NOTE 10. PENSION PLAN

The Company participates in a trusteed pension plan known as the Allegheny Group Retirement Plan covering virtually all full-time employees. Benefits are based on years of service and the employee's compensation. Accruals under the Plan were frozen as of May 31, 2014. Freezing the plan resulted in a re-measurement of the pension obligations and plan assets as of the freeze date. The pension obligation was re-measured using the discount rate based on the Citigroup Above Median Pension Discount Curve in effect on May 31, 2014 of 4.46%.

The plan freeze has lowered the pension cost in each of the last 2 years. Pension expense was $256 thousand, $469 thousand and $815 thousand in 2015, 2014 and 2013, respectively.

Information pertaining to the activity in the Company’s defined benefit plan, using the latest available actuarial valuations with a measurement date of December 31, 2015 and 2014 is as follows:


(in thousands)	2015		2014
Change in benefit obligation
Benefit obligation at beginning of year	$	8,173	$	6,492
Service cost		—		346
Interest cost		315		306
Actuarial loss		276		2,194
Assumption changes		97		1,270
Curtailment impact		—		(2,299)
Benefits paid		(199)		(136)
Benefit obligation at end of year	$	8,662	$	8,173

Change in plan assets:
Fair value of plan assets at beginning of year	$	4,471	$	4,071
Actual return on plan assets		(124)		96
Employer contribution		338		440
Benefits paid		(199)		(136)
Fair value of plan assets at end of year	$	4,486	$	4,471

Funded status	$	(4,176)	$	(3,702)
Unrecognized net actuarial loss		4,283		3,727
Unrecognized prior service cost		—		—
Prepaid pension cost recognized	$	107	$	25

Accumulated benefit obligation	$	8,662	$	8,173

At December 31, 2015, 2014 and 2013, the weighted average assumptions used to determine the benefit obligation are as follows:


	2015		2014		2013
Discount rate	4.30	%	3.90	%	4.86	%
Rate of compensation increase	n/a	%	n/a	%	3.00	%

The components of net periodic pension cost are as follows (in thousands):


	2015		2014		2013
Service cost	$	—	$	346	$	651
Interest cost		315		306		247
Expected return on plan assets		(316)		(319)		(271)
Amortization of prior service costs		—		—		2
Amortization of net actuarial loss		257		136		186
Net periodic pension cost	$	256	$	469	$	815

For the years December 31, 2015, 2014 and 2013, the weighted average assumptions used to determine net periodic pension cost are as follows:


	2015		2014		2013
Discount rate	3.90	%	4.86	%	4.31	%
Expected long-term rate of return on plan assets	6.75	%	7.50	%	7.46	%
Rate of compensation increase	n/a	%	n/a	%	3.00	%

The Company’s pension plan asset allocations at December 31, 2015 and 2014, as well as target allocations for 2015 are as follows:


	12/31/2015		12/31/2014
Plan Assets
Cash	10	%	9	%
Fixed income	20	%	27	%
Alternative investments	19	%	15	%
Domestic equities	32	%	32	%
Foreign equities	19	%	16	%
Real estate investment trusts	—	%	1	%
Total	100	%	100	%

The estimated net loss (gain) for the plan that are expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $236 thousand.

The following table sets forth by level, within the fair value hierarchy, as defined in Note 18 - Fair Value Measurements, the Plan’s assets at fair value as of December 31, 2015.


(in thousands)	Level I		Level II				Level III			Total
Assets:
Cash	$	449		$	—			—			449
Fixed income		897			—			—			897
Alternative investments		—			—			852			852
Domestic equities		1,436			—			—			1,436
Foreign equities		852			—			—			852
Real estate investment trusts		—			—			—			—

Total assets at fair value	$	3,634		$	—	$		852	$		4,486

The following table sets forth by level, within the fair value hierarchy, as defined in Note 18 - Fair Value Measurements, the Plan’s assets at fair value as of December 31, 2014.


(in thousands)	Level I		Level II		Level III		Total
Assets:
Cash	$	402	$	—		—		402
Fixed income		1,207		—		—		1,207
Alternative investments		—		671		—		671
Domestic equities		1,431		—		—		1,431
Foreign equities		715		—		—		715
Real estate investment trusts		45		—		—		45

Total assets at fair value	$	3,800	$	671	$	—	$	4,471

Investment in government securities and short-term investments are valued at the closing price reported on the active market on which the individual securities are traded. Alternative investments and investment in debt securities are valued at quoted prices which are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Below we show the best estimate of the plan contribution for next fiscal year. We also show the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter.


(in thousands)	Cash Flow

Contributions for the period of 01/01/16 through 12/31/16	$	182
Estimated future benefit payments reflecting expected future service

2016	$	219
2017	$	247
2018	$	253
2019	$	274
2020	$	290
2021 through 2025	$	1,898