PENSION AND POSTRETIREMENT BENEFITS

We sponsor several noncontributory defined benefit pension plans, covering substantially all U.S. employees and certain non-U.S. employees, which provide benefits based on years of service, age, job grade levels and type of compensation. Retirement benefits for all other covered employees are provided through contributory pension plans, cash balance pension plans and government-sponsored retirement programs. All funded defined benefit pension plans receive funding based on independent actuarial valuations to provide for current service and an amount sufficient to amortize unfunded prior service over periods not to exceed 30 years, with funding falling within the legal limits prescribed by prevailing regulation. We also maintain unfunded defined benefit plans that, as permitted by local regulations, receive funding only when benefits become due.

Our defined benefit plan strategy is to ensure that current and future benefit obligations are adequately funded in a cost-effective manner. Additionally, our investing objective is to achieve the highest level of investment performance that is compatible with our risk tolerance and prudent investment practices. Because of the long-term nature of our defined benefit plan liabilities, our funding strategy is based on a long-term perspective for formulating and implementing investment policies and evaluating their investment performance.

The asset allocation of our defined benefit plans reflects our decision about the proportion of the investment in equity and fixed income securities, and, where appropriate, the various sub-asset classes of each. At least annually, we complete a comprehensive review of our asset allocation policy and the underlying assumptions, which includes our long-term capital markets rate of return assumptions and our risk tolerances relative to our defined benefit plan liabilities.

The expected rates of return on defined benefit plan assets are derived from review of the asset allocation strategy, expected long-term performance of asset classes, risks and other factors adjusted for our specific investment strategy. These rates are impacted by changes in general market conditions, but because they are long-term in nature, short-term market changes do not significantly impact the rates.

Our U.S. defined benefit plan assets consist of a balanced portfolio of equity and fixed income securities. Our non-U.S. defined benefit plan assets include a significant concentration of United Kingdom ("U.K.") fixed income securities. We monitor investment allocations and manage plan assets to maintain acceptable levels of risk.

For all periods presented, we used a measurement date of December 31 for each of our U.S. and non-U.S. pension plans and postretirement medical plans.

U.S. Defined Benefit Plans

We maintain qualified and non-qualified defined benefit pension plans in the U.S. The qualified plan provides coverage for substantially all full-time U.S. employees who receive benefits, up to an earnings threshold specified by the U.S. Department of Labor. The non-qualified plans primarily cover a small number of employees including current and former members of senior management, providing them with benefit levels equivalent to other participants, but that are otherwise limited by U.S. Department of Labor rules. The U.S. plans are designed to operate as "cash balance" arrangements, under which the employee has the option to take a lump sum payment at the end of their service. The total accumulated benefit obligation is equivalent to the total projected benefit obligation ("Benefit Obligation").

The following are assumptions related to the U.S. defined benefit pension plans:



	Year Ended December 31,
	2017		2016		2015
Weighted average assumptions used to determine Benefit Obligations:
Discount rate	3.63	%	4.00	%	4.75	%
Rate of increase in compensation levels	4.01		4.00		4.00
Weighted average assumptions used to determine net pension expense:
Long-term rate of return on assets	6.00	%	6.00	%	6.25	%
Discount rate	4.00		4.75		4.00
Rate of increase in compensation levels	4.01		4.00		4.25

At December 31, 2017 as compared with December 31, 2016, we decreased our discount rate from 4.00% to 3.63% based on an analysis of publicly-traded investment grade U.S. corporate bonds, which had a lower yield due to current market conditions. In determining 2017 expense, the expected rate of return on U.S. plan assets remained constant at 6.00%, primarily based on our target allocations and expected long-term asset returns. The long-term rate of return assumption is calculated using a quantitative approach that utilizes unadjusted historical returns and asset allocation as inputs for the calculation. For all U.S. plans, we adopted the RP-2006 mortality tables and the MP-2017 improvement scale published in October 2017. We applied the RP-2006 tables based on the constituency of our plan population for union and non-union participants. We adjusted the improvement scale to utilize 75% of the ultimate improvement rate, consistent with assumptions adopted by the Social Security Administration trustees, based on long-term historical experience. Currently, we believe this approach provides the best estimate of our future obligation. Most plan participants elect to receive plan benefits as a lump sum at the end of service, rather than an annuity. As such, the updated mortality tables had an immaterial effect on our pension obligation.

