| Pension and Postretirement Benefits | PENSION AND POSTRETIREMENT BENEFITS We sponsor several noncontributory defined benefit pension plans, covering substantially all U.S. employees and certain non-U.S. employees, which provide benefits based on years of service, age, job grade levels and type of compensation. Retirement benefits for all other covered employees are provided through contributory pension plans, cash balance pension plans and government-sponsored retirement programs. All funded defined benefit pension plans receive funding based on independent actuarial valuations to provide for current service and an amount sufficient to amortize unfunded prior service over periods not to exceed 30 years, with funding falling within the legal limits prescribed by prevailing regulation. We also maintain unfunded defined benefit plans that, as permitted by local regulations, receive funding only when benefits become due. Our defined benefit plan strategy is to ensure that current and future benefit obligations are adequately funded in a cost-effective manner. Additionally, our investing objective is to achieve the highest level of investment performance that is compatible with our risk tolerance and prudent investment practices. Because of the long-term nature of our defined benefit plan liabilities, our funding strategy is based on a long-term perspective for formulating and implementing investment policies and evaluating their investment performance. The asset allocation of our defined benefit plans reflect our decision about the proportion of the investment in equity and fixed income securities, and, where appropriate, the various sub-asset classes of each. At least annually, we complete a comprehensive review of our asset allocation policy and the underlying assumptions, which includes our long-term capital markets rate of return assumptions and our risk tolerances relative to our defined benefit plan liabilities. The expected rates of return on defined benefit plan assets are derived from review of the asset allocation strategy, expected long-term performance of asset classes, risks and other factors adjusted for our specific investment strategy. These rates are impacted by changes in general market conditions, but because they are long-term in nature, short-term market changes do not significantly impact the rates. Our U.S. defined benefit plan assets consist of a balanced portfolio of primarily U.S. equity and fixed income securities. Our non-U.S. defined benefit plan assets include a significant concentration of United Kingdom ("U.K.") fixed income securities . We monitor investment allocations and manage plan assets to maintain acceptable levels of risk. For all periods presented, we used a measurement date of December 31 for each of our U.S. and non-U.S. pension plans and postretirement medical plans. U.S. Defined Benefit Plans We maintain qualified and non-qualified defined benefit pension plans in the U.S. The qualified plan provides coverage for substantially all full-time U.S. employees who receive benefits, up to an earnings threshold specified by the U.S. Department of Labor. The non-qualified plans primarily cover a small number of employees including current and former members of senior management, providing them with benefit levels equivalent to other participants, but that are otherwise limited by U.S. Department of Labor rules. The U.S. plans are designed to operate as "cash balance" arrangements, under which the employee has the option to take a lump sum payment at the end of their service. The total accumulated benefit obligation is equivalent to the total projected benefit obligation ("Benefit Obligation"). The following are assumptions related to the U.S. defined benefit pension plans: Year Ended December 31, 2016 2015 2014 Weighted average assumptions used to determine Benefit Obligations: Discount rate 4.00 % 4.75 % 4.00 % Rate of increase in compensation levels 4.00 4.00 4.25 Weighted average assumptions used to determine net pension expense: Long-term rate of return on assets 6.00 % 6.25 % 6.00 % Discount rate 4.75 4.00 4.50 Rate of increase in compensation levels 4.00 4.25 4.25 At December 31, 2016 as compared with December 31, 2015 , we decreased our discount rate from 4.75% to 4.00% based on an analysis of publicly-traded investment grade U.S. corporate bonds, which had a lower yield due to current market conditions. In determining 2016 expense, the expected rate of return on U.S. plan assets decreased to 