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Retirement, Other Postretirement Benefits, And Defined Contribution Plans
 12 Months Ended
Dec. 31, 2018
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778
Entergy Arkansas [Member]  
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778
Entergy Louisiana [Member]  
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778
Entergy Mississippi [Member]  
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778
Entergy New Orleans [Member]  
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778
Entergy Texas [Member]  
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778
System Energy [Member]  
Retirement And Other Postretirement Benefits
RETIREMENT, OTHER POSTRETIREMENT BENEFITS, AND DEFINED CONTRIBUTION PLANS  (Entergy Corporation, Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy)

Entergy implemented ASU No. 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” effective January 1, 2018. The ASU requires entities to report the service cost component of defined benefit pension cost and postretirement benefit cost (net benefit cost) in the same line item as other compensation costs arising from services rendered during the period.  The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations and are presented by Entergy in miscellaneous - net in other income. The amendment regarding the presentation of net benefit cost was required to be applied retrospectively for all periods presented. In addition, the ASU allows only the service cost component of net benefit cost to be eligible for capitalization on a prospective basis. In accordance with the regulatory treatment of net benefit cost of the Registrant Subsidiaries, a regulatory asset/liability will be recorded in other regulatory assets/liabilities for the non-service cost components of net benefit cost that would have been capitalized.

Qualified Pension Plans

Entergy has eight qualified pension plans covering substantially all employees. The Entergy Corporation Retirement Plan for Non-Bargaining Employees (Non-Bargaining Plan I), the Entergy Corporation Retirement Plan for Bargaining Employees (Bargaining Plan I), the Entergy Corporation Retirement Plan II for Non-Bargaining Employees (Non-Bargaining Plan II), the Entergy Corporation Retirement Plan II for Bargaining Employees, the Entergy Corporation Retirement Plan III, and the Entergy Corporation Retirement Plan IV for Bargaining Employees are non-contributory final average pay plans and provide pension benefits that are based on employees’ credited service and compensation during employment.  Effective as of the close of business on December 31, 2016, the Entergy Corporation Retirement Plan IV for Non-Bargaining Employees (Non-Bargaining Plan IV) was merged with and into Non-Bargaining Plan II. At the close of business on December 31, 2016, the liabilities for the accrued benefits and the assets attributable to such liabilities of all participants in Non-Bargaining Plan IV were assumed by and transferred to Non-Bargaining Plan II. There was no loss of vesting or benefit options or reduction of accrued benefits to affected participants as a result of this plan merger. Non-bargaining employees whose most recent date of hire is after June 30, 2014 participate in the Entergy Corporation Cash Balance Plan for Non-Bargaining Employees (Non-Bargaining Cash Balance Plan). Certain bargaining employees hired or rehired after June 30, 2014, or such later date provided for in their applicable collective bargaining agreements, participate in the Entergy Corporation Cash Balance Plan for Bargaining Employees (Bargaining Cash Balance Plan). The Registrant Subsidiaries participate in these four plans: Non-Bargaining Plan I, Bargaining Plan I, Non-Bargaining Cash Balance Plan, and Bargaining Cash Balance Plan.

The assets of the six final average pay qualified pension plans are held in a master trust established by Entergy, and the assets of the two cash balance pension plans are held in a second master trust established by Entergy.  Each pension plan has an undivided beneficial interest in each of the investment accounts in its respective master trust that is maintained by a trustee.  Use of the master trusts permits the commingling of the trust assets of the pension plans of Entergy Corporation and its Registrant Subsidiaries for investment and administrative purposes.  Although assets in the master trusts are commingled, the trustee maintains supporting records for the purpose of allocating the trust level equity in net earnings (loss) and the administrative expenses of the investment accounts in each trust to the various participating pension plans in that particular trust.  The fair value of the trusts’ assets is determined by the trustee and certain investment managers.  For each trust, the trustee calculates a daily earnings factor, including realized and unrealized gains or losses, collected and accrued income, and administrative expenses, and allocates earnings to each plan in the master trusts on a pro rata basis.

Within each pension plan, the record of each Registrant Subsidiary’s beneficial interest in the plan assets is maintained by the plan’s actuary and is updated quarterly.  Assets for each Registrant Subsidiary are increased for investment net income and contributions, and are decreased for benefit payments.  A plan’s investment net income/loss (i.e. interest and dividends, realized and unrealized gains and losses and expenses) is allocated to the Registrant Subsidiaries participating in that plan based on the value of assets for each Registrant Subsidiary at the beginning of the quarter adjusted for contributions and benefit payments made during the quarter.

Entergy Corporation and its subsidiaries fund pension plans in an amount not less than the minimum required contribution under the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended.  The assets of the plans include common and preferred stocks, fixed-income securities, interest in a money market fund, and insurance contracts.  The Registrant Subsidiaries’ pension costs are recovered from customers as a component of cost of service in each of their respective jurisdictions.

Components of Qualified Net Pension Cost and Other Amounts Recognized as a Regulatory Asset and/or Accumulated Other Comprehensive Income (AOCI)

Entergy Corporation and its subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Net periodic pension cost:
 

 
 

 
 

Service cost - benefits earned during the period

$155,010

 

$133,641

 

$143,244

Interest cost on projected benefit obligation
267,415

 
260,824

 
261,613

Expected return on assets
(442,142
)
 
(408,225
)
 
(389,465
)
Amortization of prior service cost
398

 
261

 
1,079

Recognized net loss
274,104

 
227,720

 
195,298

Curtailment loss
—

 
—

 
3,084

Settlement charges
828

 
—

 
—

Net periodic pension costs

$255,613

 

$214,221

 

$214,853

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Net loss

$394,951

 

$368,067

 

$203,229

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
Amortization of prior service cost
(398
)
 
(261
)
 
(1,079
)
Acceleration of prior service cost to curtailment
—

 
—

 
(1,045
)
Amortization of net loss
(274,932
)
 
(227,720
)
 
(195,298
)
Total

$119,621

 

$140,086

 

$5,807

Total recognized as net periodic pension cost, regulatory asset, and/or AOCI (before tax)

$375,234

 

$354,307

 

$220,660

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year:
 
 
 
 
 
Prior service cost

$—

 

$398

 

$261

Net loss

$233,677

 

$274,104

 

$227,720


The Registrant Subsidiaries’ total 2018, 2017, and 2016 qualified pension costs and amounts recognized as a regulatory asset and/or other comprehensive income, including amounts capitalized, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$24,757

 

$33,783

 

$7,286

 

$2,693

 

$6,356

 

$7,102

Interest cost on projected benefit obligation
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Expected return on assets
 
(87,404
)
 
(99,236
)
 
(26,007
)
 
(11,973
)
 
(26,091
)
 
(19,963
)
Recognized net loss
 
53,650

 
57,800

 
14,438

 
7,816

 
10,503

 
14,859

Net pension cost
 

$43,020

 

$52,108

 

$10,792

 

$5,789

 

$4,158

 

$14,905

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

$74,570

 

$41,642

 

$19,244

 

$2,351

 

$24,121

 

($2,359
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(53,650
)
 
(57,800
)
 
(14,438
)
 
(7,816
)
 
(10,503
)
 
(14,859
)
Total
 

$20,920

 

