PENSION AND OTHER POSTRETIREMENT BENEFITS

We have a noncontributory defined benefit pension plan covering substantially all employees first hired prior to July 1, 2015 after the completion of one year of service and 1,000 hours of service. The plan provides retirement benefits based on an employee’s average earnings and years of service. These employees become 100% vested after three years of service, regardless of age. A supplemental benefit plan provides nonqualified benefits for compensation in excess of the IRS compensation limits applicable to the plan.

Our plan funding policy is to make contributions provided that the total annual contributions will not be less than ERISA and the Pension Protection Act of 2006 minimums or greater than the maximum tax-deductible amount, to review the contribution and funding strategy on a regular basis, and to allow discretionary contributions to be made by us from time to time. The assets of the defined benefit pension plan are invested primarily in fixed income investments and equity securities. We pay nonqualified pension benefits when they are due according to the terms of the supplemental benefit plan.

We provide certain postretirement healthcare and life insurance benefits to retired employees. Substantially all of our employees hired or rehired prior to 2014 may become eligible for postretirement medical benefits if they reach the age and service requirements of the retiree medical plan and retire on a pension (except a deferred pension) under the defined benefit pension plan. Medical benefits are self-insured and claims are administered through an insurance company. The cost of coverage is determined based on the annual projected plan costs. The participant's premium or cost is determined based on Company guidelines. Postretirement life insurance benefits are insured through an insurance company. We fund postretirement benefits as incurred, and accordingly, there were no assets held in the postretirement benefits plan at December 31, 2016 and 2015.

The following table sets forth information regarding the funded status of our pension and other postretirement benefits as of December 31, 2016 and 2015:



	Pension Benefits						Postretirement Benefits
	2016			2015			2016			2015
Change in Benefit Obligation:
Benefit obligation at beginning of period	$	634,068		$	612,688		$	75,937		$	77,355
Service cost	25,369			25,607			2,288			2,505
Interest cost	28,263			25,203			3,030			2,925
Actuarial loss (gain)	35,504			21,731			889			(2,165		)
Benefits paid from plan assets	(50,422		)	(48,471		)	—			—
Benefits paid from Company assets	(1,634		)	(1,537		)	(6,958		)	(6,131		)
Plan participants' contributions	—			—			1,390			1,448
Administrative expenses paid	(1,359		)	(1,153		)	—			—
Benefit Obligation at End of Period	669,789			634,068			76,576			75,937
Change in Plan Assets:
Fair value of plan assets at beginning of period	447,258			470,165			—			—
Actual return on plan assets	31,810			(13,283		)	—			—
Employer contributions⁽¹⁾	81,634			41,537			5,568			4,683
Plan participants' contributions	—			—			1,390			1,448
Benefits paid⁽¹⁾	(52,056		)	(50,008		)	(6,958		)	(6,131		)
Administrative expenses paid	(1,359		)	(1,153		)	—			—
Fair Value of Plan Assets at End of Period	507,287			447,258			—			—
Unfunded Status	$	162,502		$	186,810		$	76,576		$	75,937

⁽¹⁾Includes $1,634 and $1,537 paid from our assets for unfunded nonqualified benefits in fiscal years 2016 and 2015, respectively.

The accumulated benefit obligation for our defined benefit pension plan was $592,810 and $551,662 at December 31, 2016 and 2015, respectively.

Amounts recognized in the consolidated balance sheet for the years ended December 31 consist of the following:



	Pension Benefits				Postretirement Benefits
	2016		2015		2016		2015
Current accrued benefit cost	$	1,552	$	1,599	$	5,948	$	5,634
Non-current accrued benefit cost	160,950		185,211		70,628		70,303
Net amount recognized	$	162,502	$	186,810	$	76,576	$	75,937

Amounts recognized in accumulated other comprehensive loss for the years ended December 31, net of tax, consist of the following:



	Pension Benefits				Postretirement Benefits
	2016		2015		2016			2015
Net actuarial loss	$	177,234	$	170,180	$	11,093		$	10,983
Prior service cost (gain)	457		716		(2,527		)	(3,860		)
Accumulated other comprehensive loss	$	177,691	$	170,896	$	8,566		$	7,123

Amounts estimated to be amortized from accumulated other comprehensive loss into net periodic benefit costs in 2017, net of tax, consist of the following:



	Pension Benefits		Postretirement Benefits
Net actuarial loss	$	12,911	$	530
Prior service cost (gain)	257		(1,332		)
Accumulated other comprehensive loss (income)	$	13,168	$	(802	)

Weighted-average assumptions used to determine the actuarial present value of the pension and postretirement benefit obligations as of December 31 are:



	Pension Benefits				Postretirement Benefits
	2016		2015		2016	2015
Discount rate	4.15	%	4.48	%	3.78%	4.09%
Rate of compensation increase	4.52	%	4.44	%	—	—
Healthcare cost trend on covered charges	—		—		6% / 5%	6.5% / 5%

For measurement of the postretirement benefit obligation, a 6.0% annual rate of increase in the per capita cost of covered healthcare benefits was assumed at December 31, 2016. This rate is assumed to decline to 5.0% at January 1, 2019 and remain at that level thereafter. A one percent increase or decrease in the assumed healthcare cost trend rate would not have had a material effect on the postretirement benefit obligations as of December 31, 2016 and 2015.

