Pension and other postretirement benefits

The Company has a number of defined benefit pension and postretirement plans covering eligible U.S. and non-U.S. employees. The defined benefit pension plans are noncontributory. The benefits under these plans are based primarily on years of service and employees’ pay near retirement. The Company’s funding policy for U.S. plans is to contribute annually, at a minimum, amounts required by applicable laws and regulations. Obligations under non-U.S. plans are systematically provided for by depositing funds with trustees or by book reserves. As of December 31, 2017, no further benefits are being accrued under the Company’s U.S. defined benefit pension plans and the Company’s other postretirement benefit plans, other than certain postretirement benefit plans covering employees subject to a collective bargaining agreement.

The Company and certain of its subsidiaries provide medical, dental and life insurance benefits to pensioners or their survivors. The associated plans are unfunded and approved claims are paid from Company funds.

The following table provides information regarding the components of the net benefit expense (income) of the Company's pension and postretirement benefit plans:



	Pension									Other Benefits
	2017			2016			2015			2017		2016		2015
	(Dollars in thousands)
Service cost	$	2,887		$	2,615		$	1,880		$	279	$	355	$	495
Interest cost	15,137			15,711			17,948			1,577		1,595		1,967
Expected return on plan assets	(26,809		)	(24,786		)	(25,940		)	—		—		—
Net amortization and deferral	6,734			6,567			6,159			275		454		216
Net benefit expense (income)	$	(2,051	)	$	107		$	47		$	2,131	$	2,404	$	2,678

The following table provides the weighted average assumptions for United States and foreign plans used in determining net benefit cost:



	Pension						Other Benefits
	2017		2016		2015		2017		2016		2015
Discount rate	4.2	%	4.5	%	4.1	%	4.1	%	4.3	%	4.0	%
Rate of return	8.1	%	8.1	%	8.1	%
Initial healthcare trend rate							7.9	%	8.4	%	7.3	%
Ultimate healthcare trend rate							5.0	%	5.0	%	5.0	%

The following table provides summarized information with respect to the Company’s pension and postretirement benefit plans, measured as of December 31, 2017 and 2016:



	Pension						Other Benefits
	2017			2016			2017			2016
	Under Funded						Under Funded
	(Dollars in thousands)
Benefit obligation, beginning of year	$	430,574		$	421,736		$	47,487		$	48,616
Service cost	2,887			2,615			279			355
Interest cost	15,137			15,711			1,577			1,595
Actuarial loss	31,074			16,315			2,278			646
Currency translation	3,916			(4,300		)	—			—
Benefits paid	(19,144		)	(18,887		)	(3,095		)	(3,946		)
Medicare Part D reimbursement	—			—			80			221
Plan amendments	—			—			297			—
Curtailments	—			(23		)	—			—
Administrative costs	(2,286		)	(2,593		)	—			—
Projected benefit obligation, end of year	462,158			430,574			48,903			47,487
Fair value of plan assets, beginning of year	340,265			315,951
Actual return on plan assets	53,065			36,620
Contributions	12,670			12,752
Benefits paid	(19,144		)	(18,887		)
Administrative costs	(2,286		)	(2,593		)
Currency translation	1,737			(3,578		)
Fair value of plan assets, end of year	386,307			340,265
Funded status, end of year	$	(75,851	)	$	(90,309	)	$	(48,903	)	$	(47,487	)

The following table sets forth the amounts recognized in the consolidated balance sheet with respect to the Company's pension and postretirement plans:



	Pension						Other Benefits
	2017			2016			2017			2016
	(Dollars in thousands)
Other assets	$	1,596		$	106		$	—		$	—
Payroll and benefit-related liabilities	(1,767		)	(1,640		)	(3,173		)	(3,200		)
Pension and postretirement benefit liabilities	(75,680		)	(88,775		)	(45,730		)	(44,287		)
Accumulated other comprehensive loss	209,365			209,785			6,715			4,415
	$	133,514		$	119,476		$	(42,188	)	$	(43,072	)

The following tables set forth the amounts recognized in accumulated other comprehensive loss with respect to the plans:



