NOTE 9 – PENSION AND OTHER POSTRETIREMENT BENEFITS:

U.S. Pension Benefits

Historically, the Corporation had one qualified domestic defined benefit pension plan (“legacy plan”). As part of the Åkers acquisition, the Corporation assumed the obligations for two additional U.S. plans (“Akers plans”). Collectively, the plans cover substantially all of its U.S. employees. During 2015 – 2017, the following amendments were made to the plans:

•

Effective December 31, 2017, the legacy plan and the Akers salary plan were merged.

•

Effective June 1, 2016, the Akers salary plan was amended to freeze benefit accruals and participation in the plan replacing benefit accruals with employer non-elective contributions equaling 3% of compensation to a defined contribution plan. The plan freeze resulted in remeasurement of the liability, reducing the liability by approximately $1,181 as of December 31, 2016, and a curtailment gain of $887 for the year ended December 31, 2016.

•

In 2016, the legacy plan was amended to permit lump sum distributions to inactive deferred vested participants and deferred beneficiaries who were not previously offered a lump sum, which approximated $2,739.

•

Effective July 1, 2015, the legacy plan was amended to freeze benefit accruals and participation in the plan for non-union hourly and salaried participants and, effective January 1, 2016, for employees of the Union Electric Steel Carnegie Steelworkers Location. Benefits under the legacy plan were replaced with employer contributions of a 3% non-elective base contribution and a matching contribution of up to 4% to a defined contribution plan. The plan changes resulted in curtailment losses of $1,303 for the year ended December 31, 2015.

The U.S. defined benefit pension plans are covered by the Employee Retirement Income Security Act of 1974 (“ERISA”); accordingly, the Corporation’s policy is to fund at least the minimum actuarially computed annual contribution required under ERISA. No minimum contributions were required for any of the three years for the legacy plan or, since the date of acquisition, for the Akers plans. Minimum contributions for 2018 are expected to approximate $1,300. Estimated benefit payments for subsequent years are $13,672 for 2018, $14,091 for 2019, $14,301 for 2020, $14,566 for 2021, $14,685 for 2022 and $74,009 for 2023 – 2027. The fair value of the plan assets as of December 31, 2017, and 2016, approximated $199,138 and $188,722, respectively, in comparison to accumulated benefit obligations of $245,317 and $235,299 for the same periods. Employer contributions to the defined contribution plans totaled $2,588, $2,466 and $882 for 2017, 2016 and 2015, respectively, and are expected to approximate $2,808 in 2018.

The Corporation also maintains nonqualified defined benefit pension plans for selected executives in addition to the benefits provided under the Corporation’s qualified defined benefit pension plan. The objectives of the nonqualified plans are to provide supplemental retirement benefits or restore benefits lost due to limitations set by the Internal Revenue Service. The assets of the nonqualified plans are held in a grantor tax trust known as a “Rabbi” trust and are subject to claims of the Corporation’s creditors, but otherwise must be used only for purposes of providing benefits under the plans. No contributions were made to the trust in 2015 – 2017 and none are expected in 2018. The fair market value of the trust at December 31, 2017, and 2016, which is included in other noncurrent assets, was $4,204 and $3,863, respectively. Changes in the fair market value of the trust are recorded as a component of other comprehensive income (loss). The plan is treated as a non-funded pension plan for financial reporting purposes. Accumulated benefit obligations approximated $7,202 and $6,639 at December 31, 2017, and 2016, respectively. Estimated benefit payments for subsequent years, which would represent employer contributions, are approximately $440 for 2018, $454 for 2019, $464 for 2020, $485 for 2021, $507 for 2022 and $2,570 for 2023 – 2027.

