We have historically provided certain health care benefits for a large number of retired U.S. employees. Employees hired prior to January 1, 2002 become eligible for benefits if they attain the appropriate years of service and age prior to retirement. Employees hired on January 1, 2002 or later are not eligible to participate in the plan. In addition to our retiree health care plan, we also have a U.S. supplemental executive retirement plan (SERP). The SERP is no longer an active plan. It is not adding new participants and all of the current participants are retired. The SERP has no plan assets, but our obligation is fully funded by investments in company-owned life insurance policies.



(in thousands)	Postretirement benefit plan			Pension plan⁽¹⁾
Change in benefit obligation:
Benefit obligation, December 31, 2017	$	87,594		$	3,398
Interest cost	2,529			97
Net actuarial gain	(9,231		)	(23		)
Benefits paid from plan assets and company funds	(7,175		)	(324		)
Benefit obligation, December 31, 2018	73,717			3,148
Interest cost	2,617			111
Net actuarial loss	5,012			316
Benefits paid from plan assets and company funds	(8,171		)	(324		)
Benefit obligation, December 31, 2019	$	73,175		$	3,251
Change in plan assets:
Fair value of plan assets, December 31, 2017	$	127,443		$	—
Return on plan assets	(6,663		)	—
Benefits paid	(5,804		)	—
Fair value of plan assets, December 31, 2018	114,976			—
Return on plan assets	21,179			—
Benefits paid	(6,237		)	—
Fair value of plan assets, December 31, 2019	$	129,918		$	—

Funded status, December 31, 2018	$	41,259		$	(3,148	)
Funded status, December 31, 2019	$	56,743		$	(3,251	)



	Postretirement benefit plan				Pension plan
(in thousands)	2019		2018		2019		2018
Other non-current assets	$	56,743	$	41,259	$	—	$	—
Accrued liabilities	—		—		324		324
Other non-current liabilities	—		—		2,927		2,824



(in thousands)	2019			2018
Unrecognized prior service credit	$	12,756		$	14,178
Unrecognized net actuarial loss	(45,319		)	(57,436		)
Tax effect	4,157			6,729
Amount recognized in accumulated other comprehensive loss, net of tax	$	(28,406	)	$	(36,529	)

The unrecognized prior service credit relates to our postretirement benefit plan and is a result of previous plan amendments that reduced the accumulated postretirement benefit obligation. A reduction is first used to reduce any existing unrecognized prior service cost, then to reduce any remaining unrecognized transition obligation. The excess is the unrecognized prior service credit. The prior service credit is being amortized on the straight-line basis over a weighted-average period of 21 years based on the average remaining life expectancy of plan participants at the time of the plan amendment.

Unrecognized net actuarial gains and losses result from experience different from that assumed and from changes in assumptions. The net actuarial loss generated during 2019 was primarily due to the decrease in the discount rate used to discount the benefit obligation. The net actuarial gain generated during 2018 was primarily due to favorable claims experience and an increase in the discount rate used to discount the benefit obligation. Unrecognized actuarial gains and losses for our postretirement benefit plan are being amortized over the average remaining life expectancy of inactive plan participants, as a large percentage of the plan participants are classified as inactive. This amortization period is currently 14.1 years.



(in thousands)	2019			2018			2017
Interest cost	$	2,727		$	2,626		$	2,896
Expected return on plan assets	(6,957		)	(7,737		)	(7,128		)
Amortization of prior service credit	(1,421		)	(1,421		)	(1,421		)
Amortization of net actuarial losses	3,223			2,884			3,637
Net periodic benefit income	$	(2,428	)	$	(3,648	)	$	(2,016	)



	Postretirement benefit plan						Pension plan
	2019		2018		2017		2019		2018		2017
Discount rate	4.13	%	3.46	%	3.81	%	4.01	%	3.35	%	3.66	%
Expected return on plan assets	6.25	%	6.25	%	6.25	%	—		—		—

The discount rate assumption is based on the rates of return on high-quality, fixed-income instruments currently available whose cash flows approximate the timing and amount of expected benefit payments. In determining the expected long-term rate of return on plan assets, we utilize our historical returns and then adjust these returns for estimated inflation and projected market returns. Our inflation assumption is primarily based on analysis of historical inflation data.



	2019				2018				2017
	Participants under age 65		Participants age 65 and older		Participants under age 65		Participants age 65 and older		Participants under age 65		Participants age 65 and older
Health care cost trend rate assumed for next year	7.40	%	8.40	%	7.70	%	8.70	%	7.90	%	9.10	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%	4.50	%	4.50	%	4.50	%	4.50	%	4.50	%
Year that the rate reaches the ultimate trend rate	2029		2029		2029		2029		2025		2025



	Postretirement benefit plan
	2019		2018
U.S. large capitalization equity securities	24	%	23	%
Mortgage-backed securities	24	%	25	%
International equity securities	19	%	18	%
U.S. corporate debt securities	15	%	20	%
Government debt securities	14	%	11	%
U.S. small and mid-capitalization equity securities	4	%	3	%
Total	100	%	100	%

Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and our financial condition.

The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 55% fixed income securities, 24% large capitalization equity securities, 18% international equity securities and 3% small and mid-capitalization equity securities.



	Fair value measurements using
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs		Investments measured at net asset value		Fair value as of December 31, 2019
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Investments measured at net asset value		Fair value as of December 31, 2019
U.S. large capitalization equity securities	$	—	$	30,990	$	—	$	—	$	30,990
Mortgage-backed securities	—		13,060		—		17,768		30,828
International equity securities	20,859		3,173		—		—		24,032
U.S. corporate debt securities	—		14,771		—		5,184		19,955
Government debt securities	—		18,776		—		—		18,776
U.S. small and mid-capitalization equity securities	4,228		363		—		—		4,591
Other debt securities	529		217		—		—		746
Plan assets	$	25,616	$	81,350	$	—	$	22,952	$	129,918



	Fair value measurements using
	Quoted prices in active markets for identical assets			Significant other observable inputs		Significant unobservable inputs		Investments measured at net asset value		Fair value as of December 31, 2018
(in thousands)	(Level 1)			(Level 2)		(Level 3)		Investments measured at net asset value		Fair value as of December 31, 2018
U.S. large capitalization equity securities	$	—		$	—	$	—	$	26,240	$	26,240
Mortgage-backed securities	—			13,593		—		15,138		28,731
International equity securities	20,261			298		—		—		20,559
U.S. corporate debt securities	6,489			12,468		—		3,594		22,551
Government debt securities	—			12,738		—		—		12,738
U.S. small and mid-capitalization equity securities	3,259			27		—		551		3,837
Other debt securities	(6		)	326		—		—		320
Plan assets	$	30,003		$	39,450	$	—	$	45,523	$	114,976

The fair value of Level 2 mortgage-backed securities is estimated using pricing models with inputs derived principally from observable market data. The fair value of our other Level 2 debt securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flow calculations that maximize observable inputs, such as current yields for similar instruments adjusted for trades and other pertinent market information. Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred.

We have fully funded the SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments on the consolidated balance sheets and totaled $7,136 as of December 31, 2019 and $6,869 as of December 31, 2018.