	Pension
	Prior Service Cost			Net (Gain) or Loss			Deferred Taxes			Accumulated Other Comprehensive Loss, Net of Tax
	(Dollars in thousands)
Balance at December 31, 2015	$	113		$	213,188		$	(77,255	)	$	136,046
Reclassification adjustments related to components of Net Periodic Benefit Cost recognized during the period:
Net amortization and deferral	(34		)	(6,533		)	2,339			(4,228		)
Amounts arising during the period:
Actuarial changes in benefit obligation	—			4,481			(1,603		)	2,878
Curtailments	—			(23		)	6			(17		)
Impact of currency translation	—			(1,407		)	373			(1,034		)
Balance at December 31, 2016	79			209,706			(76,140		)	133,645
Reclassification adjustments related to components of Net Periodic Benefit Cost recognized during the period:
Net amortization and deferral	(28		)	(6,706		)	2,395			(4,339		)
Amounts arising during the period:
Actuarial changes in benefit obligation	—			4,818			(1,119		)	3,699
Curtailments	—			—			—			—
Impact of currency translation	—			1,496			(413		)	1,083
Balance at December 31, 2017	$	51		$	209,314		$	(75,277	)	$	134,088



	Other Benefits
	Prior Service Cost			Net (Gain) or Loss			Deferred Taxes			Accumulated Other Comprehensive Loss, Net of Tax
	(Dollars in thousands)
Balance at December 31, 2015	$	107		$	4,116		$	(1,382	)	$	2,841
Reclassification adjustments related to components of Net Periodic Benefit Cost recognized during the period:
Net amortization and deferral	(22		)	(432		)	170			(284		)
Amounts arising during the period:
Actuarial changes in benefit obligation	—			646			(252		)	394
Balance at December 31, 2016	85			4,330			(1,464		)	2,951
Reclassification adjustments related to components of Net Periodic Benefit Cost recognized during the period:
Net amortization and deferral	(77		)	(198		)	101			(174		)
Amounts arising during the period:
Actuarial changes in benefit obligation	—			2,278			(558		)	1,720
Plan amendments	297			—			(74		)	223
Balance at December 31, 2017	$	305		$	6,410		$	(1,995	)	$	4,720

The following table provides the weighted average assumptions for United States and foreign plans used in determining benefit obligations:



	Pension				Other Benefits
	2017		2016		2017		2016
Discount rate	3.6	%	4.2	%	3.6	%	4.1	%
Rate of compensation increase	2.6	%	2.8	%
Initial healthcare trend rate					7.8	%	7.9	%
Ultimate healthcare trend rate					5.0	%	5.0	%

The discount rate represents the interest rate used to determine the present value of future cash flows currently expected to be required to settle the Company’s pension and other benefit obligations. The weighted average discount rates for United States pension plans and other benefit plans of 3.76% and 3.60%, respectively, were established by comparing the projection of expected benefit payments to the AA Above Median yield curve as of December 31, 2017. The expected benefit payments are discounted by each corresponding discount rate on the yield curve. For payments beyond 30 years, the Company extends the curve assuming that the discount rate derived in year 30 is extended to the end of the plan’s payment expectations. Once the present value of the string of benefit payments is established, the Company determines the single rate on the yield curve that, when applied to all obligations of the plan, will exactly match the previously determined present value.

As part of the evaluation of pension and other postretirement assumptions, the Company applied assumptions for mortality and healthcare cost trends that incorporate generational white and blue collar mortality trends. In determining its benefit obligations, the Company used generational tables that take into consideration increases in plan participant longevity.

The Company’s assumption for the expected return on plan assets is primarily based on the determination of an expected return for its current portfolio. This determination is made using assumptions for return and volatility of the portfolio. Asset class assumptions are set using a combination of empirical and forward-looking analysis. To the extent historical results have been affected by unsustainable trends or events, the effects of those trends are quantified and removed. The Company applies a variety of models for filtering historical data and isolating the fundamental characteristics of asset classes. These models provide empirical return estimates for each asset class, which are then reviewed and combined with a qualitative assessment of long term relationships between asset classes before a return estimate is finalized. The qualitative analysis is intended to provide an additional means for addressing the effect of unrealistic or unsustainable short-term valuations or trends, resulting in return levels and behavior the Company believes are more likely to prevail over long periods. Effective in 2018, the Company changed the expected return on plan assets of the United States pension plans from 8.25% to 8.0% due to modifications to the investment strategy in order to gradually reduce portfolio risk. This change had no impact on the results for the year ended December 31, 2017.

