Webster Bank offered a defined benefit noncontributory pension plan through December 31, 2007 for eligible employees who met certain minimum service and age requirements. Pension plan benefits are based upon employee earnings during the period of credited service. A supplemental defined benefit retirement plan (SERP) was also offered to certain employees who were at the Executive Vice President level or above through December 31, 2007. The SERP provides eligible participants with additional pension benefits. Webster Bank also provides other postretirement healthcare benefits to certain retired employees.

The Webster Bank Pension Plan and the SERP were frozen as of December 31, 2007. No additional benefits have been accrued since that time. Employees hired on or after January 1, 2007 receive no qualified or supplemental retirement income under the plans. All other employees accrue no additional qualified or supplemental retirement income after January 1, 2008, and the amount of their qualified and supplemental retirement income will not exceed the amount of benefits determined as of December 31, 2007.

The mortality assumptions used in the pension liability assessment for the year ended December 31, 2017 were the RP-2014 adjusted to 2006 dataset mortality table projected to measurement date with Mercer's mortality improvement scale MMP-2017.



	Pension Plan						SERP						Other Benefits
(In thousands)	2017			2016			2017			2016			2017			2016
Change in benefit obligation:
Beginning balance	$	211,508		$	203,645		$	11,806		$	10,518		$	3,852		$	3,853
Service cost	50			45			—			—			—			—
Interest cost	7,314			8,441			375			389			92			125
Actuarial loss (gain)	18,396			6,108			1,037			1,023			(631		)	59
Benefits paid and administrative expenses	(7,950		)	(6,731		)	(122		)	(124		)	(219		)	(185		)
Ending balance ⁽¹⁾	229,318			211,508			13,096			11,806			3,094			3,852
Change in plan assets:
Beginning balance	192,922			161,369			—			—			—			—
Actual return on plan assets	31,253			18,284			—			—			—			—
Employer contributions	—			20,000			122			124			219			185
Benefits paid and administrative expenses	(7,950		)	(6,731		)	(122		)	(124		)	(219		)	(185		)
Ending balance	216,225			192,922			—			—			—			—
Funded status of the plan at year end ⁽²⁾	$	(13,093	)	$	(18,586	)	$	(13,096	)	$	(11,806	)	$	(3,094	)	$	(3,852	)



	Pension Plan				SERP				Other Benefits
(In thousands)	2017		2016		2017		2016		2017			2016
Net actuarial loss (gain)	$	59,433	$	65,857	$	3,299	$	3,009	$	(16	)	$	616
Prior service cost	—		—		—		—		—			—
Total pre-tax amounts included in AOCL	59,433		65,857		3,299		3,009		(16		)	616
Deferred tax benefit	13,407		23,727		744		1,084		(3		)	222
Amounts included in accumulated AOCL, net of tax	$	46,026	$	42,130	$	2,555	$	1,925	$	(13	)	$	394



(In thousands)	Pension Plan		SERP		Other Benefits
2018	$	9,009	$	11,371	$	354
2019	8,630		130		342
2020	9,065		132		328
2021	9,792		132		311
2022	10,425		131		292
2023-2027	55,206		651		1,125

The components of the net periodic benefit cost (benefit) for the defined benefit pension and other postretirement benefits were as follows for the years ended December 31:



	Pension Plan									SERP						Other Benefits
(In thousands)	2017			2016			2015			2017		2016		2015		2017		2016		2015
Service cost	$	50		$	45		$	45		$	—	$	—	$	—	$	—	$	—	$	—
Interest cost on benefit obligations	7,314			8,441			8,008			375		389		345		92		125		123
Expected return on plan assets	(12,296		)	(11,461		)	(11,873		)	—		—		—		—		—		—
Amortization of prior service cost	—			—			—			—		—		—		—		14		73
Recognized net loss	5,864			6,665			5,724			748		426		390		—		35		47
Net periodic benefit cost (benefit)	$	932		$	3,690		$	1,904		$	1,123	$	815	$	735	$	92	$	174	$	243

Changes in funded status related to the defined benefit pension and other postretirement benefits and recognized as a component of OCI in the accompanying Consolidated Statements of Comprehensive Income as follows for the years ended December 31:



	Pension Plan									SERP									Other Benefits
(In thousands)	2017			2016			2015			2017			2016			2015			2017			2016			2015
Net (gain) loss	$	(561	)	$	(715	)	$	8,525		$	1,037		$	1,023		$	372		$	(631	)	$	60		$	(178	)
Amounts reclassified from AOCL	(5,864		)	(6,665		)	(5,724		)	(748		)	(426		)	(390		)	—			(35		)	(47		)
Amortization of prior service cost	—			—			—			—			—			—			—			(14		)	(73		)
Total (gain) loss recognized in OCI	$	(6,425	)	$	(7,380	)	$	2,801		$	289		$	597		$	(18	)	$	(631	)	$	11		$	(298	)

The following is a description of the valuation methodologies used for the pension plan assets measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy:

Registered investment companies. Exchange traded funds are quoted at market prices in an exchange and active market, which represent the net asset values of shares held by the plan at year end. Money market funds are shown at cost, which approximates fair value. The exchange traded fund is benchmarked against the Standard & Poor's 500 Index.