Employees at one location participate in a multi-employer plan, I.A.M. National Pension Fund, in lieu of the Corporation’s defined benefit pension plan. A multi-employer plan generally receives contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements. The assets contributed by one employer may be used to fund the benefits provided to employees of other employers in the plan because the plan assets, once contributed, are not restricted to individual employers. The latest report of summary plan information (for the 2016 plan year) provided by I.A.M. National Pension Fund indicates:

•

More than 1,650 employer locations contribute to the plan

•

Approximately 100,000 active employees participate in the plan

•

Assets of approximately $11.7 billion and a funded status of approximately 96%.

Less than 100 of the Corporation’s employees participate in the plan and contributions are based on a rate per hour. The Corporation’s contributions to the plan were less than $250 for each of 2017, 2016 and 2015, and represent less than five percent of total contributions to the plan by all contributing employers. Contributions are expected to approximate $250 in 2018.

Foreign Pension Benefits

Employees of UES-UK participate in a defined benefit pension plan that was curtailed effective December 31, 2004, and replaced with a defined contribution pension plan. The UES-UK plans are non-U.S. plans and therefore are not covered by ERISA. Instead, the Trustees and UES-UK have agreed to a recovery plan that estimates the amount of employer contributions, based on U.K. regulations, necessary to eliminate the funding deficit of the plan with such estimates subject to change based on the future investment performance of the plan’s assets. The U.S. dollar equivalent of employer contributions to the defined benefit pension plan approximated $1,521, $1,522 and $1,715 in 2017, 2016 and 2015, respectively, and are expected to approximate $850 in 2018 at which time the plan is expected to be fully funded. The fair value of the plan’s assets as of December 31, 2017, and 2016, approximated $56,419 (£41,820) and $48,055 (£38,955), respectively, in comparison to accumulated benefit obligations of $57,540 (£42,650) and $61,277 (£49,673) for the same periods. Estimated benefit payments for subsequent years are $1,644 for 2018, $1,903 for 2019, $1,768 for 2020, $1,738 for 2021, $1,670 for 2022 and $11,196 for 2023 – 2027. Contributions to the defined contribution pension plan approximated $311, $252 and $382 in 2017, 2016 and 2015, respectively, and are expected to approximate $379 in 2018.

As part of the Åkers acquisition, the Corporation assumed the obligations of two foreign defined benefit pension plans. The plans are unfunded. Projected benefit obligations approximated $7,073 and $5,633 at December 31, 2017, and 2016, respectively; accumulated benefit obligations approximated the same. Estimated benefit payments for subsequent years, for both plans combined, are $234 for 2018, $257 for 2019, $248 for 2020, $249 for 2021, $240 for 2022 and $1,379 for 2023 – 2027.

Other Postretirement Benefits

The Corporation provides a monthly reimbursement of postretirement health care benefits for a 5-year period principally to the bargaining groups of one subsidiary (“legacy OPEB plan”). The legacy OPEB plan covers participants and their spouses and/or dependents who retire under the existing pension plan on other than a deferred vested basis and at the time of retirement have also rendered 15 or more years of continuous service irrespective of age. Retiree life insurance is provided to substantially all retirees.

The Corporation also provides life insurance and health care benefits to former employees of certain discontinued operations. This obligation had been estimated and provided for at the time of disposal.

As part of the Åkers acquisition, the Corporation assumed the obligations for two additional postretirement benefit plans (“Akers OPEB plans”). The Akers OPEB plans cover retiree medical and life insurance benefits. In August 2016, the Corporation modified the Akers OPEB plans whereby retiree health benefits for certain groups of pre-Medicare eligible employees were replaced with a monthly stipend. The plan changes resulted in a reduction in prior service costs decreasing plan liabilities by approximately $4,762, which is being amortized against other postretirement benefit costs over the expected remaining service periods of approximately 7.5 and 12 years, versus recognized immediately. As of December 31, 2017, the Akers OPEB plans were merged.

The Corporation’s postretirement health care and life insurance plans are not funded or subject to any minimum regulatory funding requirements. Estimated benefit payments for subsequent years, which would represent employer contributions, for the legacy and Akers OPEB plans are approximately $1,383 for 2018, $1,407 for 2019, $1,429 for 2020, $1,239 for 2021, $1,201 for 2022 and $5,363 for 2023-2027.