Net pension expense for the U.S. defined benefit pension plans (including both qualified and non-qualified plans) was:



	Year Ended December 31,
	2017			2016			2015
	(Amounts in thousands)
Service cost	$	22,257		$	22,583		$	24,113
Interest cost	16,878			19,072			17,072
Expected return on plan assets	(24,505		)	(23,997		)	(24,185		)
Settlement (gain) loss	(216		)	91			—
Amortization of unrecognized prior service cost	112			488			509
Amortization of unrecognized net loss	6,021			4,999			9,178
U.S. net pension expense	$	20,547		$	23,236		$	26,687

The estimated prior service cost and the estimated net loss for the U.S. defined benefit pension plans that will be amortized from accumulated other comprehensive loss into pension expense in 2018 is $0.2 million and $5.5 million, respectively. We amortize estimated prior service benefits and estimated net losses over the remaining expected service period.

The following summarizes the net pension liability for U.S. plans:



	December 31,
	2017			2016
	(Amounts in thousands)
Plan assets, at fair value	$	464,779		$	418,854
Benefit Obligation	(461,355		)	(449,601		)
Funded status	$	3,424		$	(30,747	)

The following summarizes amounts recognized in the balance sheet for U.S. plans:



	December 31,
	2017			2016
	(Amounts in thousands)
Noncurrent assets	$	10,853		$	—
Current liabilities	(459		)	(273		)
Noncurrent liabilities	(6,970		)	(30,474		)
Funded status	$	3,424		$	(30,747	)

The following is a summary of the changes in the U.S. defined benefit plans’ pension obligations:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	449,601		$	426,248
Service cost	22,257			22,583
Interest cost	16,878			19,072
Plan amendments and settlements	(3,006		)	(3,221		)
Actuarial loss (1)	9,404			22,706
Benefits paid	(33,779		)	(37,787		)
Balance — December 31	$	461,355		$	449,601
Accumulated benefit obligations at December 31	$	461,355		$	449,601

_______________________________________


(1)	The actuarial losses in 2017 and 2016 primarily reflect the impact of changes in the discount rate.

The following table summarizes the expected cash benefit payments for the U.S. defined benefit pension plans in the future (amounts in millions):



2018	$	39.5
2019	39.5
2020	40.7
2021	44.3
2022	42.3
2023-2027	202.9

The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for U.S. plans, net of tax:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	(69,132	)	$	(61,647	)
Amortization of net loss	3,766			3,136
Amortization of prior service cost	70			306
Net gain (loss) arising during the year	16,009			(11,618		)
Settlement (gain) loss	(135		)	57
Prior service (cost) benefit arising during the year	(368		)	634
Balance — December 31	$	(49,790	)	$	(69,132	)

Amounts recorded in accumulated other comprehensive loss consist of:



	December 31,
	2017			2016
	(Amounts in thousands)
Unrecognized net loss	$	(48,825	)	$	(68,476	)
Unrecognized prior service cost	(965		)	(656		)
Accumulated other comprehensive loss, net of tax	$	(49,790	)	$	(69,132	)

The following is a reconciliation of the U.S. defined benefit pension plans’ assets:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	418,854		$	408,218
Return on plan assets	59,462			28,182
Company contributions	23,836			22,450
Benefits paid	(33,779		)	(37,787		)
Settlements	(3,594		)	(2,209		)
Balance — December 31	$	464,779		$	418,854

We contributed $23.8 million and $22.5 million to the U.S. defined benefit pension plans during 2017 and 2016, respectively. These payments exceeded the minimum funding requirements mandated by the U.S. Department of Labor rules. Our estimated contribution in 2018 is expected to be approximately $20 million, excluding direct benefits paid.

