RETIREMENT PLANS

The Company sponsors a defined benefit retirement plan, or Benefit Plan, that covers eligible employees hired prior to February 1, 2007. The benefits are based on years of service and the employee’s five-year final average salary. The accounting for the defined benefit plan requires the use of assumptions and estimates in order to calculate periodic benefit cost and the value of the plan's assets and benefit obligation. These assumptions include discount rates, investment returns, and project salary increases, amongst others. The discount rates used in valuing the plan's benefits obligations were determined with reference to high quality corporate and government bonds that are appropriately matched to the duration of the plan's obligation.

Contributions are intended to provide for benefits attributable to service both to date and expected to be provided in the future. The Company funds the plan in accordance with the Employee Retirement Income Security Act of 1974, or ERISA. The Company in April 2017, froze the Benefit Plan as it relates to future benefit accruals for participants. The benefit accrual freeze resulted in an adjustment to the Benefit Plan, improving our other comprehensive loss position by $404,000.

The following table sets forth changes in the plan's net benefit obligation and accumulated benefit information as of December 31:



($ in thousands)	2018			2017
Change in benefit obligation - Pension
Benefit obligation at beginning of year	$	10,099		$	9,905
Service cost	—			15
Interest cost	365			386
Actuarial (gain)/assumption changes	(837		)	1,505
Benefits paid	(221		)	(124		)
Settlements paid	—			(1,588		)
Benefit obligation at end of year	$	9,406		$	10,099
Accumulated benefit obligation at end of year	$	9,406		$	10,099
Change in Plan Assets
Fair value of plan assets at beginning of year	$	7,819		$	6,974
Actual return on plan assets	(505		)	804
Employer contribution	165			165
Benefits/expenses paid	(221		)	(124		)
Fair value of plan assets at end of year	$	7,258		$	7,819
Funded status - liability	$	(2,148	)	$	(2,280	)

Amounts recorded in equity
Net actuarial loss	$	3,162		$	2,973
Total amount recorded	$	3,162		$	2,973
Amount recorded, net taxes	$	2,277		$	1,784

Other changes in plan assets and benefit obligations recognized in other comprehensive income include the following as of December 31:



($ in thousands)	2018			2017
Net loss (gain)	$	253		$	(355	)
Recognition of net actuarial loss	(64		)	(137		)
Recognized prior service cost	—			61
Total changes	$	189		$	(431	)
Changes, net of taxes	$	136		$	(259	)

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year:



Expected return on plan assets	$	522
Interest cost	(389		)
Amortization of net gain/(loss)	(75		)
Net periodic pension benefit/(cost)	$	58

At December 31, 2018 and 2017, the Company had a long-term pension liability. For 2019, the Company is estimating that contributions to the pension plan will be approximately $165,000.

Based on actuarial estimates, it is expected that annual benefit payments from the pension trust will be as follows:



2019		2020		2021		2022		2023		Thereafter
$	274	$	276	$	291	$	294	$	352	$	2,494

Plan assets consist of equity, debt and short-term money market investment funds. The Benefit Plan’s current investment policy changed during the third quarter of 2018. The new policy is an investment strategy in which the primary focus is to minimize the volatility of the funding ratio. This objective will result in a prescribed asset mix between "return seeking" assets (e.g. stocks) and a bond portfolio (e.g., long duration bonds) according to a pre-determined customized investment strategy based on the Plan's Funded Status as the primary input. This path will be used as a reference point as to the mix of assets, which by design will de-emphasize the return seeking portion as funded status improves. At December 31, 2018, the investment mix was approximately 64% equity, 35% debt, and 1% money market funds. At December 31, 2017, the investment mix was approximately 57% equity, 37% debt and 6% money market funds. Equity investments consist of a combination of individual equity securities plus value funds, growth funds, large cap funds and international stock funds. Debt investments consist of U.S. Treasury securities and investment grade corporate debt. The weighted-average discount rate used in determining the periodic pension cost is 4.20% in 2018 and 3.65% in 2017. The expected long-term rate of return on plan assets is 7.5% in 2018 and 2017. The long-term rate of return on plan assets is based on the historical returns within the plan and expectations for future returns. See the following table for fair value hierarchy by investment type at December 31:



($ in thousands)	Fair Value Hierarchy	2018		2017
Pension Plan Assets:
Cash and Cash Equivalents	Level 1	$	95	$	455
Collective Funds	Level 2	7,163		3,942
Treasury/Corporate Notes	Level 2	—		1,583
Corporate Equities	Level 1	—		1,839
Fair value of plan assets		$	7,258	$	7,819

Total pension and retirement expense was as follows for each of the years ended December 31:



($ in thousands)	2018			2017			2016
Cost components:
Service cost	$	—		$	(15	)	$	(223	)
Interest cost	(365		)	(386		)	(406		)
Expected return on plan assets	585			531			517
Net amortization and deferral	(64		)	(122		)	(184		)
Settlement recognition	—			47			—
Total net periodic pension earnings/(cost)	$	156		$	55		$	(296	)

The Company has a Supplemental Executive Retirement Plan, or SERP, to restore to executives designated by the Compensation Committee of the Board of Directors the full benefits under the pension plan that would otherwise be restricted by certain limitations now imposed under the Internal Revenue Code. The SERP is currently unfunded. The Company in April 2017, froze the SERP as it relates to the accrual of additional benefits resulting in a SERP liability adjustment, improving our other comprehensive loss position by $328,000.

The following SERP benefit information is as of December 31:



($ in thousands)	2018			2017
Change in benefit obligation - SERP
Benefit obligation at beginning of year	$	7,759		$	8,015
Interest cost	268			287
Actuarial gain/assumption changes	267			466
Benefits paid	(544		)	(444		)
Curtailments	—			(565		)
Benefit obligation at end of year	$	7,750		$	7,759
Accumulated benefit obligation at end of year	$	7,750		$	7,759
Funded status - liability	$	(7,750	)	$	(7,759	)



($ in thousands)	2018		2017
Amounts recorded in stockholders’ equity
Net actuarial loss (gain)	$	1,978	$	1,935
Total amount recorded	$	1,978	$	1,935
Amount recorded, net taxes	$	1,425	$	1,161

Other changes in benefit obligations recognized in other comprehensive income for 2018 and 2017 included the following components:



($ in thousands)	2018			2017
Net (gain) loss	$	109		$	(101	)
Recognition of net actuarial gain or (loss)	(66		)	(212		)
Total changes	$	43		$	(313	)
Changes, net of taxes	$	31		$	188

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year ($ in thousands):



Interest cost	$	(304	)
Amortization of net (gain)/loss	(62		)
Net periodic pension earnings/(cost)	$	(366	)

Based on actuarial estimates, it is expected that annual SERP benefit payments will be as follows ($ in thousands):



2019		2020		2021		2022		2023		Thereafter
$	527	$	523	$	519	$	514	$	508	$	2,738

The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of projected benefits obligation was 4.05% and 0.0% for 2018, 3.40% and 0.0% for 2017, and 3.90% and 3.50% for 2016. Total pension and retirement expense was as follows for each of the years ended December 31:



($ in thousands)	2018			2017			2016
Cost components:
Interest cost	$	(268	)	$	(287	)	$	(323	)
Net amortization and other	(223		)	(211		)	(343		)
Total net periodic pension earnings/(cost)	$	(491	)	$	(498	)	$	(666	)