Reconciliations

The following provides a reconciliation of projected benefit obligations (“PBO”), plan assets and the funded status of the plans for the Corporation’s defined benefit plans calculated using a measurement date as of the end of the respective years.

	U.S. Pension Benefits^(a)						Foreign Pension Benefits						Other Postretirement Benefits
	2017			2016			2017			2016			2017			2016
Change in projected benefit obligations:
PBO at January 1	$	244,440		$	181,803		$	66,910		$	63,750		$	19,059		$	8,117
Åkers acquisition – PBO at March 3		0			68,081			0			5,393			0			17,467
Service cost		1,651			1,714			150			314			492			504
Interest cost		8,413			9,977			1,845			2,250			571			722
Plan amendments		0			0			0			0			165			(4,762	)
Plan settlements^(b)		0			(2,739	)		0			0			0			0
Plan curtailments		0			(1,181	)		0			0			0			0
Foreign currency exchange rate changes		0			0			5,948			(11,477	)		0			0
Actuarial loss (gain)		13,825			(160	)		(7,954	)		8,869			(2,170	)		(1,598	)
Participant contributions		0			0			0			0			92			80
Benefits paid from plan assets		(12,950	)		(12,679	)		(1,813	)		(2,189	)		0			0
Benefits paid by the Corporation		(403	)		(376	)		(473	)		0			(1,230	)		(1,471	)
PBO at December 31	$	254,976		$	244,440		$	64,613		$	66,910		$	16,979		$	19,059
Change in plan assets:
Fair value of plan assets at January 1	$	188,722		$	139,376		$	48,055		$	49,628		$	0		$	0
Åkers acquisition – fair value of plan assets at March 3		0			50,108			0			0			0			0
Actual return on plan assets		23,366			14,656			3,998			7,859			0			0
Foreign currency exchange rate changes		0			0			4,673			(8,930	)		0			0
Corporate contributions		403			376			1,979			1,687			1,138			1,391
Participant contributions		0			0			0			0			92			80
Plan settlements^(b)		0			(2,739	)		0			0			0			0
Gross benefits paid		(13,353	)		(13,055	)		(2,286	)		(2,189	)		(1,230	)		(1,471	)
Fair value of plan assets at December 31	$	199,138		$	188,722		$	56,419		$	48,055		$	0		$	0
Funded status of the plans:
Fair value of plan assets	$	199,138		$	188,722		$	56,419		$	48,055		$	0		$	0
Less benefit obligations		254,976			244,440			64,613			66,910			16,979			19,059
Funded status at December 31	$	(55,838	)	$	(55,718	)	$	(8,194	)	$	(18,855	)	$	(16,979	)	$	(19,059	)

(a)	Includes the nonqualified defined benefit pension plan.

(b)	Represents lump sum payments.

The following provides a summary of amounts recognized in the consolidated balance sheets.

	U.S. Pension Benefits						Foreign Pension Benefits						Other Postretirement Benefits
	2017			2016			2017			2016			2017			2016
Employee benefit obligations:
Accrued payrolls and employee benefits^(a)	$	(432	)	$	(409	)	$	0		$	0		$	(1,371	)	$	(1,276	)
Employee benefit obligations^(b)		(55,406	)		(55,309	)		(8,194	)		(18,855	)		(15,608	)		(17,783	)
	$	(55,838	)	$	(55,718	)	$	(8,194	)	$	(18,855	)	$	(16,979	)	$	(19,059	)
Accumulated other comprehensive loss:^(c)
Net actuarial loss (gain)	$	47,252		$	48,153		$	25,914		$	25,547		$	(1,211	)	$	936
Prior service cost (credit)		156			209			(9,174	)		0			(13,809	)		(15,581	)
	$	47,408		$	48,362		$	16,740		$	25,547		$	(15,020	)	$	(14,645	)

(a)	Recorded as a current liability in the consolidated balance sheet.

