Pension Plans and Other Postretirement Benefits

The Company has defined benefit pension plans or defined contribution retirement plans covering substantially all employees. Benefits under the defined benefit pension plans are generally based on years of service and/or final average pay. The Company funds the U.S. pension plans in accordance with the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code.

The Company also sponsors several postretirement plans covering certain salaried and hourly employees. The plans provide health care and life insurance benefits for eligible retirees. In most retiree health care plans, Company contributions towards premiums are capped based on the cost as of a certain date, thereby creating a defined contribution. For the non-collectively bargained plans, the Company maintains the right to amend or terminate the plans at its discretion.

For the three month periods ended September 30, 2016 and 2015, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):



	Pension Benefits						Other Postretirement Benefits
	Three months ended September 30,						Three months ended September 30,
	2016			2015			2016			2015
Service cost - benefits earned during the year	$	5.2		$	5.7		$	0.6		$	0.7
Interest cost on benefits earned in prior years	31.4			30.3			4.0			4.4
Expected return on plan assets	(37.2		)	(42.1		)	—			—
Amortization of prior service cost (credit)	0.3			0.3			(0.7		)	1.2
Amortization of net actuarial loss	16.3			15.1			2.4			3.7
Total retirement benefit expense	$	16.0		$	9.3		$	6.3		$	10.0

For the nine month periods ended September 30, 2016 and 2015, the components of pension and other postretirement benefit expense for the Company’s defined benefit plans included the following (in millions):



	Pension Benefits						Other Postretirement Benefits
	Nine months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Service cost - benefits earned during the year	$	15.5		$	17.1		$	1.9		$	2.1
Interest cost on benefits earned in prior years	94.1			90.8			12.0			13.4
Expected return on plan assets	(111.5		)	(126.2		)	—			—
Amortization of prior service cost (credit)	0.9			0.9			(0.9		)	3.6
Amortization of net actuarial loss	49.0			45.3			7.2			10.9
Total retirement benefit expense	$	48.0		$	27.9		$	20.2		$	30.0

On March 4, 2016, the Company announced that it had reached a four-year labor agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) covering USW-represented employees of its ATI Flat Rolled Products business unit and at two locations in the High Performance Materials & Components business segment. The new labor agreement included changes to several retirement benefit programs, including a freeze to new entrants to ATI’s defined benefit pension plan, the elimination of defined benefit retiree healthcare for new employees, and changes in the levels of profit-based contributions for retiree medical benefits. The Company remeasured its other postretirement benefit obligation as of the March 1, 2016 contract effective date using a 4.05% discount rate, compared to a 4.50% discount rate as of December 31, 2015. Based on the remeasurement, other postretirement benefit liabilities decreased $22.5 million, and other postretirement benefit expense will decrease by $7.5 million in the March through December 2016 period.

In July 2016, the Company made a $115 million contribution to its U.S. defined benefit pension plan and expects to use additional proceeds from its recent convertible debt issuance to meet future pension funding requirements.