PENSION AND OTHER POSTRETIREMENT PLANS – The Company has defined benefit pension plans that are principally noncontributory and cover most full-time employees. All pension plans are funded except for the U.S. and Canadian nonqualified supplemental plans and the U.S. directors’ plan. All U.S. tax qualified plans meet the funding requirements of federal laws and regulations. Contributions to foreign plans are based on local laws and tax regulations. The Company also sponsors health care and life insurance benefit plans, which are not funded, that cover most retired U.S. employees. The health care benefits are contributory; the life insurance benefits are noncontributory.

The tables that follow provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets for the years ended December 31, 2019 and 2018 and a statement of the funded status as of December 31, 2019 and 2018.



	Pension Benefits					Other Postretirement Benefits
(Thousands of dollars)	2019			2018		2019		2018
Change in benefit obligation
Obligation at January 1	$	777,645		881,932		94,779		106,276
Service cost	7,964			8,994		1,559		1,965
Interest cost	27,835			26,168		3,864		3,427
Participant contributions	11			—		1,930		2,104
Actuarial loss (gain)	103,374			(57,378	)	10,503		(13,778	)
Medicare Part D subsidy	—			—		234		325
Exchange rate changes	7,687			(12,742	)	30		(67	)
Benefits paid	(41,247		)	(41,132	)	(4,498	)	(5,473	)
Prior Service Cost	—			737		—		—
Other	—			(28,934	)	—		—
Obligation at December 31	883,269			777,645		108,401		94,779
Change in plan assets
Fair value of plan assets at January 1	487,094			563,825		—		—
Actual return on plan assets	70,893			(18,951	)	—		—
Employer contributions	25,915			24,357		2,333		3,044
Participant contributions	11			—		1,930		2,104
Medicare Part D subsidy	—			—		234		325
Exchange rate changes	7,328			(12,071	)	—		—
Benefits paid	(41,247		)	(41,132	)	(4,497	)	(5,473	)
Other	(2,510		)	(28,934	)	—		—
Fair value of plan assets at December 31	547,484			487,094		—		—
Funded status and amounts recognized in the Consolidated Balance Sheets at December 31
Deferred charges and other assets	5,353			11,039		—		—
Other accrued liabilities	(8,810		)	(9,175	)	(5,234	)	(5,101	)
Deferred credits and other liabilities	(332,328		)	(292,415	)	(103,167	)	(89,678	)
Fund Status and net plan liability recognized at December 31	$	(335,785	)	(290,551	)	(108,401	)	(94,779	)



	Projected Benefit Obligations			Accumulated Benefit Obligations		Fair Value of Plan Assets
(Thousands of dollars)	2019		2018	2019	2018	2019	2018
Funded qualified plans where accumulated benefit obligation exceeds fair value of plan assets	$	688,249	457,446	676,177	447,793	525,108	316,543
Unfunded nonqualified and directors’ plans where accumulated benefit obligation exceeds fair value of plan assets	177,999		158,228	171,934	150,586	—	—
Unfunded other postretirement plans	108,401		94,808	108,401	94,808	—	—



	Pension Benefits							Other Postretirement Benefits
(Thousands of dollars)	2019			2018		2017		2019		2018		2017
Service cost	$	7,964		8,994		8,279		1,559		1,965		1,601
Interest cost	27,835			26,168		27,047		3,864		3,427		3,444
Expected return on plan assets	(25,719		)	(29,236	)	(28,941	)	—		—		—
Amortization of prior service cost (credit)	964			1,021		1,026		—		(38	)	(74	)
Recognized actuarial loss	14,106			21,893		16,691		(193	)	—		—
Net periodic benefit expense	$	25,150		28,840		24,102		5,230		5,354		4,971



	Benefit Obligations								Net Periodic Benefit Expense
	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	December 31,				December 31,				Year				Year
	2019		2018		2019		2018		2019		2018		2019		2018
Discount rate	3.85	%	4.07	%	3.42	%	3.73	%	3.35	%	3.54	%	4.42	%	4.32	%
Expected return on plan assets	5.05	%	5.37	%	—		—		5.05	%	5.37	%	—		—
Rate of compensation increase	3.28	%	3.28	%	—		—		3.52	%	3.52	%	—		—

The discount rates used for determining the plan obligations and expense are based on the universe of high-quality corporate bonds that are available within each country. Cash flow analyses are performed in which a spot yield curve is used to discount projected benefit payment streams for the most significant plans. The discounted cash flows are used to determine an equivalent single rate which is the basis for selecting the discount rate within each country. Expected plan asset returns are based on long-term expectations for asset portfolios with similar investment mix characteristics. Expected compensation increases are based on anticipated future averages for the Company.