(b)	Recorded as a noncurrent liability in the consolidated balance sheet.

(c)	Amounts are pre-tax.

Amounts included in accumulated other comprehensive loss as of December 31, 2017, expected to be recognized in net periodic pension and other postretirement costs in 2018 include:

	U.S. Pension Benefits		Foreign Pension Benefits			Other Postretirement Benefits
Net actuarial loss (gain)	$	1,763	$	784		$	(109	)
Prior service cost (credit)		52		(324	)		(1,607	)
	$	1,815	$	460		$	(1,716	)

Investment Policies and Strategies

The investment policies and strategies are determined and monitored by the Board of Directors for the U.S. pension plans and by the Trustees (as appointed by UES-UK and the employees of UES-UK) for the UES-UK pension plan, each of whom employ their own investment managers to manage the plan’s assets in accordance with the policy guidelines. The foreign pension plans of Åkers are unfunded. In 2017, the U.S defined benefit pension plans adopted a glide-path strategy whereby target asset allocations are rebalanced based on projected payment obligations and the funded status of the plans. Pension assets of the UES-UK plan are invested with the objective of maximizing long-term returns while minimizing material losses to meet future benefit obligations as they become due. Investments in equity securities are primarily in common stocks of publicly traded U.S. and international companies across a broad spectrum of industry sectors. Investments in fixed-income securities are principally A-rated or better bonds with maturities of less than ten years, preferred stocks and convertible bonds. The Corporation believes there are no significant concentrations of risk associated with the Plans’ assets.

Attempts to minimize risk include allowing temporary changes to the allocation mix in response to market conditions, diversifying investments among asset categories (e.g., equity securities, fixed-income securities, alternative investments, cash and cash equivalents) and within these asset categories (e.g., economic sector, industry, geographic distribution, size) and consulting with independent financial and legal counsels to assure that the investments and their expected returns and risks are consistent with the goals of the Board of Directors or Trustees.

With respect to the U.S. pension plans, the following investments are prohibited unless otherwise approved by the Board of Directors: stock of the Corporation, futures and options except for hedging purposes, unregistered or restricted stock, warrants, margin trading, short-selling, real estate excluding public or real estate partnerships, and commodities including art, jewelry and gold. The foreign pension plan invests in specific funds. Any investments other than those specifically identified would be considered prohibited.

The following summarizes target asset allocations (within +/-5% considered acceptable) and major asset categories. Certain investments are classified differently for target asset allocation purposes and external reporting purposes. Adoption of the glide-path strategy in 2017 did not result in any significant changes to the target asset allocations. In December 2016, the Corporation changed investment managers for the legacy plan; accordingly, there was temporarily a higher amount in cash and cash equivalents.

	U.S. Pension Benefits									Foreign Pension Benefits
	Target Allocation			Percentage of Plan Assets						Target Allocation			Percentage of Plan Assets
	Dec. 31, 2017			2017			2016			Dec. 31, 2017			2017			2016
Equity Securities		60	%		58	%		47	%		44	%		49	%		48	%
Fixed-Income Securities		20	%		21	%		21	%		35	%		33	%		34	%
Alternative Investments		15	%		16	%		8	%		21	%		17	%		18	%
Other (primarily cash and cash equivalents)		5	%		5	%		24	%		0	%		1	%		0	%

Fair Value Measurement of Plan Assets

Equity securities, exchange-traded funds and mutual funds are actively traded on exchanges and price quotes for these investments are readily available. Similarly, fixed-income mutual funds consist of debt securities of U.S. and U.K. corporations and price quotes for these investments are readily available. Commingled funds are not traded publicly, but the underlying assets (such as stocks and bonds) held in these funds are traded on active markets and the prices for the underlying assets are readily observable. For securities not actively traded, the fair value may be based on third-party appraisals, discounted cash flow analysis, benchmark yields and inputs that are currently observable in markets for similar securities.

Investment Strategies

The significant investment strategies of the various funds are summarized below.

