Pension and Non-pension Postretirement Benefits

We have pension plans covering the majority of our employees. Benefits generally are based on compensation and service for salaried employees and job grade and length of service for hourly employees. In addition, we have an unfunded supplemental employee retirement plan (SERP) that covers certain salaried U.S.-based employees of Libbey hired before January 1, 2006. The U.S. pension plans cover the salaried U.S.-based employees of Libbey hired before January 1, 2006 and most hourly U.S.-based employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Effective January 1, 2013, we ceased annual company contribution credits to the cash balance accounts in our Libbey U.S. Salaried Pension Plan and SERP. The non-U.S. pension plans cover the employees of our wholly owned subsidiary in Mexico. The plan in Mexico is unfunded.

In the fourth quarter of 2015, we executed an agreement with Pensioenfonds voor de Grafische Bedrijven (“PGB”), an industry wide pension fund, and unwound direct ownership of our defined benefit pension plan in the Netherlands. In accordance with this agreement, we transferred all assets of the plan to PGB, which now assumes the related liabilities and administrative responsibilities of the plan. In 2016, Libbey Holland continues to make cash contributions to PGB as participating employees earn pension benefits. These related costs are expensed as incurred and are excluded from 2016 pension expense below.

The components of our net pension expense, including the SERP, are as follows:



Three months ended September 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2016			2015			2016			2015			2016			2015
Service cost	$	929		$	1,091		$	313		$	741		$	1,242		$	1,832
Interest cost	3,740			3,678			663			1,085			4,403			4,763
Expected return on plan assets	(5,757		)	(5,666		)	—			(608		)	(5,757		)	(6,274		)
Amortization of unrecognized:
Prior service cost	65			104			(53		)	(62		)	12			42
Actuarial loss	1,068			1,823			412			400			1,480			2,223
Pension expense	$	45		$	1,030		$	1,335		$	1,556		$	1,380		$	2,586

Nine months ended September 30,	U.S. Plans						Non-U.S. Plans						Total
(dollars in thousands)	2016			2015			2016			2015			2016			2015
Service cost	$	2,788		$	3,274		$	948		$	2,251		$	3,736		$	5,525
Interest cost	11,222			11,036			2,005			3,295			13,227			14,331
Expected return on plan assets	(17,272		)	(16,996		)	—			(1,844		)	(17,272		)	(18,840		)
Amortization of unrecognized:
Prior service cost	197			313			(160		)	(187		)	37			126
Actuarial loss	3,204			5,468			817			1,215			4,021			6,683
Settlement charge	42			—			170			—			212			—
Pension expense	$	181		$	3,095		$	3,780		$	4,730		$	3,961		$	7,825

We have contributed $0.7 million and $3.1 million of cash into our pension plans for the three months and nine months ended September 30, 2016. Pension contributions for the remainder of 2016 are estimated to be $1.2 million.

We provide certain retiree health care and life insurance benefits covering our U.S. and Canadian salaried employees hired before January 1, 2004 and a majority of our union hourly employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Benefits for most hourly retirees are determined by collective bargaining. The U.S. non-pension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey (excluding those mentioned above). The non-U.S. non-pension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are unfunded.

The provision for our non-pension postretirement benefit expense consists of the following:



Three months ended September 30,	U.S. Plans				Non-U.S. Plans						Total
(dollars in thousands)	2016		2015		2016			2015			2016		2015
Service cost	$	200	$	214	$	—		$	—		$	200	$	214
Interest cost	652		634		11			10			663		644
Amortization of unrecognized:
Prior service cost	35		35		—			—			35		35
Actuarial loss / (gain)	21		148		(10		)	(19		)	11		129
Non-pension postretirement benefit expense	$	908	$	1,031	$	1		$	(9	)	$	909	$	1,022

Nine months ended September 30,	U.S. Plans				Non-U.S. Plans						Total
(dollars in thousands)	2016		2015		2016			2015			2016		2015
Service cost	$	598	$	641	$	1		$	1		$	599	$	642
Interest cost	1,956		1,903		35			39			1,991		1,942
Amortization of unrecognized:
Prior service cost	105		105		—			—			105		105
Actuarial loss / (gain)	61		444		(32		)	(43		)	29		401
Non-pension postretirement benefit expense	$	2,720	$	3,093	$	4		$	(3	)	$	2,724	$	3,090

Our 2016 estimate of non-pension cash payments is $4.0 million, and we have paid $0.9 million and $2.7 million for the three months and nine months ended September 30, 2016.