All U.S. defined benefit plan assets are held by the qualified plan. The asset allocations for the qualified plan at the end of 2017 and 2016 by asset category, are as follows:



	Target Allocation at December 31,				Percentage of Actual Plan Assets at December 31,
Asset category	2017		2016		2017		2016
Cash and cash equivalents	—	%	—	%	1	%	—	%
U.S. Large Cap	—	%	19	%	—	%	20	%
U.S. Small Cap	—	%	4	%	—	%	4	%
International Large Cap	—	%	14	%	—	%	14	%
Emerging Markets	—	%	5	%	—	%	5	%
World Equity	—	%	8	%	—	%	8	%
Global Equity	36	%	—	%	36	%	—	%
Global Real Assets	12	%	—	%	12	%	—	%
Equity securities	48	%	50	%	48	%	51	%
Diversified Credit	12	%	—	%	12	%	—	%
Liability Driven Investment	40	%	40	%	39	%	39	%
Long-Term Government / Credit	—	%	10	%	—	%	10	%
Fixed income	52	%	50	%	51	%	49	%

_______________________________________

None of our common stock is directly held by our qualified plan. Our investment strategy is to earn a long-term rate of return consistent with an acceptable degree of risk and minimize our cash contributions over the life of the plan, while taking into account the liquidity needs of the plan. We preserve capital through diversified investments in high quality securities. Our current allocation target is to invest approximately 48% of plan assets in equity securities and 52% in fixed income securities. Within each investment category, assets are allocated to various investment strategies. Professional money management firms manage our assets, and we engage a consultant to assist in evaluating these activities. We periodically review the allocation target, generally in conjunction with an asset and liability study and in consideration of our future cash flow needs. We regularly rebalance the actual allocation to our target investment allocation.

Plan assets are invested in commingled funds. Our "Pension and Investment Committee" is responsible for setting the investment strategy and the target asset allocation for the plan's assets. As the qualified plan approached fully funded status, we implemented a Liability-Driven Investing ("LDI") strategy, which more closely aligns the duration of the plan's assets with the duration of its liabilities. The LDI strategy results in an asset portfolio that more closely matches the behavior of the liability, thereby reducing the volatility of the plan's funded status.

The plan’s financial instruments, shown below, are presented at fair value. See Note 1 for further discussion on how the hierarchical levels of the fair values of the Plan’s investments are determined. The fair values of our U.S. defined benefit plan assets were:



	At December 31, 2017								At December 31, 2016
			Hierarchical Levels								Hierarchical Levels
	Total		I		II		III		Total		I		II		III
	(Amounts in thousands)								(Amounts in thousands)
Cash and cash equivalents	$	5,494	$	5,494	$	—	$	—	$	848	$	848	$	—	$	—
Commingled Funds:
Equity securities
U.S. Large Cap(a)	—		—		—		—		81,953		—		81,953		—
U.S. Small Cap(b)	—		—		—		—		17,738		—		17,738		—
International Large Cap(c)	—		—		—		—		59,435		—		59,435		—
Emerging Markets(d)	—		—		—		—		20,014		—		20,014		—
World Equity(e)	—		—		—		—		34,261		—		34,261		—
Global Equity(f)	167,336		—		167,336		—		—		—		—		—
Global Real Assets(g)	55,261		—		55,261		—		—		—		—		—
Fixed income securities
Diversified Credit(h)	55,440		—		55,440		—		—		—		—		—
Liability Driven Investment (i)	181,248		—		181,248		—		164,384		—		164,384		—
Long-Term Government/Credit(j)	—		—		—		—		40,221		—		40,221		—
	$	464,779	$	5,494	$	459,285	$	—	$	418,854	$	848	$	418,006	$	—

_______________________________________


(a)	U.S. Large Cap funds seek to outperform the Russell 1000 (R) Index with investments in large and medium capitalization U.S. companies represented in the Russell 1000 (R) Index, which is composed of the largest 1,000 U.S. equities as determined by market capitalization.


(b)	U.S. Small Cap funds seek to outperform the Russell 2000 (R) Index with investments in medium and small capitalization U.S. companies represented in the Russell 2000 (R) Index, which is composed of the smallest 2,000 U.S. equities as determined by market capitalization.


(c)	International Large Cap funds seek to outperform the MSCI Europe, Australia, and Far East Index with investments in most of the developed nations of the world so as to maintain a high degree of diversification among countries and currencies.


(d)	Emerging Markets funds represent a diversified portfolio that seeks high, long-term returns comparable to investments in emerging markets by investing in stocks from newly developed emerging market economies.


