Note 8 — Defined Benefit Pension and Other Postretirement Plans

We sponsor a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI Utilities, PNG, CPG and certain of UGI’s other domestic wholly owned subsidiaries (“Pension Plan”). Pension Plan benefits are based on years of service, age and employee compensation. We also provide postretirement health care benefits to certain retirees and postretirement life insurance benefits to nearly all active and retired employees.

Net periodic pension expense and other postretirement benefit costs include the following components:



	Pension Benefits						Other Postretirement Benefits
Three Months Ended June 30,	2017			2016			2017			2016
Service cost	$	2,023		$	1,731		$	62		$	46
Interest cost	5,540			5,818			108			116
Expected return on assets	(7,497		)	(7,167		)	(164		)	(149		)
Amortization of:
Prior service cost (benefit)	81			87			(160		)	(160		)
Actuarial loss	3,706			2,393			28			24
Net benefit cost (income)	3,853			2,862			(126		)	(123		)
Change in associated regulatory liabilities	—			—			(123		)	878
Net benefit cost (income) after change in regulatory liabilities	$	3,853		$	2,862		$	(249	)	$	755

	Pension Benefits						Other Postretirement Benefits
Nine Months Ended June 30,	2017			2016			2017			2016
Service cost	$	6,068		$	5,195		$	184		$	137
Interest cost	16,618			17,453			323			349
Expected return on assets	(22,490		)	(21,502		)	(492		)	(447		)
Amortization of:
Prior service cost (benefit)	244			261			(480		)	(480		)
Actuarial loss	11,119			7,179			85			73
Net benefit cost (income)	11,559			8,586			(380		)	(368		)
Change in associated regulatory liabilities	—			—			(368		)	2,632
Net benefit cost (income) after change in regulatory liabilities	$	11,559		$	8,586		$	(748	)	$	2,264

Pension Plan assets are held in trust and consist principally of publicly traded, diversified equity and fixed income mutual funds and, to a much lesser extent, UGI Corporation Common Stock. It is our general policy to fund amounts for Pension Plan benefits equal to at least the minimum contribution required by ERISA. From time to time we may, at our discretion, contribute additional amounts. During the nine months ended June 30, 2017 and 2016, the Company made contributions to the Pension Plan of $8,546 and $7,402, respectively. The Company expects to make additional discretionary cash contributions of approximately $2,800 to the Pension Plan during the remainder of Fiscal 2017.

UGI Utilities has established a Voluntary Employees’ Beneficiary Association (“VEBA”) trust to pay retiree health care and life insurance benefits by depositing into the VEBA the annual amount of postretirement benefits costs, if any, determined under GAAP. The difference between such amount and the amounts included in UGI Gas’ and Electric Utility’s rates, if any, is deferred for future recovery from, or refund to, ratepayers. There were no required contributions to the VEBA during the nine months ended June 30, 2017 and 2016.

We also participate in an unfunded and non-qualified defined benefit supplemental executive retirement plan. Net benefit costs associated with this plan for all periods presented were not material.