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PENSIONS
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
PENSIONS
22.PENSIONS

Defined contribution scheme
We operate a defined contribution scheme. The pension cost for the period represents contributions payable by us to the scheme. The charge to net income for the years ended December 31, 2020, 2019 and 2018 was $2.1 million, $2.4 million and $1.9 million, respectively.
Defined benefit schemes
We have two defined benefit pension plans both of which are closed to new entrants but still cover certain of our employees. Benefits are based on the employee's years of service and compensation. Net periodic pension plan costs are determined using the Projected Unit Credit Cost method. Our plans are funded by us in conformity with the funding requirements of the applicable government regulations. Plan assets consist of both fixed income and equity funds managed by professional fund managers.

We use December 31 as a measurement date for our pension plans.

The components of net periodic benefit costs are as follows:
(in thousands of $)202020192018
Service cost155 162 250 
Interest cost1,271 1,740 1,687 
Expected return on plan assets(318)(375)(926)
Recognized actuarial loss848 777 1,392 
Net periodic benefit cost1,956 2,304 2,403 

The components of net periodic benefit costs are recognized in the income statement within administrative expenses and vessel operating expenses.


The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic pension benefit cost during the year ended December 31, 2020 is $0.8 million (2019: $0.8 million).

The change in projected benefit obligation and plan assets and reconciliation of funded status as of December 31 are as follows:
(in thousands of $)20202019
Reconciliation of benefit obligation: 
Benefit obligation at January 149,943 46,093 
Service cost155 162 
Interest cost1,271 1,740 
Actuarial loss 5,458 4,581 
Foreign currency exchange rate changes372 433 
Benefit payments(3,077)(3,066)
Benefit obligation at December 3154,122 49,943 

The accumulated benefit obligation at December 31, 2020 and 2019 was $53.4 million and $49.2 million, respectively.
(in thousands of $)20202019
Reconciliation of fair value of plan assets: 
Fair value of plan assets at January 115,223 13,121 
Actual return on plan assets1,355 1,216 
Employer contributions2,900 3,411 
Foreign currency exchange rate changes463 541 
Benefit payments(3,077)(3,066)
Fair value of plan assets at December 3116,864 15,223 

(in thousands of $)20202019
Fair value of benefit obligation(54,122)(49,943)
Fair value of plan assets16,864 15,223 
Unfunded status (1)
(37,258)(34,720)
Employer contributions and benefits paid under the pension plans include $2.9 million paid from employer assets for the year ended December 31, 2020 (2019: $3.4 million).

(1) Our plan comprises two schemes. The details of these schemes are as follows:
 December 31, 2020December 31, 2019
 
(in thousands of $)
UK SchemeMarine SchemeTotalUK SchemeMarine SchemeTotal
Fair value of benefit obligation(12,727)(41,395)(54,122)(11,479)(38,464)(49,943)
Fair value of plan assets15,822 1,042 16,864 14,323 900 15,223 
Funded (unfunded) status at end of year3,095 (40,353)(37,258)2,844 (37,564)(34,720)
The fair value of our plan assets, by category, as of December 31, 2020 and 2019 is as follows:
(in thousands of $)20202019
Equity securities15,822 14,323 
Cash1,042 900 
 16,864 15,223 

The amounts recognized in accumulated other comprehensive income, as of December 31, 2020 and 2019, is $15.9 million and $12.2 million, respectively.

The actuarial loss recognized in other comprehensive income is net of tax of $0.6 million, $0.5 million, and $0.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The asset allocation for our Marine scheme at December 31, 2020 and 2019, by asset category are as follows:
Marine scheme2020 (%)2019 (%)
Cash100 100 
Total100 100 

The asset allocation for our UK scheme at December 31, 2020 and 2019, by asset category are as follows:
UK scheme2020 (%)2019 (%)
Equity100 100 
Total100 100 

Our investment strategy is to balance risk and reward through the selection of professional investment managers and investing in pooled funds.

We are expected to make the following contributions to the schemes during the year ended December 31, 2021, as follows:
(in thousands of $)UK schemeMarine scheme
Employer contributions— 2,900 

We are expected to make the following pension disbursements as follows:
(in thousands of $)UK schemeMarine scheme
2021590 2,700 
2022370 2,600 
2023380 2,500 
2024420 2,400 
2025660 2,300 
2026 - 20302,350 11,000 
The weighted average assumptions used to determine the benefit obligation for our plans for the years ended December 31 are as follows:
 20202019
Discount rate1.68 %2.61 %
Rate of compensation increase2.29 %2.15 %

The weighted average assumptions used to determine the net periodic benefit cost for our plans for the years ended December 31 are as follows:
 20202019
Discount rate1.69 %2.63 %
Expected return on plan assets2.06 %2.81 %
Rate of compensation increase2.31 %2.20 %

The overall expected long-term rate of return on assets assumption used to determine the net periodic benefit cost for our plans for the years ended December 31, 2020 and 2019 is based on the weighted average of various returns on assets using the asset allocation as at the beginning of 2020 and 2019. For equities and other asset classes, we have applied an equity risk premium over ten year governmental bonds.