($16,158
)
 

$4,806

 

($5,465
)
 

$13,618

 

($17,218
)
Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$63,940

 

$35,950

 

$15,598

 

$324

 

$17,776

 

($2,313
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$47,361

 

$46,571

 

$12,416

 

$6,117

 

$9,335

 

$11,400


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,358

 

$27,698

 

$5,890

 

$2,500

 

$5,455

 

$6,145

Interest cost on projected benefit obligation
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Expected return on assets
 
(81,707
)
 
(92,067
)
 
(24,526
)
 
(11,199
)
 
(24,722
)
 
(18,650
)
Recognized net loss
 
46,560

 
49,417

 
12,213

 
6,632

 
9,241

 
11,857

Net pension cost
 

$36,987

 

$44,283

 

$8,504

 

$5,096

 

$3,543

 

$11,716

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$51,569

 

$57,510

 

$14,681

 

$8,601

 

$1,109

 

$27,733

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(46,560
)
 
(49,417
)
 
(12,213
)
 
(6,632
)
 
(9,241
)
 
(11,857
)
Total
 

$5,009

 

$8,093

 

$2,468

 

$1,969

 

($8,132
)
 

$15,876

Total recognized as net periodic pension (income)/ cost, regulatory asset, and/or AOCI (before tax)
 

$41,996

 

$52,376

 

$10,972

 

$7,065

 

($4,589
)
 

$27,592

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$53,650

 

$57,800

 

$14,438

 

$7,816

 

$10,503

 

$14,859


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Net periodic pension cost:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$20,724

 

$28,194

 

$6,250

 

$2,625

 

$5,664

 

$6,263

Interest cost on projected benefit obligation
 
52,219

 
59,478

 
15,245

 
7,256

 
14,228

 
11,966

Expected return on assets
 
(79,087
)
 
(88,383
)
 
(23,923
)
 
(10,748
)
 
(24,248
)
 
(17,836
)
Recognized net loss
 
43,745

 
47,783

 
11,938

 
6,460

 
9,358

 
10,415

Net pension cost
 

$37,601

 

$47,072

 

$9,510

 

$5,593

 

$5,002

 

$10,808

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$60,968

 

$46,742

 

$10,942

 

$5,463

 

$3,816

 

$20,805

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
(43,745
)
 
(47,783
)
 
(11,938
)
 
(6,460
)
 
(9,358
)
 
(10,415
)
Total
 

$17,223

 

($1,041
)
 

($996
)
 

($997
)
 

($5,542
)
 

$10,390

Total recognized as net periodic pension (income)/cost, regulatory asset, and/or AOCI (before tax)
 

$54,824

 

$46,031

 

$8,514

 

$4,596

 

($540
)
 

$21,198

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$46,560

 

$49,417

 

$12,213

 

$6,632

 

$9,241

 

$11,857



Qualified Pension Obligations, Plan Assets, Funded Status, Amounts Recognized in the Balance Sheet

Qualified pension obligations, plan assets, funded status, amounts recognized in the Consolidated Balance Sheets for Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 

 
 

Balance at January 1

$7,987,087

 

$7,142,567

Service cost
155,010

 
133,641

Interest cost
267,415

 
260,824

Settlement lump sum payments
(1,794
)
 
—

Actuarial (gain)/loss
(395,242
)
 
767,849

Employee contributions
—

 
40

Benefits paid
(607,559
)
 
(317,834
)
Balance at December 31

$7,404,917

 

$7,987,087

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$6,071,316

 

$5,171,202

Actual return on plan assets
(348,051
)
 
808,007

Employer contributions
383,503

 
409,901

Employee contributions
—

 
40

Settlements
(1,794
)
 
—

Benefits paid
(607,559
)
 
(317,834
)
Fair value of assets at December 31

$5,497,415

 

$6,071,316

Funded status

($1,907,502
)
 

($1,915,771
)
Amount recognized in the balance sheet
 
 
 
Non-current liabilities

($1,907,502
)
 

($1,915,771
)
Amount recognized as a regulatory asset
 
 
 
Net loss

$2,468,987

 

$2,418,206

Amount recognized as AOCI (before tax)
 
 
 
Prior service cost

$—

 

$398

Net loss
737,004

 
667,766

 

$737,004

 

$668,164



Qualified pension obligations, plan assets, funded status, amounts recognized in the Balance Sheets for the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Service cost
 
24,757

 
33,783

 
7,286

 
2,693

 
6,356

 
7,102

Interest cost
 
52,017

 
59,761

 
15,075

 
7,253

 
13,390

 
12,907

Actuarial loss
 
(79,621
)
 
(133,520
)
 
(26,611
)
 
(18,844
)
 
(21,656
)
 
(37,842
)
Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Balance at December 31
 

$1,443,808

 

$1,599,916

 

$414,089

 

$191,190

 

$369,604

 

$339,034

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at
January 1
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Actual return on plan assets
 
(66,787
)
 
(75,926
)
 
(19,849
)
 
(9,221
)
 
(19,686
)
 
(15,520
)
Employer contributions
 
64,062

 
71,919

 
14,933

 
7,250

 
10,883

 
13,786

Benefits paid
 
(134,101
)
 
(145,808
)
 
(39,210
)
 
(17,808
)
 
(39,206
)
 
(27,182
)
Fair value of assets at December 31
 

$1,068,842

 

$1,215,926

 

$316,716

 

$145,968

 

$315,514

 

$245,516

Funded status
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($374,966
)
 

($383,990
)
 

($97,373
)
 

($45,222
)
 

($54,090
)
 

($93,518
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 

Net loss
 

$727,703

 

$686,138

 

$196,683

 

$91,448

 

$159,030

 

$168,559

Amounts recognized as AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$43,796

 

$—

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in Projected Benefit Obligation (PBO)
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$1,454,310

 

$1,624,233

 

$419,201

 

$197,464

 

$386,366

 

$335,381

Service cost
 
20,358

 
27,698

 
5,890

 
2,500

 
5,455

 
6,145

Interest cost
 
51,776

 
59,235

 
14,927

 
7,163

 
13,569

 
12,364

Actuarial loss
 
131,729

 
147,704

 
38,726

 
19,507

 
25,339

 
45,471

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Balance at December 31
 

$1,580,756

 

$1,785,700

 

$457,549

 

$217,896

 

$410,720

 

$384,049

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$1,041,592

 

$1,169,147

 

$314,349

 

$142,488

 

$317,576

 

$235,144

Actual return on plan assets
 
161,868

 
182,261

 
48,572

 
22,104

 
48,952

 
36,387

Employer contributions
 
79,625

 
87,503

 
19,116

 
9,893

 
17,004

 
18,213

Benefits paid
 
(77,417
)
 
(73,170
)
 
(21,195
)
 
(8,738
)
 
(20,009
)
 
(15,312
)
Fair value of assets at December 31
 

$1,205,668

 

$1,365,741

 

$360,842

 

$165,747

 

$363,523

 

$274,432

Funded status
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized in the balance sheet (funded status)
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
 

($375,088
)
 

($419,959
)
 

($96,707
)
 

($52,149
)
 

($47,197
)
 

($109,617
)
Amounts recognized as regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 

$706,783

 

$701,324

 

$191,877

 

$96,913

 

$145,412

 

$185,774

Amounts recognized as AOCI  (before tax)
 
 

 
 
 
 
 
 
 
 
 
 
Net loss
 

$—

 

$44,765

 

$—

 

$—

 

$—

 

$—



Accumulated Pension Benefit Obligation

The accumulated benefit obligation for Entergy’s qualified pension plans was $6.9 billion and $7.4 billion at December 31, 2018 and 2017, respectively.