6.00% , primarily based on our target allocations and expected long-term asset returns. The long-term rate of return assumption is calculated using a quantitative approach that utilizes unadjusted historical returns and asset allocation as inputs for the calculation. For all US plans, we adopted the RP-2006 mortality tables and the MP-2016 improvement scale published in October 2016. We applied the RP-2006 tables based on the constituency of our plan population for union and non-union participants. We adjusted the improvement scale to utilize 75% of the ultimate improvement rate, consistent with assumptions adopted by the Social Security Administration trustees, based on long-term historical experience. Currently, we believe this approach provides the best estimate of our future obligation. Most plan participants elect to receive plan benefits as a lump sum at the end of service, rather than an annuity. As such, the updated mortality tables had an immaterial effect on our pension obligation. Net pension expense for the U.S. defined benefit pension plans (including both qualified and non-qualified plans) was: Year Ended December 31, 2016 2015 2014 (Amounts in thousands) Service cost $ 22,583 $ 24,113 $ 22,981 Interest cost 19,072 17,072 17,429 Expected return on plan assets (23,997 ) (24,185 ) (21,985 ) Settlement cost 91 — — Amortization of unrecognized prior service cost 488 509 475 Amortization of unrecognized net loss 4,999 9,178 8,428 U.S. net pension expense $ 23,236 $ 26,687 $ 27,328 The estimated prior service cost and the estimated net loss for the U.S. defined benefit pension plans that will be amortized from accumulated other comprehensive loss into pension expense in 2017 is $0.1 million and $6.0 million , respectively. We amortize estimated prior service benefits and estimated net losses over the remaining expected service period. The following summarizes the net pension liability for U.S. plans: December 31, 2016 2015 (Amounts in thousands) Plan assets, at fair value $ 418,854 $ 408,218 Benefit Obligation (449,601 ) (426,248 ) Funded status $ (30,747 ) $ (18,030 ) The following summarizes amounts recognized in the balance sheet for U.S. plans: December 31, 2016 2015 (Amounts in thousands) Current liabilities (273 ) (248 ) Noncurrent liabilities (30,474 ) (17,782 ) Funded status $ (30,747 ) $ (18,030 ) The following is a summary of the changes in the U.S. defined benefit plans’ pension obligations: 2016 2015 (Amounts in thousands) Balance — January 1 $ 426,248 $ 447,552 Service cost 22,583 24,113 Interest cost 19,072 17,072 Plan amendments and settlements (3,221 ) — Actuarial loss (gain)(1) 22,706 (28,052 ) Benefits paid (37,787 ) (34,437 ) Balance — December 31 $ 449,601 $ 426,248 Accumulated benefit obligations at December 31 $ 449,601 $ 426,248 _______________________________________ (1) The actuarial loss in 2016 and gain in 2015 primarily reflect the impact of changes in the discount rate. The following table summarizes the expected cash benefit payments for the U.S. defined benefit pension plans in the future (amounts in millions): 2017 $ 38.6 2018 40.1 2019 40.4 2020 40.9 2021 45.4 2022-2026 206.0 The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for U.S. plans, net of tax: 2016 2015 2014 (Amounts in thousands) Balance — January 1 $ (61,647 ) $ (66,903 ) $ (55,110 ) Amortization of net loss 3,136 5,750 5,277 Amortization of prior service cost 306 318 297 Net loss arising during the year (11,618 ) (812 ) (17,367 ) Settlement gain 57 — — Prior service cost 634 — — Balance — December 31 $ (69,132 ) $ (61,647 ) $ (66,903 ) Amounts recorded in accumulated other comprehensive loss consist of: December 31, 2016 2015 (Amounts in thousands) Unrecognized net loss $ (68,476 ) $ (60,034 ) Unrecognized prior service cost (656 ) (1,613 ) Accumulated other comprehensive loss, net of tax $ (69,132 ) $ (61,647 ) The following is a reconciliation of the U.S. defined benefit pension plans’ assets: 2016 2015 (Amounts in thousands) Balance — January 1 $ 408,218 $ 426,784 Return on plan assets 28,182 (5,160 ) Company contributions 22,450 21,031 Benefits paid (37,787 ) (34,437 ) Settlements (2,209 ) — Balance — December 31 $ 418,854 $ 408,218 We contributed $22.5 million and $21.0 million to the U.S. defined benefit pension plans during 2016 and 2015 , respectively. These payments exceeded the minimum funding requirements mandated by the U.S. Department of Labor rules. Our estimated contribution in 2017 is expected to be approximately $20 million , excluding direct benefits paid. All U.S. defined benefit plan assets are held by the qualified plan. The asset allocations for the qualified plan at the end of 2016 and 2015 by asset category, are as follows: Target Allocation at December 31, Percentage of Actual Plan Assets at December 31, Asset category 2016 2015 2016 2015 U.S. Large Cap 19 % 19 % 20 % 19 % U.S. Small Cap 4 % 4 % 4 % 4 % International Large Cap 14 % 14 % 14 % 14 % Emerging Markets 5 % 5 % 5 % 5 % World Equity 8 % 8 % 8 % 8 % Equity securities 50 % 50 % 51 % 50 % Liability Driven Investment 40 % 39 % 39 % 39 % Long-Term Government / Credit 10 % 11 % 10 % 11 % Fixed income 50 % 50 % 49 % 50 % _______________________________________ None of our common stock is directly held by our qualified plan. Our investment strategy is to earn a long-term rate of return consistent with an acceptable degree of risk and minimize our cash contributions over the life of the plan, while taking into account the liquidity needs of the plan. We preserve capital through diversified investments in high quality securities. Our current allocation target is to invest approximately 50% of plan assets in equity securities and 50% in fixed income securities. Within each investment category, assets are allocated to various investment strategies. A professional money management firm manages our assets, and we engage a consultant to assist in evaluating these activities. We periodically review the allocation target, generally in conjunction with an asset and liability study and in consideration of our future cash flow needs. We regularly rebalance the actual allocation to our target investment allocation. Plan assets are invested in commingled funds and the individual funds are actively managed with the intent to outperform specified benchmarks. Our "Pension and Investment Committee" is responsible for setting the investment strategy and the target asset allocation, as well as selecting individual funds. As the qualified plan approached fully funded status, we implemented a Liability-Driven Investing ("LDI") strategy, which more closely aligns the duration of the assets with the duration of the liabilities. The LDI strategy results in an asset portfolio that more closely matches the behavior of the liability, thereby protecting the funded status of the plan. The plan’s financial instruments, shown below, are presented at fair value. See Note 1 for further discussion on how the hierarchical levels of the fair values of the Plan’s investments are determined. The fair values of our U.S. defined benefit plan assets were: At December 31, 2016 At December 31, 2015 Hierarchical Levels Hierarchical Levels Total I II III Total I II III (Amounts in thousands) (Amounts in thousands) Cash and cash equivalents $ 848 $ 848 $ — $ — $ 31 $ 31 $ — $ — Commingled Funds: Equity securities U.S. Large Cap(a) 81,953 — 81,953 — 77,765 — 77,765 — U.S. Small Cap(b) 17,738 — 17,738 — 16,160 — 16,160 — International Large Cap(c) 59,435 — 59,435 — 57,174 — 57,174 — Emerging Markets(d) 20,014 — 20,014 — 19,888 — 19,888 — World Equity(e) 34,261 — 34,261 — 32,680 — 32,680 — Fixed income securities Liability Driven Investment (f) 164,384 — 164,384 — 159,900 — 159,900 — Long-Term Government/Credit(g) 40,221 — 40,221 — 44,620 — 44,620 — $ 418,854 $ 848 $ 418,006 $ — $ 408,218 $ 31 $ 408,187 $ — _______________________________________ (a) U.S. Large Cap funds seek to outperform the Russell 1000 (R) Index with investments in large and medium capitalization U.S. companies represented in the Russell 1000 (R) Index, which is composed of the largest 1,000 U.S. equities as determined by market capitalization. (b) U.S. Small Cap funds seek to outperform the Russell 2000 (R) Index with investments in medium and small capitalization U.S. companies represented in the Russell 2000 (R) Index, which is composed of the smallest 2,000 U.S. equities as determined by market capitalization. (c) International Large Cap funds seek to outperform the MSCI Europe, Australia, and Far East Index with investments in most of the developed nations of the world so as to maintain a high degree of diversification among countries and currencies. (d) Emerging Markets funds represent a diversified portfolio that seeks high, long-term returns comparable to investments in emerging markets by investing in stocks from newly developed emerging market economies. (e) World Equity funds seek to outperform the Russell Developed Large Cap Index Net over a full market cycle. The fund's goal