8. Pension and Other Employee Benefits

Defined Benefit (Pension)

The Company sponsors various defined benefit (pension) plans for certain, primarily unionized, active employees (those in the employment of the Company at, and certain employees hired since, November 30, 2004).

The following tables represent the reconciliation of the benefit obligation, fair value of plan assets and funded status of the respective defined benefit (pension) plans as of December 31, 2016 and 2015:

	Pension Benefits
	US Plan						Non-U.S. Plans						Total Pension Benefits
	Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2016			Year ended December 31, 2015
Change in benefit obligation:
Obligation at beginning of period	$	26,188		$	26,242		$	7,802		$	8,619		$	33,990		$	34,861
Assumed Stromag benefit obligation		—			—			15,284			—			15,284			—
Service cost		3			0			92			92			95			92
Interest cost		1,016			987			171			181			1,187			1,168
Partial settlement payments		—			—			(149	)		—			(149	)		—
Actuarial (gains) losses		530			79			520			(34	)		1,050			45
Foreign exchange effect		—			—			(263	)		(883	)		(263	)		(883	)
Benefits paid		(2,093	)		(1,120	)		(257	)		(173	)		(2,350	)		(1,293	)
Obligation at end of period	$	25,644		$	26,188		$	23,200		$	7,802		$	48,844		$	33,990
Change in plan assets:
Fair value of plan assets, beginning of period	$	25,432		$	24,558		$	230		$	310			25,662		$	24,868
Partial settlement payments		—						—			—			—			-
Actual return on plan assets		1,765			(555	)		8			13			1,773			(542	)
Employer contributions		—			2,738			248			100			248			2,838
Plan expenses		(173	)		(189	)		(7	)		(20	)		(180	)		(209	)
Benefits paid		(2,093	)		(1,120	)		(257	)		(173	)		(2,350	)		(1,293	)
Fair value of plan assets, end of period	$	24,931		$	25,432		$	222		$	230		$	25,153		$	25,662
Funded status	$	713		$	756		$	22,978		$	7,572		$	23,691		$	8,328
Amounts recognized in the balance sheet consist of:
Total 'Non-current liabilities	$	713		$	756		$	22,978		$	7,572		$	23,691		$	8,328

For all pension plans presented above, the accumulated and projected benefit obligations exceed the fair value of plan assets. The accumulated benefit obligation at December 31, 2016 and 2015 was $48.8 million and $34.0 million, respectively. Non-U.S. pension liabilities are $23.2 million and $7.8 million at December 31, 2016 and 2015, respectively.

Included in accumulated other comprehensive loss at December 31, 2016 and 2015, is $5.7 million (net of $2.0 million in taxes) and $ 5.8 million (net of $2.1 million in taxes), respectively, of unrecognized actuarial losses that have not yet been recognized in net periodic pension cost.

The discount rate used in the computation of the respective benefit obligations at December 31, 2016 and 2015, presented above are as follows:

	US Pension Benefits						Non US Pension Benefits
	2016			2015			2016			2015
Pension benefits		3.80	%		3.90	%		1.75	%		2.25	%

The following table represents the components of the net periodic benefit cost associated with the respective plans:

	Pension Benefits
	US Plan						Non-US Plans						Total Pension Benefits
	Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2016			Year ended December 31, 2015
Service cost		3			—		$	92		$	92		$	95		$	92
Interest cost		1,016			987			171			181			1,187			1,168
Expected return on plan assets		(770	)		(882	)		(7	)		(7	)		(777	)		(889	)
Non-cash impact of partial pension settlement		—			—			(149	)		—			(149	)		-
Amortization of actuarial losses		213			168			203			217			416			385
Net periodic benefit cost	$	462		$	273		$	310		$	483		$	772		$	756

The key economic assumptions used in the computation of the respective net periodic benefit cost for the periods presented above are as follows:

	Pension Benefits
	US Plan						Non US Plan
	Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2016			Year ended December 31, 2015
Discount rate		3.90	%		3.70	%		2.50	%		2.50	%
Expected return on plan assets		3.90	%		3.70	%		2.50	%		2.50	%

The expected long-term rate of return represents the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the benefit obligation. The assumption reflects expectations regarding future rates of return for the investment portfolio, with consideration given to the distribution of investments by asset class and historical rates of return for each individual asset class.

Fair Value of Plan Assets

The fair value of the Company’s pension plan assets at December 31, 2016 and 2015 by asset category is as follows:

	2016		2015
Asset Category
Fixed income (Level 1)
U.S. government	$	3,849	$	4,384
Corporate bonds		—		—
Investment grade		6,239		16,916
High yield		3,022		2,963
Total fixed income		13,110		24,263
Investment grade (Level 2)		11,560		—
Other (Level 2)		222		260
Cash and cash equivalents (Level 1)		261		1,139
Total assets at fair value	$	25,153	$	25,662

The asset allocations for the Company’s funded retirement plan at December 31, 2016 and 2015, respectively, and the target allocation for 2016, by asset category, are as follows:

	Allocation Percentage of Plan Assets at Year-End
	2016 Actual		2016 Target	2015 Actual
Asset Category
U.S. Government Bonds		15%	0 - 50%		17%
Investment Grade Bonds		72%	0 - 100%		68%
High Yield Bonds		12%	0 - 25%		11%
Cash		1%	0 - 5%		4%

The investment strategy is to achieve a rate of return on the plan’s assets that meets the performance of liabilities as calculated using a bank’s liability index with appropriate adjustments for benefit payments, service cost and actuarial assumption changes. A determinant of the plan’s return is the asset allocation policy. The plan’s asset mix will be reviewed by the Company periodically, but at least quarterly, to rebalance within the target guidelines. The Company will also periodically review investment managers to determine if the respective manager has performed satisfactorily when compared to the defined objectives, similarly invested portfolios, and specific market indices.

Expected cash flows

The following table provides the amounts of expected benefit payments, which are made from the plans’ assets and includes the participants’ share of the costs, which is funded by participant contributions. The amounts in the table are actuarially determined and reflect the Company’s best estimate given its current knowledge; actual amounts could be materially different.

	Pension Benefits
Expected benefit payments (from plan assets)
2017	$	1,614
2018		1,678
2019		1,756
2020		1,753
2021		1,692
Thereafter	$	8,290

The Company has no minimum cash funding requirements associated with its pension plans for years 2017 through 2021.

Defined Contribution Plans

Under the terms of the Company’s defined contribution plans, eligible employees may contribute up to 75% percent of their eligible compensation to the plan on a pre-tax basis, subject to annual IRS limitations. The Company makes matching contributions equal to half of the first six percent of eligible compensation contributed by each employee and made a unilateral contribution (including for non-contributing employees). The Company’s expense associated with the defined contribution plans was $2.8 million, $4.0 million and $4.0 million during the years ended December 31, 2016, 2015 and 2014, respectively.