The qualified pension accumulated benefit obligation for each of the Registrant Subsidiaries for their employees as of December 31, 2018 and 2017 was as follows:
 
December 31,
 
2018
 
2017
 
(In Thousands)
Entergy Arkansas

$1,362,425

 

$1,492,876

Entergy Louisiana

$1,481,158

 

$1,652,939

Entergy Mississippi

$387,635

 

$430,268

Entergy New Orleans

$179,907

 

$205,316

Entergy Texas

$347,852

 

$387,083

System Energy

$317,848

 

$359,258



Other Postretirement Benefits

Entergy also currently offers retiree medical, dental, vision, and life insurance benefits (other postretirement benefits) for eligible retired employees.  Employees who commenced employment before July 1, 2014 and who satisfy certain eligibility requirements (including retiring from Entergy after a certain age and/or years of service with Entergy and immediately commencing their Entergy pension benefit), may become eligible for other postretirement benefits.

Entergy uses a December 31 measurement date for its postretirement benefit plans.

Effective January 1, 1993, Entergy adopted an accounting standard requiring a change from a cash method to an accrual method of accounting for postretirement benefits other than pensions.  Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, and Entergy Texas have received regulatory approval to recover accrued other postretirement benefit costs through rates.  The LPSC ordered Entergy Louisiana to continue the use of the pay-as-you-go method for ratemaking purposes for postretirement benefits other than pensions.  However, the LPSC retains the flexibility to examine individual companies’ accounting for other postretirement benefits to determine if special exceptions to this order are warranted. Pursuant to regulatory directives, Entergy Arkansas, Entergy Mississippi, Entergy New Orleans, Entergy Texas, and System Energy contribute the other postretirement benefit costs collected in rates into external trusts.  System Energy is funding, on behalf of Entergy Operations, other postretirement benefits associated with Grand Gulf.

Trust assets contributed by participating Registrant Subsidiaries are in master trusts, established by Entergy Corporation and maintained by a trustee.  Each participating Registrant Subsidiary holds a beneficial interest in the trusts’ assets.  The assets in the master trusts are commingled for investment and administrative purposes.  Although assets are commingled, supporting records are maintained for the purpose of allocating the beneficial interest in net earnings/(losses) and the administrative expenses of the investment accounts to the various participating plans and participating Registrant Subsidiaries. Beneficial interest in an investment account’s net income/(loss) is comprised of interest and dividends, realized and unrealized gains and losses, and expenses.  Beneficial interest from these investments is allocated to the plans and participating Registrant Subsidiary based on their portion of net assets in the pooled accounts.

Components of Net Other Postretirement Benefit Cost and Other Amounts Recognized as a Regulatory Asset and/or AOCI

Entergy Corporation’s and its subsidiaries’ total 2018, 2017, and 2016 other postretirement benefit costs, including amounts capitalized and amounts recognized as a regulatory asset and/or other comprehensive income, included the following components:
 
2018
 
2017
 
2016
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
Service cost - benefits earned during the period

$27,129

 

$26,915

 

$32,291

Interest cost on accumulated postretirement benefit obligation (APBO)
50,725

 
55,838

 
56,331

Expected return on assets
(41,493
)
 
(37,630
)
 
(41,820
)
Amortization of prior service credit
(37,002
)
 
(41,425
)
 
(45,490
)
Recognized net loss
13,729

 
21,905

 
18,214

Net other postretirement benefit cost

$13,088

 

$25,603

 

$19,526

Other changes in plan assets and benefit obligations recognized as a regulatory asset and /or AOCI (before tax)
 
 
 
 
 
Arising this period:
 
 
 
 
 
Prior service credit for period

$—

 

($2,564
)
 

($20,353
)
Net (gain)/loss
(274,354
)
 
(66,922
)
 
49,805

Amounts reclassified from regulatory asset and /or AOCI to net periodic benefit cost in the current year:
 
 
 
 
 
Amortization of prior service credit
37,002

 
41,425

 
45,490

Amortization of net loss
(13,729
)
 
(21,905
)
 
(18,214
)
Total

($251,081
)
 

($49,966
)
 

$56,728

Total recognized as net periodic benefit income/(cost), regulatory asset, and/or AOCI (before tax)

($237,993
)
 

($24,363
)
 

$76,254

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic benefit cost in the following year
 
 
 
 
 
Prior service credit

($35,377
)
 

($37,002
)
 

($41,425
)
Net loss

$1,430

 

$13,729

 

$21,905



Total 2018, 2017, and 2016 other postretirement benefit costs of the Registrant Subsidiaries, including amounts capitalized and deferred, for their employees included the following components:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
 
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,170

 

$6,225

 

$1,284

 

$516

 

$1,319

 

$1,223

Interest cost on APBO
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Expected return on assets
 
(17,368
)
 
—

 
(5,213
)
 
(5,250
)
 
(9,784
)
 
(3,130
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
1,154

 
1,550

 
1,508

 
137

 
823

 
932

Net other postretirement benefit (income)/cost
 

($10,168
)
 

$11,194

 

($1,513
)
 

($3,673
)
 

($6,204
)
 

($490
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net gain
 

($32,219
)
 

($73,249
)
 

($7,794
)
 

($981
)
 

($10,561
)
 

($6,680
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 

 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(1,154
)
 
(1,550
)
 
(1,508
)
 
(137
)
 
(823
)
 
(932
)
Total
 

($28,263
)
 

($67,064
)
 

($7,479
)
 

($373
)
 

($9,068
)
 

($6,099
)
Total recognized as net periodic other postretirement cost, regulatory asset, and/or AOCI (before tax)
 

($38,431
)
 

($55,870
)
 

($8,992
)
 

($4,046
)
 

($15,272
)
 

($6,589
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($4,950
)
 

($7,349
)
 

($1,756
)
 

($682
)
 

($2,243
)
 

($1,450
)
Net (gain)/loss
 

$576

 

($695
)
 

$723

 

$231

 

$485

 

$354


2017
 
Entergy Arkansas

Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,451

 

$6,373

 

$1,160

 

$567

 

$1,488

 

$1,278

Interest cost on APBO
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Expected return on assets
 
(15,836
)
 
—

 
(4,801
)
 
(4,635
)
 
(8,720
)
 
(2,869
)
Amortization of prior service credit
 
(5,110
)
 
(7,735
)
 
(1,823
)
 
(745
)
 
(2,316
)
 
(1,513
)
Recognized net loss
 
4,460

 
1,859

 
1,675

 
418

 
3,303

 
1,560

Net other postretirement benefit (income)/cost
 

($4,015
)
 

$12,598

 

($1,030
)
 

($2,521
)
 

($1,751
)
 

$692

Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Net (gain)/loss
 

($29,534
)
 

($1,256
)
 

