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Pension and Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2018
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits We provide defined contribution plans and noncontributory defined benefit retirement plans that cover certain of our employees. Benefits under the defined benefit retirement plans reflect the employees’ compensation, years of service and age at retirement. Additionally, we provide health care and life insurance benefits for certain retired employees. The majority of employees may become eligible for these benefits if they reach retirement age while working for us. The expected cost of such benefits is accrued during the employees’ years of service. Current rates of rate-regulated companies include postretirement benefit costs, including amortization of the regulatory assets that arose prior to inclusion of these costs in rates. For most plans, cash contributions are remitted to grantor trusts. Our Pension and Other Postretirement Benefit Plans’ Asset Management. We employ a liability-driven investing strategy for the pension plan, as noted below. A mix of equities and fixed income investments are used to maximize the long-term return of plan assets and hedge the liabilities at a prudent level of risk. We utilize a total return investment approach for the other postretirement benefit plans. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and asset class volatility. The investment portfolio contains a diversified blend of equity and fixed income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, as well as growth, value, small and large capitalizations. Other assets such as private equity funds are used judiciously to enhance long-term returns while improving portfolio diversification. Derivatives may be used to gain market exposure in an efficient and timely manner; however, derivatives may not be used to leverage the portfolio beyond the market value of the underlying assets. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability studies. We utilize a building block approach with proper consideration of diversification and rebalancing in determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships between equities and fixed income are analyzed to ensure that they are consistent with the widely accepted capital market principle that assets with higher volatility generate greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term capital market assumptions are determined. Peer data and historical returns are reviewed to check for reasonability and appropriateness. The most important component of an investment strategy is the portfolio asset mix, or the allocation between the various classes of securities available to the pension and other postretirement benefit plans for investment purposes. The asset mix and acceptable minimum and maximum ranges established for our plan assets represents a long-term view and are listed in the table below. In 2012, a dynamic asset allocation policy for the pension fund was approved. This policy calls for a gradual reduction in the allocation of return-seeking assets (equities, real estate and private equity) and a corresponding increase in the allocation of liability-hedging assets (fixed income) as the funded status of the plans increase above 90% (as measured by the market value of qualified pension plan assets divided by the projected benefit obligations of the qualified pension plans). During 2017, a $277 million discretionary contribution was made to the pension plans. A new asset-liability study was completed in 2018 resulting in a more conservative glide path and an increase in the allocation to liability-hedging assets held in the portfolio. As of December 31, 2018, the asset mix and acceptable minimum and maximum ranges established by the policy for the pension and other postretirement benefit plans are as follows: Asset Mix Policy of Funds:
| Defined Benefit Pension Plan |  | Postretirement Benefit Plan
Asset Category | Minimum |  | Maximum |  | Minimum |  | Maximum
Domestic Equities | 12% |  | 32% |  | 0% |  | 55%
International Equities | 6% |  | 16% |  | 0% |  | 25%
Fixed Income | 59% |  | 71% |  | 20% |  | 100%
Real Estate | 0% |  | 7% |  | 0% |  | 0%
Short-Term Investments/Other | 0% |  | 15% |  | 0% |  | 10%
