PENSION, POST-RETIREMENT AND POST-EMPLOYMENT PLANS

The Company has multiple deferred compensation arrangements, as described below, which include defined benefit pension plans for certain domestic and foreign employees, a SERP for certain executive officers and a post-retirement medical and dental plan for certain domestic employees. Aggregate (losses) income reported in net earnings for these plans by the Company for 2017, 2016 and 2015 totaled $(12.8) million, $(4.1) million and $1.0 million, respectively.

Domestic Defined Benefit Pension Plan

This domestic non-contributory defined benefit pension plan is closed to new participants. Pursuant to this plan, retirement benefits are provided based upon years of service and compensation levels. An investment committee, appointed by the Board, manages the plan and its assets in accordance with the plan’s investment policies. The Company’s investment policies incorporate an asset allocation strategy that emphasizes the long-term growth of capital and acceptable asset volatility as long as it is consistent with the volatility of the relevant market indexes. The investment policies attempt to achieve a mix of approximately 50% of plan investments for long-term growth, 49% for liability-matching assets and 1% for near-term benefit payments. The Company believes this strategy is consistent with the long-term nature of plan liabilities and ultimate cash needs of the plans. Plan assets consist primarily of limited partnership interests, listed stocks, equity security funds, and a short-term Treasury bond mutual fund. The weighted average asset allocation of this pension plan was 49% fixed income mutual fund holdings, 27% equity securities, 19% limited partnership interests, 4% collective investment funds and 1% cash at December 31, 2017.

Actual pension expense and future contributions required to fund this pension plan will depend on future investment performance, changes in future discount rates, the level of Company contributions and various other factors related to the populations participating in this pension plan. The Company evaluates the plan's actuarial assumptions on an annual basis, including the expected long-term rate of return on assets and discount rate, and adjusts the assumptions, as necessary, to ensure proper funding levels are maintained so that the plan can meet obligations as they become due.

At December 31, 2017 and 2016, the projected benefit obligation for this pension plan was $218 million and $206 million, respectively.

Supplemental Executive Retirement Plan

The Company sponsors a SERP that entitles certain executive officers to the difference between the benefits actually paid to them and the benefits they would have received under the pension plan described above were it not for certain restrictions imposed by the Internal Revenue Service Code. Covered compensation under the SERP includes an employee’s annual salary and bonus. At December 31, 2017 and 2016, the projected benefit obligation for the SERP was $8.5 million and $7.9 million, respectively.

Foreign Pension Plans

The Company's U.K. Pension Plan, which was comprised of a defined benefit plan and a defined contribution plan providing retirement and death benefit plans to employees in the U.K., was transferred to Pension Insurance Corporation plc, or PIC, as of December 31, 2017, in accordance with an agreement entered in to by the plan trustees in October 2014, and the related plan liabilities were settled. For 2017, the Company reclassified $9.8 million from accumulated other comprehensive income (loss) to reflect the settlement of the pension obligation.

The Company has other international benefit plans, including in Taiwan, Germany and France. These plans, which are included in the tables presented below, are not significant, individually or in the aggregate, to the Company's consolidated financial position, results of operations or cash flows. Certain other foreign subsidiaries maintain benefit plans that are consistent with statutory practices, but do not meet the criteria for pension or post-retirement accounting. These benefit plans had obligation balances of $7.7 million and $5.1 million at December 31, 2017 and 2016, respectively, which were recorded in the Consolidated Balance Sheets as "Pension and post-retirement benefits," and were excluded from from the tables presented below.

Domestic Defined Benefit Post-Retirement Medical and Dental Plan

The Company sponsors defined benefit post-retirement medical and dental plans that covers all of its MacDermid domestic full-time employees, hired prior to April 1, 1997, who retire after age 55, with at least ten to twenty years of service (depending upon the date of hire). Eligible employees receive a subsidy from the Company towards the purchase of their retiree medical benefits based on the date of retirement. The annual increase in the Company’s costs for post-retirement medical benefits is subject to a limit of 5%. Retirees are required to contribute to the plan costs in excess of their respective Company limits in addition to their other required contributions. The projected benefit obligation for the post-retirement plan at December 31, 2017 comprised 35% retirees, 39% fully eligible active participants and 26% other participants. The actuarial determination of the Company's accumulated benefit obligation associated with the plan for post-retirement medical benefits assumes annual cost increases of 2% and 4%, based on the date of retirement. As a result of the above mentioned plan limits, the effect of an increase in the healthcare cost trend on the Company's accumulated benefit obligation and the service and interest costs associated therewith is limited to an immaterial amount.