$506

 

($7,342
)
 

($22,255
)
 

($5,459
)
Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,110

 
7,735

 
1,823

 
745

 
2,316

 
1,513

Amortization of net loss
 
(4,460
)
 
(1,859
)
 
(1,675
)
 
(418
)
 
(3,303
)
 
(1,560
)
Total
 

($28,884
)
 

$4,620

 

$654

 

($7,015
)
 

($23,242
)
 

($5,506
)
Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($32,899
)
 

$17,218

 

($376
)
 

($9,536
)
 

($24,993
)
 

($4,814
)
Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,735
)
 

($1,823
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$1,154

 

$1,550

 

$1,508

 

$137

 

$823

 

$932


2016
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Other postretirement costs:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost - benefits earned during the period
 

$3,913

 

$7,476

 

$1,543

 

$622

 

$1,590

 

$1,337

Interest cost on APBO
 
9,297

 
13,041

 
2,835

 
1,791

 
4,154

 
2,117

Expected return on assets
 
(17,855
)
 
—

 
(5,517
)
 
(4,617
)
 
(9,575
)
 
(3,257
)
Amortization of prior service credit
 
(5,472
)
 
(7,787
)
 
(934
)
 
(745
)
 
(2,722
)
 
(1,570
)
Recognized net loss
 
4,256

 
2,926

 
893

 
146

 
2,148

 
1,149

Net other postretirement benefit (income)/cost
 

($5,861
)
 

$15,656

 

($1,180
)
 

($2,803
)
 

($4,405
)
 

($224
)
Other changes in plan assets and benefit obligations recognized as a regulatory asset and/or AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Arising this period:
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit for the period
 

($1,007
)
 

($4,647
)
 

($6,219
)
 

$—

 

$—

 

$—

Net (gain)/loss
 
3,331

 
(13,117
)
 
8,715

 
5,717

 
13,378

 
4,997

Amounts reclassified from regulatory asset and/or AOCI to net periodic pension cost in the current year:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of prior service credit
 
5,472

 
7,787

 
934

 
745

 
2,722

 
1,570

Amortization of net loss
 
(4,256
)
 
(2,926
)
 
(893
)
 
(146
)
 
(2,148
)
 
(1,149
)
Total
 

$3,540

 

($12,903
)
 

$2,537

 

$6,316

 

$13,952

 

$5,418

Total recognized as net periodic other postretirement income/(cost), regulatory asset, and/or AOCI (before tax)
 

($2,321
)
 

$2,753

 

$1,357

 

$3,513

 

$9,547

 

$5,194

Estimated amortization amounts from regulatory asset and/or AOCI to net periodic cost  in the following year
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($5,110
)
 

($7,739
)
 

($1,824
)
 

($745
)
 

($2,316
)
 

($1,513
)
Net loss
 

$4,460

 

$1,859

 

$1,675

 

$418

 

$3,303

 

$1,560



Other Postretirement Benefit Obligations, Plan Assets, Funded Status, and Amounts Not Yet Recognized and Recognized in the Balance Sheet

Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Consolidated Balance Sheets of Entergy Corporation and its Subsidiaries as of December 31, 2018 and 2017 are as follows:
 
2018
 
2017
 
(In Thousands)
Change in APBO
 

 
 

Balance at January 1

$1,563,487

 

$1,568,963

Service cost
27,129

 
26,915

Interest cost
50,725

 
55,838

Plan amendments
—

 
(2,564
)
Plan participant contributions
37,049

 
35,080

Actuarial gain
(346,429
)
 
(23,409
)
Benefits paid
(99,785
)
 
(97,829
)
Medicare Part D subsidy received
443

 
493

Balance at December 31

$1,232,619

 

$1,563,487

Change in Plan Assets
 

 
 

Fair value of assets at January 1

$659,327

 

$596,660

Actual return on plan assets
(30,582
)
 
81,143

Employer contributions
43,773

 
44,273

Plan participant contributions
37,049

 
35,080

Benefits paid
(99,785
)
 
(97,829
)
Fair value of assets at December 31

$609,782

 

$659,327

Funded status

($622,837
)
 

($904,160
)
Amounts recognized in the balance sheet
 
 
 
Current liabilities

($44,276
)
 

($45,237
)
Non-current liabilities
(578,561
)
 
(858,923
)
Total funded status

($622,837
)
 

($904,160
)
Amounts recognized as a regulatory asset
 
 
 
Prior service credit

($25,778
)
 

($40,461
)
Net loss
51,774

 
144,966

 

$25,996

 

$104,505

Amounts recognized as AOCI (before tax)
 
 
 
Prior service credit

($42,730
)
 

($65,047
)
Net loss
(33,569
)
 
161,322

 

($76,299
)
 

$96,275



Other postretirement benefit obligations, plan assets, funded status, and amounts not yet recognized and recognized in the Balance Sheets of the Registrant Subsidiaries as of December 31, 2018 and 2017 are as follows:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Service cost
 
3,170

 
6,225

 
1,284

 
516

 
1,319

 
1,223

Interest cost
 
7,986

 
11,154

 
2,731

 
1,669

 
3,754

 
1,998

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Actuarial gain
 
(61,960
)
 
(73,249
)
 
(16,762
)
 
(10,847
)
 
(27,527
)
 
(11,985
)
Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Medicare Part D subsidy received
 
60

 
64

 
14

 
8

 
13

 
22

Balance at December 31
 

$187,830

 

$275,269

 

$68,976

 

$41,987

 

$88,310

 

$48,791

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Actual return on plan assets
 
(12,373
)
 
—

 
(3,755
)
 
(4,616
)
 
(7,182
)
 
(2,175
)
Employer contributions
 
195

 
14,314

 
87

 
3,793

 
3,808

 
569

Plan participant contributions
 
8,136

 
8,162

 
2,233

 
1,171

 
2,565

 
1,837

Benefits paid
 
(18,581
)
 
(22,476
)
 
(5,145
)
 
(4,078
)
 
(8,516
)
 
(5,685
)
Fair value of assets at December 31
 

$252,055

 

$—

 

$75,853

 

$81,774

 

$144,846

 

$43,670

Funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($17,740
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
64,225

 
(257,529
)
 
6,877

 
39,787

 
56,536

 
(5,121
)
Total funded status
 

$64,225

 

($275,269
)
 

$6,877

 

$39,787

 

$56,536

 

($5,121
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($11,465
)
 

$—

 

($4,864
)
 

($681
)
 

($3,665
)
 

($2,304
)
Net loss
 
9,021

 
—

 
15,945

 
3,151

 
13,094

 
8,774

 
 

($2,444
)
 

$—

 

$11,081

 

$2,470

 

$9,429

 

$6,470

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($12,264
)
 

$—

 

$—

 

$—

 

$—

Net gain
 
—

 
(23,214
)
 
—

 
—

 
—

 
—

 
 

$—

 

($35,478
)
 

$—

 

$—

 

$—

 

$—



2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Change in APBO
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1
 

$258,787

 

$342,500

 

$78,485

 

$55,515

 

$127,700

 

$62,498

Service cost
 
3,451

 
6,373

 
1,160

 
567

 
1,488

 
1,278

Interest cost
 
9,020

 
12,101

 
2,759

 
1,874

 
4,494

 
2,236

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Actuarial (gain)/loss
 
(11,691
)
 
