The following table provides amounts recorded within the account line items of the statements of financial position as of December 31:


	2019						2018
	United States			Foreign			United States			Foreign
	(in thousands)
Retirement plans assets	$	18,457		$	—		$	16,883		$	—
Accrued employees’ compensation and withholdings		(2,826	)		(922	)		(2,676	)		(852	)
Retirement plans liabilities		(52,490	)		(41,444	)		(48,143	)		(36,894	)

Funded status	$	(36,859	)	$	(42,366	)	$	(33,936	)	$	(37,746	)

The following table provides amounts recognized in accumulated other comprehensive income as of December 31:


	2019				2018
	United States		Foreign		United States		Foreign
	(in thousands)
Deferred taxes related to prior service cost recognized in other comprehensive income	$	560	$	—	$	560	$	—

The accumulated benefit obligation for the United States defined benefit pension plans was $198.2 million and $172.8 million at December 31, 2019 and 2018, respectively. The accumulated benefit obligation for foreign defined benefit pension plans was $39.9 million and $35.6 million at December 31, 2019 and 2018, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31:


	2019				2018
	United States		Foreign		United States		Foreign
	(in millions)
Projected benefit obligation	$	55.3	$	44.0	$	50.8	$	39.1
Accumulated benefit obligation		53.2		39.9		48.6		35.6
Fair value of plan assets		—		1.6		—		1.4

Expense

For the years ended December 31, 2019, 2018, and 2017, Teradyne’s net periodic pension

cost

(income) was comprised of the following:


	2019						2018						2017
	United States			Foreign			United States			Foreign			United States			Foreign
	(in thousands)
Components of Net Periodic Pension Cost (Income):
Service cost	$	1,608		$	751		$	2,196		$	786		$	2,239		$	818
Interest cost		7,189			691			8,940			687			13,151			852
Expected return on plan assets		(6,042	)		(29	)		(9,049	)		(19	)		(12,008	)		(165	)
Amortization of prior service cost		—			—			58			—			70			—
Net actuarial loss (gain)		2,973			4,485			(4,429	)		743			(6,712	)		(310	)
Settlement loss		—			—			345			—			—			—

Total net periodic pension cost (income)	$	5,728		$	5,898		$	(1,939	)	$	2,197		$	(3,260	)	$	1,195

Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Reversal of amortization items:
Prior service cost		—			—			(58	)		—			(70	)		—

Total recognized in other comprehensive income		—			—			(58	)		—			(70	)		—

Total recognized in net periodic pension cost (income) and other comprehensive income	$	5,728		$	5,898		$	(1,997	)	$	2,197		$	(3,330	)	$	1,195

Weighted Average Assumptions to Determine Net Periodic Pension Cost at January 1:


	2019						2018						2017
	United States			Foreign			United States			Foreign			United States			Foreign
Discount rate		4.1	%		1.8	%		3.4	%		1.8	%		3.9	%		1.8	%
Expected return on plan assets		4.3			2.0			4.3			1.5			4.0			2.0
Salary progression rate		2.5			2.5			2.3			2.7			2.6			2.7

Weighted Average Assumptions to Determine Pension Obligations at December 31:


	2019						2018
	United States			Foreign			United States			Foreign
Discount rate		3.0	%		1.1	%		4.1	%		1.8	%
Salary progression rate		2.6			2.5			2.5			2.6

In developing the expected return on plan assets assumption, Teradyne evaluates input from its investment manager and pension consultants, including their forecast of asset class return expectations. Teradyne believes that 4.25% was an appropriate rate to use for fiscal 2019 for the U.S. Qualified Pension Plan (“U.S. Plan”).

Teradyne recognizes net actuarial gains and losses and the change in the fair value of the plan assets in its operating results in the year in which they occur or upon any interim remeasurement of the plans. Teradyne calculates the expected return on plan assets using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interim remeasurement of the plans.

The discount rate utilized to determine future pension obligations for the U.S. Plan is based on FTSE Pension Index adjusted for the plan’s expected cash flows and was 3.10% at December 31, 2019,

down

from 4.15% at December 31, 2018.

Plan Assets

As of December 31, 2019, the fair value of Teradyne’s pension plans’ assets totaled $168.5 million of which $166.9 million was related to the U.S. Plan and $1.6 million was related to the Taiwan defined benefit pension plan. Substantially all of Teradyne’s pension plans’ assets are held in individual trusts, which were established for the investment of assets of Teradyne’s sponsored retirement plans.