The components of net periodic benefit cost of the Domestic and Foreign Pension Plans and Post-retirement Medical Benefits were as follows:



	Year Ended December 31,
	2017						2016						2015
($ amounts in millions)	Domestic			Foreign			Domestic			Foreign			Domestic			Foreign
Pension and SERP Benefits
Service cost	$	—		$	2.1		$	—		$	1.8		$	—		$	1.4
Interest cost on the projected benefit obligation	8.8			2.3			10.1			3.1			6.8			2.8
Expected return on plan assets	(10.1		)	(1.9		)	(11.6		)	(2.6		)	(9.9		)	(2.7		)
Amortization of prior service cost	—			—			—			0.6			—			—
Amortization of actuarial net loss	—			0.1			—			0.2			—			—
Plan curtailment	—			0.3			—			(0.1		)	—			—
Plan settlement	—			10.2			1.7			0.2			—			—
Net periodic (benefit) cost	$	(1.3	)	$	13.1		$	0.2		$	3.2		$	(3.1	)	$	1.5
Post-retirement Medical Benefits
Service cost	$	—		$	0.1		$	—		$	0.1		$	0.1		$	0.1
Interest cost on the projected benefit obligation	0.4			0.4			0.4			0.2			0.3			0.1
Amortization of net loss	—			0.1			—			—			—			—
Net periodic cost	$	0.4		$	0.6		$	0.4		$	0.3		$	0.4		$	0.2

The weighted average key assumptions used to determine the net periodic benefit cost of the Domestic and Foreign Pension Plans are as follows:



	Year Ended December 31,
	2017				2016				2015
	Domestic		Foreign		Domestic		Foreign		Domestic		Foreign
Pension and SERP Benefits
Discount rate	4.2	%	2.3	%	4.6	%	2.8	%	4.2	%	2.5	%
Rate of compensation increase	3.5	%	3.3	%	3.5	%	3.3	%	3.5	%	2.9	%
Long-term rate of return on assets	5.9	%	2.3	%	6.5	%	2.9	%	7.4	%	2.5	%
Post-retirement Medical Benefits
Discount rate	4.2	%	12.2	%	4.4	%	14.0	%	4.2	%	14.5	%

The expected long-term rate of return on assets assumption is developed with reference to historical returns, forward-looking return expectations, the Domestic and Foreign Pension Plans' investment allocations, and peer comparisons.

The following tables summarize changes in benefit obligation, plan assets and funded status of the Company’s plans:



	Pension and SERP Benefits												Post-retirement Medical Benefits
	2017						2016						2017						2016
($ amounts in millions)	Domestic			Foreign			Domestic			Foreign			Domestic			Foreign			Domestic			Foreign
Change in Benefit Obligation:
Beginning of period balance	$	213.5		$	103.0		$	230.5		$	112.7		$	9.6		$	3.1		$	9.4		$	1.4
Additions	—			0.6			—			2.7			—			—			—			—
Service cost	—			2.1			—			1.8			—			0.1			0.1			0.1
Plan amendments	—			—			—			(6.9		)	—			—			—			—
Interest cost	8.8			2.3			10.1			3.1			0.4			0.4			0.4			0.2
Plan curtailment	—			(0.1		)	—			(0.1		)	—			—			—			—
Employee contributions	—			—			—			—			—			—			0.3			—
Actuarial (gain) loss due to assumption change	—			(1.4		)	—			14.5			—			0.3			—			0.5
Actuarial loss (gain) due to plan experience	13.8			0.3			5.0			(2.1		)	0.2			0.9			0.2			0.6
Benefits and expenses paid	(9.9		)	(6.5		)	(9.2		)	(6.6		)	(0.5		)	(0.2		)	(0.8		)	(0.1		)
Settlement	—			(72.2		)	(22.9		)	(2.5		)	—			—			—			—
Foreign currency translation	—			6.1			—			(13.6		)	—			(0.1		)	—			0.4
End of period balance	$	226.2		$	34.2		$	213.5		$	103.0		$	9.7		$	4.5		$	9.6		$	3.1
Change in Plan Assets:
Beginning of period balance	$	176.6		$	85.0		$	184.5		$	93.7		$	—		$	—		$	—		$	—
Additions	—			0.5			—			—			—			—			—			—
Actual return on plan assets, net of expenses	29.8			0.5			17.9			11.3			—			—			—			—
Employer contributions	3.1			1.8			6.2			2.5			0.5			0.2			0.5			0.1
Employee contributions	—			—			—			—			—			—			0.3			—
Benefits paid	(9.9		)	(6.5		)	(9.1		)	(6.6		)	(0.5		)	(0.2		)	(0.8		)	(0.1		)
Settlement	—			(72.2		)	(22.9		)	(2.5		)	—			—			—			—
Foreign currency translation	—			3.9			—			(13.4		)	—			—			—			—
End of period balance	$	199.6		$	13.0		$	176.6		$	85.0		$	—		$	—		$	—		$	—
Funded Status
Funded status of plan	$	(26.6	)	$	(21.2	)	$	(36.9	)	$	(18.0	)	$	(9.7	)	$	(4.5	)	$	(9.6	)	$	(3.1	)

The aggregate accumulated benefit obligation for all defined benefit pension plans was $244 million and $300 million at December 31, 2017 and 2016, respectively. At December 31, 2017, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were $244 million and $209 million, respectively. At December 31, 2016, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were $228 million and $186 million, respectively.