is to provide a favorable total return relative to the benchmark, primarily through long-term capital appreciation. (f) LDI funds seek to outperform the Barclays-Russell LDI Index by investing in high quality, mostly corporate bonds and fixed income securities that closely match those found in discount curves used to value the plan's liabilities. (g) Long-Term Government/Credit funds seek to outperform the Barclays Capital U.S. Long-Term Government/Credit Index by generating excess return through a variety of diversified strategies in securities with longer durations, such as sector rotation, security selection and tactical use of high-yield bonds. Non-U.S. Defined Benefit Plans We maintain defined benefit pension plans, which cover some or all of our employees in the following countries: Austria, Belgium, Canada, France, Germany, India, Italy, Mexico, The Netherlands, Sweden, Switzerland and the U.K. The assets in the U.K. ( two plans), The Netherlands and Canada represent 94% of the total non-U.S. plan assets ("non-U.S. assets"). Details of other countries’ plan assets have not been provided due to immateriality. The following are assumptions related to the non-U.S. defined benefit pension plans: Year Ended December 31, 2016 2015 2014 Weighted average assumptions used to determine Benefit Obligations: Discount rate 2.34 % 3.13 % 3.40 % Rate of increase in compensation levels 3.22 3.61 3.95 Weighted average assumptions used to determine net pension expense: Long-term rate of return on assets 4.68 % 5.03 % 5.51 % Discount rate 3.13 3.40 4.22 Rate of increase in compensation levels 3.61 3.95 3.83 At December 31, 2016 as compared with December 31, 2015 , we decreased our average discount rate for non-U.S. plans from 3.13% to 2.34% based on analysis of bonds and other publicly-traded instruments, by country, which had lower yields due to market conditions . To determine 2016 pension expense, we decreased our average expected rate of return on plan assets from 5.03% at December 31, 2015 to 4.68% at December 31, 2016 , primarily based on our target allocations and expected long-term asset returns. As the expected rate of return on plan assets is long-term in nature, short-term market changes do not significantly impact the rate. Many of our non-U.S. defined benefit plans are unfunded, as permitted by local regulation. The expected long-term rate of return on assets for funded plans was determined by assessing the rates of return for each asset class and is calculated using a quantitative approach that utilizes unadjusted historical returns and asset allocation as inputs for the calculation. We work with our actuaries to determine the reasonableness of our long-term rate of return assumptions by looking at several factors including historical returns, expected future returns, asset allocation, risks by asset class and other items. Net pension expense for non-U.S. defined benefit pension plans was: Year Ended December 31, 2016 2015 2014 (Amounts in thousands) Service cost $ 7,131 $ 7,832 $ 6,857 Interest cost 11,623 11,770 14,576 Expected return on plan assets (10,013 ) (11,693 ) (10,581 ) Amortization of unrecognized net loss 4,751 4,949 6,962 Amortization of unrecognized prior service cost (benefit) 4 (12 ) — Settlement and other 780 570 314 Non-U.S. net pension expense $ 14,276 $ 13,416 $ 18,128 In 2017 , there is no significant estimated prior service cost that will be amortized from accumulated other comprehensive loss into pension expense for the non-U.S. defined benefit pension plans. The estimated net loss for the non-U.S. defined benefit pension plans that will be amortized from accumulated other comprehensive loss into pension expense in 2017 is $3.5 million . We amortize estimated net losses over the remaining expected service period or over the remaining expected lifetime of inactive participants for plans with only inactive participants. The following summarizes the net pension liability for non-U.S. plans: December 31, 2016 2015 (Amounts in thousands) Plan assets, at fair value $ 223,491 $ 230,827 Benefit Obligation (383,947 ) (386,175 ) Funded status $ (160,456 ) $ (155,348 ) The following summarizes amounts recognized in the balance sheet for non-U.S. plans: December 31, 2016 2015 \ (Amounts in thousands) Noncurrent assets $ 4,905 $ 9,570 Current liabilities (7,932 ) (9,950 ) Noncurrent liabilities (157,429 ) (154,968 ) Funded status $ (160,456 ) $ (155,348 ) The following is a reconciliation of the non-U.S. plans’ defined benefit