Benefit payments, reflecting expected future service as appropriate, which are expected to be paid in future years from the assets of the plans or by the Company are shown in the following table.



(Thousands of dollars)	Pension Benefits		Other Postretirement Benefits
2020	$	42,399	5,233
2021	43,500		5,360
2022	44,824		5,428
2023	44,850		5,421
2024	45,557		5,505
2025-2030	233,751		27,847

Plan Investments – Murphy Oil Corporation maintains an Investment Policy Statement (Statement) that establishes investment standards related to its funded domestic qualified retirement plan. The Statement specifies that all assets will be held in a Trust sponsored by the Company, which is administrated by a trustee appointed by the Investment Committee (Committee). Members of the Committee are appointed by the Chief Executive Officer of Murphy. The Committee hires Investment Managers to invest trust assets within the guidelines established by the Committee as allowed by the Statement. The investment goals call for a portfolio of assets consisting of equity, fixed income and cash equivalent securities. The primary consideration for investments is the preservation of capital, and investment growth should exceed the rate of inflation. The Committee has directed the asset investment advisors of its benefit plans to maintain a portfolio consisting of both equity and fixed income securities. The Company believes that over time a balanced to slightly heavier weighting of the portfolio in equity securities compared to fixed income securities represents the most appropriate long-term mix for future investment return on assets held by domestic plans.

Generally, no more than 10% of an Investment Manager’s portfolio is to be held in equity securities of any one issuer, and equity securities should have a minimum market capitalization of $100.0 million. Equities held in the trust should be listed on the New York or American Stock Exchanges, principal U.S. regional exchanges, major foreign exchanges or quoted in significant over-the-counter markets. Equity or fixed income securities issued by the Company may not be held in the trust. Fixed income securities include maturities greater than one year to maturity. The fixed income portfolio should not exceed an average maturity of 11 years. The portfolio may include investment grade corporate bonds, issues of the U.S. government, its agencies and government sponsored entities, government agency issued collateralized mortgage backed securities, agency issued mortgage backed securities, municipal bonds, asset backed securities, commercial mortgage backed securities and international and emerging markets bond funds. The Committee routinely reviews the investment performance of Investment Managers.

For the U.K. retirement plan, trustees have been appointed by the wholly-owned subsidiary that sponsors the plan for U.K. employees. The trustees have hired Hewitt Risk Management Services Limited (Manager) as fiduciary investment manager of the plan’s assets. The trustees have adopted a de-risking strategy which permits the Manager discretion to vary the investment allocation as needed to meet a target return. The target return is reduced over time as pre-determined funding level triggers are met in proportion to pension liability changes. As of December 31, 2019, one of seven funding level triggers have been met which led to a reduction in growth assets to more low-risk assets. The plan primarily invests in two funds, the Delegated Growth Fund DGF and the Delegated Liability Fund DLF. The DGF is diversified by style, strategy and asset class by investing with underlying funds that may include equity funds, fixed income funds, debt funds, currency funds, hedge funds, fund of hedge funds and other collective investment schemes covering a broad range of asset classes and strategies. The DLF aims to provide returns in line with the liabilities of typical pension plans on an exposure basis in the relevant tenures and instruments (long/short, real/nominal). The DLF also holds cash as collateral for the leveraged positions along with small working cash balances to facilitate daily management of payments and receipts within the plan. The trustee routinely reviews the investment performance of the plan.

For the Canadian retirement plan, the wholly-owned subsidiary that sponsors the plan has a Statement of Investment Policies and Procedures (Policy) applicable to the plan assets. A pension committee appointed by the board of directors of the subsidiary oversees the plan, selects the investment advisors and routinely reviews performance of the asset portfolio. The Policy permits assets to be invested in various Canadian and foreign equity securities, various fixed income securities, real estate, natural resource properties or participation rights and cash. The objective for plan investments is to achieve a total rate of return equal to the long-term interest rate assumption used for the going-concern actuarial funding valuation.



	Allocation of Plan Assets
	Domestic Plan		Canadian Plan		U.K. Plan
	Target	Allocation at	Target	Allocation at	Target	Allocation at
	Allocation	December 31, 2019	Allocation	December 31, 2019	Allocation	December 31, 2019
Equity securities	40-70%	54.0%	28-38%	34.5%	N/A	59.2%
Fixed income securities	25-60%	27.8%	60-70%	63.5%	N/A	18.4%
Alternatives	0-20%	16.9%	—%	—%	N/A	20.2%
Cash and equivalents	0-15%	1.3%	0-10%	2.0%	N/A	2.2%

The Company’s weighted average expected return on plan assets was 5.51% in 2019 and the return was determined based on an assessment of actual long-term historical returns and expected future returns for a portfolio with investment characteristics similar to that maintained by the plans. The 5.51% expected return was based on an expected average future equity securities return of 6.30% and a fixed income securities return of 3.95% and is net of average expected investment expenses of 0.60%. Over the last 10 years, the return on funded retirement plan assets has averaged 7.56%.

