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Retirement Plans | 12 Months Ended
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Dec. 31, 2019
Retirement Plans | P. RETIREMENT PLANS ASC 715 , “ Compensation—Retirement Benefits, ” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all of its plans. Defined Benefit Pension Plans Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of these plans consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans. During 2018, Teradyne purchased a group annuity contract for its retiree participants in the U.S. qualified pension plan. Under the group annuity, the accrued pension obligations for approximately 1,700 retiree participants were transferred to an insurance company. The reduction in the pension benefit obligation and pension assets was $151.3 million. During 2018, Teradyne recorded a settlement loss of $0.3 million related to the retiree group annuity transaction. The December 31 balances of these defined benefit pension plans assets and obligations are shown below:
|  | 2019 |  |  | 2018 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
|  | (in thousands) |
Assets and Obligations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year |  | $ | 178,237 |  |  | $ | 39,146 |  |  | $ | 363,026 |  |  | $ | 39,353 |
Service cost |  |  | 1,608 |  |  |  | 751 |  |  |  | 2,196 |  |  |  | 786 |
Interest cost |  |  | 7,189 |  |  |  | 691 |  |  |  | 8,940 |  |  |  | 687 |
Actuarial loss (gain) |  |  | 24,447 |  |  |  | 4,520 |  |  |  | (30,136 | ) |  |  | 773 |
Benefits paid |  |  | (7,690 | ) |  |  | (836 | ) |  |  | (14,793 | ) |  |  | (741 | )
Retiree annuity purchase |  |  | — |  |  |  | — |  |  |  | (151,341 | ) |  |  | — |
Liability loss due to settlement |  |  | — |  |  |  | — |  |  |  | 345 |  |  |  | — |
Non-U.S. currency movement |  |  | — |  |  |  | (320 | ) |  |  | — |  |  |  | (1,712 | )
End of year |  |  | 203,791 |  |  |  | 43,952 |  |  |  | 178,237 |  |  |  | 39,146 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year |  |  | 144,301 |  |  |  | 1,400 |  |  |  | 324,506 |  |  |  | 1,307 |
Company contributions |  |  | 2,805 |  |  |  | 923 |  |  |  | 2,587 |  |  |  | 822 |
Actual return on plan assets |  |  | 27,516 |  |  |  | 64 |  |  |  | (16,658 | ) |  |  | 50 |
Benefits paid |  |  | (7,690 | ) |  |  | (836 | ) |  |  | (14,793 | ) |  |  | (741 | )
Retiree annuity purchase |  |  | — |  |  |  | — |  |  |  | (151,341 | ) |  |  | — |
Non-U.S. currency movement |  |  | — |  |  |  | 35 |  |  |  | — |  |  |  | (38 | )
End of year |  |  | 166,932 |  |  |  | 1,586 |  |  |  | 144,301 |  |  |  | 1,400 |
Funded status |  | $ | (36,859 | ) |  | $ | (42,366 | ) |  | $ | (33,936 | ) |  | $ | (37,746 | )
The following table provides amounts recorded within the account line items of the statements of financial position as of December 31:
|  | 2019 |  |  | 2018 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
|  | (in thousands) |
Retirement plans assets |  | $ | 18,457 |  |  | $ | — |  |  | $ | 16,883 |  |  | $ | — |
Accrued employees’ compensation and withholdings |  |  | (2,826 | ) |  |  | (922 | ) |  |  | (2,676 | ) |  |  | (852 | )
Retirement plans liabilities |  |  | (52,490 | ) |  |  | (41,444 | ) |  |  | (48,143 | ) |  |  | (36,894 | )
Funded status |  | $ | (36,859 | ) |  | $ | (42,366 | ) |  | $ | (33,936 | ) |  | $ | (37,746 | )
The following table provides amounts recognized in accumulated other comprehensive income as of December 31:
|  | 2019 |  |  | 2018 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
|  | (in thousands) |
Deferred taxes related to prior service cost recognized in other comprehensive income |  | $ | 560 |  |  | $ | — |  |  | $ | 560 |  |  | $ | — |
The accumulated benefit obligation for the United States defined benefit pension plans was $198.2 million and $172.8 million at December 31, 2019 and 2018, respectively. The accumulated benefit obligation for foreign defined benefit pension plans was $39.9 million and $35.6 million at December 31, 2019 and 2018, respectively. Information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31:
|  | 2019 |  |  | 2018 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
|  | (in millions) |
Projected benefit obligation |  | $ | 55.3 |  |  | $ | 44.0 |  |  | $ | 50.8 |  |  | $ | 39.1 |
Accumulated benefit obligation |  |  | 53.2 |  |  |  | 39.9 |  |  |  | 48.6 |  |  |  | 35.6 |
Fair value of plan assets |  |  | — |  |  |  | 1.6 |  |  |  | — |  |  |  | 1.4 |
Expense For the years ended December 31, 2019, 2018, and 2017, Teradyne’s net periodic pension cost (income) was comprised of the following:
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
|  | (in thousands) |
Components of Net Periodic Pension Cost (Income): |  |  |  |  |  |  |  |  |
Service cost |  | $ | 1,608 |  |  | $ | 751 |  |  | $ | 2,196 |  |  | $ | 786 |  |  | $ | 2,239 |  |  | $ | 818 |
Interest cost |  |  | 7,189 |  |  |  | 691 |  |  |  | 8,940 |  |  |  | 687 |  |  |  | 13,151 |  |  |  | 852 |
Expected return on plan assets |  |  | (6,042 | ) |  |  | (29 | ) |  |  | (9,049 | ) |  |  | (19 | ) |  |  | (12,008 | ) |  |  | (165 | )
Amortization of prior service cost |  |  | — |  |  |  | — |  |  |  | 58 |  |  |  | — |  |  |  | 70 |  |  |  | — |
Net actuarial loss (gain) |  |  | 2,973 |  |  |  | 4,485 |  |  |  | (4,429 | ) |  |  | 743 |  |  |  | (6,712 | ) |  |  | (310 | )
Settlement loss |  |  | — |  |  |  | — |  |  |  | 345 |  |  |  | — |  |  |  | — |  |  |  | — |
Total net periodic pension cost (income) |  | $ | 5,728 |  |  | $ | 5,898 |  |  | $ | (1,939 | ) |  | $ | 2,197 |  |  | $ | (3,260 | ) |  | $ | 1,195 |
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reversal of amortization items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  |  | — |  |  |  | — |  |  |  | (58 | ) |  |  | — |  |  |  | (70 | ) |  |  | — |
Total recognized in other comprehensive income |  |  | — |  |  |  | — |  |  |  | (58 | ) |  |  | — |  |  |  | (70 | ) |  |  | — |
Total recognized in net periodic pension cost (income) and other comprehensive income |  | $ | 5,728 |  |  | $ | 5,898 |  |  | $ | (1,997 | ) |  | $ | 2,197 |  |  | $ | (3,330 | ) |  | $ | 1,195 |
Weighted Average Assumptions to Determine Net Periodic Pension Cost at January 1:
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
Discount rate |  |  | 4.1 | % |  |  | 1.8 | % |  |  | 3.4 | % |  |  | 1.8 | % |  |  | 3.9 | % |  |  | 1.8 | %
Expected return on plan assets |  |  | 4.3 |  |  |  | 2.0 |  |  |  | 4.3 |  |  |  | 1.5 |  |  |  | 4.0 |  |  |  | 2.0 |
Salary progression rate |  |  | 2.5 |  |  |  | 2.5 |  |  |  | 2.3 |  |  |  | 2.7 |  |  |  | 2.6 |  |  |  | 2.7 |
Weighted Average Assumptions to Determine Pension Obligations at December 31:
|  | 2019 |  |  | 2018 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
Discount rate |  |  | 3.0 | % |  |  | 1.1 | % |  |  | 4.1 | % |  |  | 1.8 | %
Salary progression rate |  |  | 2.6 |  |  |  | 2.5 |  |  |  | 2.5 |  |  |  | 2.6 |
In developing the expected return on plan assets assumption, Teradyne evaluates input from its investment manager and pension consultants, including their forecast of asset class return expectations. Teradyne believes that 4.25% was an appropriate rate to use for fiscal 2019 for the U.S. Qualified Pension Plan (“U.S. Plan”). Teradyne recognizes net actuarial gains and losses and the change in the fair value of the plan assets in its operating results in the year in which they occur or upon any interim remeasurement of the plans. Teradyne calculates the expected return on plan assets using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interim remeasurement of the plans. The discount rate utilized to determine future pension obligations for the U.S. Plan is based on FTSE Pension Index adjusted for the plan’s expected cash flows and was 3.10% at December 31, 2019, down from 4.15% at December 31, 2018. Plan Assets As of December 31, 2019, the fair value of Teradyne’s pension plans’ assets totaled $168.5 million of which $166.9 million was related to the U.S. Plan and $1.6 million was related to the Taiwan defined benefit pension plan. Substantially all of Teradyne’s pension plans’ assets are held in individual trusts, which were established for the investment of assets of Teradyne’s sponsored retirement plans. The following table provides weighted average pension asset allocation by asset category at December 31, 2019 and 2018:
|  | 2019 |  |  | 2018 |
|  | United States |  |  | Foreign |  |  | United States |  |  | Foreign |
Fixed income securities |  |  | 94.0 | % |  |  | — | % |  |  | 94.0 | % |  |  | — | %
Equity securities |  |  | 5.0 |  |  |  | — |  |  |  | 5.0 |  |  |  | — |
Other |  |  | 1.0 |  |  |  | 100.0 |  |  |  | 1.0 |  |  |  | 100.0 |
|  |  | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | %
The assets of the U.S. Plan are overseen by the Teradyne Fiduciary Committee which is comprised of members of senior management drawn from appropriate diversified levels of the management team. The Fiduciary Committee is responsible for setting the policy that provides the framework for management of the U.S. Plan assets. In accordance with its responsibilities, the Fiduciary Committee meets on a regular basis to review the performance of the U.S. Plan assets and compliance with the investment policy. The policy sets forth an investment structure for managing U.S. Plan assets, including setting the asset allocation ranges, which are expected to provide an appropriate level of overall diversification required to maximize the long-term return on plan assets for a prudent and reasonable level of risk given prevailing market conditions, total investment return over the long term, and preservation of capital, while maintaining sufficient liquidity to pay the benefits of the U.S. Plan. The investment portfolio will not, at any time, have a direct investment in Teradyne stock. It may have indirect investment in Teradyne stock, if one of the funds selected by the investment manager invests in Teradyne stock. In developing the asset allocation ranges, third party asset allocation studies are periodically performed that consider the current and expected positions of the plan assets and funded status. Based on this study and other appropriate information, the Fiduciary Committee establishes asset allocation ranges taking into account acceptable risk targets and associated returns. The investment return objectives are to avoid excessive volatility and produce a rate of return that at least matches the Policy Index identified below. The manager’s investment performance is reviewed at least annually. Results for the total portfolio and for each major category of assets are evaluated in comparison with appropriate market indices and the Policy Index. The target asset allocation and the index for each asset category for the U.S. Plan, per the investment policy, are as follows:
Asset Category: |  | Policy Index: |  | Target Allocation |
U.S. corporate fixed income |  | Barclays U.S. Corporate A or Better Index |  |  | 75 | %
Global equity |  | MSCI World Minimum Volatility Index |  |  | 5 |
U.S. government fixed income |  | Barclays U.S. Long Government Bond Index |  |  | 14 |
High yield fixed income |  | Barclays U.S. High Yield Index |  |  | 5 |
Cash |  | Citigroup Three Month U.S. Treasury Bill Index |  |  | 1 |
Teradyne’s U.S. Plan invests primarily in common trust funds. Units held in the common trust funds are valued at the unit price as reported by the investment manager based on the asset value of the underlying investments; underlying investments in equity securities are valued at the last reported sales price, and underlying investments in fixed-income securities are generally valued using methods based upon market transactions for comparable securities. In 2017, the U.K. defined benefit pension was terminated and the obligations and assets of the plan were transferred to an insurance company. During the year ended December 31, 2019, there were no transfers of pension assets in or out of Level 1, Level 2, and Level 3. During the year ended December 31, 2018, $2.7 million of pension assets were transferred out of Level 3 to Level 2. The fair value of pension plan assets by asset category and by level at December 31, 2019 and December 31, 2018 were as follows:
|  | December 31, 2019 |
|  | United States |  |  | Foreign |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (in thousands) |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities |  | $ | — |  |  | $ | 133,792 |  |  | $ | — |  |  | $ | 133,792 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
U.S. government securities |  |  | — |  |  |  | 23,186 |  |  |  | — |  |  |  | 23,186 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Global equity |  |  | — |  |  |  | 8,344 |  |  |  | — |  |  |  | 8,344 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,586 |  |  |  | — |  |  |  | 1,586 |
Cash and cash equivalents |  |  | 1,610 |  |  |  | — |  |  |  | — |  |  |  | 1,610 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 1,610 |  |  | $ | 165,322 |  |  | $ | — |  |  | $ | 166,932 |  |  | $ | — |  |  | $ | 1,586 |  |  | $ | — |  |  | $ | 1,586 |
|  | December 31, 2018 |
|  | United States |  |  | Foreign |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (in thousands) |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt securities |  | $ | — |  |  | $ | 115,424 |  |  | $ | — |  |  | $ | 115,424 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
U.S. government securities |  |  | — |  |  |  | 20,176 |  |  |  | — |  |  |  | 20,176 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Global equity |  |  | — |  |  |  | 7,252 |  |  |  | — |  |  |  | 7,252 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,400 |  |  |  | — |  |  |  | 1,400 |
Cash and cash equivalents |  |  | 1,449 |  |  |  | — |  |  |  | — |  |  |  | 1,449 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  | $ | 1,449 |  |  | $ | 142,852 |  |  | $ | — |  |  | $ | 144,301 |  |  | $ | — |  |  | $ | 1,400 |  |  | $ | — |  |  | $ | 1,400 |
Changes in the fair value of Level 3 group annuity insurance contracts for the year ended December 31, 2018 were as follows:
|  | Group Annuity Insurance Contracts |
|  | (in thousands) |
Balance at December 31, 2017 |  | $ | 3,166 |
Transfer out of level 3 |  |  | (2,658 | )
Purchase s o f r etiree annuity insurance c ontracts |  |  | (512 | )
Interest and market value adjustments |  |  | 59 |
Benefits paid |  |  | (40 | )
Other |  |  | (15 | )
Balance at December 31, 2018 |  | $ | — |
Contributions Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such contributions are tax deductible. During 2019, Teradyne contributed $2.8 million to the U.S. supplemental executive defined benefit pension plan and $0.9 million to certain qualified plans for non-U.S. subsidiaries. During 2018, Teradyne contributed $2.6 million to the U.S supplemental executive defined benefit pension plan and $0.8 million to certain qualified plans for non-U.S. subsidiaries. In 2020 , contributions to the U.S. supplemental executive defined benefit pension plan and certain qualified plans from non-U.S. subsidiaries will be approximately $2.8 million and $1.0 million, respectively. Expected Future Pension Benefit Payments Future benefit payments are expected to be paid as follows:
|  | United States |  |  | Foreign |
|  | (in thousands) |
2020 |  | $ | 8,027 |  |  | $ | 1,237 |
2021 |  |  | 8,416 |  |  |  | 985 |
2022 |  |  | 9,163 |  |  |  | 982 |
2023 |  |  | 9,785 |  |  |  | 1,258 |
2024 |  |  | 10,558 |  |  |  | 1,098 |
2025-2029 |  |  | 59,665 |  |  |  | 6,129 |
Postretirement Benefit Plans In addition to receiving pension benefits, U.S. Teradyne employees who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees. The December 31 balances of the postretirement assets and obligations are shown below:
|  | 2019 |  |  | 2018 |
|  | (in thousands) |
Assets and Obligations |  |  |  |  |  |  |  |
Change in benefit obligation: |  |  |  |  |  |  |  |
Projected benefit obligation: |  |  |  |  |  |  |  |
Beginning of year |  | $ | 9,256 |  |  | $ | 6,177 |
Service cost |  |  | 41 |  |  |  | 39 |
Interest cost |  |  | 347 |  |  |  | 196 |
Actuarial loss |  |  | 717 |  |  |  | 25 |
Benefits paid |  |  | (1,358 | ) |  |  | (889 | )
Special termination benefits |  |  | — |  |  |  | 3,708 |