An increase in the assumed healthcare trend rate of 1% would increase the benefit obligation at December 31, 2017 by $3.6 million and would increase the 2017 benefit expense by $0.2 million. Decreasing this assumed rate by 1% would decrease the benefit obligation at December 31, 2017 by $3.1 million and would decrease the 2017 benefit expense by $0.1 million.

The accumulated benefit obligation for all United States and foreign defined benefit pension plans was $461.6 million and $430.0 million for 2017 and 2016, respectively. All of the Company's pension plans had accumulated benefit obligations in excess of their respective plan assets as of December 31, 2017 and 2016.

The Company’s investment objective is to achieve an enhanced long-term rate of return on plan assets, subject to a prudent level of portfolio risk, for the purpose of enhancing the availability of benefits for participants. These investments are primarily comprised of equity and fixed income mutual funds. The Company’s other investments are largely comprised of a hedge fund of funds and a structured credit fund. The equity funds are diversified in terms of domestic and international equity securities, as well as small, middle and large capitalization stocks. The Company’s target allocation percentage is as follows: equity securities (45%); fixed-income securities (35%) and other securities (20%). Equity funds are held for their expected return over inflation. Fixed-income funds are held for diversification relative to equities and as a partial hedge of interest rate risk with respect to plan liabilities. The other investments are held to further diversify assets within the plans and are designed to provide a mix of equity and bond like return with a bond like risk profile. The plans may also hold cash to meet liquidity requirements. Actual performance may not be consistent with the respective investment strategies. Investment risks and returns are measured and monitored on an ongoing basis through annual liability measurements and investment portfolio reviews to determine whether the asset allocation targets continue to represent an appropriate balance of expected risk and reward.

The following table provides the fair values of the Company’s pension plan assets at December 31, 2017 by asset category:



	Fair Value Measurements
Asset Category (a)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Cash	$	1,324	$	1,324
Money market funds	51		51
Equity securities:
Managed volatility (b)	79,964		79,964
United States small/mid-cap equity (c)	19,239		19,239
World Equity (excluding United States) (d)	32,294		32,294
Common Equity Securities – Teleflex Incorporated	29,087		29,087
Diversified Global	6,353		6,353
Fixed income securities:
Intermediate duration bond fund (e)	23,378		23,378
Long duration bond fund (f)	94,623		94,623
High yield bond fund (g)	12,420		12,420
Emerging markets debt fund (h)	9,184		9,184
Corporate, government and foreign bonds	2,024		2,024
Asset backed – home loans	454				$	454
Other types of investments:
Multi asset funds (i)	11,114		6,187		4,927
Other	5						$	5
Total investments at fair value	$	321,514	$	316,128	$	5,381	$	5
Investments measured at net asset value (j)	64,793
Total	$	386,307

The following table provides the fair values of the Company’s pension plan assets at December 31, 2016 by asset category:



	Fair Value Measurements
Asset Category (a)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Cash	$	437	$	437
Money market funds	76		76
Equity securities:
Managed volatility (b)	88,051		88,051
United States small/mid-cap equity (c)	24,785		24,785
World Equity (excluding United States) (d)	33,376		33,376
Common Equity Securities – Teleflex Incorporated	18,838		18,838
Diversified Global	5,086		5,086
Fixed income securities:
Intermediate duration bond fund (e)	—
Long duration bond fund (f)	73,544		73,544
High yield bond fund (g)	15,451		15,451
Emerging markets debt fund (h)	9,412		9,412
Corporate, government and foreign bonds	1,864		1,864
Asset backed – home loans	527				$	527
Other types of investments:
Multi asset funds (i)	9,622		5,460		4,162
Other	5						$	5
Total investments at fair value	$	281,074	$	276,380	$	4,689	$	5
Investments measured at NAV (j)	59,191
Total	$	340,265


(a)	Information on asset categories described in notes (b)-(k) is derived from prospectuses and other material provided by the respective funds comprising the respective asset categories.


(b)	This category comprises mutual funds that invest in securities of United States and non-United States companies of all capitalization ranges that exhibit relatively low volatility.