(e)	World Equity funds seek to outperform the Russell Developed Large Cap Index Net over a full market cycle. The fund's goal is to provide a favorable total return relative to the benchmark, primarily through long-term capital appreciation.


(f)	Global Equity fund seeks to closely track the performance of the MSCI All Country World Index.


(g)	Global Real Asset funds seek to provide exposure to the listed global real estate investment trusts (REITs) and infrastructure markets.


(h)	Diversified Credit funds seek to provide exposure to the high yield, emerging markets, bank loans, and securitized credit markets.


(i)	LDI funds seek to invest in high quality fixed income securities that closely match those found in discount curves used to value the plan's liabilities.


(j)	Long-Term Government/Credit funds seek to outperform the Bloomberg Barclays Capital U.S. Long-Term Government/Credit Index by generating excess return through a variety of diversified strategies in securities with longer durations, such as sector rotation, security selection and tactical use of high-yield bonds.

Non-U.S. Defined Benefit Plans

We maintain defined benefit pension plans, which cover some or all of our employees in the following countries: Austria, Belgium, Canada, France, Germany, India, Italy, Mexico, The Netherlands, Sweden, Switzerland and the U.K. The assets in the U.K. (two plans), The Netherlands and Canada represent 94% of the total non-U.S. plan assets ("non-U.S. assets"). Details of other countries’ plan assets have not been provided due to immateriality.

The following are assumptions related to the non-U.S. defined benefit pension plans:



	Year Ended December 31,
	2017		2016		2015
Weighted average assumptions used to determine Benefit Obligations:
Discount rate	2.25	%	2.34	%	3.13	%
Rate of increase in compensation levels	3.25		3.22		3.61
Weighted average assumptions used to determine net pension expense:
Long-term rate of return on assets	3.88	%	4.68	%	5.03	%
Discount rate	2.34		3.13		3.40
Rate of increase in compensation levels	3.22		3.61		3.95

At December 31, 2017 as compared with December 31, 2016, we decreased our average discount rate for non-U.S. plans from 2.34% to 2.25% based on analysis of bonds and other publicly-traded instruments, by country, which had lower yields due to market conditions. To determine 2017 pension expense, we decreased our average expected rate of return on plan assets from 4.68% at December 31, 2016 to 3.88% at December 31, 2017, primarily based on our target allocations and expected long-term asset returns. As the expected rate of return on plan assets is long-term in nature, short-term market changes do not significantly impact the rate.

Many of our non-U.S. defined benefit plans are unfunded, as permitted by local regulation. The expected long-term rate of return on assets for funded plans was determined by assessing the rates of return for each asset class and is calculated using a quantitative approach that utilizes unadjusted historical returns and asset allocation as inputs for the calculation. We work with our actuaries to determine the reasonableness of our long-term rate of return assumptions by looking at several factors including historical returns, expected future returns, asset allocation, risks by asset class and other items.

Net pension expense for non-U.S. defined benefit pension plans was:



	Year Ended December 31,
	2017			2016			2015
	(Amounts in thousands)
Service cost	$	7,247		$	7,131		$	7,832
Interest cost	9,320			11,623			11,770
Expected return on plan assets	(8,834		)	(10,013		)	(11,693		)
Amortization of unrecognized net loss	3,741			4,751			4,949
Amortization of unrecognized prior service (benefit) cost	(4		)	4			(12		)
Settlement loss and other	2,434			780			570
Non-U.S. net pension expense	$	13,904		$	14,276		$	13,416

In 2018, there is no significant estimated prior service cost that will be amortized from accumulated other comprehensive loss into pension expense for the non-U.S. defined benefit pension plans. The estimated net loss for the non-U.S. defined benefit pension plans that will be amortized from accumulated other comprehensive loss into pension expense in 2018 is $3.7 million. We amortize estimated net losses over the remaining expected service period or over the remaining expected lifetime of inactive participants for plans with only inactive participants.