pension obligations: 2016 2015 (Amounts in thousands) Balance — January 1 $ 386,175 $ 361,351 Acquisition — 65,920 Service cost 7,131 7,832 Interest cost 11,623 11,770 Employee contributions 219 312 Plan amendments and other (10,347 ) (1,254 ) Actuarial loss (gain) (1) 49,826 (6,407 ) Net benefits and expenses paid (21,735 ) (16,476 ) Currency translation impact(2) (38,945 ) (36,873 ) Balance — December 31 $ 383,947 $ 386,175 Accumulated benefit obligations at December 31 $ 362,618 $ 363,918 _______________________________________ (1) The 2016 actuarial loss primarily reflects the decrease in the discount rates for U.K. and the Euro-zone. (2) The currency translation impact reflects the strengthening of the U.S. dollar against our significant currencies, primarily the Euro and British pound. The following table summarizes the expected cash benefit payments for the non-U.S. defined benefit plans in the future (amounts in millions): 2017 $ 16.5 2018 14.3 2019 14.7 2020 15.0 2021 15.4 2022-2026 84.3 The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for non-U.S. plans, net of tax: 2016 2015 2014 (Amounts in thousands) Balance — January 1 $ (59,993 ) $ (69,598 ) $ (78,863 ) Amortization of net loss 3,673 3,776 5,262 Net loss arising during the year (20,071 ) (2,673 ) (3,709 ) Settlement loss 610 390 216 Prior service (cost) benefit arising during the year — (14 ) 141 Currency translation impact and other 7,521 8,126 7,355 Balance — December 31 $ (68,260 ) $ (59,993 ) $ (69,598 ) Amounts recorded in accumulated other comprehensive loss consist of: December 31, 2016 2015 (Amounts in thousands) Unrecognized net loss $ (68,194 ) $ (59,878 ) Unrecognized prior service cost (66 ) (115 ) Accumulated other comprehensive loss, net of tax $ (68,260 ) $ (59,993 ) The following is a reconciliation of the non-U.S. plans’ defined benefit pension assets: 2016 2015 (Amounts in thousands) Balance — January 1 $ 230,827 $ 215,360 Acquisition — 23,333 Return on plan assets 33,073 3,017 Employee contributions 219 312 Company contributions 20,004 22,785 Settlements (4,511 ) (1,485 ) Currency translation impact and other (34,386 ) (16,019 ) Net benefits and expenses paid (21,735 ) (16,476 ) Balance — December 31 $ 223,491 $ 230,827 Our contributions to non-U.S. defined benefit pension plans in 2017 are expected to be approximately $6 million , excluding direct benefits paid. The asset allocations for the non-U.S. defined benefit pension plans at the end of 2016 and 2015 are as follows: Target Allocation at December 31, Percentage of Actual Plan Assets at December 31, Asset category 2016 2015 2016 2015 North American Companies 7 % 6 % 7 % 6 % U.K. Companies — % 8 % — % 8 % European Companies — % 4 % — % 3 % Asian Pacific Companies — % 2 % — % 2 % Global Equity 8 % 9 % 8 % 8 % Equity securities 15 % 29 % 15 % 27 % U.K. Government Gilt Index 31 % 27 % 31 % 27 % U.K. Corporate Bond Index 1 % 20 % 1 % 19 % Global Fixed Income Bond 2 % 18 % 2 % 18 % Liability Driven Investment 11 % — % 11 % — % Fixed income 45 % 65 % 45 % 64 % Multi-asset 25 % — % 25 % — % Buy-in Contract 9 % — % 9 % — % Other 6 % 6 % 6 % 9 % Other Types 40 % 6 % 40 % 9 % None of our common stock is held directly by these plans. In all cases, our investment strategy for these plans is to earn a long-term rate of return consistent with an acceptable degree of risk and minimize our cash contributions over the life of the plan, while taking into account the liquidity needs of the plan and the legal requirements of the particular country. We preserve capital through diversified investments in high quality securities. Asset allocation differs by plan based upon the plan’s Benefit Obligation to participants, as well as the results of asset and liability studies that are conducted for each plan and in consideration of our future cash flow needs. Professional money management firms manage plan assets and we engage consultants in the U.K. to assist in evaluation of these activities. The assets of the U.K. plans are overseen by a group of Trustees who review the investment strategy, asset allocation and fund selection. These assets are passively managed as they are invested in index funds that attempt to match the performance of the specified benchmark index. The fair values of the non-U.S. assets were: At December 31, 2016 At December 31, 2015 Hierarchical Levels Hierarchical Levels Total I II III Total I II III (Amounts in thousands) (Amounts in thousands) Cash $ 10,396 $ 10,396 $ — $ — $ 5,641 $ 5,641 $ — $ — Commingled Funds: Equity securities North American Companies(a) 5,945 — 5,945 — 13,737 — 13,737 — U.K. Companies(b) — — — — 18,003 — 18,003 — European Companies (c) — — — — 8,035 — 8,035 — Asian Pacific Companies(d) — — — — 5,378 — 5,378 — Global Equity(e) 16,774 — 16,774 — 19,581 — 19,581 — Fixed income securities U.K. Government Gilt Index(f) 68,227 — 68,227 — 60,478 — 60,478 — U.K. Corporate Bond Index(g) 2,785 — 2,785 — 44,318 — 44,318 — Global Fixed Income Bond(h) 5,259 — 5,259 — 41,325 — 41,325 — Liability Driven Investment (i) 25,348 — 25,348 — — — — — Other Types of Investments: Multi-asset (j) 54,880 — 54,880 — — — — — Buy-in Contract (k) 20,931 — — 20,931 — — — — Other(I) 12,946 — — 12,946 14,331 — — 14,331 $ 223,491 $ 10,396 $ 179,218 $ 33,877 $ 230,827 $ 5,641 $ 210,855 $ 14,331 _______________________________________ (a) North American Companies represents U.S. and Canadian large cap equity funds, which are managed and track their respective benchmarks (FTSE All-World USA Index and FTSE All-World Canada Index). (b) U.K. Companies represents a U.K. equity index fund, which is passively managed and tracks the FTSE All-Share Index. (c) European companies represents a European equity index fund, which is passively managed and tracks the FTSE All-World Developed Europe Ex-U.K. Index. (d) Asian Pacific Companies represents Japanese and Pacific Rim equity index funds, which are passively managed and track their respective benchmarks (FTSE All-World Japan Index and FTSE All-World Developed Asia Pacific Ex-Japan Index). (e) Global Equity represents actively managed, global equity funds taking a top-down strategic view on the different regions by analyzing companies based on fundamentals, market-driven, thematic and quantitative factors to generate alpha. (f) U.K. Government Gilt Index represents U.K. government issued fixed income investments which are passively managed and track the respective benchmarks (FTSE U.K. Gilt Index-Linked Over 5 Years Index, FTSE U.K. Gilt Over 15 Years Index and FTSE UK Gilt Index-Linked Over 25 Years Index). (g) U.K. Corporate Bond Index represents U.K. corporate bond investments, which are passively managed and track the iBoxx Over 15 years £ Non-Gilt Index. (h) Global Fixed Income Bond represents investment funds that are actively managed, diversified and invested in traditional government bonds, high-quality corporate bonds, asset backed securities and emerging market debt. (i) Liability Driven Investment seeks to invest in fixed income securities that closely match those found in discount curves used to value the plan's liabilities. (j) Multi-asset seeks an attractive risk-adjusted return by investing in a diversified portfolio of strategies, including equities and fixed income. (k) Buy-in contract represents an asset held by the Netherlands plan, whereby the cost of providing benefits is funded by the contract. The initial investment in this contract of $19.7 million was made on January 1, 2016 and fair value and currency adjustments resulted in a fair value of $20.9 million at December 31, 2016 . The fair value of this asset is based on the current present value of accrued benefits and will fluctuate based on changes in the obligations associated with covered plan members as well as the assumptions used in the present value calculation. (l) Includes assets held by plans outside the United Kingdom and the Netherlands. Details, including Level III rollforward details are not material. Defined Benefit Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets The following summarizes key pension plan information regarding U.S. and non-U.S. plans whose accumulated benefit obligations exceed the fair value of their respective plan assets. December 31, 2016 2015 (Amounts in thousands) Benefit Obligation $ 802,456 $ 629,402 Accumulated benefit obligation 784,337 614,172 Fair value of plan assets 607,705 449,818 Postretirement Medical Plans We sponsor several defined benefit postretirement medical plans covering certain current retirees and a limited number of future retirees in the U.S. These plans provide for medical and dental benefits and are administered through insurance companies and health maintenance organizations. The plans include participant contributions, deductibles, co-insurance provisions and other limitations and are integrated with Medicare and other group plans. We fund the plans as benefits and health maintenance organization premiums are paid, such that the plans hold no assets in any period