Pensions

Components of net periodic pension benefit cost are as follows:



	Three months ended				Six months ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
	$’000		$’000		$’000		$’000

Service cost	—		—		—		—
Interest cost on projected benefit obligation	177		227		348		453
Expected return on assets	(247	)	(294	)	(487	)	(589	)
Net amortization and deferrals	193		161		381		323

Net periodic benefit cost	123		94		242		187

From January 1, 2003, a number of non-U.S. Belmond employees participated in a funded defined benefit pension plan in the United Kingdom called the Belmond (UK) Ltd. 2003 Pension Scheme. On May 31, 2006, the plan was closed for future benefit accruals.

Belmond (UK) Ltd., a wholly owned subsidiary of the Company (“Belmond UK”), is obligated to the plan’s trust to pay £1,272,000 (equivalent to $1,654,000 at June 30, 2017) annually through June 30, 2017 in accordance with a recently concluded, U.K. statutorily-mandated triennial negotiation with the plan’s trustees and Belmond UK, as the plan sponsor. Thereafter, Belmond UK is obligated to fund any deficits on a monthly basis commencing July 30, 2017 based on a formula that calculates the amount due for such month as the pro rata portion of any funding deficit over the period remaining through December 31, 2020. Based on its December 2015 actuarial assessment (prepared using assumptions which differ in some respects to those used to value the liability for these financial statements), the plan is projected to be fully funded in 2017. During the three and six months ended June 30, 2017, contributions of $401,000 (June 30, 2016 - $455,000) and $795,000 (June 30, 2016 - $910,000), respectively, were made to the pension plan and Belmond anticipates contributing an additional $859,000 to fund the plan in 2017 for a total of $1,654,000.

Once the plan is fully funded, Belmond UK will remain obligated to restore the plan to a fully funded balance over the balance of the period through December 31, 2021 based on the formula described above should its position deteriorate. In May 2014, Belmond guaranteed the payment obligations of Belmond UK through 2023, subject to a cap of £8,200,000 (equivalent to $10,660,000 at June 30, 2017), which reduces commensurately with every payment made to the plan since December 31, 2012. As part of the recent triennial negotiation referred to above, Belmond expects to reinstate this guarantee by August 31, 2017, for the period through 2026 and reset the cap from December 31, 2015 at £8,200,000, which as before will reduce with each payment made to the plan over the period.