The net periodic benefit cost for the years ended December 31, 2016, 2015, and 2014 included the following components:



	Pension Benefits									Postretirement Benefits
	2016			2015			2014			2016			2015			2014
Service cost	$	25,369		$	25,607		$	22,205		$	2,288		$	2,505		$	2,454
Interest cost	28,263			25,203			26,817			3,030			2,925			3,338
Expected return on plan assets	(27,016		)	(28,297		)	(26,624		)	—			—			—
Amortization of:
Net actuarial loss	19,164			20,028			17,639			709			1,044			1,267
Prior service cost (gain)	423			452			952			(2,181		)	(2,181		)	(2,181		)
Settlement loss	—			—			789			—			—			—
Net periodic benefit cost	$	46,203		$	42,993		$	41,778		$	3,846		$	4,293		$	4,878

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 were:



	Pension Benefits						Postretirement Benefits
	2016		2015		2014		2016	2015	2014
Discount rate	4.48	%	4.08	%	4.87	%	4.09%	3.77%	4.34%
Expected return on plan assets	5.75	%	6.25	%	6.25	%	—	—	—
Rate of compensation increase	4.44	%	4.47	%	4.25	%	—	—	—
Healthcare cost trend on covered charges	—		—		—		6.5% / 5%	7% / 5%	7.5% / 5%

The expected return on plan assets assumption for the defined benefit pension plan is a long-term assumption and was determined after evaluating input from both the plan’s actuary and pension fund investment advisors, consideration of historical rates of return on plan assets, and anticipated current and long-term rates of return on the various classes of assets in which the plan invests.

For measurement of the postretirement benefits net periodic cost, a 6.5% annual rate of increase in per capita cost of covered healthcare benefits was assumed for 2016. The rate was assumed to decline to 5.0% in 2019 and to remain at that level thereafter. A one percent increase or decrease in the assumed healthcare cost trend rate would not have had a material effect on 2016, 2015 and 2014 net periodic benefit cost.

We expect to make contributions totaling $60,000 to our defined benefit pension plan and fund $1,589 for non-qualified benefits during 2017.

Estimated future defined benefit pension and other postretirement benefit plan payments to plan participants for the years ending December 31 are as follows:



Year	Pension Benefits		Postretirement Benefits
2017	$	42,035	$	6,059
2018	43,351		6,449
2019	45,689		6,711
2020	47,949		6,893
2021	46,678		6,992
After 2021	259,183		33,882

The investment objective of our defined benefit pension plan is to ensure that there are sufficient assets to fund regular pension benefits payable to employees over the long-term life of the plan. Our defined benefit pension plan seeks to allocate plan assets in a manner that is closely duration-matched with the actuarial projected cash flow liabilities, consistent with prudent standards for preservation of capital, tolerance of investment risk, and maintenance of liquidity. Assets of the qualified pension plan are held by Comerica Bank (the "Trustee").

Our defined benefit pension plan utilizes a liability-driven investment (“LDI”) approach to help meet these objectives. The LDI strategy employs a structured fixed-income portfolio designed to reduce volatility in the plan's future funding requirements and funding status. This is accomplished by using a blend of corporate fixed-income securities, long duration government, and quasi-governmental, as well as appropriate levels of equity and alternative investments designed to optimize the plan's liability hedge ratio. In practice, the value of an asset portfolio constructed primarily of fixed income securities is inversely correlated to changes in market interest rates, at least partially offsetting changes in the value of the pension benefit obligation caused by changes in the interest rate used to discount plan liabilities.

Asset allocation information for the defined benefit pension plan at December 31, 2016 and 2015 is as follows:



Investment	2016 Actual Allocation		2016 Target Allocation Range	2015 Actual Allocation		2015 Target Allocation Range
Equity securities-U.S.	8	%	3-15%	12	%	3-15%
Equity securities-International	11	%	3-15%	11	%	3-15%
Fixed income investments-U.S.	62	%	35-75%	59	%	35-75%
Fixed income investments-International	5	%	3-10%	6	%	3-10%
Absolute return	5	%	5-15%	7	%	5-15%
Real assets	3	%	3-10%	3	%	3-10%
Private equity	1	%	0-3%	1	%	0-3%
Short-term investments	5	%	0-3%	1	%	0-3%
Total	100	%	100%	100	%	100%

The following is a description of the valuation methodologies used for assets held by the defined benefit pension plan measured at fair value:

Equity securities - U.S.

Equity securities - U.S. consist of investments in U.S. corporate stocks and U.S. equity mutual funds. U.S. equity mutual funds include publicly traded mutual funds and a bank collective fund for ERISA plans. U.S. corporate stocks and U.S. equity mutual funds are primarily large-capitalization stocks (defined as companies with market capitalization of more than $10 billion). U.S. corporate stocks and publicly traded mutual funds are valued at the closing price reported on the active public market in which the individual securities are traded and are classified as Level 1. The bank collective fund for ERISA plans is valued at the net asset value ("NAV") of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund.