Fund	Investment Strategy	Primary Investment Objective
Temporary Investment Funds	Invests primarily in a diversified portfolio of investment grade money market instruments.	Achieve a market level of current income while maintaining stability of principal and liquidity.
Various Equity Funds	Each fund maintains a diversified holding in common stock of applicable companies (e.g., common stock of small capitalization companies if a small-cap fund, common stock of medium capitalization companies if a mid-cap fund, common stock of foreign corporations if an international fund, etc.).	Outperform the fund’s related index.
Various Fixed Income Funds	Invests primarily in a diversified portfolio of fixed-income securities of varying maturities or in commingled funds which invest in a diversified portfolio of fixed-income securities of varying maturities.	For the U.S. Plans – to achieve a rate of return that matches or exceeds the expected growth in plan liabilities. For the Foreign Plan – to outperform the applicable FTSE index over a prescribed period.
Alternative Investments – Managed Funds	Invests in equities and equity-like asset classes and strategies (such as public equities, venture capital, private equity, real estate, natural resources and hedged strategies) and fixed-income securities approved by the Board of Directors of the Corporation.	Generate a minimum annual inflation adjusted return of 5% and outperform a traditional 70/30 equities/bond portfolio.
Alternative Investments – Hedge and Absolute Return Funds	Invests in a diversified portfolio of alternative investment styles and strategies.	Generate long-term capital appreciation while maintaining a low correlation with the traditional global financial markets.

Categories of Plan Assets

Asset categories based on the nature and risks of the U.S. Pension Benefit Plans’ assets as of December 31, 2017, are summarized below.

	Quoted Prices in Active Markets for Identical Inputs (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity Securities:
U.S.
Consumer discretionary	$	637	$	0	$	0	$	637
Consumer staples		896		0		0		896
Energy		427		0		0		427
Financial		1,362		0		0		1,362
Healthcare		1,192		0		0		1,192
Industrials		819		0		0		819
Information technology		2,061		0		0		2,061
Materials		248		0		0		248
Mutual funds		91,258		0		0		91,258
Telecommunications		198		0		0		198
Utilities		204		0		0		204
Total Equity Securities		99,302		0		0		99,302
Fixed Income Securities:
Corporate bonds		0		10,801		0		10,801
Mutual funds		18,884		0		0		18,884
Treasury bonds		6,976		0		0		6,976
Agency bonds		0		926		0		926
Total Fixed Income Securities		25,860		11,727		0		37,587
Alternative Investments:
Managed funds^(a)		0		0		49,838		49,838
Total Alternative Investments		0		0		49,838		49,838
Other:
Cash and cash equivalents^(b)		11,012		0		0		11,012
Commingled funds		0		174		0		174
Other^(c)		2		0		1,223		1,225
Total Other		11,014		174		1,223		12,411
	$	136,176	$	11,901	$	51,061	$	199,138

(a)	Includes approximately 47.3% in equity and equity-like asset securities, 41.1% in alternative investments (real assets, commodities and resources, absolute return funds) and 9.6% in fixed income securities and 2.0% in other, primarily cash and cash equivalents.

(b)	Includes investments in temporary funds.

(c)	Includes accrued receivables and pending broker settlements.

Categories of Plan Assets

Asset categories based on the nature and risks of the U.S. Pension Benefit Plans’ assets as of December 31, 2016, are summarized below.