presented. Accordingly, we have no investment strategy or targeted allocations for plan assets. Benefits under our postretirement medical plans are not available to new employees or most existing employees. The following are assumptions related to postretirement benefits: Year Ended December 31, 2016 2015 2014 Weighted average assumptions used to determine Benefit Obligation: Discount rate 3.75 % 4.25 % 3.75 % Weighted average assumptions used to determine net expense: Discount rate 4.25 % 3.75 % 4.00 % The assumed ranges for the annual rates of increase in medical costs used to determine net expense were 7.5% for 2016 , 2015 and 2014 , with a gradual decrease to 5.0% for 2025 and future years. Net postretirement benefit cost (income) for postretirement medical plans was: Year Ended December 31, 2016 2015 2014 (Amounts in thousands) Service cost $ 1 $ 2 $ 3 Interest cost 1,154 1,155 1,200 Amortization of unrecognized prior service cost 122 122 — Amortization of unrecognized net gain (355 ) (539 ) (1,220 ) Net postretirement benefit expense (income) $ 922 $ 740 $ (17 ) The estimated prior service cost expected to be amortized from accumulated other comprehensive loss into U.S. pension expense in 2017 is $0.1 million . The estimated net loss for postretirement medical plans that will be amortized from accumulated other comprehensive loss into U.S. expense in 2017 is $0.1 million . The following summarizes the accrued postretirement benefits liability for the postretirement medical plans: December 31, 2016 2015 (Amounts in thousands) Postretirement Benefit Obligation $ 27,317 $ 28,614 Funded status $ (27,317 ) $ (28,614 ) The following summarizes amounts recognized in the balance sheet for postretirement Benefit Obligation: December 31, 2016 2015 (Amounts in thousands) Current liabilities $ (3,442 ) $ (3,582 ) Noncurrent liabilities (23,875 ) (25,032 ) Funded status $ (27,317 ) $ (28,614 ) The following is a reconciliation of the postretirement Benefit Obligation: 2016 2015 (Amounts in thousands) Balance — January 1 $ 28,614 $ 33,019 Service cost 1 2 Interest cost 1,154 1,155 Employee contributions 856 789 Medicare subsidies receivable 117 71 Actuarial loss 1,907 127 Plan Amendments — (625 ) Net benefits and expenses paid (5,332 ) (5,924 ) Balance — December 31 $ 27,317 $ 28,614 The following presents expected benefit payments for future periods (amounts in millions): Expected Payments Medicare Subsidy 2017 $ 3.5 $ 0.1 2018 3.2 0.1 2019 3.0 0.1 2020 2.7 0.1 2021 2.4 0.1 2022-2026 9.3 0.3 The following table shows the change in accumulated other comprehensive loss attributable to the components of the net cost and the change in Benefit Obligations for postretirement benefits, net of tax: 2016 2015 2014 (Amounts in thousands) Balance — January 1 $ 1,179 $ 1,103 $ 4,445 Amortization of net gain (223 ) (338 ) (764 ) Amortization of prior service cost 77 76 (1,464 ) Net (loss) gain arising during the year (1,196 ) 338 (1,114 ) Balance — December 31 $ (163 ) $ 1,179 $ 1,103 Amounts recorded in accumulated other comprehensive loss consist of: December 31, 2016 2015 (Amounts in thousands) Unrecognized net (loss) gain $ (455 ) $ 2,344 Unrecognized prior service gain (cost) 292 (1,165 ) Accumulated other comprehensive (loss) income, net of tax $ (163 ) $ 1,179 We made contributions to the postretirement medical plans to pay benefits of $4.4 million in 2016 , $5.1 million in 2015 and $3.8 million in 2014 . Because the postretirement medical plans are unfunded, we make contributions as the covered individuals’ claims are approved for payment. Accordingly, contributions during any period are directly correlated to the benefits paid. Assumed health care cost trend rates have an effect on the amounts reported for the postretirement medical plans. A one-percentage point change in assumed health care cost trend rates would have the following effect on the 2016 reported amounts (in thousands): 1% Increase 1% Decrease Effect on postretirement Benefit Obligation $ 149 $ (142 ) Effect on service cost plus interest cost 4 (4 ) Defined Contribution Plans We sponsor several defined contribution plans covering substantially all U.S. and Canadian employees and certain other non-U.S. employees. Employees may contribute to these plans, and these contributions are matched in varying amounts by us, including opportunities for discretionary matching contributions by us. Defined contribution plan expense was $17.2 million in 2016 , $19.6 million in 2015 and $20.4 million in 2014 . |