As of December 31, 2017, the asset mix and acceptable minimum and maximum ranges established by the policy for the pension and other postretirement benefit plans were as follows: Asset Mix Policy of Funds:
| Defined Benefit Pension Plan |  | Postretirement Benefit Plan
Asset Category | Minimum |  | Maximum |  | Minimum |  | Maximum
Domestic Equities | 16% |  | 36% |  | 0% |  | 55%
International Equities | 8% |  | 18% |  | 0% |  | 25%
Fixed Income | 39% |  | 51% |  | 20% |  | 100%
Diversified Credit | 0% |  | 13% |  | 0% |  | 0%
Real Estate | 0% |  | 13% |  | 0% |  | 0%
Short-Term Investments | 0% |  | 10% |  | 0% |  | 10%
Pension Plan and Postretirement Plan Asset Mix at December 31, 2018 and December 31, 2017:
| Defined Benefit Pension Assets |  | December 31, 2018 |  | Postretirement Benefit Plan Assets |  | December 31, 2018
Asset Class (in millions) | Asset Value |  | % of Total Assets |  | Asset Value |  | % of Total Assets
Domestic Equities | $ | 355.5 |  |  | 19.0 | % |  | $ | 78.8 |  |  | 36.4 | %
International Equities | 165.5 |  |  | 8.9 | % |  | 17.5 |  |  | 8.1 | %
Fixed Income | 1,241.9 |  |  | 66.5 | % |  | 115.1 |  |  | 53.2 | %
Real Estate | 52.7 |  |  | 2.8 | % |  | — |  |  | — |
Cash/Other | 52.1 |  |  | 2.8 | % |  | 4.9 |  |  | 2.3 | %
Total | $ | 1,867.7 |  |  | 100.0 | % |  | $ | 216.3 |  |  | 100.0 | %
| Defined Benefit Pension Assets |  | December 31, 2017 |  | Postretirement Benefit Plan Assets |  | December 31, 2017
Asset Class (in millions) | Asset Value |  | % of Total Assets |  | Asset Value |  | % of Total Assets
Domestic Equities | $ | 698.2 |  |  | 32.3 | % |  | $ | 96.0 |  |  | 36.6 | %
International Equities | 351.0 |  |  | 16.2 | % |  | 39.8 |  |  | 15.2 | %
Fixed Income | 977.6 |  |  | 45.3 | % |  | 117.5 |  |  | 44.8 | %
Real Estate | 49.9 |  |  | 2.3 | % |  | — |  |  | — |
Cash/Other | 83.3 |  |  | 3.9 | % |  | 9.2 |  |  | 3.4 | %
Total | $ | 2,160.0 |  |  | 100.0 | % |  | $ | 262.5 |  |  | 100.0 | %
The categorization of investments into the asset classes in the table above are based on definitions established by our Benefits Committee. Fair Value Measurements. The following table sets forth, by level within the fair value hierarchy, the Master Trust and other postretirement benefits investment assets at fair value as of December 31, 2018 and 2017. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Total Master Trust and other postretirement benefits investment assets at fair value classified within Level 3 were $86.1 million and $98.9 million as of December 31, 2018 and December 31, 2017, respectively. Such amounts were approximately 4% of the Master Trust and other postretirement benefits’ total investments as reported on the statement of net assets available for benefits at fair value as of December 31, 2018 and 2017. Valuation Techniques Used to Determine Fair Value: Level 1 Measurements Most common and preferred stocks are traded in active markets on national and international securities exchanges and are valued at closing prices on the last business day of each period presented. Cash is stated at cost which approximates fair value, with the exception of cash held in foreign currencies which fluctuates with changes in the exchange rates. Short-term bills and notes are priced based on quoted market values. Level 2 Measurements Most U.S. Government Agency obligations, mortgage/asset-backed securities, and corporate fixed income securities are generally valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. To the extent that quoted prices are not available, fair value is determined based on a valuation model that includes inputs such as interest rate yield curves and credit spreads. Securities traded in markets that are not considered active are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Other fixed income includes futures and options which are priced on bid valuation or settlement pricing. Level 3 Measurements Private equity investment strategies include buy-out, venture capital, growth equity, distressed debt, and mezzanine debt. Private equity investments are held through limited partnerships. Limited partnerships are valued at estimated fair market value based on their proportionate share of the partnership's fair value as recorded in the partnerships' audited financial statements. Partnership interests represent ownership interests in private equity funds and real estate