NOTE 6 — EMPLOYEE BENEFIT PLANS

Pension Plan — In December 2012, the Cooperative approved a change to freeze the Cooperative’s defined benefit pension plan as of January 1, 2013. As a result, no additional benefits will accrue to participants in the plan and no new employees are eligible for the plan. During the year ended December 31, 2016, 2015 and 2014, the pension expenses were $12,000, $25,000, and $74,000, respectively.

As of December 31, 2016, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA).

The Cooperative’s Compensation Committee has the responsibility of managing the operations and administration of the Cooperative’s retirement plans. The Cooperative has an investment policy that establishes target asset allocations to reduce the risk of large losses. Asset classes are diversified to reduce risk, and equity exposure is limited to 75% of the total portfolio value. The stated goal is for each component of the plan to earn a rate of return greater than its corresponding benchmark. The return objective of the plan is to achieve a minimum average total rate of return of four percentage points (4.0%) above the rate of inflation as measured by the Consumer Price Index. The real rate of return goal assumes a real rate of return for equities of 10.0% and a real rate of return for fixed income of 4.0%.

Substantially all of the Plan’s assets consist of BNY Mellon funds (Fund) and are valued based on Level II inputs, as determined from the Fund’s FAS 157 footnote included in the Fund’s audited financial statements. The Fund’s valuation techniques include market matrix pricing and market inputs, including bench mark yields, reported trades, broker/dealer quotes and others. There has been no changes in valuation techniques and inputs in 2016, 2015 and 2014.

The assumptions used in the measurement of the Cooperative’s benefit obligations are shown below:


	2016		2015

Discount Rate	4.50	%	5.00	%
Expected Return on Plan Assets	6.25	%	6.25	%
Rate of Compensation Increase	4.73	%	4.73	%

The following schedule reflects the expected pension benefit payments during each of the next five years and the aggregate for the following five years (in thousands):


	Expected
	Benefit
	Payments

2017	$	54
2018		54
2019		54
2020		54
2021		54
2022-2026		243

Total	$	513

The Cooperative expects to make contributions of approximately $9,000 to the defined benefit pension plan during the next fiscal year.

The following schedules provide the components of the Net Periodic Pension Costs for the periods ended December 31, 2016, 2015 and 2014 (in thousands):


	2016		2015		2014


Service Cost	$	—	$	—	$	—
Interest Cost		34		37		36
Expected Return on Plan Assets		(48)		(44)		(48)
Amortization of Net (Gain) Loss		5		11		25
Net Periodic Pension Cost	$	(9)	$	4	$	13

The following schedules set forth a reconciliation of the changes in the plan’s benefit obligation and fair value of assets for the periods ending December 31, 2016 and 2015 and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of December 31, 2016 and 2015 (in thousands):


	December 31,		December 31,
	2016		2015

Change in Benefit Obligation
Obligation at the Beginning of the Period	$	775	$	748
Service Cost		—		—
Interest Cost		37		36
Actuarial (Gain) Loss		15		45
Benefits Paid		(55)		(54)

Obligation at the End of the Period	$	772	$	775

Change in Plan Assets
Fair Value at the Beginning of the Period	$	727	$	777
Actual Returns on Plan Assets		107		(21)
Employer Contributions		12		25
Benefits Paid		(55)		(54)

Fair Value at the End of the Period	$	791	$	727

Funded Status
Funded Status as of Period Ended	$	19	$	(48)

Net Amount Recognized	$	—	$	(48)


	December 31,		December 31,
	2016		2015

Amounts Recognized in the Balance Sheets
Noncurrent Assets	$	—	$	—
Current Liabilities		—		—
Noncurrent Liabilities		—		(48)

Net Amount Recognized	$	—	$	(48)

Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income
Accumulated Gain (Loss) Beginning of the Period	$	(48)	$	—
Recognized in Periodic Cost		—		—
Amount Arising During the Period		48		(48)

Accumulated Gain (Loss) End of the Period	$	0	$	(48)

401(k) Plan — The Cooperative has a 401(k) plan that covers employees that meet eligibility requirements. The Cooperative’s contributions to the plan totaled $7,489, $7,123 and $6,979 for the years ended December 31, 2016, 2015 and 2014, respectively.