Equity securities - International

Equity securities - International consist of investments in international corporate stocks and publicly traded mutual funds and are both primarily investments within developed and emerging markets. Both are valued at the closing price reported on the active public market in which the individual securities are traded and are classified as Level 1.

Fixed income investments - U.S.

Fixed income investments - U.S. consist of U.S. corporate bonds, government and government agency bonds, as well as a publicly traded mutual fund and commingled funds, both of which invest in corporate and government debt securities within the U.S. U.S. corporate bonds, government and government agency bonds, and the publicly traded mutual fund are valued at the closing price reported on the active market in which they are traded and thus are classified as Level 1. The commingled funds are valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund.

Fixed income investments - International

Fixed income investments - International consist of international corporate bonds. International corporate bonds are valued at the closing price reported on the active market in which they are traded and thus are classified as Level 1.

Absolute return

Absolute return consists of investments in various hedge funds structured as fund-of-funds (defined as a single fund that invests in multiple funds). The hedge funds use various investment strategies in an attempt to generate non-correlated returns. A fund-of-funds is designed to help diversify and reduce the risk of the overall portfolio. The hedge funds are valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund. Audited financial statements are produced on an annual basis for the hedge funds.

Real assets

Real assets consists of natural resource fund (oil, gas and forestry) and a real estate investment trust ("REIT"). The natural resource fund is owned by a limited partnership ("LP"). The LP is generally characterized as requiring a long-term commitment with limited liquidity. The value of the LP is not publicly available and thus, is classified as Level 3. The REIT is a commingled trust. The commingled trust is valued at the NAV of units of the trust. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund. Audited financial statements are produced on an annual basis for the LP and REIT.

Private equity

Private equity is an asset class that is generally characterized as requiring long-term commitments and where liquidity is typically limited. Private equity does not have an actively traded market with readily observable prices. The investments are limited partnerships structured as fund-of-funds. The investments are diversified across typical private equity strategies including: buyouts, co-investments, secondary offerings, venture capital, and special situations. Valuations are developed using a variety of proprietary model methodologies. Valuations may be derived from publicly available sources as well as information obtained from each fund's general partner based upon public market conditions and returns. All private equity investments are classified as Level 3. Audited financial statements are produced on an annual basis for the private equity investments.

Short-term investments

Short-term investments consist of cash and cash equivalents in a short-term fund which is valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund.

The methods described above may produce fair value calculations that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our defined benefit pension plan 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.

There have been no changes in the methodologies for determining fair value at December 31, 2016 or 2015.

The following tables set forth, by level within the fair value hierarchy, the defined benefit pension plan assets measured at fair value as of December 31, 2016 and 2015:



December 31, 2016
Investment	Investments Measured at NAV		Level 1		Level 2		Level 3		Total
Equity securities - U.S.	$	9,827	$	30,952	$	—	$	—	$	40,779
Equity securities - International	—		55,619		—		—		55,619
Fixed income investments - U.S.	99,383		218,712		—		—		318,095
Fixed income investments - International	—		27,346		—		—		27,346
Absolute return	25,479		—		—		—		25,479
Real assets	14,852		—		—		195		15,047
Private equity	—		—		—		1,942		1,942
Short-term investments	22,980		—		—		—		22,980
Total	$	172,521	$	332,629	$	—	$	2,137	$	507,287



December 31, 2015
Investment	Investments Measured at NAV		Level 1		Level 2		Level 3		Total
Equity securities - U.S.	$	9,206	$	43,560	$	—	$	—	$	52,766
Equity securities - International	—		48,004		—		—		48,004
Fixed income investments - U.S.	70,949		196,222		—		—		267,171
Fixed income investments - International	—		26,044		—		—		26,044
Absolute return	32,383		—		—		—		32,383
Real assets	13,166		—		—		456		13,622
Private equity	—		—		—		2,704		2,704
Short-term investments	4,564		—		—		—		4,564
Total	$	130,268	$	313,830	$	—	$	3,160	$	447,258

The tables below set forth a summary of changes in the fair value of the defined benefit pension plan's Level 3 assets for the years ended December 31, 2016 and 2015:



December 31, 2016
	Real Assets			Private Equity			Total
Balance, beginning of year	$	456		$	2,704		$	3,160
Realized gains	12			181			193
Unrealized losses	(19		)	(150		)	(169		)
Purchases	—			121			121
Sales	(254		)	(914		)	(1,168		)
Balance, end of year	$	195		$	1,942		$	2,137



December 31, 2015
	Real Assets			Private Equity			Total
Balance, beginning of year	$	548		$	3,682		$	4,230
Realized gains	—			174			174
Unrealized losses	(37		)	(92		)	(129		)
Purchases	—			188			188
Sales	(55		)	(1,248		)	(1,303		)
Balance, end of year	$	456		$	2,704		$	3,160