EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Sep. 30, 2016

Estimated funded status of these frozen defined benefit plans

The following table sets forth the estimated funded status of these frozen defined benefit plans and the amounts recognized by Sevcon:

(in thousands of dollars)
	2016			2015
Change in benefit obligation:
Benefit obligation at beginning of year	$	31,090		$	30,646
Interest cost		1,141			1,236
Actuarial loss		8,267			1,540
Benefits paid		(2,404	)		(437	)
Foreign currency exchange rate changes		(4,304	)		(1,895	)
Benefit obligation at end of year		33,790			31,090
Change in plan assets:
Fair value of plan assets at beginning of year	$	20,127		$	21,117
Return on plan assets		6,660			22
Employer contributions		624			662
Benefits paid		(2,404	)		(437	)
Foreign currency exchange rate changes		(2,728	)		(1,237	)
Fair value of plan assets at end of year		22,279			20,127
Funded status		(11,511	)		(10,963	)
Liability for pension benefits recorded in the balance sheet	$	(11,511	)	$	(10,963	)

Amounts recognized in balance sheet

Amounts recognized in the consolidated balance sheets consist of:

(in thousands of dollars)
	2016		2015
Non-current liabilities	$	11,511	$	10,963

Amounts recognized in other comprehensive loss

Amounts recognized in other comprehensive loss consist of:

(in thousands of dollars)
	2016			2015
Actuarial loss, net of $354 tax benefit (2015:actuarial loss net of $644 tax benefit)	$	(1,420	)	$	(1,857	)

Components of the net pension cost

The Sevcon net periodic pension cost included the following components:

(in thousands of dollars)
	2016			2015
Components of net periodic benefit cost:
Interest cost	$	1,141		$	1,236
Expected return on plan assets		(1,104	)		(1,250	)
Settlement cost		529			-
Amortization of net actuarial loss		365			264
Net periodic benefit cost	$	931		$	250
Net cost of defined contribution plans	$	505		$	494

Weighted average assumptions used to determine plan obligations and net periodic benefit cost

The weighted average assumptions used to determine plan obligations and net periodic benefit cost for the years ended September 30, 2016 and 2015 were as set out below:

	2016			2015
Plan obligations:
Discount rate		2.59	%		3.90	%
Net periodic benefit cost:
Discount rate		2.59	%		3.90	%
Expected long term return on plan assets		4.81	%		5.73	%

Assumptions regarding mortality tables and estimated retirement dates.

The assumptions regarding mortality tables and estimated retirement dates were as follows:

	2016	2015

Retirement age – U.K. Plan	65	65

Retirement age – U.S. Plan	65	65

Post-retirement mortality tables – U.K. Plan	105% of the S1PXA birth year tables with the latest CMI projections (CMI 2015) and a 1.0% p.a. long-term future improvement rate	105% of the S1PXA birth year tables with the latest CMI projections and a 1.0% p.a. long-term future improvement rate

Post-retirement mortality tables – U.S. Plan	RP-2014 White Collar Annuitant with MP-2015 Generational Projection (M/F)	RP-2014 White Collar Annuitant with MP-2014 Generational Projection (M/F)

Pre-retirement mortality tables – U.K. Plan	None	None

Pre-retirement mortality tables – U.S. Plan	RP-2014 White Collar Employee with MP-2015 Generational Projection (M/F)	RP-2014 White Collar Employee with MP-2014 Generational Projection (M/F)

Pension plan assets measured and recorded at fair value

The tables below present information about our plan assets measured and recorded at fair value as of September 30, 2016 and September 30, 2015, and indicates the fair value hierarchy of the inputs utilized by the Company to determine the fair values (see Fair value measurements in Note 1).

(in thousands of dollars)
2016	Level 1* (Quoted prices in active markets)		Level 2** (Significant observable inputs)		Level 3*** (Unobservable inputs)
Adept Strategy 9 Fund (a sub-fund of Adept Investment Management plc)		-		13,268		-
Schroder Matching Plus Nominal and Index Linked Liability Driven Investment Swap Funds (funds managed by Schroder Investment Management Limited)		-		5,335		-
U.S. Mutual Funds and Fixed Income Funds		2,837		-		-
U.S. Equity Funds		400		-		-
Other Types of Investments
Cash		439		-		-
Total		3,676		18,603		-

(in thousands of dollars)
2015	Level 1* (Quoted prices in active markets)		Level 2** (Significant observable inputs)		Level 3*** (Unobservable inputs)
Adept Strategy 9 Fund ( a sub-fund of Adept Investment Management plc)		-		13,044		-
Schroder Matching Plus Nominal and Index Linked Liability Driven Investment Swap Funds (funds managed by Schroder Investment Management Limited)		-		3,845		-
U.S. Mutual Funds and Fixed Income Funds		2,557		-		-
U.S. Equity Funds		350		-		-
Other Types of Investments
Cash		331		-		-
Total		3,238		16,889		-

*	Level 1 investments represent mutual funds for which a quoted market price is available on an active market. These investments primarily hold stocks or bonds, or a combination of stocks and bonds.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The Company’s pension plan financial assets held in the Adept Strategy 9 Fund and the Schroder investments are Level 2 assets. The Company uses the Net Asset Value to determine the fair value of underlying investments which (a) do not have readily determinable fair value; and (b) prepare their financial statements consistent with the measurement principles of an investment company. The Funds are not exchange traded. The Funds are not subject to any redemption notice periods or restrictions and can be redeemed on a daily basis. No gates or holdbacks or dealing suspensions are being applied to the Funds. The Funds are of perpetual duration.

***	The Company currently does not have any Level 3 pension plan financial assets.

Estimated future benefit payments

The following estimated benefit payments, which reflect future service, as appropriate, are expected to be paid:

(in thousands of dollars)
2017	$	470
2018		488
2019		494
2020		502
2021		499
2022 – 2026		2,722