The following summarizes the net pension liability for non-U.S. plans:



	December 31,
	2017			2016
	(Amounts in thousands)
Plan assets, at fair value	$	248,733		$	223,491
Benefit Obligation	(413,960		)	(383,947		)
Funded status	$	(165,227	)	$	(160,456	)

The following summarizes amounts recognized in the balance sheet for non-U.S. plans:



	December 31,
	2017			2016
\	(Amounts in thousands)
Noncurrent assets	$	13,908		$	4,905
Current liabilities	(8,392		)	(7,932		)
Noncurrent liabilities	(170,743		)	(157,429		)
Funded status	$	(165,227	)	$	(160,456	)

The following is a reconciliation of the non-U.S. plans’ defined benefit pension obligations:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	383,947		$	386,175
Service cost	7,247			7,131
Interest cost	9,320			11,623
Employee contributions	228			219
Settlements and other	(9,260		)	(10,347		)
Actuarial (gain) loss (1)	(1,913		)	49,826
Net benefits and expenses paid	(18,701		)	(21,735		)
Currency translation impact(2)	43,092			(38,945		)
Balance — December 31	$	413,960		$	383,947
Accumulated benefit obligations at December 31	$	391,102		$	362,618

_______________________________________


(1)	The 2016 actuarial loss primarily reflects the decrease in the discount rates for U.K. and the Euro-zone.


(2)	In 2017 the currency translation impact reflects the weakening of the U.S. dollar against our significant currencies, primarily the Euro and British pound, while in 2016 the currency translation impact reflects the strengthening of the U.S. dollar against our significant currencies, primarily the Euro and British pound.

The following table summarizes the expected cash benefit payments for the non-U.S. defined benefit plans in the future (amounts in millions):



2018	$	17.5
2019	16.9
2020	17.2
2021	17.7
2022	18.5
2023-2027	97.3

The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for non-U.S. plans, net of tax:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	(68,260	)	$	(59,993	)
Amortization of net loss	2,756			3,673
Net gain (loss) arising during the year	2,289			(20,071		)
Settlement loss	1,668			610
Prior service benefit arising during the year	28			—
Currency translation impact and other	(6,353		)	7,521
Balance — December 31	$	(67,872	)	$	(68,260	)

Amounts recorded in accumulated other comprehensive loss consist of:



	December 31,
	2017			2016
	(Amounts in thousands)
Unrecognized net loss	$	(67,886	)	$	(68,194	)
Unrecognized prior service gain (cost)	14			(66		)
Accumulated other comprehensive loss, net of tax	$	(67,872	)	$	(68,260	)

The following is a reconciliation of the non-U.S. plans’ defined benefit pension assets:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	223,491		$	230,827
Return on plan assets	10,871			33,073
Employee contributions	228			219
Company contributions	18,494			20,004
Settlements	(7,383		)	(4,511		)
Currency translation impact and other	21,733			(34,386		)
Net benefits and expenses paid	(18,701		)	(21,735		)
Balance — December 31	$	248,733		$	223,491

Our contributions to non-U.S. defined benefit pension plans in 2018 are expected to be approximately $10 million, excluding direct benefits paid.

The asset allocations for the non-U.S. defined benefit pension plans at the end of 2017 and 2016 are as follows:



	Target Allocation at December 31,				Percentage of Actual Plan Assets at December 31,
Asset category	2017		2016		2017		2016
Cash and cash equivalents	3	%	4	%	3	%	4	%
North American Companies	3	%	3	%	3	%	3	%
Global Equity	3	%	8	%	3	%	8	%
Equity securities	6	%	11	%	6	%	11	%
U.K. Government Gilt Index	41	%	31	%	41	%	31	%
U.K. Corporate Bond Index	1	%	1	%	1	%	1	%
Global Fixed Income Bond	2	%	2	%	2	%	2	%
Liability Driven Investment	9	%	11	%	9	%	11	%
Fixed income	53	%	45	%	53	%	45	%
Multi-asset	22	%	25	%	22	%	25	%
Buy-in Contract	10	%	9	%	10	%	9	%
Other	6	%	6	%	6	%	6	%
Other Types	38	%	40	%	38	%	40	%

None of our common stock is held directly by these plans. In all cases, our investment strategy for these plans is to earn a long-term rate of return consistent with an acceptable degree of risk and minimize our cash contributions over the life of the plan, while taking into account the liquidity needs of the plan and the legal requirements of the particular country. We preserve capital through diversified investments in high quality securities.