At December 31, 2019, the fair value measurements of retirement plan assets within the fair value hierarchy are included in the table that follows.



			Fair Value Measurements Using
(Thousands of dollars)	Fair Value at December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Domestic Plans
Equity securities:
U.S. core equity	$	63,169	63,169	—	—
U.S. small/midcap	26,062		26,062	—	—
Hedged funds and other alternative strategies	58,864		—	—	58,864
International commingled trust fund	73,783		924	55,798	17,061
Emerging market commingled equity fund	25,911		8,011	17,900	—
Fixed income securities:
U.S. fixed income	88,525		—	88,525	—
International commingled trust fund	8,720		—	8,720	—
Cash and equivalents	4,485		4,485	—	—
Total Domestic Plans	349,519		102,651	170,943	75,925
Foreign Plans
Equity securities funds	68,878		—	68,840	—
Fixed income securities funds	46,582		—	46,390	—
Diversified pooled fund	42,582		—	42,582	—
Other	35,661		—	—	35,661
Cash and equivalents	4,262		—	4,256	—
Total Foreign Plans	197,965		—	162,068	35,661
Total	$	547,484	102,651	333,011	111,586



			Fair Value Measurements Using
(Thousands of dollars)	Fair Value at December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Domestic Plans
Equity securities:
U.S. core equity	$	62,105	62,105	—	—
U.S. small/midcap	19,436		19,436	—	—
Hedged funds and other alternative strategies	45,844		—	10,789	35,055
International commingled trust fund	63,089		—	63,089	—
Emerging market commingled equity fund	15,355		—	15,355	—
Fixed income securities:
U.S. fixed income	87,526		—	87,526	—
International commingled trust fund	13,274		—	13,274	—
Emerging market mutual fund	4,570		—	4,570	—
Cash and equivalents	5,344		5,344	—	—
Total Domestic Plans	316,543		86,885	194,603	35,055
Foreign Plans
Equity securities funds	67,165		—	67,165	—
Fixed income securities funds	89,417		—	89,417	—
Diversified pooled fund	10,762		—	10,762	—
Cash and equivalents	3,207		—	3,207	—
Total Foreign Plans	170,551		—	170,551	—
Total	$	487,094	86,885	365,154	35,055

For domestic plans, U.S. core and small/midcap equity securities are valued based on daily market prices as quoted on national stock exchanges or in the over-the-counter market. Hedge funds and other alternative strategies funds consist of three investments. One of these investments is valued based on daily market prices as quoted on national stock exchanges, another investment is valued monthly based on net asset value and permits withdrawals semi-annually after a 90-day notice, and the third investment is also valued monthly based on net asset values and has a two-year lock-up period and a 95-day notice following the lock-up period. International equities held in a commingled trust are valued monthly based on prices as quoted on various international stock exchanges. The emerging market commingled equity fund is valued monthly based on net asset value. These commingled equity funds can be withdrawn monthly and have a 10-day notice period. U.S. fixed income securities are valued daily based on bids for the same or similar securities or using net asset values. International fixed income securities held in a commingled trust are valued on a monthly basis using net asset values. The fixed income emerging market mutual fund is valued daily based on net asset value. For foreign plans, the equity securities funds are comprised of U.K. and foreign equity funds valued daily based on fund net asset values. Fixed income securities funds are U.K. securities valued daily at net asset values. The diversified pooled fund is valued daily at net asset value and contains a combination of Canadian and foreign equity securities, Canadian fixed income securities and cash.

The effects of fair value measurements using significant unobservable inputs on changes in Level 3 plan assets are outlined below:



(Thousands of dollars)	Hedged Funds and Other Alternative Strategies
Total at December 31, 2017	$	37,950
Actual return on plan assets:
Relating to assets held at the reporting date	(2,921		)
Total at December 31, 2018	35,029
Actual return on plan assets:
Relating to assets held at the reporting date	20,811
Purchases, sales and settlements	55,746
Total at December 31, 2019	$	111,586

THRIFT PLANS – Most full-time U.S. employees of the Company may participate in thrift or similar savings plans by allotting up to a specified percentage of their base pay. The Company matches contributions at a stated percentage of each employee’s allotment based on years of participation in the plans, with a maximum match of 6%. Amounts charged to expense for the Company’s match to these plans were $8.4 million in 2019, $5.2 million in 2018 and $7.8 million in 2017.