(1,256
)
 
5,858

 
(899
)
 
(12,469
)
 
(2,233
)
Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Medicare Part D subsidy received
 
74

 
89

 
22

 
10

 
16

 
28

Balance at December 31
 

$249,019

 

$345,389

 

$84,621

 

$53,548

 

$116,702

 

$61,381

Change in Plan Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of assets at January 1
 

$250,926

 

$—

 

$75,945

 

$74,236

 

$137,069

 

$44,885

Actual return on plan assets
 
33,679

 
—

 
10,153

 
11,078

 
18,506

 
6,095

Employer contributions
 
695

 
14,418

 
(2
)
 
3,709

 
3,123

 
570

Plan participant contributions
 
7,875

 
7,855

 
2,160

 
1,151

 
2,453

 
1,779

Benefits paid
 
(18,497
)
 
(22,273
)
 
(5,823
)
 
(4,670
)
 
(6,980
)
 
(4,205
)
Fair value of assets at December 31
 

$274,678

 

$—

 

$82,433

 

$85,504

 

$154,171

 

$49,124

Funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in the balance sheet
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 

$—

 

($18,794
)
 

$—

 

$—

 

$—

 

$—

Non-current liabilities
 
25,659

 
(326,595
)
 
(2,188
)
 
31,956

 
37,469

 
(12,257
)
Total funded status
 

$25,659

 

($345,389
)
 

($2,188
)
 

$31,956

 

$37,469

 

($12,257
)
Amounts recognized in regulatory asset
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

($16,574
)
 

$—

 

($6,687
)
 

($1,427
)
 

($5,980
)
 

($3,819
)
Net loss
 
42,394

 
—

 
25,247

 
4,269

 
24,478

 
16,386

 
 

$25,820

 

$—

 

$18,560

 

$2,842

 

$18,498

 

$12,567

Amounts recognized in AOCI (before tax)
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
 

$—

 

($19,999
)
 

$—

 

$—

 

$—

 

$—

Net loss
 
—

 
51,585

 
—

 
—

 
—

 
—

 
 

$—

 

$31,586

 

$—

 

$—

 

$—

 

$—



Non-Qualified Pension Plans

Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  Entergy recognized net periodic pension cost related to these plans of $24.4 million in 2018, $37.6 million in 2017, and $24.9 million in 2016.  In 2018, 2017, and 2016 Entergy recognized $7.7 million, $20.3 million, and $8.1 million, respectively in settlement charges related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost above.  

The projected benefit obligation was $147 million as of December 31, 2018 of which $17 million was a current liability and $130 million was a non-current liability. The projected benefit obligation was $162.3 million as of December 31, 2017 of which $26.4 million was a current liability and $136 million was a non-current liability.  The accumulated benefit obligation was $131.9 million and $144.7 million as of December 31, 2018 and 2017, respectively. The unamortized prior service cost and net loss are recognized in regulatory assets ($51.9 million at December 31, 2018 and $55.2 million at December 31, 2017) and accumulated other comprehensive income before taxes ($19.2 million at December 31, 2018 and $35.9 million at December 31, 2017).

The following Registrant Subsidiaries participate in Entergy’s non-qualified, non-contributory defined benefit pension plans that provide benefits to certain key employees.  The net periodic pension cost for their employees for the non-qualified plans for 2018, 2017, and 2016, was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$474

 

$180

 

$300

 

$81

 

$650

2017

$679

 

$185

 

$251

 

$73

 

$499

2016

$1,819

 

$231

 

$236

 

$65

 

$504



Included in the 2018 net periodic pension cost above are settlement charges of $30 thousand and $139 thousand for Entergy Arkansas and Entergy Texas, respectively, related to the lump sum benefits paid out of the plan. Included in the 2017 net periodic pension cost above are settlement charges of $269 thousand for Entergy Arkansas related to the lump sum benefits paid out of the plan. Included in the 2016 net periodic pension cost above are settlement charges of $1.4 million and $1 thousand for Entergy Arkansas and Entergy Mississippi, respectively, related to the lump sum benefits paid out of the plan.

The projected benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,752

 

$1,881

 

$2,732

 

$206

 

$7,952

2017

$4,221

 

$2,061

 

$2,737

 

$583

 

$8,913



The accumulated benefit obligation for their employees for the non-qualified plans as of December 31, 2018 and 2017 was as follows:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
(In Thousands)
2018

$2,519

 

$1,881

 

$2,427

 

$206

 

$7,724

2017

$3,825

 

$2,061

 

$2,250

 

$519

 

$8,602



The following amounts were recorded on the balance sheet as of December 31, 2018 and 2017:
2018
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($198
)
 

($229
)
 

($128
)
 

($16
)
 

($672
)
Non-current liabilities
 
(2,554
)
 
(1,652
)
 
(2,604
)
 
(191
)
 
(7,280
)
Total funded status
 

($2,752
)
 

($1,881
)
 

($2,732
)
 

($207
)
 

($7,952
)
Regulatory asset/(liability)
 

$1,314

 

$79

 

$1,009

 

($579
)
 

($517
)
Accumulated other comprehensive income (before taxes)
 

$—

 

$5

 

$—

 

$—

 

$—


2017
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Current liabilities
 

($376
)
 

($231
)
 

($135
)
 

($21
)
 

($788
)
Non-current liabilities
 
(3,845
)
 
(1,830
)
 
(2,603
)
 
(562
)
 
(8,125
)
Total funded status
 

($4,221
)
 

($2,061
)
 

($2,738
)
 

($583
)
 

($8,913
)
Regulatory asset/(liability)
 

$2,995

 

$166

 

$1,186

 

($140
)
 

$133

Accumulated other comprehensive income (before taxes)
 

$—

 

$11

 

$—

 

$—

 

$—



Reclassification out of Accumulated Other Comprehensive Income (Loss)

Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2018:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($398
)
 

$22,379

 

($281
)
 

$21,700

Amortization of loss
(87,828
)
 
(7,730
)
 
(3,628
)
 
(99,186
)
Settlement loss
(828
)
 
—

 
(2,379
)
 
(3,207
)
 

($89,054
)
 

$14,649

 

($6,288
)
 

($80,693
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—

 

$7,735

 

$—

 

$7,735

Amortization of loss
(3,468
)
 
(1,550
)
 
(7
)
 
(5,025
)
 

($3,468
)
 

$6,185

 

($7
)
 

$2,710


Entergy and Entergy Louisiana reclassified the following costs out of accumulated other comprehensive income (loss) (before taxes and including amounts capitalized) as of December 31, 2017:
 
Qualified Pension Costs
 
Other Postretirement Costs
 
Non-Qualified Pension Costs
 
Total
 
(In Thousands)
Entergy
 
 
 
 
 
 
 
Amortization of prior service cost

($261
)


$26,867

 

($355
)
 

$26,251

Amortization of loss
(73,800
)
 
(8,805
)
 
(3,397
)
 
(86,002
)
Settlement loss
—

 
—

 
(7,544
)
 
(7,544
)
 

($74,061
)
 

$18,062

 

($11,296
)
 

($67,295
)
Entergy Louisiana
 
 
 
