We maintain both funded and unfunded noncontributory defined benefit pension plans covering our domestic employees and the employees of our subsidiaries. We also have a funded noncontributory defined benefit pension plan related to a former business in the United Kingdom that has no active employees. The plans base benefits payable on years of service and/or final average salary. We base our funding policies for the pension plans on actuarially determined cost methods allowable under IRS regulations and statutory requirements in the UK.

In addition to the pension plans, we have other post-retirement plans that provide health care, life insurance, and other benefits for certain retired domestic employees who meet established criteria. Most domestic employees that retire with immediate benefits under our pension plan are eligible for health care and life insurance benefits. The other post-retirement plans are either contributory or noncontributory, depending on various factors.

In 2018, we adopted ASU 2017-07 which modifies how an entity must present service costs and other components of net benefit cost. See "Note 2. Accounting Changes" for further details. In accordance with this new guidance, the service cost component of net periodic cost is recorded in the applicable operating expense line, including maintenance expense and selling, general and administrative expense in the Statements of Comprehensive Income; and the other components are recorded in other expense.

We recorded settlement accounting expenses of $2.1 million, $0.2 million, and $6.1 million in 2018, 2017, and 2016 attributable to lump sum distributions made during each year.

We use a December 31 measurement date for all of our plans. The following tables show pension obligations, plan assets, and other post-retirement obligations as of December 31 (in millions):



	2018 Pension Benefits			2017 Pension Benefits			2018 Retiree Health and Life			2017 Retiree Health and Life
Change in Benefit Obligation
Benefit obligation at beginning of year	$	480.1		$	464.4		$	33.7		$	30.3
Service cost	8.2			6.5			0.2			0.2
Interest cost	14.7			15.4			1.0			1.1
Actuarial (gain) loss	(40.9		)	34.8			(5.0		)	5.5
Benefits paid	(46.5		)	(44.2		)	(2.4		)	(3.4		)
Effect of foreign exchange rate changes	(1.9		)	3.2			—			—
Benefit obligation at end of year	$	413.7		$	480.1		$	27.5		$	33.7
Change in Fair Value of Plan Assets
Plan assets at beginning of year	435.6			413.5			—			—
Actual return on plan assets	(23.9		)	61.3			—			—
Effect of exchange rate changes	(2.0		)	3.4			—			—
Company contributions	6.6			1.6			2.4			3.4
Benefits paid	(46.5		)	(44.2		)	(2.4		)	(3.4		)
Plan assets at end of year	$	369.8		$	435.6		$	—		$	—
Funded Status at end of year	$	(43.9	)	$	(44.5	)	$	(27.5	)	$	(33.7	)
Amount Recognized
Other liabilities and other assets (net)	$	(43.9	)	$	(44.5	)	$	(27.5	)	$	(33.7	)
Accumulated other comprehensive loss:
Net actuarial loss (gain)	125.2			132.5			(2.2		)	2.8
Prior service credit	—			(0.1		)	(1.4		)	(1.6		)
Accumulated other comprehensive loss (income)	125.2			132.4			(3.6		)	1.2
Total recognized	$	81.3		$	87.9		$	(31.1	)	$	(32.5	)
After-tax amount recognized in accumulated other comprehensive loss (gain)	$	95.4		$	82.7		$	(2.8	)	$	0.9

The aggregate accumulated benefit obligation for the defined benefit pension plans was $394.8 million at December 31, 2018 and $457.0 million at December 31, 2017.

The following table shows our pension plans that have a projected benefit obligation in excess of plan assets as of December 31 (in millions):



	2018		2017
Projected benefit obligations	$	303.8	$	350.7
Fair value of plan assets	255.5		299.9

The following table shows our pension plans that have an accumulated benefit obligation in excess of plan assets as of December 31 (in millions):



	2018		2017
Accumulated benefit obligations	$	30.0	$	37.1
Fair value of plan assets	—		—

The following table shows the components of net periodic cost (benefit) for the year ended December 31 (in millions):