Asset allocation differs by plan based upon the plan’s benefit obligation to participants, as well as the results of asset and liability studies that are conducted for each plan and in consideration of our future cash flow needs. Professional money management firms manage plan assets and we engage a consultant in the U.K. to assist in evaluation of these activities. The assets of the U.K. plans are overseen by a group of Trustees who review the investment strategy, asset allocation and fund selection. These assets are passively managed as they are invested in index funds that attempt to match the performance of the specified benchmark index.

The fair values of the non-U.S. assets were:



	At December 31, 2017								At December 31, 2016
			Hierarchical Levels								Hierarchical Levels
	Total		I		II		III		Total		I		II		III
	(Amounts in thousands)								(Amounts in thousands)
Cash	$	6,815	$	6,815	$	—	$	—	$	10,396	$	10,396	$	—	$	—
Commingled Funds:
Equity securities
North American Companies(a)	7,119		—		7,119		—		5,945		—		5,945		—
Global Equity(b)	8,951		—		8,951		—		16,774		—		16,774		—
Fixed income securities
U.K. Government Gilt Index(c)	103,230		—		103,230		—		68,227		—		68,227		—
U.K. Corporate Bond Index(d)	1,316		—		1,316		—		2,785		—		2,785		—
Global Fixed Income Bond(e)	5,350		—		5,350		—		5,259		—		5,259		—
Liability Driven Investment (f)	21,837		—		21,837		—		25,348		—		25,348		—
Other Types of Investments:
Multi-asset (g)	55,503		—		55,503		—		54,880		—		54,880		—
Buy-in Contract (h)	24,484		—		—		24,484		20,931		—		—		20,931
Other(i)	14,128		—		—		14,128		12,946		—		—		12,946
	$	248,733	$	6,815	$	203,306	$	38,612	$	223,491	$	10,396	$	179,218	$	33,877

_______________________________________


(a)	North American Companies represents U.S. and Canadian large cap equity funds, which are managed and track their respective benchmarks (FTSE All-World USA Index and FTSE All-World Canada Index).


(b)	Global Equity represents actively managed, global equity funds taking a top-down strategic view on the different regions by analyzing companies based on fundamentals, market-driven, thematic and quantitative factors to generate alpha.


(c)	U.K. Government Gilt Index represents U.K. government issued fixed income investments which are passively managed and track their respective benchmarks.


(d)	U.K. Corporate Bond Index represents U.K. corporate bond investments, which are passively managed and track the iBoxx Over 15 years £ Non-Gilt Index.


(e)	Global Fixed Income Bond represents investment funds that are actively managed, diversified and invested in traditional government bonds, high-quality corporate bonds, asset backed securities and emerging market debt.


(f)	Liability Driven Investment seeks to invest in fixed income securities that closely match those found in discount curves used to value the plan's liabilities.


(g)	Multi-asset seeks an attractive risk-adjusted return by investing in a diversified portfolio of strategies, including equities and fixed income.

(h)

Buy-in contract represents an asset held by the Netherlands plan, whereby the cost of providing benefits is funded by the contract. The fair value of the asset as January 1, 2017 was $20.9 million with contributions and currency adjustments resulting in a fair value of $24.5 million at December 31, 2017. The fair value of this asset is based on the current present value of accrued benefits and will fluctuate based on changes in the obligations associated with covered plan members as well as the assumptions used in the present value calculation.


(i)	Includes assets held by plans outside the United Kingdom and the Netherlands. Details, including Level III rollforward details are not material.

Defined Benefit Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets

The following summarizes key pension plan information regarding U.S. and non-U.S. plans whose accumulated benefit obligations exceed the fair value of their respective plan assets.



	December 31,
	2017		2016
	(Amounts in thousands)
Benefit Obligation	$	217,510	$	802,456
Accumulated benefit obligation	197,816		784,337
Fair value of plan assets	32,052		607,705

Postretirement Medical Plans

We sponsor several defined benefit postretirement medical plans covering certain current retirees and a limited number of future retirees in the U.S. These plans provide for medical and dental benefits and are administered through insurance companies and health maintenance organizations. The plans include participant contributions, deductibles, co-insurance provisions and other limitations and are integrated with Medicare and other group plans. We fund the plans as benefits and health maintenance organization premiums are paid, such that the plans hold no assets in any period presented. Accordingly, we have no investment strategy or targeted allocations for plan assets. Benefits under our postretirement medical plans are not available to new employees or most existing employees.

