Benefit Plans

U.S. Pension Plan. We maintain a defined benefit pension plan, Jefferies Group LLC Employees’ Pension Plan (the “U.S. Pension Plan”), which is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended, and covers certain of our employees. Under the U.S. Pension Plan, benefits to participants are based on years of service and the employee’s career average pay. Effective December 31, 2005, benefits under the U.S. Pension Plan were frozen with no further benefit accruing to participants for future service after December 31, 2005.

German Pension Plan. In connection with the acquisition of Jefferies Bache from Prudential on July 1, 2011, we acquired a defined benefits pension plan located in Germany (the “German Pension Plan”) for the benefit of eligible employees of Jefferies Bache in that territory. The German Pension Plan has no plan assets and is therefore unfunded. We have purchased insurance contracts from multi-national insurers held in the name of Jefferies Bache Limited to provide for the plan’s future obligations. The investment in these insurance contracts is included in Financial Instruments owned in the Consolidated Statements of Financial Condition and has a fair value of $16.0 million and $15.3 million at August 31, 2016 and November 30, 2015, respectively. We expect to pay our pension obligations from the cash flows available to us under the insurance contracts. All costs relating to the plan (including insurance premiums and other costs as computed by the insurers) are paid by us. In connection with the acquisition, it was agreed with Prudential that any insurance premiums and funding obligations related to pre-acquisition date service will be reimbursed to us by Prudential.

The components of net periodic pension cost (income) for our pension plans are as follows (in thousands):



	Three Months Ended August 31,						Nine Months Ended August 31,
U.S. Pension Plan	2016			2015			2016			2015
Components of net periodic pension cost (income):
Service cost	$	100		$	63		$	300		$	189
Interest cost on projected benefit obligation	587			585			1,761			1,755
Expected return on plan assets	(730		)	(848		)	(2,190		)	(2,544		)
Net periodic pension income	$	(43	)	$	(200	)	$	(129	)	$	(600	)



	Three Months Ended August 31,				Nine Months Ended August 31,
German Pension Plan	2016		2015		2016		2015
Components of net periodic pension cost:
Interest cost on projected benefit obligation	$	133	$	132	$	398	$	395
Net amortization	83		82		246		245
Net periodic pension cost	$	216	$	214	$	644	$	640

Employer Contributions. Our funding policy is to contribute to the plans at least the minimum amount required for funding purposes under applicable employee benefit and tax laws. We contributed $3.0 million to the U.S. Pension Plan during the nine months ended August 31, 2016. We did not contribute to the German Pension Plan during the nine months ended August 31, 2016. We do not expect to make any additional contributions to the plans during the remainder of the fiscal year.