The following table provides weighted average pension asset allocation by asset category at December 31, 2019 and 2018:


	2019						2018
	United States			Foreign			United States			Foreign
Fixed income securities		94.0	%		—	%		94.0	%		—	%
Equity securities		5.0			—			5.0			—
Other		1.0			100.0			1.0			100.0

		100.0	%		100.0	%		100.0	%		100.0	%

The assets of the U.S. Plan are overseen by the Teradyne Fiduciary Committee which is comprised of members of senior management drawn from appropriate diversified levels of the management team. The Fiduciary Committee is responsible for setting the policy that provides the framework for management of the U.S. Plan assets. In accordance with its responsibilities, the Fiduciary Committee meets on a regular basis to review the performance of the U.S. Plan assets and compliance with the investment policy. The policy sets forth an investment structure for managing U.S. Plan assets, including setting the asset allocation ranges, which are expected to provide an appropriate level of overall diversification required to maximize the long-term return on plan assets for a prudent and reasonable level of risk given prevailing market conditions, total investment return over the long term, and preservation of capital, while maintaining sufficient liquidity to pay the benefits of the U.S. Plan. The investment portfolio will not, at any time, have a direct investment in Teradyne stock. It may have indirect investment in Teradyne stock, if one of the funds selected by the investment manager invests in Teradyne stock. In developing the asset allocation ranges, third party asset allocation studies are periodically performed that consider the current and expected positions of the plan assets and funded status. Based on this study and other appropriate information, the Fiduciary Committee establishes asset allocation ranges taking into account acceptable risk targets and associated returns. The investment return objectives are to avoid excessive volatility and produce a rate of return that at least matches the Policy Index identified below. The manager’s investment performance is reviewed at least annually. Results for the total portfolio and for each major category of assets are evaluated in comparison

with

appropriate market indices and the Policy Index.

The target asset allocation and the index for each asset category for the U.S. Plan, per the investment policy, are as follows:


Asset Category:	Policy Index:	Target Allocation
U.S. corporate fixed income	Barclays U.S. Corporate A or Better Index		75	%
Global equity	MSCI World Minimum Volatility Index		5
U.S. government fixed income	Barclays U.S. Long Government Bond Index		14
High yield fixed income	Barclays U.S. High Yield Index		5
Cash	Citigroup Three Month U.S. Treasury Bill Index		1

Teradyne’s U.S. Plan invests primarily in common trust funds. Units held in the common trust funds are valued at the unit price as reported by the investment manager based on the asset value of the

underlying investments; underlying investments in equity securities are valued at the last reported sales price, and underlying investments in fixed-income securities are generally valued using methods based upon market transactions for comparable securities.

In 2017, the U.K. defined benefit pension was terminated and the obligations and assets of the plan were transferred to an insurance company.

During the year ended December 31, 2019, there were no transfers of pension assets in or out of Level 1, Level 2, and Level 3. During the year ended December 31, 2018, $2.7 million of pension assets were transferred out of Level 3 to Level 2.

The fair value of pension plan assets by asset category and by level at December 31, 2019 and December 31, 2018 were as follows:


	December 31, 2019
	United States								Foreign
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Fixed income securities:
Corporate debt securities	$	—	$	133,792	$	—	$	133,792	$	—	$	—	$	—	$	—
U.S. government securities		—		23,186		—		23,186		—		—		—		—
Global equity		—		8,344		—		8,344		—		—		—		—
Other		—		—		—		—		—		1,586		—		1,586
Cash and cash equivalents		1,610		—		—		1,610		—		—		—		—

Total	$	1,610	$	165,322	$	—	$	166,932	$	—	$	1,586	$	—	$	1,586


	December 31, 2018
	United States								Foreign
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)
Fixed income securities:
Corporate debt securities	$	—	$	115,424	$	—	$	115,424	$	—	$	—	$	—	$	—
U.S. government securities		—		20,176		—		20,176		—		—		—		—
Global equity		—		7,252		—		7,252		—		—		—		—
Other		—		—		—		—		—		1,400		—		1,400
Cash and cash equivalents		1,449		—		—		1,449		—		—		—		—

Total	$	1,449	$	142,852	$	—	$	144,301	$	—	$	1,400	$	—	$	1,400

Changes in the fair value of Level 3 group annuity insurance contracts for the year ended December 31, 2018

were

as follows:


	Group Annuity Insurance Contracts
	(in thousands)
Balance at December 31, 2017	$	3,166
Transfer out of level 3		(2,658	)
Purchase s o f r etiree annuity insurance c ontracts		(512	)
Interest and market value adjustments		59
Benefits paid		(40	)
Other		(15	)