 
 
 
 
Amortization of prior service cost

$—



$7,735

 

($1
)
 

$7,734

Amortization of loss
(3,459
)
 
(1,859
)
 
(9
)
 
(5,327
)
 

($3,459
)
 

$5,876

 

($10
)
 

$2,407



Accounting for Pension and Other Postretirement Benefits

Accounting standards require an employer to recognize in its balance sheet the funded status of its benefit plans.  This is measured as the difference between plan assets at fair value and the benefit obligation.  Entergy uses a December 31 measurement date for its pension and other postretirement plans.  Employers are to record previously unrecognized gains and losses, prior service costs, and any remaining transition asset or obligation (that resulted from adopting prior pension and other postretirement benefits accounting standards) as comprehensive income and/or as a regulatory asset reflective of the recovery mechanism for pension and other postretirement benefit costs in the Registrant Subsidiaries’ respective regulatory jurisdictions.  For the portion of Entergy Louisiana that is not regulated, the unrecognized prior service cost, gains and losses, and transition asset/obligation for its pension and other postretirement benefit obligations are recorded as other comprehensive income.  Entergy Louisiana recovers other postretirement benefit costs on a pay-as-you-go basis and records the unrecognized prior service cost, gains and losses, and transition obligation for its other postretirement benefit obligation as other comprehensive income.  Accounting standards also require that changes in the funded status be recorded as other comprehensive income and/or a regulatory asset in the period in which the changes occur.

With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-related value (MRV) of plan assets.  Entergy determines the MRV of pension plan assets by calculating a value that uses a 20-quarter phase-in of the difference between actual and expected returns.  For other postretirement benefit plan assets Entergy uses fair value when determining MRV.

Qualified Pension and Other Postretirement Plans’ Assets

The Plan Administrator’s trust asset investment strategy is to invest the assets in a manner whereby long-term earnings on the assets (plus cash contributions) provide adequate funding for retiree benefit payments.  The mix of assets is based on an optimization study that identifies asset allocation targets in order to achieve the maximum return for an acceptable level of risk, while minimizing the expected contributions and pension and postretirement expense.

In the optimization studies, the Plan Administrator formulates assumptions about characteristics, such as expected asset class investment returns, volatility (risk), and correlation coefficients among the various asset classes.  The future market assumptions used in the optimization study are determined by examining historical market characteristics of the various asset classes and making adjustments to reflect future conditions expected to prevail over the study period.

The target asset allocation for pension adjusts dynamically based on the pension plans’ funded status. The current targets are shown below. The expectation is that the allocation to fixed income securities will increase as the pension plans’ funded status increases.  The following ranges were established to produce an acceptable, economically efficient plan to manage around the targets.

For postretirement assets the target and range asset allocations (as shown below) reflect recommendations made in the latest optimization study. The target asset allocations for postretirement assets adjust dynamically based on the funded status of each sub-account within each trust. The current weighted average targets shown below represent the aggregate of all targets for all sub-accounts within all trusts.

Entergy’s qualified pension and postretirement weighted-average asset allocations by asset category at December 31, 2018 and 2017 and the target asset allocation and ranges for 2018 are as follows:
Pension Asset Allocation
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
39%
 
32%
to
46%
 
40%
 
45%
International Equity Securities
 
19%
 
15%
to
23%
 
18%
 
20%
Fixed Income Securities
 
42%
 
39%
to
45%
 
41%
 
34%
Other
 
0%
 
0%
to
10%
 
1%
 
1%


Postretirement Asset Allocation
 
Non-Taxable and Taxable
 
 
Target
 
Range
 
Actual 2018
 
Actual 2017
Domestic Equity Securities
 
27%
 
22%
to
32%
 
27%
 
30%
International Equity Securities
 
18%
 
13%
to
23%
 
17%
 
20%
Fixed Income Securities
 
55%
 
50%
to
60%
 
56%
 
50%
Other
 
0%
 
0%
to
5%
 
0%
 
0%


In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some investment managers.

The expected long-term rate of return for the qualified pension plans’ assets is based primarily on the geometric average of the historical annual performance of a representative portfolio weighted by the target asset allocation defined in the table above, along with other indications of expected return on assets. The time period reflected is a long dated period spanning several decades.

The expected long-term rate of return for the non-taxable postretirement trust assets is determined using the same methodology described above for pension assets, but the aggregate asset allocation specific to the non-taxable postretirement assets is used.

For the taxable postretirement trust assets, the investment allocation includes tax-exempt fixed income securities.  This asset allocation, in combination with the same methodology employed to determine the expected return for other postretirement assets (as described above), and with a modification to reflect applicable taxes, is used to produce the expected long-term rate of return for taxable postretirement trust assets.

Concentrations of Credit Risk

Entergy’s investment guidelines mandate the avoidance of risk concentrations.  Types of concentrations specified to be avoided include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, geographic area and individual security issuance.  As of December 31, 2018, all investment managers and assets were materially in compliance with the approved investment guidelines, therefore there were no significant concentrations (defined as greater than 10 percent of plan assets) of credit risk in Entergy’s pension and other postretirement benefit plan assets.

Fair Value Measurements

Accounting standards provide the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described below:

•
Level 1 - Level 1 inputs are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access at the measurement date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•
Level 2 - Level 2 inputs are inputs other than quoted prices included in Level 1 that are, either directly or indirectly, observable for the asset or liability at the measurement date.  Assets are valued based on prices derived by an independent party that uses inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads.  Prices are reviewed and can be challenged with the independent parties and/or overridden if it is believed such would be more reflective of fair value.  Level 2 inputs include the following:

-     quoted prices for similar assets or liabilities in active markets;
-     quoted prices for identical assets or liabilities in inactive markets;
-     inputs other than quoted prices that are observable for the asset or liability; or
-     inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If an asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

•
Level 3 - Level 3 refers to securities valued based on significant unobservable inputs.
    
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The following tables set forth by level within the fair value hierarchy, measured at fair value on a recurring basis at December 31, 2018, and December 31, 2017, a summary of the investments held in the master trusts for Entergy’s qualified pension and other postretirement plans in which the Registrant Subsidiaries participate.

