Retirement Plans

Post-retirement Healthcare Plans

We provide post-retirement medical benefits to certain eligible employees. These plans are unfunded and provide differing levels of healthcare benefits dependent upon hire date and work location. Not all of our employees are covered by these plans at December 31, 2015.

The following table sets forth the changes in the benefit obligation and plan assets of our post-retirement healthcare plans for the years ended December 31, 2015 and 2014:



	Years Ended December 31,
	2015			2014
	(In thousands)
Change in plans' benefit obligation
Post-retirement plans' benefit obligation - beginning of year	$	23,633		$	15,715
Service cost	1,694			895
Interest cost	819			638
Participant contributions	593			573
Amendments	—			3,383
Benefits paid	(2,260		)	(1,533		)
Actuarial loss (gain)	(3,278		)	3,962
Post-retirement plans' benefit obligation - end of year	$	21,201		$	23,633

Change in plan assets
Fair value of plan assets - beginning of year	$	—		$	—
Employer contributions	1,667			960
Participant contributions	593			573
Benefits paid	(2,260		)	(1,533		)
Fair value of plan assets - end of year	$	—		$	—

Funded status
Under-funded balance	$	(21,201	)	$	(23,633	)

Amounts recognized in consolidated balance sheets
Accrued post-retirement liability	$	(21,201	)	$	(23,633	)

Amounts recognized in accumulated other comprehensive income (loss)
Cumulative actuarial loss	$	(1,613	)	$	(5,074	)
Prior service credit	35,937			39,419
Total	$	34,324		$	34,345

Benefit payments, which reflect expected future service, are expected to be paid as follows: $2.1 million in 2016; $1.8 million in 2017; $1.9 million in 2018; $1.8 million in 2019; $1.9 million in 2020; and $9.2 million in 2021 through 2025.

The weighted average assumptions used to determine end of period benefit obligations:



	December 31,
	2015		2014

Discount rate	3.90	%	3.60	%
Current health care trend rate	8.00	%	8.00	%
Ultimate health care trend rate	5.00	%	5.00	%
Year rate reaches ultimate trend rate	2041		2042

Net periodic post-retirement credit consisted of the following components:



	Years Ended December 31,
	2015			2014			2013
	(In thousands)
Service cost – benefit earned during the year	$	1,694		$	895		$	1,112
Interest cost on projected benefit obligations	819			638			665
Amortization of prior service credit	(3,482		)	(4,296		)	(5,896		)
Amortization of net loss	183			—			130
Loss on settlement	—			—			1,726
Net periodic post-retirement credit	$	(786	)	$	(2,763	)	$	(2,263	)

Prior service credits are amortized over the average remaining effective period to obtain full benefit eligibility for participants.

Assumed health care cost trend rates have an effect on the amounts reported for the post-retirement health care benefit plans. The weighted average assumptions used to determine net periodic benefit expense follow:



	Years Ended December 31,
	2015		2014		2013

Discount rate	3.60	%	4.25	%	3.45	%
Current health care trend rate	8.00	%	8.00	%	8.10	%
Ultimate health care trend rate	5.00	%	5.00	%	5.00	%
Year rate reaches ultimate trend rate	2042		2045		2023

The effect of a 1% change in health care cost trend rates is as follows:



	1% Point Increase		1% Point Decrease
	(In thousands)
Service cost	$	268	$	(222	)
Interest cost	$	68	$	(58	)
Year-end accumulated post-retirement benefit obligation	$	1,443	$	(1,254	)

Pension Plan

In 2013, we terminated the HollyFrontier Corporation Pension Plan (the "Plan"), a non-contributory defined benefit retirement plan that covered certain employees. In June 2013, we made contributions of $22.7 million to the Plan, which was sufficient for the Plan to settle its obligations to all participants including the premium paid to the non-participating annuity provider. In 2013, we recognized a pre-tax pension settlement charge of $39.5 million, of which $37.6 million was reclassified out of accumulated other comprehensive income, representing the irrevocable portion of our obligation. Net periodic pension expense was $42.6 million for the year ended December 31, 2013.

Additionally, we had a program that provided transition benefit payments to certain employees that participated in a previously terminated defined benefit plan. The program extended through 2014 and provided payments subsequent to year-end provided the employee was employed by us on the last day of each year. The payments were based on each employee's years of service and eligible salary. Transition benefit costs under this program were $10.8 million and $12.5 million for the years ended December 31, 2014 and 2013, respectively. In March 2015, we paid all remaining amounts owed to plan participants of $11.0 million.

Retirement Restoration Plan

We have an unfunded retirement restoration plan that provides for additional payments from us so that total retirement plan benefits for certain executives will be maintained at the levels provided in the retirement plan before the application of Internal Revenue Code limitations. We expensed $0.1 million, $1.2 million and $0.4 million for the years ended December 31, 2015, 2014 and 2013, respectively, in connection with this plan. The accrued liability reflected in the consolidated balance sheets was $2.8 million and $3.0 million at December 31, 2015 and 2014, respectively. As of December 31, 2015, the projected benefit obligation under this plan was $2.8 million. Annual benefit payments of $0.2 million are expected to be paid through 2025, which reflect expected future service.

Defined Contribution Plans

We have a defined contribution “401(k)” plan that covers substantially all employees. Our contributions are based on an employee's eligible compensation and years of service. We also partially match the employee's contributions. We expensed $17.2 million, $16.1 million and $15.5 million for the years ended December 31, 2015, 2014 and 2013, respectively, in connection with these plans.