Retirement Plans

The Company assumed, through its acquisition of nTelos, a qualified pension plan and other postretirement benefit plans. We have recorded the fair value of the nTelos plans using assumptions and accounting policies consistent with those disclosed by nTelos. Upon acquisition, the excess of projected benefit obligations over the plan assets was recognized as a liability and previously existing deferred actuarial gains and losses and unrecognized service costs and benefits were eliminated.

The following tables provide the benefit obligations, fair value of assets and a statement of the funded status since the acquisition date (in thousands):



	Defined Benefit Pension Plan			Other Postretirement Benefit Plans
Benefit obligations, at acquisition	$	37,443		$	4,298
Service cost	—			18
Interest cost	956			108
Benefits paid	(340		)	—
Actuarial gain	(3,703		)	(174		)
Benefit obligations as of December 31, 2016	$	34,356		$	4,250



	Defined Benefit Pension Plan			Other Postretirement Benefit Plans
Plan assets, at acquisition	$	22,813		$	—
Actual return on Plan assets	1,722			—
Benefits paid	(340		)	—
Plan expenses	(121		)	—
Plan assets as of December 31, 2016	$	24,074		$	—

Funded status: Net liability as of December 31, 2016	$	(10,282	)	$	(4,250	)

The funded status is included in other long-term liabilities on the Company's consolidated balance sheets.

The accumulated benefit obligation for the defined benefit pension plan at May 6, 2016 was $37.4 million. The accumulated benefit obligation represents the present value of pension benefits based on service and salary earned to date. The defined benefit plan was frozen for future benefit accruals as of December 31, 2012. Accordingly, the accumulated benefit obligation is equal to the projected benefit obligation.

The following table provides the components of net periodic pension (benefit) cost for the plans for the period from acquisition date to December 31, 2016 (in thousands):



	Defined Benefit Pension Plan			Other Postretirement Benefit Plans
Components of net periodic pension (benefit) cost:
Service cost	$	—		$	18
Interest cost	956			108
Expected return on plan assets	(1,018		)	—
Actuarial gains	(4,286		)	(174		)

Net periodic (benefit) cost	$	(4,348	)	$	(48	)

We recognize gains and losses on pension and postretirement plan assets and obligations immediately in our operating results. These gains and losses are measured annually as of December 31 and accordingly are recorded during the fourth quarter, unless earlier measurements are required.

The assumptions used in the measurements of the Company’s benefit obligations at December 31, 2016 for the plans are shown in the following table:

The assumptions used in the measurements of the Company’s net periodic benefit cost (income) for the consolidated statement of operations for the period from acquisition date through December 31, 2016 are:



	Defined Benefit Pension Plan		Other Postretirement Benefit Plans
Discount rate	4.15	%	4.11	%
Expected return on plan assets	6.75	%	—	%

The Company reviews the assumptions noted in the above tables annually or more frequently to reflect anticipated future changes in the underlying economic factors used to determine these assumptions. The discount rates assumed reflect the rate at which the Company could invest in high quality corporate bonds in order to settle future obligations.

The Company uses the RP-2014 mortality table with generational improvement Scale MP-2016 published by the Society of Actuaries.

For measurement purposes, an 8.0% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2016 for the obligation as of the acquisition date. The rate was assumed to decrease one-half percent per year to a rate of 5.0% for 2022 and remain at that level thereafter.

Assumed health care cost trend rates may have a significant effect on the amounts reported for the health care plans. The effect of a 1% change on the medical trend rate per future year, while holding all other assumptions constant, to the service and interest cost components of net periodic postretirement health care benefit costs and accumulated postretirement benefit obligation would be a $41 thousand increase and a $800 thousand increase, respectively, for a 1% increase in medical trend rate and a $32 thousand decrease and a $634 thousand decrease, respectively, for a 1% decrease in medical trend rate.

The weighted average expected rate of return on plan assets is based on anticipated performance of the various asset in which the plans invest, weighted by target allocation percentages. Anticipated future performance is based on long-term historical returns of the plan assets, adjusted for the long-term expectations on the performance of the markets.

The actual and target allocation for plan assets is broadly defined and measured as follows:



Asset Category	Actual Allocation		Target Allocation
Equity securities	76	%	65-75
Bond securities and cash equivalents	24	%	25-35
Total	100	%	100	%

It is the Company’s policy to invest pension plan assets in a diversified portfolio consisting of an array of asset classes. The investment risk of the assets is limited by appropriate diversification both within and between asset classes. The assets are primarily invested in investment funds that invest in a broad mix of publicly traded equities, bonds and cash equivalents (and fair value is based on quoted market prices (“Level 1” input)). The fair value of an investment fund representing 4% of total plan assets, which is included in bond and cash equivalents, is based on significant other observable inputs ("Level 2" input). The allocation between equity and bonds is reset quarterly to the target allocations. Updates to the allocation are considered in the normal course and changes may be made when appropriate. The bond holdings consist of two bond funds split relatively evenly between these funds at December 31, 2016. The maximum holdings of any one asset within these funds is under 4% of this fund and thus is well under 1% of the total portfolio. At December 31, 2016, the Company believes that there are no material concentrations of risk within the portfolio of plan assets.

The assumed long-term return noted above is the target long-term return. Overall return, risk adjusted return, and management fees are assessed against a peer group and benchmark indices. There are minimum performance standards that must be attained within the investment portfolio. Reporting on asset performance is provided quarterly and review meetings are held semi-annually. In addition to normal rebalancing to maintain an adequate cash reserve, projected cash flow needs of the plan are reviewed at least annually to ensure liquidity is properly managed.

The Company does not expect to contribute to the pension plan in 2017. The Company expects the net periodic benefit income for the defined benefit pension plan in 2017 to be $0.2 million and expects the periodic benefit cost for the other postretirement benefit plans in 2017 to be $0.2 million, excluding actuarial gains and losses which will be recorded in the fourth quarter of 2017.

The following estimated future pension benefit payments and other postretirement benefit plan payments which reflect expected future service, as appropriate, are expected to be paid in the years indicated (in thousands):



	Defined Benefit Pension Plan		Other Postretirement Benefit Plans
2017	$	684	$	187
2018	703		156
2019	752		160
2020	821		155
2021	924		170
Aggregate of next five years	6,409		925

The Company plans to make contributions to comply with minimum funding requirements of ERISA. In accordance with such practice, no contributions are required for 2017.

The Company maintains a defined contribution 401(k) plan. The Company's matching and employer discretionary contributions to the defined contribution 401(k) plan were approximately $3.8 million, $2.6 million and $2.5 million for the years ended December 31, 2016, 2015 and 2014, respectively.

The Company maintains an unfunded, non-qualified Supplemental Executive Retirement Plan (the “SERP”) for named executives. In 2010, the Company curtailed future participation in the SERP. Current participants may remain in the SERP and continue to earn returns (either gains or losses) on invested balances, but the Company will make no further contributions to the SERP and no new participants will be eligible to join the SERP.

In order to provide some protection to the participants, the Company created a rabbi trust to hold assets sufficient to pay obligations under the SERP. Assets within the trust were invested to mirror participant elections as to investment options (a mix of stock and bond mutual funds); investment income, gains and losses in the trust were used to determine investment returns on the participants’ balances in the SERP. At December 31, 2016 and 2015, the total liability due to participants in the SERP was $2.9 million and $2.7 million, respectively.

Defined
Benefit
Pension Plan

Other
Postretirement
Benefit Plans

Discount rate