Retirement Plan

We sponsor a non-contributory defined benefit retirement plan that covers certain employees and is fully frozen. In 2012, our Compensation Committee, pursuant to authority delegated to it by the Board of Directors, approved the termination of the HollyFrontier Corporation Pension Plan (the “Plan”). Accordingly, our remaining liability under the Plan is expected to be funded in 2013. Our actual obligations under the Plan are contingent upon the timing of the pension plan termination as well as participant settlement obligations. We expect to record an additional expense on termination of the Plan at the date we are released from the liability, including the amount of actuarial loss currently recorded as accumulated other comprehensive income ($37.6 million, $23.0 million after-tax) at March 31, 2013 plus an amount equal to any contribution we make to the Plan in excess of the $19.3 million accrued pension liability we have recorded at March 31, 2013.

The net periodic pension expense consisted of the following components:



	Three Months Ended March 31,
	2013			2012
	(In thousands)
Service cost – benefit earned during the period	$	—		$	170
Interest cost on projected benefit obligations	899			991
Expected return on plan assets	(46		)	(950		)
Amortization of prior service cost	—			17
Amortization of net loss	693			483
Estimated effect of curtailment	—			225
Net periodic pension expense	$	1,546		$	936

The expected long-term annual rate of return on plan assets is 0.25%, which is the rate used in measuring 2013 net periodic benefit costs.

In 2012, we established a program for plan participants whose benefits pursuant to the defined benefit plan were frozen. The program provides for payments after year-end for each of the next three years provided the employee remains with us. The payments are based on each employee's years of service and eligible salary. For the three months ended March 31, 2013 and 2012, we recognized transition benefit costs of $2.9 million and $3.4 million, respectively, associated with transition to the new defined contribution plan.

We have a post-retirement healthcare and other benefits plan that is available to certain of our employees who satisfy certain age and service requirements.The net periodic benefit expense of this plan consisted of the following components:



	Three Months Ended March 31,
	2013			2012
	(In thousands)
Service cost – benefit earned during the period	$	278		$	475
Interest cost on projected benefit obligations	159			875
Amortization of prior service credit	(1,474		)	(550		)
Amortization of net loss	31			75
Actuarial loss on post-retirement healthcare plan reclassified to net income upon partial plan settlement	1,726			—
Net periodic pension expense	$	720		$	875

In the first quarter of 2013, we settled a portion of our post-retirement medical obligation. Upon settlement, we reclassified a $1.7 million pretax loss out of accumulated other comprehensive income that was recognized as a charge to net income.