The following are assumptions related to postretirement benefits:



	Year Ended December 31,
	2017		2016		2015
Weighted average assumptions used to determine Benefit Obligation:
Discount rate	3.48	%	3.75	%	4.25	%
Weighted average assumptions used to determine net expense:
Discount rate	3.75	%	4.25	%	3.75	%

The assumed ranges for the annual rates of increase in medical costs used to determine net expense were 7.0% for 2017 and 7.5% for both 2016 and 2015, with a gradual decrease to 5.0% for 2025 and future years.

Net postretirement benefit cost for postretirement medical plans was:



	Year Ended December 31,
	2017			2016			2015
	(Amounts in thousands)
Service cost	$	—		$	1		$	2
Interest cost	919			1,154			1,155
Amortization of unrecognized prior service cost	122			122			122
Amortization of unrecognized net gain	(275		)	(355		)	(539		)
Net postretirement benefit expense	$	766		$	922		$	740

The estimated prior service cost expected to be amortized from accumulated other comprehensive loss into U.S. pension expense in 2018 is $0.1 million. The estimated net gain for postretirement medical plans that will be amortized from accumulated other comprehensive loss into U.S. expense in 2018 is $0.5 million.

The following summarizes the accrued postretirement benefits liability for the postretirement medical plans:



	December 31,
	2017			2016
	(Amounts in thousands)
Postretirement Benefit Obligation	$	23,882		$	27,317
Funded status	$	(23,882	)	$	(27,317	)

The following summarizes amounts recognized in the balance sheet for postretirement Benefit Obligation:



	December 31,
	2017			2016
	(Amounts in thousands)
Current liabilities	$	(2,952	)	$	(3,442	)
Noncurrent liabilities	(20,930		)	(23,875		)
Funded status	$	(23,882	)	$	(27,317	)

The following is a reconciliation of the postretirement Benefit Obligation:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	27,317		$	28,614
Service cost	—			1
Interest cost	919			1,154
Employee contributions	939			856
Medicare subsidies receivable	235			117
Actuarial (gain) loss	(1,818		)	1,907
Net benefits and expenses paid	(3,710		)	(5,332		)
Balance — December 31	$	23,882		$	27,317

The following presents expected benefit payments for future periods (amounts in millions):



	Expected Payments		Medicare Subsidy
2018	$	3.0	$	0.1
2019	2.8		0.1
2020	2.6		0.1
2021	2.3		0.1
2022	2.1		0.1
2023-2027	8.1		0.3

The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for postretirement benefits, net of tax:



	2017			2016
	(Amounts in thousands)
Balance — January 1	$	(163	)	$	1,179
Amortization of net gain	(172		)	(223		)
Amortization of prior service cost	76			77
Net gain (loss) arising during the year	1,139			(1,196		)
Balance — December 31	$	880		$	(163	)

Amounts recorded in accumulated other comprehensive loss consist of:



	December 31,
	2017			2016
	(Amounts in thousands)
Unrecognized net gain (loss)	$	1,921		$	(455	)
Unrecognized prior service (cost) gain	(1,041		)	292
Accumulated other comprehensive income (loss), net of tax	$	880		$	(163	)

We made contributions to the postretirement medical plans to pay benefits of $2.5 million in 2017, $4.4 million in 2016 and $5.1 million in 2015. Because the postretirement medical plans are unfunded, we make contributions as the covered individuals’ claims are approved for payment. Accordingly, contributions during any period are directly correlated to the benefits paid.

Assumed health care cost trend rates have an effect on the amounts reported for the postretirement medical plans. A one-percentage point change in assumed health care cost trend rates would have the following effect on the 2017 reported amounts (in thousands):



	1% Increase		1% Decrease
Effect on postretirement Benefit Obligation	$	116	$	(111	)
Effect on service cost plus interest cost	4		(4		)

Defined Contribution Plans

We sponsor several defined contribution plans covering substantially all U.S. and Canadian employees and certain other non-U.S. employees. Employees may contribute to these plans, and these contributions are matched in varying amounts by us, including opportunities for discretionary matching contributions by us. Defined contribution plan expense was $17.7 million in 2017, $17.2 million in 2016 and $19.6 million in 2015.