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.

Employer Contributions - Our funding policy is to contribute to the U.S. Pension Plan at least the minimum amount required for funding purposes under applicable employee benefit and tax laws. We did not contribute to the U.S. Pension Plan during the three months ended February 28, 2017 and we do not anticipate making additional contributions to the U.S. Pension Plan during the remainder of the year ended November 30, 2017.

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 $15.0 million and $15.2 million at February 28, 2017 and November 30, 2016, 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
U.S. Pension Plan	February 28, 2017			February 29, 2016
Components of net periodic pension cost (income):
Service cost	$	112		$	100
Interest cost on projected benefit obligation	564			587
Expected return on plan assets	(767		)	(776		)
Net amortization	1			—
Net periodic pension income	$	(90	)	$	(89	)



	Three Months Ended
German Pension Plan	February 28, 2017		February 29, 2016
Components of net periodic pension cost:
Interest cost on projected benefit obligation	$	100	$	130
Net amortization	84		80
Net periodic pension cost	$	184	$	210