	2018 Pension Benefits			2017 Pension Benefits			2016 Pension Benefits			2018 Retiree Health and Life			2017 Retiree Health and Life			2016 Retiree Health and Life
Service cost	$	8.2		$	6.5		$	6.1		$	0.2		$	0.2		$	0.2
Interest cost	14.7			15.4			15.3			1.0			1.1			0.9
Expected return on plan assets	(22.2		)	(24.0		)	(25.6		)	—			—			—
Settlement expense	2.1			0.2			6.1			—			—			—
Amortization of:
Unrecognized prior service credit	—			—			(1.0		)	(0.1		)	(0.2		)	(0.2		)
Unrecognized net actuarial loss (gain)	10.0			9.3			10.5			—			(0.3		)	(0.3		)
Net periodic cost	$	12.8		$	7.4		$	11.4		$	1.1		$	0.8		$	0.6

We amortize the unrecognized prior service credit using a straight-line method over the average remaining service period of the employees we expect to receive benefits under the plan. We amortize the unrecognized net actuarial loss (gain), which is subject to certain averaging conventions, over the average remaining service period of active employees.

The following table shows the amounts we expect to recognize as components of net periodic cost in 2019 from amounts recorded in accumulated comprehensive loss (income) as of December 31, 2018 (in millions):



	Pension Benefits		Retiree Health and Life
Unrecognized net actuarial loss	$	7.7	$	—
Unrecognized prior service cost	—		(0.2		)

We use the following assumptions to measure the benefit obligation, compute the expected long-term return on assets, and measure the periodic cost for our defined benefit pension plans and other post-retirement benefit plans for the years ended December 31:



	2018		2017
Domestic defined benefit pension plans
Benefit Obligation at December 31:
Discount rate — salaried funded plans	4.32	%	3.68	%
Discount rate — salaried unfunded plans	3.72% - 4.26%		3.07% - 3.45%
Discount rate — hourly funded plan	4.42	%	3.73	%
Rate of compensation increases — salaried funded and unfunded plans	3.00	%	2.50	%
Rate of compensation increases — hourly funded plans	n/a		n/a
Net Periodic Cost (Benefit) for the years ended December 31:
Discount rate — salaried funded and unfunded plans	3.68	%	4.23	%
Discount rate — hourly funded plan	3.74	%	4.31	%
Expected return on plan assets — salaried funded plan	5.90	%	6.25	%
Expected return on plan assets — hourly funded plan	5.50	%	6.15	%
Rate of compensation increases — salaried funded and unfunded plans	2.50	%	2.50	%
Rate of compensation increases — hourly funded plan	n/a		n/a
Foreign defined benefit pension plan
Benefit Obligation at December 31:
Discount rate	2.60	%	2.40	%
Rate of pension-in-payment increases	3.20	%	3.10	%
Net Periodic Cost (Benefit) for the years ended December 31:
Discount rate	2.40	%	2.60	%
Expected return on plan assets	4.10	%	4.20	%
Rate of pension-in-payment increases	3.10	%	3.20	%
Other post-retirement benefit plans
Benefit Obligation at December 31:
Discount rate - combined health	4.06	%	3.40	%
Discount rate - combined life insurance	4.32	%	3.66	%
Rate of compensation increases	n/a		n/a
Net Periodic Cost (Benefit) for the years ended December 31:
Discount rate - salaried health	n/a		3.67	%
Discount rate - hourly health	n/a		4.00	%
Discount rate - combined health	3.41	%	n/a
Discount rate - salaried life insurance	n/a		4.19	%
Discount rate - hourly life insurance	n/a		3.84	%
Discount rate - combined life insurance	3.66	%	n/a
Rate of compensation increases	n/a		n/a

We calculate the present value of expected future pension and post-retirement cash flows as of the measurement date using a discount rate. We base the discount rate on yields for high-quality, long-term bonds with durations similar to that of our projected benefit obligation. We base the expected return on our plan assets on current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. We routinely review our historical returns along with current market conditions to ensure our expected return assumption is reasonable and appropriate.