Weighted average key assumptions used to determine the benefit obligations in the actuarial valuations of the pension and post-retirement benefit liabilities are as follows:



	Pension and SERP Benefits								Post-retirement Medical Benefits
	2017				2016				2017				2016
	Domestic		Foreign		Domestic		Foreign		Domestic		Foreign		Domestic		Foreign
Discount rate	3.7	%	3.0	%	4.2	%	2.3	%	3.7	%	9.9	%	4.2	%	12.2	%
Rate of compensation increase	3.5	%	3.4	%	3.5	%	3.0	%	N/A		N/A		N/A		N/A

(N/A) Not applicable as compensation rates are not used in the determination of benefit obligations under the post-retirement benefit plans.

Amounts recognized in the Consolidated Balance Sheets and Accumulated Other Comprehensive Income (Loss) consist of the following:



	Pension and SERP Benefits												Post-retirement Medical Benefits
	2017						2016						2017						2016
($ amounts in millions)	Domestic			Foreign			Domestic			Foreign			Domestic			Foreign			Domestic			Foreign
Balance Sheet
Other assets	$	—		$	3.6		$	—		$	4.0		$	—		$	—		$	—		$	—
Accrued expenses and other current liabilities	1.1			0.7			0.7			0.6			0.6			0.2			0.6			0.2
Pension and post-retirement benefits	25.5			24.1			36.2			21.4			9.1			4.3			9.0			2.9
Accumulated Other Comprehensive Income (Loss) Balance Sheet
Net actuarial loss	$	(7.0	)	$	(3.1	)	$	(12.8	)	$	(12.3	)	$	(0.8	)	$	(2.2	)	$	(0.6	)	$	(1.1	)
Prior service costs	(0.1		)	—			(0.1		)	(0.3		)	N/A			N/A			N/A			N/A

The amount of estimated prior service costs for the Company's Pension Plans and SERP plans that will be reclassified from "Accumulated other comprehensive loss" into net periodic cost over the next 12 months is immaterial.

The following table presents the fair value of plan assets:



		December 31,
($ amounts in millions)	Classification	2017		2016
Asset Category
Domestic equities	Level 1	$	31.8	$	31.1
Foreign equities	Level 1	18.3		—
Mutual funds holding domestic securities	Level 1	4.0		5.5
U.S. Treasuries	Level 2	14.6		4.9
Mutual funds holding U.S. Treasury Securities	Level 1	9.2		12.0
Mutual funds holding fixed income securities	Level 1	74.6		14.6
Insurance "Buy-In" Policy ^(a)	Level 3	—		70.2
Foreign public bonds	Level 2	5.3		5.1
Corporate bonds	Level 2	—		1.2
Cash and cash equivalents	Level 1	10.1		15.1
Sub-Total		167.9		159.7
Assets using net asset value (or NAV) as a practical expedient		44.7		101.9
Total		$	212.6	$	261.6


^(a)	This category represents assets in the U.K. Pension Plan invested in insurance contract with PIC in connection with the “Buy-In” of the U.K. Pension Plan, which was transferred to PIC, as of December 31, 2017.

Assets using NAV as a practical expedient include limited partnership interests and commingled funds that are not actively traded or whose underlying investments are valued using observable marketplace inputs.

At December 31, 2017, expected future benefit payments related to the Company’s defined benefit plans were as follows:



	Pension and SERP Benefits				Post-retirement Medical Benefits		Total
($ amounts in millions)	Domestic		Foreign		Post-retirement Medical Benefits		Total
2018	$	12.0	$	1.6	$	0.7	$	14.3
2019	12.0		1.8		0.8		14.6
2020	12.2		1.7		0.8		14.7
2021	12.1		1.8		0.8		14.7
2022	12.7		1.9		0.8		15.4
Subsequent five years	64.1		11.1		4.0		79.2
Total	$	125.1	$	19.9	$	7.9	$	152.9

The measurement date used to determine pension and other post-retirement medical benefits was December 31, 2017, at which time the minimum contribution level for the following year was determined. The Company's expected contribution to the pension and other post-retirement plans is $3.4 million in 2018.