Qualified Defined Benefit Pension Plan Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Short-term investments
 

$—

 

$7,715

(a)

$—

 

$7,715

Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 
8,250

(b)
—

 
—

 
8,250

Common
 
695,003

(b)
—

(b)
—

 
695,003

Common collective trusts (c)
 


 


 


 
2,408,053

Registered investment companies
 
108,740

(d)
—

 
—

 
108,740

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
675,880

(a)
—

 
675,880

Corporate debt instruments
 
—

 
619,310

(a)
—

 
619,310

Registered investment companies (e)
 
29,374

(d)
2,697

(d)
—

 
931,439

Other
 
1,866

(f)
48,482

(f)
—

 
50,348

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
39,322

(g)
—

 
39,322

Total investments
 

$843,233

 

$1,393,406

 

$—

 

$5,544,060

Cash
 
 
 
 
 
 
 
2,591

Other pending transactions
 
 
 
 
 
 
 
5,956

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(55,192
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$5,497,415


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Corporate stocks:
 
 
 
 
 
 
 
 
Preferred
 

$11,461

(b)

$—

 

$—

 

$11,461

Common
 
663,923

(b)
34

(b)
—

 
663,957

Common collective trusts (c)
 


 


 


 
3,198,799

Registered investment companies
 
125,174

(d)
—

 
—

 
125,174

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. Government securities
 
—

(b)
638,832

(a)
—

 
638,832

Corporate debt instruments
 
—

 
619,735

(a)
—

 
619,735

Registered investment companies (e)
 
45,768

(d)
2,735

(d)
—

 
764,251

Other
 
46

(f)
62,559

(f)
—

 
62,605

Other:
 
 
 
 
 
 
 
 
Insurance company general account (unallocated contracts)
 
—

 
37,994

(g)
—

 
37,994

Total investments
 

$846,372

 

$1,361,889

 

$—

 

$6,122,808

Cash
 
 
 
 
 
 
 
1,508

Other pending transactions
 
 
 
 
 
 
 
5,179

Less: Other postretirement assets included in total investments
 
 
 
 
 
 
 
(58,179
)
Total fair value of qualified pension assets
 
 
 
 
 
 
 

$6,071,316


Other Postretirement Trusts
2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$244,729

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
63,174

(b)
80,039

(a)
—

 
143,213

Corporate debt instruments
 
—

 
105,989

(a)
—

 
105,989

Registered investment companies
 
2,442

(d)
—

 
—

 
2,442

Other
 
—

 
56,980

(f)
—

 
56,980

Total investments
 

$65,616

 

$243,008

 

$—

 

$553,353

Other pending transactions
 
 
 
 
 
 
 
1,237

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
55,192

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$609,782


2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
(In Thousands)
Equity securities:
 
 
 
 
 
 
 
 
Common collective trust (c)
 
 
 
 
 
 
 

$300,139

Fixed income securities:
 
 
 
 
 
 
 
 

U.S. Government securities
 
81,602

(b)
76,790

(a)
—

 
158,392

Corporate debt instruments
 
—

 
92,869

(a)
—

 
92,869

Registered investment companies
 
3,127

(d)
—

 
—

 
3,127

Other
 
—

 
45,627

(f)
—

 
45,627

Total investments
 

$84,729

 

$215,286

 

$—

 

$600,154

Other pending transactions
 
 
 
 
 
 
 
994

Plus:  Other postretirement assets included in the investments of the qualified pension trust
 
 
 
 
 
 
 
58,179

Total fair value of other postretirement assets
 
 
 
 
 
 
 

$659,327


(a)
Certain preferred stocks and certain fixed income debt securities (corporate, government, and securitized) are stated at fair value as determined by broker quotes.
(b)
Common stocks, certain preferred stocks, and certain fixed income debt securities (government) are stated at fair value determined by quoted market prices.
(c)
The common collective trusts hold investments in accordance with stated objectives.  The investment strategy of the trusts is to capture the growth potential of equity markets by replicating the performance of a specified index.  Net asset value per share of common collective trusts estimate fair value. Certain of these common collective trusts are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(d)
Registered investment companies are money market mutual funds with a stable net asset value of one dollar per share. Registered investment companies may hold investments in domestic and international bond markets or domestic equities and estimate fair value using net asset value per share.
(e)
Certain of these registered investment companies are not publicly quoted, and are valued by the fund administrators using net asset value as a practical expedient. Accordingly, these funds are not assigned a level in the fair value table.
(f)
The other remaining assets are U.S. municipal and foreign government bonds stated at fair value as determined by broker quotes.
(g)
The unallocated insurance contract investments are recorded at contract value, which approximates fair value.  The contract value represents contributions made under the contract, plus interest, less funds used to pay benefits and contract expenses, and less distributions to the master trust.


Estimated Future Benefit Payments

Based upon the assumptions used to measure Entergy’s qualified pension and other postretirement benefit obligations at December 31, 2018, and including pension and other postretirement benefits attributable to estimated future employee service, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for Entergy Corporation and its subsidiaries will be as follows:

 
Estimated Future Benefits Payments
 
 
 
Qualified Pension
 
Non-Qualified Pension
 
Other Postretirement (before Medicare Subsidy)
 
Estimated Future Medicare D Subsidy Receipts
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
2019

$552,111

 

$16,964

 

$78,232

 

$865

2020

$437,699

 

$14,679

 

$80,312

 

$977

2021

$461,562

 

$10,563

 

$81,718

 

$1,102

2022

$467,822

 

$17,805

 

$82,624

 

$1,229

2023

$480,531

 

$17,578

 

$82,337

 

$1,370

2024 - 2028

$2,481,536

 

$68,687

 

$400,498

 

$9,007



Based upon the same assumptions, Entergy expects that benefits to be paid and the Medicare Part D subsidies to be received over the next ten years for the Registrant Subsidiaries for their employees will be as follows:
Estimated Future Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$100,948

 

$145,515

 

$30,687

 

$18,436

 

$34,401

 

$20,792

2020
 

$91,941

 

$101,275

 

$27,376

 

$12,476

 

$27,273

 

$19,907

2021
 

$92,675

 

$104,465

 

$27,023

 

$12,555

 

$27,137

 

$20,628

2022
 

$94,051

 

$106,307

 

$27,348

 

$12,938

 

$27,420

 

$21,678

2023
 

$94,474

 

$107,771

 

$27,773

 

$13,250

 

$27,797

 

$21,970

2024 - 2028
 

$479,455

 

$547,028

 

$139,930

 

$64,413

 

$129,657

 

$114,223

Estimated Future Non-Qualified Pension Benefits Payments
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
2019
 

$198

 

$229

 

$128

 

$16

 

$672

2020
 

$295

 

$217

 

$306

 

$16

 

$733

2021
 

$254

 

$204

 

$203

 

$16

 

$753

2022
 

$503

 

$194

 

$213

 

$15

 

$686

2023
 

$356

 

$180

 

$191

 

$15

 

$904

2024 - 2028
 

$1,295

 

$711

 

$1,633

 

$72

 

$3,481


Estimated Future Other Postretirement Benefits Payments (before Medicare Part D Subsidy)
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$13,709

 

$17,933

 

$4,320

 

$3,634

 

$5,802

 

$3,082

2020
 

$13,520

 

$18,306

 

$4,508

 

$3,576

 

$5,964

 

$3,068

2021
 

$13,444

 

$18,526

 

$4,615

 

$3,468

 

$6,109

 

$3,160

2022
 

$13,183

 

$18,714

 

$4,689

 

$3,326

 

$6,206

 

$3,163

2023
 

$12,926

 

$18,842

 

$4,686

 

$3,251

 

$6,207

 

$3,126

2024 - 2028
 

$61,088

 

$91,994

 

$23,192

 

$14,573

 

$29,810

 

$14,814


Estimated Future Medicare Part D Subsidy
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
 
(In Thousands)
Year(s)
 
 
 
 
 
 
 
 
 
 
 
 
2019
 

$192

 

$193

 

$66

 

$39

 

$71

 

$28

2020
 

$216

 

$215

 

$72

 

$42

 

$77

 

$34

2021
 

$239

 

$240

 

$79

 

$44

 

$84

 

$39

2022
 

$264

 

$265

 

$85

 

$46

 

$91

 

$46

2023
 

$291

 

$292

 

$92

 

$48

 

$97

 

$54

2024 - 2028
 

$1,836

 

$1,919

 

$559

 

$270

 

$599

 

$394



Contributions

Entergy currently expects to contribute approximately $176.9 million to its qualified pension plans and approximately $47.6 million to other postretirement plans in 2019.  The expected 2019 pension and other postretirement plan contributions of the Registrant Subsidiaries for their employees are shown below.  The 2019 required pension contributions will be known with more certainty when the January 1, 2019 valuations are completed, which is expected by April 1, 2019.