(c)	This category comprises a mutual fund that invests at least 80% of its net assets in equity securities of small and mid-sized companies. The fund invests in common stocks or exchange traded funds holding common stock of United States companies with market capitalizations in the range of companies in the Russell 2500 Index.

(d)

This category comprises a mutual fund that invests at least 80% of its net assets in equity securities of foreign companies. These securities may include common stocks, preferred stocks, warrants, exchange traded funds based on an international equity index, derivative instruments whose value is based on an international equity index and derivative instruments whose value is based on an underlying equity security or a basket of equity securities. The fund invests in securities of foreign issuers located in developed and emerging market countries. However, the fund will not invest more than 35% of its assets in the common stocks or other equity securities of issuers located in emerging market countries.

(e)

This category comprises a mutual fund that invests in instruments or derivatives having economic characteristics similar to fixed income securities. The fund invests in investment grade fixed income instruments, including United States and foreign corporate obligations, fixed income securities issued by sovereigns or agencies in both developed and emerging foreign markets, debt obligations issued by governments or other municipalities, and securities issued or guaranteed by the United States Government and its agencies. The fund will seek to maintain an effective average duration between three and ten years, and uses derivative instruments, including interest rate swap agreements and credit default swaps, for the purpose of managing the overall duration and yield curve exposure of the Fund’s portfolio of fixed income securities.

(f)

This category comprises a mutual fund that invests in instruments or derivatives having economic characteristics similar to fixed income securities. The fund invests in investment grade fixed income instruments, including securities issued or guaranteed by the United States Government and its agencies and instrumentalities, corporate bonds, asset-backed securities, exchange traded funds, mortgage-backed securities and collateralized mortgage-backed securities. The fund invests primarily in long duration government and corporate fixed income securities, and uses derivative instruments, including interest rate swap agreements and Treasury futures contracts, for the purpose of managing the overall duration and yield curve exposure of the Fund’s portfolio of fixed income securities.


(g)	This category comprises a mutual fund that invests at least 80% of its net assets in higher-yielding fixed income securities, including corporate bonds and debentures, convertible and preferred securities and zero coupon obligations.


(h)	This category comprises a mutual fund that invests at least 80% of its net assets in fixed income securities of emerging market issuers, primarily in United States dollar-denominated debt of foreign governments, government-related and corporate issuers in emerging market countries and entities organized to restructure the debt of those issuers.


(i)	This category comprises funds that may invest in equities, bonds, or derivatives.


(j)	This category comprises pooled institutional investments, primarily collective investment trusts. These funds are not available on an exchange or in an active market and these investments are valued using their NAV, which is generally based on the underlying asset values of the pooled investments held in the trusts. This category comprises the following funds:


•	a fund that invests primarily in collateralized debt obligations (“CDOs”) and other structured credit vehicles and may include fixed income securities, loan participations, credit-linked notes, medium-term notes, pooled investment vehicles and derivative instruments.


•	a hedge fund that invests in various other hedge funds.


•	funds that invest in underlying funds that acquire, manage, and dispose of real estate properties, with a focus on properties in the U.S. and the UK markets.

The Company’s contributions to United States and foreign pension plans during 2018 are expected to be approximately $12.8 million. Contributions to postretirement healthcare plans during 2018 are expected to be approximately $3.2 million.

The following table provides information about the Company’s expected benefit payments under its U.S. and foreign plans for each of the five succeeding years and the aggregate of the five years thereafter, net of the annual average Medicare Part D subsidy of approximately $0.2 million:



	Pension		Other Benefits
	(Dollars in thousands)
2018	$	20,636	$	3,173
2019	20,865		3,201
2020	21,419		3,387
2021	22,171		3,414
2022	23,024		3,579
Years 2023 — 2027	124,398		18,147

The amounts in accumulated other comprehensive income expected to be recognized over the next fiscal year for the Company's pension and postretirement benefit plans are $6.8 million and $0.2 million, respectively.

The Company maintains a number of defined contribution savings plans covering eligible United States and non-United States employees. The Company partially matches employee contributions. Costs related to these plans were $12.5 million, $12.0 million and $12.6 million for 2017, 2016 and 2015, respectively.