	2018		2017
Assumed Health Care Cost Trend Rates at December 31
Health care cost trend assumed for next year
Medical claims - pre age 65	6.70	%	6.70	%
Medical claims - post age 65	5.80	%	4.90	%
Prescription drugs claims - pre age 65	9.30	%	11.10	%
Prescription drugs claims - post age 65	9.20	%	11.10	%
Rate to which the cost trend is expected to decline (the ultimate trend rate)
Medical claims	4.50	%	4.50	%
Prescription drugs claims	4.50	%	4.50	%
Year that rate reaches the ultimate trend rate
Medical claims	2026		2025
Prescription drugs claims	2026		2025

The health care cost trend, which is based on projected growth rates for medical and prescription drug claims, has an effect on our other post-retirement benefit costs and obligations. The following table shows the effects of a one percentage point change in the health care cost trend rate on service and interest costs for the year ended December 31, 2018 and the post-retirement benefit obligation as of December 31, 2018 (in millions):



	One Percentage Point Increase		One Percentage Point Decrease
Effect on total of service and interest cost (1)	$	—	$	—
Effect on post-retirement benefit obligation	0.8		(0.7		)

_________


(1)	The effect of a one percentage point increase (decrease) was less than $0.1 million.

Our investment policies require that asset allocations of domestic and foreign funded pension plans be maintained at certain targets. The following table shows our weighted-average asset allocations of our domestic funded pension plans at December 31, 2018 and 2017, and current target asset allocation for 2019, by asset category:



			Plan Assets for Salaried Employees at December 31
	Target		2018		2017
Asset Category
Equity securities	45.6	%	44.1	%	50.7	%
Debt securities	51.0	%	51.8	%	44.8	%
Real estate	3.4	%	3.9	%	3.7	%
Cash	—	%	0.2	%	0.8	%
	100.0	%	100.0	%	100.0	%



			Plan Assets for Hourly Employees at December 31
	Target		2018		2017
Asset Category
Equity securities	32.7	%	30.3	%	39.4	%
Debt securities	64.1	%	64.9	%	56.8	%
Real estate	3.2	%	4.7	%	3.7	%
Cash	—	%	0.1	%	0.1	%
	100.0	%	100.0	%	100.0	%

The following table shows the weighted-average asset allocations of our foreign funded pension plan at December 31, 2018 and 2017, and current target asset allocation for 2019, by asset category:



			Plan Assets at December 31
	Target		2018		2017
Asset Category
Equity securities	36.8	%	33.4	%	36.0	%
Debt securities	63.2	%	66.6	%	64.0	%
	100.0	%	100.0	%	100.0	%

The following table sets forth the fair value of our pension plan assets as of December 31 (in millions):



	2018		2017
Assets measured at net asset value (1):
Short-term investment fund	$	0.7	$	2.6
Common stock collective trust funds	148.2		204.1
Fixed income group trusts	207.1		211.0
Real estate collective trust funds	13.8		14.8
Loan fund	—		3.1
Total	$	369.8	$	435.6

_______


(1)	In accordance with the relevant accounting standards, investments measured at fair value using the net asset value per share (or its equivalent) practical expedient are not recorded in any specific category of the fair value hierarchy.

The following is a description of the valuation techniques and inputs used as of December 31, 2018 and 2017.

Short-term investment fund

We value the short-term investment fund based on the closing net asset values ("NAV") quoted by the funds. The short-term investment fund is a highly liquid investment in obligations of the U.S. Government, or its agencies or instrumentalities, and the related money market instruments. The short-term investment fund has no unfunded commitments, restrictions on redemption frequency, or advance notice periods required for redemption. The fund seeks to provide safety of principal, daily liquidity, and a competitive yield over the long term.

Common stock collective trust funds and fixed income group trusts

We value common stock collective trust funds and fixed income group trusts based on the closing NAV prices quoted by the funds. None of the collective trusts or the group trusts have unfunded commitments, restrictions on redemption frequency, or advance notice periods required for redemption. The investment objective of each of the common stock funds is long-term total return through capital appreciation and current income. The fixed income funds are each designed to deliver safety and stability by preserving principal and accumulated earnings. The group trust seeks to achieve, over an extended period of time, total returns comparable or superior to broad measures of the long-term domestic investment grade credit bond market.

Real estate collective trust funds

We value real estate collective trust funds based on the NAV provided by the funds' administrators. A lack of liquidity in the funds may limit or delay redemptions. The investment objective of the real estate funds, which are diversified by location and property type, is long-term return through property appreciation, current income, and timely sales.

