92325,995
Insurance Continuance Fund1,4911,500
Fixed Rate Fund2,9413,391
Total$366,301$410,121
Benefit Payments, Fiscal Year Maturity

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

PensionOther Postretirement Benefits
(In thousands)Pension BenefitsGross Postretirement BenefitsExpected Medicare Part D SubsidyNet Postretirement Benefits
2019$16,362$4,248$(228)$4,020
202017,0874,585(252)4,333
202117,8354,994(276)4,718
202218,9565,325(305)5,020
202319,7705,604(334)5,270
2024 - 2028110,03729,478(2,103)27,375