funds. Real estate partnerships invest in natural resources, commercial real estate and distressed real estate. The fair value of these investments is determined by reference to the funds' underlying assets, which are principally securities, private businesses, and real estate properties. The value of interests held in limited partnerships, other than securities, is determined by the general partner, based upon third-party appraisals of the underlying assets, which include inputs such as cost, operating results, discounted cash flows and market based comparable data. Private equity and real estate limited partnerships typically call capital over a three to five year period and pay out distributions as the underlying investments are liquidated. The typical expected life of these limited partnerships is 10-15 years and these investments typically cannot be redeemed prior to liquidation. Not Classified Commingled funds that hold underlying investments that have prices which are derived from the quoted prices in active markets are not classified within the fair value hierarchy. Instead, these assets are measured at estimated fair value using the net asset value per share of the investments. The funds' underlying assets are principally marketable equity and fixed income securities. Units held in commingled funds are valued at the unit value as reported by the investment managers. For the year ended December 31, 2018, there were no significant changes to valuation techniques to determine the fair value of our pension and other postretirement benefits' assets. Fair Value Measurements at December 31, 2018:
(in millions) | December 31, 2018 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Pension plan assets: |  |  |  |  |  |  |
Cash | $ | 9.2 |  |  | $ | 8.8 |  |  | $ | 0.4 |  |  | $ | — |
Equity securities |  |  |  |  |  |  |
U.S. equities | 0.2 |  |  | 0.2 |  |  | — |  |  | — |
Fixed income securities |  |  |  |  |  |  |
Government | 250.2 |  |  | — |  |  | 250.2 |  |  | — |
Corporate | 442.8 |  |  | — |  |  | 442.8 |  |  | — |
Mutual Funds |  |  |  |  |  |  |
U.S. multi-strategy | 110.3 |  |  | 110.3 |  |  | — |  |  | — |
International equities | 43.2 |  |  | 43.2 |  |  | — |  |  | — |
Fixed income | 166.8 |  |  | 166.8 |  |  | — |  |  | — |
Private equity limited partnerships |  |  |  |  |  |  |
U.S. multi-strategy(1) | 18.5 |  |  | — |  |  | — |  |  | 18.5 |
International multi-strategy(2) | 12.5 |  |  | — |  |  | — |  |  | 12.5 |
Distressed opportunities | 2.4 |  |  | — |  |  | — |  |  | 2.4 |
Real estate | 52.7 |  |  | — |  |  | — |  |  | 52.7 |
Commingled funds(3) |  |  |  |  |  |  |
Short-term money markets | 18.3 |  |  | — |  |  | — |  |  | — |
U.S. equities | 245.2 |  |  | — |  |  | — |  |  | — |
International equities | 122.3 |  |  | — |  |  | — |  |  | — |
Fixed income | 365.7 |  |  | — |  |  | — |  |  | — |
Pension plan assets subtotal | 1,860.3 |  |  | 329.3 |  |  | 693.4 |  |  | 86.1 |
Other postretirement benefit plan assets: |  |  |  |  |  |  |
Mutual funds |  |  |  |  |  |  |
U.S. equities | 68.4 |  |  | 68.4 |  |  | — |  |  | — |
International equities | 17.5 |  |  | 17.5 |  |  | — |  |  | — |
Fixed income | 114.8 |  |  | 114.8 |  |  | — |  |  | — |
Commingled funds(3) |  |  |  |  |  |  |
Short-term money markets | 5.2 |  |  | — |  |  | — |  |  | — |
U.S. equities | 10.4 |  |  | — |  |  | — |  |  | — |
Other postretirement benefit plan assets subtotal | 216.3 |  |  | 200.7 |  |  | — |  |  | — |
Due to brokers, net(4) | (1.1 | ) |  | — |  |  | (1.1 | ) |  | — |
Accrued income/dividends | 8.6 |  |  | 8.6 |  |  | — |  |  | — |
Total pension and other postretirement benefit plan assets | $ | 2,084.1 |  |  | $ | 538.6 |  |  | $ | 692.3 |  |  | $ | 86.1 |
(1) This class includes limited partnerships/fund of funds that invest in a diverse portfolio of private equity strategies, including buy-outs, venture capital, growth capital, special situations and secondary markets, primarily inside the United States. (2) This class includes limited partnerships/fund of funds that invest in diverse portfolio of private equity strategies, including buy-outs, venture capital, growth capital, special situations and secondary markets, primarily outside the United States. (3) This class of investments is measured at fair value using the net asset value per share and has not been classified in the fair value hierarchy. (4) This class represents pending trades with brokers. The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 assets for the year ended December 31, 2018:
| Balance at January 1, 2018 |  | Total gains or losses (unrealized / realized) |  | Purchases |  | (Sales) |  | Balance at December 31, 2018
Private equity limited partnerships |  |  |  |  |  |  |  |  |
U.S. multi-strategy | 26.7 |  |  | 2.4 |  |  | 0.7 |  |  | (11.3 | ) |  | 18.5 |
International multi-strategy | 19.1 |  |  | (0.6 | ) |  | — |  |  | (6.0 | ) |  | 12.5 |
Distressed opportunities | 3.2 |  |  | (0.8 | ) |  | — |  |  | — |  |  | 2.4 |
Real estate | 49.9 |  |  | 1.7 |  |  | 1.8 |  |  | (0.7 | ) |  | 52.7 |
Total | $ | 98.9 |  |  | $ | 2.7 |  |  | $ | 2.5 |  |  | $ | (18.0 | ) |  | $ | 86.1 |
The table below sets forth a summary of unfunded commitments, redemption frequency and redemption notice periods for certain investments that are measured at fair value using the net asset value per share for the year ended December 31, 2018:
(in millions) | Fair Value |  | Redemption Frequency |  | Redemption Notice Period
Commingled Funds |  |  |  |  |
Short-term money markets | $ | 23.5 |  |  | Daily |  | 1 day
U.S. equities | 255.6 |  |  | Monthly |  | 3 days
International equities | 122.3 |  |  | Monthly |  | 10-30 days
Fixed income | 365.7 |  |  | Monthly |  | 3 days
Total | $ | 767.1 |  |  |  |  |
Fair Value Measurements at December 31, 2017:
(in millions) | December 31, 2017 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Pension plan assets: |  |  |  |  |  |  |
Cash | $ | 9.7 |  |  | $ | 9.7 |  |  | $ | — |  |  | $ | — |
Equity securities |  |  |  |  |  |  |
U.S. equities | 0.3 |  |  | 0.3 |  |  | — |  |  | — |
Fixed income securities |  |  |  |  |  |  |
Government | 143.4 |  |  | — |  |  | 143.4 |  |  | — |
Corporate | 332.6 |  |  | — |  |  | 332.6 |  |  | — |
Mutual Funds |  |  |  |  |  |  |
U.S. multi-strategy | 231.5 |  |  | 231.5 |  |  | — |  |  | — |
International equities | 85.8 |  |  | 85.8 |  |  | — |  |  | — |
Fixed income | 242.3 |  |  | 242.3 |  |  | — |  |  | — |
Private equity limited partnerships |  |  |  |  |  |  |
U.S. multi-strategy(1) | 26.7 |  |  | — |  |  | — |  |  | 26.7 |
International multi-strategy(2) | 19.1 |  |  | — |  |  | — |  |  | 19.1 |
Distressed opportunities | 3.2 |  |  | — |  |  | — |  |  | 3.2 |
Real Estate | 49.9 |  |  | — |  |  | — |  |  | 49.9 |
Commingled funds(3) |  |  |  |  |  |  |
Short-term money markets | 34.1 |  |  | — |  |  | — |  |  | — |
U.S. equities | 466.6 |  |  | — |  |  | — |  |  | — |
International equities | 265.1 |  |  | — |  |  | — |  |  | — |
Fixed income | 244.9 |  |  | — |  |  | — |  |  | — |
Pension plan assets subtotal | 2,155.2 |  |  | 569.6 |  |  | 476.0 |  |  | 98.9 |
Other postretirement benefit plan assets: |  |  |  |  |  |  |
Mutual funds |  |  |  |  |  |  |
U.S. equities | 83.8 |  |  | 83.8 |  |  | — |  |  | — |
International equities | 39.8 |  |  | 39.8 |  |  | — |  |  | — |
Fixed income | 117.3 |  |  | 117.3 |  |  | — |  |  | — |
Commingled funds(3) |  |  |  |  |  |  |
Short-term money markets | 9.4 |  |  | — |  |  | — |  |  | — |
U.S. equities | 12.2 |  |  | — |  |  | — |  |  | — |
Other postretirement benefit plan assets subtotal | 262.5 |  |  | 240.9 |  |  | — |  |  | — |
Due to brokers, net(4) | (2.5 | ) |  | — |  |  | — |  |  | — |
Accrued investment income/dividends | 7.3 |  |  | — |  |  | — |  |  | — |
Total pension and other postretirement benefit plan assets | $ | 2,422.5 |  |  | $ | 810.5 |  |  | $ | 476.0 |  |  | $ | 98.9 |
(1) This class includes limited partnerships/fund of funds that invest in a diverse portfolio of private equity strategies, including buy-outs, venture capital, growth capital, special situations and secondary markets, primarily inside the United States. (2) This class includes limited partnerships/fund of funds that invest in a diverse portfolio of private equity strategies, including buy-outs, venture capital, growth capital, special situations and secondary markets, primarily outside the United States. (3) This class of investments is measured at fair value using the net asset value per share and has not been classified in the fair value hierarchy. (4) This class represents pending trades with brokers. The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 assets for the year ended December 31, 2017:
| Balance at January 1, 2017 |  | Total gains or losses (unrealized / realized) |  | Purchases |  | (Sales) |  | Balance at December 31, 2017
Fixed income securities |  |  |  |  |  |  |  |  |
Other fixed income | $ | 0.1 |  |  | $ | (0.1 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |
Private equity limited partnerships |  |  |  |  |  |  |  |  |
U.S. multi-strategy | 34.8 |  |  | 2.1 |  |  | 0.9 |  |  | (11.1 | ) |  | 26.7 |
International multi-strategy | 24.9 |  |  | 1.1 |  |  | 0.1 |  |  | (7.0 | ) |  | 19.1 |
Distress opportunities | 4.1 |  |  | 0.4 |  |  | — |  |  | (1.3 | ) |  | 3.2 |
Real estate | 9.2 |  |  | (0.6 | ) |  | 42.1 |  |  | (0.8 | ) |  | 49.9 |
Total | $ | 73.1 |  |  | $ | 2.9 |  |  | $ | 43.1 |  |  | $ | (20.2 | ) |  | $ | 98.9 |
The table below sets forth a summary of unfunded commitments, redemption frequency and redemption notice periods for certain investments that are measured at fair value using the net asset value per share for the year ended December 31, 2017:
(in millions) | Fair Value |  | Redemption Frequency |  | Redemption Notice Period
Commingled Funds |  |  |  |  |
Short-term money markets | $ | 43.5 |  |  | Daily |  | 1 day
U.S. equities | 478.8 |  |  | Monthly |  | 3 days
International equities | 265.1 |  |  | Monthly |  | 14-30 days
Fixed income | 244.9 |  |  | Monthly |  | 3 days
Total | $ | 1,032.3 |  |  |  |  |
Our Pension and Other Postretirement Benefit Plans’ Funded Status and Related Disclosure. The following table provides a reconciliation of the plans’ funded status and amounts reflected in our Consolidated Balance Sheets at December 31 based on a December 31 measurement date:
| Pension Benefits |  | Other Postretirement Benefits
(in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
Change in projected benefit obligation(1) |  |  |  |  |  |  |
Benefit obligation at beginning of year | $ | 2,192.6 |  |  | $ | 2,165.8 |  |  | $ | 556.3 |  |  | $ | 529.0 |
Service cost | 31.3 |  |  | 30.0 |  |  | 5.0 |  |  | 4.8 |
Interest cost | 67.1 |  |  | 68.3 |  |  | 17.6 |  |  | 17.8 |
Plan participants’ contributions | — |  |  | — |  |  | 5.7 |  |  | 5.7 |
Plan amendments | 0.2 |  |  | 0.9 |  |  | 0.1 |  |  | 1.6 |
Actuarial (gain) loss | (103.9 | ) |  | 98.3 |  |  | (51.7 | ) |  | 36.2 |
Settlement loss | 0.8 |  |  | 1.6 |  |  | — |  |  | — |
Benefits paid | (206.8 | ) |  | (172.3 | ) |  | (41.1 | ) |  | (39.3 | )
Estimated benefits paid by incurred subsidy | — |  |  | — |  |  | 0.6 |  |  | 0.5 |
Projected benefit obligation at end of year | $ | 1,981.3 |  |  | $ | 2,192.6 |  |  | $ | 492.5 |  |  | $ | 556.3 |
Change in plan assets |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | $ | 2,160.0 |  |  | $ | 1,750.9 |  |  | $ | 262.5 |  |  | $ | 231.4 |
Actual (loss) return on plan assets | (88.4 | ) |  | 299.1 |  |  | (31.8 | ) |  | 33.1 |
Employer contributions | 2.9 |  |  | 282.3 |  |  | 21.0 |  |  | 31.6 |
Plan participants’ contributions | — |  |  | — |  |  | 5.7 |  |  | 5.7 |
Benefits paid | (206.8 | ) |  | (172.3 | ) |  | (41.1 | ) |  | (39.3 | )
Fair value of plan assets at end of year | $ | 1,867.7 |  |  | $ | 2,160.0 |  |  | $ | 216.3 |  |  | $ | 262.5 |
Funded Status at end of year | $ | (113.6 | ) |  | $ | (32.6 | ) |  | $ | (276.2 | ) |  | $ | (293.8 | )
Amounts recognized in the statement of financial position consist of: |  |  |  |  |  |  |
Noncurrent assets | — |  |  | 9.8 |  |  | — |  |  | — |
Current liabilities | (3.0 | ) |  | (2.8 | ) |  | (0.8 | ) |  | (0.7 | )
Noncurrent liabilities | (110.6 | ) |  | (39.6 | ) |  | (275.4 | ) |  | (293.1 | )
Net amount recognized at end of year(2) | $ | (113.6 | ) |  | $ | (32.6 | ) |  | $ | (276.2 | ) |  | $ | (293.8 | )
Amounts recognized in accumulated other comprehensive income or regulatory asset/liability(3) |  |  |  |  |  |  |
Unrecognized prior service credit | $ | 3.2 |  |  | $ | 2.5 |  |  | $ | (19.0 | ) |  | $ | (23.1 | )
Unrecognized actuarial loss | 761.2 |  |  | 692.9 |  |  | 75.3 |  |  | 84.2 |
Net amount recognized at end of year | $ | 764.4 |  |  | $ | 695.4 |  |  | $ | 56.3 |  |  | $ | 61.1 |