Loan fund

The loan fund is a limited liability company ("LLC") and is valued using the NAV provided by the administrator of the fund. As of December 31, 2017, we held investments in one LLC. Generally, capital may be withdrawn as of the last day of the month upon written notice given on no later than 30 days prior to the withdrawal date. The investment manager may determine in its discretion to allow withdrawals on any such other date. The LLC fund seeks to achieve risk-adjusted total returns by buying and selling investments that are anticipated to have a primarily bank loan focus. Investments will be primarily in debt securities of midsize and large capitalizations. There are no unfunded commitments.

The primary investing objective of the pension plans is to provide benefits to plan participants and their beneficiaries. To achieve this goal, we invest in a diversified portfolio of equities, debt, and real estate investments to maximize return and to keep long-term investment risk at a reasonable level. Equity investments are diversified across U.S. and non-U.S. stocks, growth and value stocks, and small cap and large cap stocks. Debt securities are predominately investments in long-term, investment-grade corporate bonds. Real estate investments include investments in funds that are diversified by location and property type.

On a timely basis, but not less than twice a year, we formally review pension plan investments to ensure we adhere to investment guidelines and our stated investment approach. Our review also evaluates the reasonableness of our investment decisions and risk positions. We compare our investments' performance to indices and peers to determine if investment performance has been acceptable.

In 2019, we expect to contribute approximately $5.7 million to our pension and other post-retirement benefit plans. Additional contributions to the domestic funded pension plans will depend on investment returns on plan assets and actuarial experience.

The following table shows benefit payments, which reflect expected future service (in millions):



	Funded Plans		Unfunded Plans		Retiree Health and Life
2019	$	28.3	$	2.5	$	3.2
2020	27.6		2.8		3.0
2021	27.5		2.6		2.8
2022	27.5		2.9		2.6
2023	27.8		3.0		2.4
Years 2024-2028	137.2		14.9		9.5
Total	$	275.9	$	28.7	$	23.5

In addition to our defined benefit plans, we have two 401(k) retirement savings plans available to substantially all salaried employees and certain other employee groups. We may contribute to the plans as specified by their respective terms and as our board of directors determines. Contributions to our 401(k) retirement plans were $2.2 million for 2018, $1.9 million for 2017, and $1.8 million for 2016.

Multiemployer Plans

Most of the shipboard personnel at ASC participate in various multiemployer benefit plans that provide pension, health care, and post-retirement and other benefits to active and retired employees. Unlike single employer plans, we do not recognize plan assets or obligations for multiemployer plans on our balance sheet. Rather, we recognize our contributions to the plans as marine operating expenses. The amounts we contribute are based on the number of crew hours worked, which depends on the number of vessels deployed and aggregate operating days in a particular year. The risks of participating in these multiemployer plans are different from single employer plans in the following aspects:


•	Assets contributed by one employer may be used to provide benefits to employees of other participating employers;


•	If a participating employer fails to make its required contributions, any unfunded obligations of the plan may be the responsibility of the remaining participating employers; and


•	If an employer chooses to stop participating in a multiemployer plan, the plan may require the withdrawing company to make additional contributions.

The following table shows our contributions to multiemployer benefit plans for the years indicated (in millions):



Multiemployer Plans	EIN and Pension Plan Number	Pension Protection Act Zone Status	GATX Contributions						Collective Bargaining Agreement Expiration Date
Multiemployer Plans	EIN and Pension Plan Number	Pension Protection Act Zone Status	2018		2017		2016		Collective Bargaining Agreement Expiration Date
American Maritime Officers Pension Plan (1)	13-1969709-001	Green	$	2.3	$	2.3	$	1.2	February 7, 2021
Other multiemployer post-retirement plans			5.8		6.1		5.9
Total			$	8.1	$	8.4	$	7.1

_______


(1)	As of December 31, 2018, the actuary for the American Maritime Officers Pension Plan certified that the plan is in the “green zone” as defined by the Pension Protection Act of 2006. Our share of the total contributions was less than 5% in 2018 and more than 5% in 2017 and 2016. No surcharges were imposed for 2018, 2017, or 2016.