Balance at December 31, 2018	$	—

Contributions

Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such contributions are tax deductible. During 2019, Teradyne contributed $2.8 million to the U.S. supplemental executive defined benefit pension plan and $0.9 million to certain qualified plans for

non-U.S.

subsidiaries. During 2018, Teradyne contributed $2.6 million to the U.S supplemental executive defined benefit pension plan and $0.8 million to certain qualified plans for

non-U.S.

subsidiaries. In

2020

, contributions to the U.S. supplemental executive defined benefit pension plan and certain qualified plans from

non-U.S.

subsidiaries will be approximately $2.8 million and $1.0 million, respectively.

Expected Future Pension Benefit Payments

Future benefit payments are expected to be paid as follows:


	United States		Foreign
	(in thousands)
2020	$	8,027	$	1,237
2021		8,416		985
2022		9,163		982
2023		9,785		1,258
2024		10,558		1,098
2025-2029		59,665		6,129

Postretirement Benefit Plans

In addition to receiving pension benefits, U.S. Teradyne employees who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

The December 31 balances of the postretirement assets and obligations are shown below:


	2019			2018
	(in thousands)
Assets and Obligations
Change in benefit obligation:
Projected benefit obligation:
Beginning of year	$	9,256		$	6,177
Service cost		41			39
Interest cost		347			196
Actuarial loss		717			25
Benefits paid		(1,358	)		(889	)
Special termination benefits		—			3,708

End of year		9,003			9,256

Change in plan assets:
Fair value of plan assets:
Beginning of year		—			—
Company contributions		1,358			889
Benefits paid		(1,358	)		(889	)

End of year		—			—

Funded status	$	(9,003	)	$	(9,256	)

The following table provides amounts recorded within the account line items of financial position as of December 31:


	2019			2018
	(in thousands)
Accrued employees’ compensation and withholdings	$	(1,231	)	$	(1,310	)
Retirement plans liability		(7,772	)		(7,946	)

Funded status	$	(9,003	)	$	(9,256	)

The following table provides amounts recognized in accumulated other comprehensive income as of December 31:


	2019			2018
	(in thousands)
Prior service credit, before tax	$	(58	)	$	(249	)
Deferred taxes		(1,684	)		(1,641	)

Total recognized in other comprehensive income, net of tax	$	(1,742	)	$	(1,890	)

Expense

For the years ended December 31, 2019, 2018, and 2017, Teradyne’s net periodic postretirement benefit cost (income) was comprised of the following:


	2019			2018			2017
	(in thousands)
Components of Net Periodic Postretirement Benefit Cost (income):
Service cost	$	41		$	39		$	34
Interest cost		347			196			201
Amortization of prior service credit		(191	)		(373	)		(496	)
Net actuarial loss		717			25			398
Special termination benefits		—			3,708			591

Total net periodic postretirement benefit cost		914			3,595			728

Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Prior service cost		—			—			—
Reversal of amortization items:
Prior service credit		191			373			496

Total recognized in other comprehensive income		191			373			496

Total recognized in net periodic postretirement cost and other comprehensive income	$	1,105		$	3,968		$	1,224

Weighted Average Assumptions to Determine Net Periodic Postretirement Benefit Income as of January 1:


	2019			2018			2017
Discount rate		4.0	%		3.4	%		3.9	%
Initial health care cost trend rate		7.5			7.9			7.3
Ultimate health care cost trend rate		4.5			4.5			5.0
Year in which ultimate health care cost trend rate is reached		2026			2026			2023

Weighted Average Assumptions to Determine Postretirement Benefit Obligation as of December 31:


	2019			2018			2017
Discount rate		3.0	%		4.0	%		3.4	%
Initial medical trend		7.1			7.5			7.9
Ultimate health care trend		4.5			4.5			4.5
Medical cost trend rate decrease to ultimate rate in year		2026			2026			2026

Assumed health care trend rates could have a significant effect on the amounts reported for health care plans. A one percentage point change in the assumed health care cost trend rates for the year ended December 31, 2019 would have the following effects:


	1 Percentage Point Increase		1 Percentage Point Decrease
	(in thousands)
Effect on total service and interest cost components	$	6	$	(6	)
Effect on postretirement benefit obligations		139		(133	)

Expected Future Benefit Payments

Future benefit payments are expected to be paid as follows:


	Benefit Payments
	(in thousands)
2020	$	1,231
2021		1,171
2022		958
2023		789
2024		662
2025-2029		1,965