Pension and Postretirement Plans

As of September 30, 2018, the Company sponsors three noncontributory defined benefit plans and a postretirement health and life insurance plan in Cincinnati ("Cincinnati Plans"), and one noncontributory defined benefit plan, one cash balance pension plan for nonunion employees, and two postretirement health and life insurance plans for Hawaiian Telcom employees ("Hawaii Plans").

Based on current assumptions, contributions to the Cincinnati qualified and non-qualified pension plans in 2018 are expected to be approximately $4 million and $3 million, respectively, and contributions to the Hawaii qualified pension plans in 2018 are expected to be approximately $5 million. Management expects to make cash payments related to the Cincinnati postretirement health plan of approximately $9 million, and cash payments of approximately $0.8 million to the Hawaii postretirement plan in 2018.

For the nine months ended September 30, 2018, contributions to the pension plans were $11.0 million, inclusive of contributions to the Hawaii pension plans of $5.0 million in the three months ended September 30, 2018. For the nine months ended September 30, 2018, contributions to the postretirement plans were $6.2 million, inclusive of contributions to the Hawaii postretirement plan of $0.4 million.

Cincinnati Plans

For the three and nine months ended September 30, 2017, approximately 13% of the costs, respectively, were capitalized as a component of property, plant and equipment related to construction of our copper and fiber networks. In accordance with ASU 2017-07, retrospectively adopted effective January 1, 2018, only the service cost component of net benefit cost is eligible for capitalization on a prospective basis, which was immaterial for the three and nine months ended September 30, 2018.

For the three and nine months ended September 30, 2018 and 2017, pension and postretirement benefit costs (benefits) were as follows:



	Three Months Ended September 30,
	2018			2017			2018			2017
(dollars in millions)	Pension Benefits						Postretirement and Other Benefits
Service cost	$	—		$	—		$	0.1		$	0.1
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation	4.2			4.9			0.8			0.8
Expected return on plan assets	(6.2		)	(6.5		)	—			—
Amortization of:
Prior service benefit	—			—			(0.7		)	(1.2		)
Actuarial loss	4.2			4.3			1.0			1.2
Total amortization	4.2			4.3			0.3			—
Pension / postretirement costs	$	2.2		$	2.7		$	1.2		$	0.9



	Nine Months Ended September 30,
	2018			2017			2018			2017
(dollars in millions)	Pension Benefits						Postretirement and Other Benefits
Service cost	$	—		$	—		$	0.2		$	0.2
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation	12.5			14.6			2.4			2.4
Expected return on plan assets	(18.6		)	(19.5		)	—			—
Amortization of:
Prior service benefit	—			—			(2.3		)	(3.4		)
Actuarial loss	12.7			13.1			3.1			3.5
Total amortization	12.7			13.1			0.8			0.1
Pension / postretirement costs	$	6.6		$	8.2		$	3.4		$	2.7

Amortizations of prior service benefit and actuarial loss represent reclassifications from accumulated other comprehensive income.

Hawaii Plans

Upon completion of the Hawaiian Telcom merger, Cincinnati Bell assumed sponsorship of Hawaiian Telcom's pension plans.

The Company sponsors a defined benefit pension plan, with benefits frozen as of March 1, 2012, and postretirement health and life insurance benefits for union employees. The Company also sponsors a cash balance pension plan for nonunion employees, with benefits frozen as of April 1, 2007, and certain management employees receive postretirement health and life insurance under grandfathered provisions of a formerly active plan.

The following are the weighted-average assumptions used in accounting for and measuring the projected benefit obligations as of the acquisition date:



	Pension Benefits		Postretirement and Other Benefits
	2018		2018
Discount rate	4.14	%	4.22	%

The assumed healthcare cost trend rate used to measure the postretirement health benefit obligation as of the acquisition date is shown below:



	2018
Healthcare cost trend	7.0	%
Rate to which the cost trend is assumed to decline (ultimate trend rate)	5.0	%
Year the rates reach the ultimate trend rate	2026

The following provides the components of benefit costs (income) for the applicable periods (dollars in thousands):



	Three Months Ended September 30, 2018
(dollars in millions)	Pension Benefits			Postretirement and Other Benefits
Service cost	$	—		$	0.2
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation	1.7			0.5
Expected return on plan assets	(2.5		)	—
Pension / postretirement costs	$	(0.8	)	$	0.7