The Registrant Subsidiaries expect to contribute approximately the following to the qualified pension and other postretirement plans for their employees in 2019:
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
System Energy
 
(In Thousands)
Pension Contributions

$27,112

 

$26,451

 

$7,701

 

$1,800

 

$1,645

 

$8,285

Other Postretirement Contributions

$501

 

$17,933

 

$123

 

$2,140

 

$56

 

$20



Actuarial Assumptions

The significant actuarial assumptions used in determining the pension PBO and the other postretirement benefit APBO as of December 31, 2018 and 2017 were as follows:
 
2018
 
2017
Weighted-average discount rate:
 
 
 
Qualified pension
4.37% - 4.52% Blended 4.47%
 
3.70% - 3.82% Blended 3.78%
Other postretirement
4.42%
 
3.72%
Non-qualified pension
3.98%
 
3.34%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
Assumed health care trend rate:
 
 
 
Pre-65
6.59%
 
6.95%
Post-65
7.15%
 
7.25%
Ultimate rate
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 
 
    Pre-65
2027
 
2027
    Post-65
2026
 
2027


The significant actuarial assumptions used in determining the net periodic pension and other postretirement benefit costs for 2018, 2017, and 2016 were as follows:
 
2018
 
2017
 
2016
Weighted-average discount rate:
 
 
 
 
 
Qualified pension:
 
 
 
 
 
    Service cost
3.89%
 
4.75%
 
5.00%
    Interest cost
3.44%
 
3.73%
 
3.90%
Other postretirement:
 
 
 
 
 
    Service cost
3.88%
 
4.60%
 
4.92%
    Interest cost
3.33%
 
3.61%
 
3.78%
Non-qualified pension:
 
 
 
 
 
    Service cost
3.35%
 
3.65%
 
3.65%
    Interest cost
2.76%
 
3.10%
 
3.10%
Weighted-average rate of increase in future compensation levels
3.98%
 
3.98%
 
4.23%
Expected long-term rate of return on plan assets:
 
 
 
 
 
Pension assets
7.50%
 
7.50%
 
7.75%
Other postretirement non-taxable assets
6.50% - 7.50%
 
6.50% - 7.50%
 
7.75%
Other postretirement taxable assets
5.50%
 
5.75%
 
6.00%
Assumed health care trend rate:
 
 
 
 
 
Pre-65
6.95%
 
6.55%
 
6.75%
Post-65
7.25%
 
7.25%
 
7.55%
Ultimate rate
4.75%
 
4.75%
 
4.75%
Year ultimate rate is reached and beyond:

 

 

    Pre-65
2027
 
2026
 
2024
    Post-65
2027
 
2026
 
2024

    
In 2016, Entergy refined its approach to estimating the service cost and interest cost components of qualified pension, other postretirement, and non-qualified pension costs. Under the refined approach, instead of using the weighted-average obligation discount rates at the beginning of the year, 2016 service cost and interest costs’ expected cash flows were discounted by the applicable spot rates. The refinement in approach was a change in accounting estimate and, accordingly, the effect was reflected prospectively. The measurement of the benefit obligation was not affected.
    
With respect to the mortality assumptions, Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2018 projection scale, in determining its December 31, 2018 pension plans’ PBOs and other postretirement benefit APBO. Entergy used the RP-2014 Employee and Healthy Annuitant Tables (adjusted to base year 2006) with a fully generational MP-2017 projection scale, in determining its December 31, 2017 pension plans’ PBOs and other postretirement benefit APBO. 

Entergy’s health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in Entergy’s assumed health care cost trend rate for 2018 would have the following effects:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase /(Decrease)
(In Thousands)
Entergy Corporation and its subsidiaries
 

$120,335

 

$9,254

 

($100,393
)
 

($7,593
)


The Registrant Subsidiaries’ health care cost trend is affected by both medical cost inflation, and with respect to capped costs, the effects of general inflation. A one percentage point change in the assumed health care cost trend rate for 2018 would have the following effects for the Registrant Subsidiaries for their employees:
 
 
1 Percentage Point Increase
 
1 Percentage Point Decrease
2018
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
Impact on the APBO
 
Impact on the sum of service costs and interest cost
 
 
Increase/(Decrease)
(In Thousands)
Entergy Arkansas
 

$15,906

 

$1,129

 

($13,323
)
 

($942
)
Entergy Louisiana
 

$27,684

 

$2,112

 

($23,071
)
 

($1,732
)
Entergy Mississippi
 

$6,768

 

$460

 

($5,665
)
 

($379
)
Entergy New Orleans
 

$3,281

 

$217

 

($2,784
)
 

($180
)
Entergy Texas
 

$8,673

 

$605

 

($7,292
)
 

($498
)
System Energy
 

$5,537

 

$416

 

($4,578
)
 

($339
)


Defined Contribution Plans

Entergy sponsors the Savings Plan of Entergy Corporation and Subsidiaries (System Savings Plan).  The System Savings Plan is a defined contribution plan covering eligible employees of Entergy and certain of its subsidiaries. The participating Entergy subsidiary makes matching contributions to the System Savings Plan for all eligible participating employees in an amount equal to either 70% or 100% of the participants’ basic contributions, up to 6% of their eligible earnings per pay period.  The matching contribution is allocated to investments as directed by the employee.

Entergy also sponsors the Savings Plan of Entergy Corporation and Subsidiaries VI (established in April 2007) and the Savings Plan of Entergy Corporation and Subsidiaries VII (established in April 2007) to which matching contributions are also made.  The plans are defined contribution plans that cover eligible employees, as defined by each plan, of Entergy and certain of its subsidiaries. Effective as of the close of business on December 31, 2017, the Savings Plan of Entergy Corporation and Subsidiaries IV (Entergy Savings Plan IV) was merged into the System Savings Plan and all of the assets of Entergy Savings Plan IV were transferred to the System Savings Plan.   

Entergy’s subsidiaries’ contributions to defined contribution plans collectively were $54.3 million in 2018, $49.1 million in 2017, and $47 million in 2016.  The majority of the contributions were to the System Savings Plan.

The Registrant Subsidiaries’ 2018, 2017, and 2016 contributions to defined contribution plans for their employees were as follows:
 
 
Year
 
Entergy Arkansas
 
Entergy Louisiana
 
Entergy Mississippi
 
Entergy New Orleans
 
Entergy Texas
 
 
(In Thousands)
2018
 

$3,985

 

$5,450

 

$2,307

 

$795

 

$1,992

2017
 

$3,741

 

$5,079

 

$2,133

 

$731

 

$1,865

2016
 

$3,528

 

$4,746

 

$1,997

 

$708

 

$1,778