	Quoted Prices in Active Markets for Identical Inputs (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity Securities:
U.S.
Bank & financial services	$	631	$	0	$	0	$	631
Capital goods		75		0		0		75
Chemicals		20		0		0		20
Commercial services		16		0		0		16
Electronics		67		0		0		67
Health care		201		0		0		201
Mutual funds		72,571		0		0		72,571
Oil & gas		87		0		0		87
Retail		101		0		0		101
Technology		188		0		0		188
Transportation		18		0		0		18
Wholesale distribution		16		0		0		16
Other (represents 8 business sectors)		211		0		0		211
International
Chemicals		7		0		0		7
Technology		6		0		0		6
Total Equity Securities		74,215		0		0		74,215
Fixed Income Securities:
Mutual funds		36,601		0		0		36,601
Total Fixed Income Securities		36,601		0		0		36,601
Alternative Investments:
Managed funds^(a)		0		0		33,830		33,830
Total Alternative Investments		0		0		33,830		33,830
Other:
Cash and cash equivalents^(b)		27,902		0		0		27,902
Commingled funds		0		154		0		154
Other^(c)		16,020		0		0		16,020
Total Other		43,922		154		0		44,076
	$	154,738	$	154	$	33,830	$	188,722

(a)	Includes approximately 45.9% in equity and equity-like asset securities, 44.5% in alternative investments (real assets, commodities and resources, absolute return funds) and 7.4% in fixed income securities and 2.2% in other, primarily cash and cash equivalents.

(b)	Includes investments in temporary funds.

(c)	Includes accrued receivables and pending broker settlements.

Asset categories based on the nature and risks of the Foreign Pension Benefit Plan’s assets as of December 31, 2017, are summarized below.

	Quoted Prices in Active Markets for Identical Inputs (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity Securities:
Commingled Funds (U.K.)	$	0	$	4,617	$	0	$	4,617
Commingled Funds (International)		0		23,015		0		23,015
Total Equity Securities		0		27,632		0		27,632
Fixed-Income Securities:
Commingled Funds (U.K.)		0		18,851		0		18,851
Alternative Investments:
Hedge and Absolute Return Funds		0		0		9,637		9,637
Cash and cash equivalents		299		0		0		299
	$	299	$	46,483	$	9,637	$	56,419

Asset categories based on the nature and risks of the Foreign Pension Benefit Plan’s assets as of December 31, 2016, are summarized below.

	Quoted Prices in Active Markets for Identical Inputs (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equity Securities:
Commingled Funds (U.K.)	$	0	$	3,716	$	0	$	3,716
Commingled Funds (International)		0		19,146		0		19,146
Total Equity Securities		0		22,862		0		22,862
Fixed-Income Securities:
Commingled Funds (U.K.)		0		16,426		0		16,426
Alternative Investments:
Hedge and Absolute Return Funds		0		0		8,593		8,593
Cash and cash equivalents		174		0		0		174
	$	174	$	39,288	$	8,593	$	48,055

The table below sets forth a summary of changes in the fair value of the Level 3 plan assets for U.S. and foreign pension plans for the year ended December 31, 2017.

	Alternative Investments
	U.S. Pension Benefits			Foreign Pension Benefits
Fair value as of January 1, 2017	$	33,830		$	8,593
Contributions		16,000			0
Withdrawals		(5,364	)		0
Realized gains		1,304			0
Change in net unrealized gains		4,068			229
Other, primarily impact from changes in foreign currency exchange rates		0			815
Fair value as of December 31, 2017	$	49,838		$	9,637

The table below sets forth a summary of changes in the fair value of the Level 3 plan assets for U.S. and foreign pension plans for the year ended December 31, 2016.

	Alternative Investments
	U.S. Pension Benefits						Foreign Pension Benefits
Fair value as of January 1, 2016	$	4,967		$	32,210		$	10,571
Withdrawals		(4,967	)		0			0
Realized gains		0			1,857			0
Change in net unrealized losses		0			(237	)		(280	)
Other, primarily impact from changes in foreign currency exchange rates		0			0			(1,698	)
Fair value as of December 31, 2016	$	0		$	33,830		$	8,593

Net Periodic Pension and Other Postretirement Benefit Costs

The actual return on the fair value of plan assets is included in determining the funded status of the plans. In determining net periodic pension costs, the expected long-term rate of return on the market-related value of plan assets is used. Differences between the actual return on plan assets and the expected long-term rate of return on plan assets are classified as part of unrecognized actuarial gains or losses and are recorded as a component of accumulated other comprehensive loss on the consolidated balance sheet. When these gains or losses exceed 10% of the greater of the projected benefit obligation or the market-related value of plan assets, they are amortized to net periodic pension and other postretirement costs over the average remaining service period or life expectancy of the employees expected to receive benefits under the plans. When the gains or losses are less than 10% of the greater of the projected benefit obligation or the market-related value of plan assets, they are included in net periodic pension and other postretirement costs indirectly as a result of lower/higher interest costs arising from a decrease/increase in the projected benefit obligation.