End of year |  |  | 9,003 |  |  |  | 9,256 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets: |  |  |  |  |  |  |  |
Beginning of year |  |  | — |  |  |  | — |
Company contributions |  |  | 1,358 |  |  |  | 889 |
Benefits paid |  |  | (1,358 | ) |  |  | (889 | )
End of year |  |  | — |  |  |  | — |
Funded status |  | $ | (9,003 | ) |  | $ | (9,256 | )
The following table provides amounts recorded within the account line items of financial position as of December 31:
|  | 2019 |  |  | 2018 |
|  | (in thousands) |
Accrued employees’ compensation and withholdings |  | $ | (1,231 | ) |  | $ | (1,310 | )
Retirement plans liability |  |  | (7,772 | ) |  |  | (7,946 | )
Funded status |  | $ | (9,003 | ) |  | $ | (9,256 | )
The following table provides amounts recognized in accumulated other comprehensive income as of December 31:
|  | 2019 |  |  | 2018 |
|  | (in thousands) |
Prior service credit, before tax |  | $ | (58 | ) |  | $ | (249 | )
Deferred taxes |  |  | (1,684 | ) |  |  | (1,641 | )
Total recognized in other comprehensive income, net of tax |  | $ | (1,742 | ) |  | $ | (1,890 | )
Expense For the years ended December 31, 2019, 2018, and 2017, Teradyne’s net periodic postretirement benefit cost (income) was comprised of the following:
|  | 2019 |  |  | 2018 |  |  | 2017 |
|  | (in thousands) |
Components of Net Periodic Postretirement Benefit Cost (income): |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 41 |  |  | $ | 39 |  |  | $ | 34 |
Interest cost |  |  | 347 |  |  |  | 196 |  |  |  | 201 |
Amortization of prior service credit |  |  | (191 | ) |  |  | (373 | ) |  |  | (496 | )
Net actuarial loss |  |  | 717 |  |  |  | 25 |  |  |  | 398 |
Special termination benefits |  |  | — |  |  |  | 3,708 |  |  |  | 591 |
Total net periodic postretirement benefit cost |  |  | 914 |  |  |  | 3,595 |  |  |  | 728 |
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  |  | — |  |  |  | — |  |  |  | — |
Reversal of amortization items: |  |  |  |  |  |  |  |  |  |  |  |
Prior service credit |  |  | 191 |  |  |  | 373 |  |  |  | 496 |
Total recognized in other comprehensive income |  |  | 191 |  |  |  | 373 |  |  |  | 496 |
Total recognized in net periodic postretirement cost and other comprehensive income |  | $ | 1,105 |  |  | $ | 3,968 |  |  | $ | 1,224 |
Weighted Average Assumptions to Determine Net Periodic Postretirement Benefit Income as of January 1:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Discount rate |  |  | 4.0 | % |  |  | 3.4 | % |  |  | 3.9 | %
Initial health care cost trend rate |  |  | 7.5 |  |  |  | 7.9 |  |  |  | 7.3 |
Ultimate health care cost trend rate |  |  | 4.5 |  |  |  | 4.5 |  |  |  | 5.0 |
Year in which ultimate health care cost trend rate is reached |  |  | 2026 |  |  |  | 2026 |  |  |  | 2023 |
Weighted Average Assumptions to Determine Postretirement Benefit Obligation as of December 31:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Discount rate |  |  | 3.0 | % |  |  | 4.0 | % |  |  | 3.4 | %
Initial medical trend |  |  | 7.1 |  |  |  | 7.5 |  |  |  | 7.9 |
Ultimate health care trend |  |  | 4.5 |  |  |  | 4.5 |  |  |  | 4.5 |
Medical cost trend rate decrease to ultimate rate in year |  |  | 2026 |  |  |  | 2026 |  |  |  | 2026 |
Assumed health care trend rates could have a significant effect on the amounts reported for health care plans. A one percentage point change in the assumed health care cost trend rates for the year ended December 31, 2019 would have the following effects:
|  | 1 Percentage Point Increase |  |  | 1 Percentage Point Decrease |
|  | (in thousands) |
Effect on total service and interest cost components |  | $ | 6 |  |  | $ | (6 | )
Effect on postretirement benefit obligations |  |  | 139 |  |  |  | (133 | )
Expected Future Benefit Payments Future benefit payments are expected to be paid as follows:
|  | Benefit Payments |
|  | (in thousands) |
2020 |  | $ | 1,231 |
2021 |  |  | 1,171 |
2022 |  |  | 958 |
2023 |  |  | 789 |
2024 |  |  | 662 |
2025-2029 |  |  | 1,965 |

X
- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
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