Defined Benefit Plan

San Jose Water Company sponsors a noncontributory defined benefit pension plan for its eligible employees. Employees hired before March 31, 2008 are entitled to receive retirement benefits using a formula based on the employee's three highest years of compensation (whether or not consecutive). For employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee. Officers hired before March 31, 2008 are eligible to receive additional retirement benefits under the Executive Supplemental Retirement Plan, and officers hired on or after March 31, 2008 are eligible to receive additional retirement benefits under the Cash Balance Executive Supplemental Retirement Plan. Both plans are non-qualified plans in which only officers and other designated members of management may participate. The Company also provides health care and life insurance benefits for retired employees under the San Jose Water Company Social Welfare Plan. The components of net periodic benefit costs for San Jose Water Company's pension plan, its Executive Supplemental Retirement Plan, Cash Balance Executive Supplemental Retirement Plan and Social Welfare Plan for the three months ended March 31, 2014 and 2013 are as follows:



	Three months ended March 31,
	2014			2013
Service cost	$	1,059		1,239
Interest cost	1,651			1,475
Other cost	632			1,208
Expected return on assets	(1,667		)	(1,380	)
	$	1,675		2,542

The following tables summarize the fair values of plan assets by major categories as of March 31, 2014 and December 31, 2013:



		Fair Value Measurements at March 31, 2014
				Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable Inputs
Asset Category	Benchmark	Total		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents		$	4,191	$	4,191	$	—	$	—
Actively Managed (a):
All Cap Equity	Russell 3000 Value	2,533		2,510		23		—
U.S. Large Cap Equity	Russell 1000, Russell 1000 Growth, Russell 1000 Value	34,283		34,283		—		—
U.S. Mid Cap Equity	Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value	5,627		5,627		—		—
U.S. Small Cap Equity	Russell 2000, Russell 2000 Growth, Russell 2000 Value	3,068		3,068		—		—
Non-U.S. Large Cap Equity	MSCI EAFE	5,005		5,005		—		—
REIT	NAREIT - Equity REIT'S	4,325		—		4,325		—
Fixed Income (b)	(b)	36,528		—		36,528		—
Total		$	95,560	$	54,684	$	40,876	$	—

The Plan has a current target allocation of 55% invested in a diversified array of equity securities to provide long-term capital appreciation and 45% invested in a diversified array of fixed income securities to provide preservation of capital plus generation of income.


(a)	Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.


(b)	Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.



		Fair Value Measurements at December 31, 2013
				Quoted Prices in Active Markets for Identical Assets		Significant Observable Inputs		Significant Unobservable Inputs
Asset Category	Benchmark	Total		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents		$	9,127	$	9,127	$	—	$	—
Actively Managed (a):
All Cap Equity	Russell 3000 Vaue	283		266		17		—
U.S. Large Cap Equity	Russell 1000, Russell 1000 Growth, Russell 1000 Value	32,286		32,286		—		—
U.S. Mid Cap Equity	Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value	5,551		5,551		—		—
U.S. Small Cap Equity	Russell 2000, Russell 2000 Growth, Russell 2000 Value	3,236		3,236		—		—
Non-U.S. Large Cap Equity	MSCI EAFE	5,066		5,066		—		—
REIT	NAREIT - Equity REIT'S	3,913		—		3,913		—
Fixed Income (b)	(b)	35,891		—		35,891		—
Total		$	95,353	$	55,532	$	39,821	$	—


(a)	Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.


(b)	Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.

In 2014, San Jose Water Company expects to make required and discretionary cash contributions of up to $7,800 to the pension plans and Social Welfare Plan. There have been no contributions to the pension plans and Social Welfare Plan for the three months ended March 31, 2014.