Common collective trust funds. The net asset value (NAV), as provided by the trustee, is used as the fair value of the investments. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. Plan transactions (purchases and sales) may occur daily. Were the Plan to initiate a full redemption of the collective trust, the investment adviser reserves the right to temporarily delay withdrawal from the trust in order to ensure that securities liquidations will be carried out in an orderly business manner. The common collective trust funds performance are benchmarked against the Standard and Poor’s 500 Stock Index, the S&P 400 Mid Cap Index, the Russell 2000 Index, the MSCI ACWI ex U.S. Index, and the Barclays Capital U.S. Long Credit Index.

Investment contract with insurance company. These investments are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer. Holdings of insurance company investment contracts are classified as Level 3 investments.



	At December 31,
	2017								2016
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Registered investment companies:
Exchange traded funds	$	37,848	$	—	$	—	$	37,848	$	31,526	$	—	$	—	$	31,526
Cash and cash equivalents	1,115		—		—		1,115		701		—		—		701
Common collective trust funds:
Fixed Income funds	—		107,430		—		107,430		—		96,429		—		96,429
Equity Funds	—		69,832		—		69,832		—		63,285		—		63,285
Insurance company investment contract	—		—		—		—		—		—		793		793
Total	$	38,963	$	177,262	$	—	$	216,225	$	32,227	$	159,714	$	793	$	192,734



	Years ended December 31,
(In thousands)	2017			2016
Beginning balance	$	793		$	934
Employer contributions	78			—
Unrealized gains relating to instruments still held at the reporting date	—			(10		)
Benefit payments, administrative expenses	(166		)	(131		)
Asset sales	(705		)	—
Ending balance	$	—		$	793

The Retirement Plan Committee is a fiduciary under ERISA and is charged with the responsibility for directing and monitoring the investment management of the pension plan. To assist the Retirement Plan Committee in this function, it engages the services of investment managers and advisors who possess the necessary expertise to manage the pension plan assets within the established investment policy guidelines and objectives. The investment policy guidelines and objectives is reviewed at a minimum annually by the Retirement Plan Committee.

The primary objective of the pension plan investment strategy is to provide long-term total return through capital appreciation and dividend and interest income. The Plan invests in registered investment companies and bank collective trusts. The volatility, as measured by standard deviation, of the pension plan assets should not exceed that of the Composite Index. The investment policy guidelines allow the pension plan assets to be invested in certain types of cash equivalents, fixed income securities, equity securities, mutual funds, and collective trusts. Investments in mutual funds and collective trust funds are substantially limited to funds with the securities characteristic of their assigned benchmarks.

The pension plan investment strategy is designed to maintain a diversified portfolio, with a target average long-term rate of 6.50%, however, there is no certainty that the portfolio will perform to expectations. Asset allocations are monitored monthly, and the portfolio is rebalanced as needed.



	Pension Plan						SERP						Other Benefits
	2017		2016		2015		2017		2016		2015		2017		2016		2015
Discount rate	4.01	%	4.20	%	3.85	%	3.63	%	3.75	%	3.50	%	3.27	%	3.35	%	3.15	%
Expected long-term return on assets	6.50	%	7.00	%	7.00	%	n/a		n/a		n/a		n/a		n/a		n/a
Rate of compensation increase	n/a		n/a		n/a		n/a		n/a		n/a		n/a		n/a		n/a
Assumed healthcare cost trend	n/a		n/a		n/a		n/a		n/a		n/a		7.50	%	8.25	%	8.00	%

The assumed healthcare cost-trend rate is 7.50% for 2017 and 2018, declining 1.0% each year thereafter until 2024 when the rate will be 4.60%. An increase of 1.0% in the assumed healthcare cost-trend rate for 2017 would have increased the net periodic postretirement benefit cost by $5 thousand and increased the accumulated benefit obligation by $148 thousand. A decrease of 1.0% in the assumed healthcare cost trend rate for 2017 would have decreased the net periodic postretirement benefit cost by $5 thousand and decreased the accumulated postretirement benefit obligation by $134 thousand.

Webster Bank, for the benefit of former employees of a bank acquired by the Company, is a sponsor of a multiple-employer pension plan that does not segregate the assets or liabilities of its employers participating in the plan. According to the plan administrator, as of July 1, 2017, the date of the latest actuarial valuation, Webster Bank’s portion of this plan was under-funded by $0.8 million.

The following table sets forth contributions and funding status of Webster Bank's portion of this plan:



(Dollars in thousands)			Contributions by Webster Bank for the year ended December 31,			Funded Status of the Plan at December 31,
Plan Name	Employer Identification Number	Plan Number	2017	2016	2015	2017	2016
Pentegra Defined Benefit Plan for Financial Institutions	13-5645888	333	$614	$690	$340	At least 80 percent	At least 80 percent

Multi-employer accounting is applied to the Fund. As a multiple-employer pension plan, there are no collective bargained contracts affecting its contribution or benefit provisions. Any shortfall amortization basis is being amortized over seven years, as required by the Pension Protection Act. All benefit accruals were frozen as of September 1, 2004. The Company's contributions to this plan did not exceed more than 5% of total contributions in the plan for the years ended December 31, 2017, 2016, and 2015.

Webster Bank provides an employee retirement savings plan governed by section 401(k) of the Internal Revenue Code. Webster Bank matches 100% of the first 2% and 50% of the next 6% of employees’ pre-tax contributions based on annual compensation. If a participant fails to make a pre-tax contribution election within 90 days of his or her date of hire, automatic pre-tax contributions will commence 90 days after his or her date of hire at a rate equal to 3% of compensation.