Net periodic pension and other postretirement benefit costs include the following components for the year ended December 31:

	U.S. Pension Benefits									Foreign Pension Benefits									Other Postretirement Benefits
	2017			2016			2015			2017			2016			2015			2017			2016			2015
Service cost	$	1,651		$	1,714		$	2,743		$	150		$	314		$	0		$	492		$	504		$	384
Interest cost		8,413			9,977			7,990			1,845			2,250			2,394			571			722			474
Expected return on plan assets		(12,503	)		(13,424	)		(10,996	)		(2,239	)		(2,461	)		(2,681	)		0			0			0
Amortization of:
Prior service cost (credit)		52			44			371			0			0			0			(1,607	)		(1,277	)		(672	)
Actuarial loss (gain)		4,111			3,324			5,440			751			670			845			(24	)		36			26
Curtailment (gain) loss		0			(887	)		1,303			0			0			0			0			0			0
	$	1,724		$	748		$	6,851		$	507		$	773		$	558		$	(568	)	$	(15	)	$	212

Assumptions

Assumptions are reviewed on an annual basis. The expected long-term rate of return on plan assets is an estimate of average rates of earnings expected to be earned on funds invested or to be invested to provide for the benefits included in the projected benefit obligation. Since these benefits will be paid over many years, the expected long-term rate of return is reflective of current investment returns and investment returns over a longer period. Consideration is also given to target and actual asset allocations, inflation and real risk-free return. The discount rates used in determining future pension obligations and other postretirement benefits for each of the plans are based on rates of return on high-quality fixed-income investments currently available and expected to be available during the period to maturity of the pension and other postretirement benefits. High-quality fixed-income investments are defined as those investments which have received one of the two highest ratings given by a recognized rating agency with maturities of 10+ years.

The discount rates and weighted-average wage increases used to determine the benefit obligations as of December 31, 2017, and 2016, are summarized below.

	U.S. Pension Benefits		Foreign Pension Benefits		Other Postretirement Benefits
	2017	2016	2017	2016	2017	2016
Discount rate	3.63-3.72%	4.02-4.25%	2.45%	2.50-2.65%	3.46-3.69%	3.90-4.13%
Wage increases	3.00%	3.00%	n/a	n/a	n/a	n/a

In addition, the assumed health care cost trend rate at December 31, 2017, for other postretirement benefits is 6% for 2018 gradually decreasing to 4.75% in 2020. In selecting rates for current and long-term health care assumptions, the Corporation considers known health care cost increases, the design of the benefit programs, the demographics of its active and retiree populations and expectations of inflation rates in the future. A one percentage point increase or decrease in the assumed health care cost trend rate would result in an inconsequential change to the postretirement benefit obligation at December 31, 2017, and the annual benefit expense for 2017.

The following assumptions were used to determine net periodic pension and other postretirement benefit costs for the year ended December 31:

	U.S. Pension Benefits			Foreign Pension Benefits			Other Postretirement Benefits
	2017	2016	2015	2017	2016	2015	2017	2016	2015
Discount rate	4.02-4.25%	4.20-4.40%	4.00-4.10%	2.50-2.65%	3.00-3.65%	3.50%	3.90-4.13%	3.80-4.20%	4.00%
Expected long-term rate of return	6.95-7.50%	6.90-7.75%	8.00%	4.45%	5.40%	5.40%	n/a	n/a	n/a
Wages increases	3.00%	3.00%	4.00%	n/a	n/a	n/a	n/a	n/a	n/a