(1) The change in benefit obligation for Pension Benefits represents the change in Projected Benefit Obligation while the change in benefit obligation for Other Postretirement Benefits represents the change in accumulated postretirement benefit obligation. (2) We recognize our Consolidated Balance Sheets underfunded and overfunded status of our various defined benefit postretirement plans, measured as the difference between the fair value of the plan assets and the benefit obligation. (3) We determined that for certain rate-regulated subsidiaries the future recovery of pension and other postretirement benefits costs is probable. These rate-regulated subsidiaries recorded regulatory assets and liabilities of $798.3 million and $0.1 million, respectively, as of December 31, 2018, and $733.5 million and $0.1 million, respectively, as of December 31, 2017 that would otherwise have been recorded to accumulated other comprehensive loss. Our accumulated benefit obligation for our pension plans was $1,965.6 million and $2,170.4 million as of December 31, 2018 and 2017, respectively. The accumulated benefit obligation as of a date is the actuarial present value of benefits attributed by the pension benefit formula to employee service rendered prior to that date and based on current and past compensation levels. The accumulated benefit obligation differs from the projected benefit obligation disclosed in the table above in that it includes no assumptions about future compensation levels. Our pension plans were underfunded by $113.6 million at December 31, 2018 compared to being underfunded, in aggregate, by $32.6 million at December 31, 2017. The decline in the funded status was due primarily to unfavorable asset returns offset by an increase in discount rates. We contributed $2.9 million and $282.3 million to our pension plans in 2018 and 2017, respectively. Our other postretirement benefit plans were underfunded by $276.2 million at December 31, 2018 compared to being underfunded by $293.8 million at December 31, 2017. The improvement in funded status was primarily due to employer contributions and an increase in discount rates, offset by unfavorable asset returns. We contributed $21.0 million and $31.6 million to our other postretirement benefit plans in 2018 and 2017, respectively. No amounts of our pension or other postretirement benefit plans’ assets are expected to be returned to us or any of our subsidiaries in 2018. In 2018 and 2017, some of our qualified pension plans paid lump sum payouts in excess of the respective plan's service cost plus interest cost, thereby meeting the requirement for settlement accounting. We recorded settlement charges of $18.5 million and $13.7 million in 2018 and 2017, respectively. Net periodic pension benefit cost for 2018 was increased by $3.0 million as a result of the interim remeasurement. The following table provides the key assumptions that were used to calculate the pension and other postretirement benefits obligations for our various plans as of December 31:
| Pension Benefits |  | Other Postretirement Benefits
| 2018 |  | 2017 |  | 2018 |  | 2017
Weighted-average assumptions to Determine Benefit Obligation |  |  |  |  |  |  |
Discount Rate | 4.26 | % |  | 3.58 | % |  | 4.31 | % |  | 3.67 | %
Rate of Compensation Increases | 4.00 | % |  | 4.00 | % |  | — |  |  | — |
Health Care Trend Rates |  |  |  |  |  |  |
Trend for Next Year | — |  |  | — |  |  | 8.48 | % |  | 8.52 | %
Ultimate Trend | — |  |  | — |  |  | 4.50 | % |  | 4.50 | %
Year Ultimate Trend Reached | — |  |  | — |  |  | 2026 |  |  | 2025 |
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
(in millions) | 1% point increase |  | 1% point decrease
Effect on service and interest components of net periodic cost | $ | 1.3 |  |  | $ | (1.1 | )
Effect on accumulated postretirement benefit obligation | 25.0 |  |  | (22.0 | )
We expect to make contributions of approximately $3.0 million to our pension plans and approximately $20.6 million to our postretirement medical and life plans in 2018. The following table provides benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter. The expected benefits are estimated based on the same assumptions used to measure our benefit obligation at the end of the year and include benefits attributable to the estimated future service of employees:
(in millions) | Pension Benefits |  | Other Postretirement Benefits |  | Federal Subsidy Receipts
Year(s) |  |  |  |  |
2019 | $ | 177.4 |  |  | $ | 34.3 |  |  | $ | 0.5 |
2020 | 176.0 |  |  | 35.0 |  |  | 0.5 |
2021 | 176.5 |  |  | 35.7 |  |  | 0.5 |
2022 | 174.4 |  |  | 36.0 |  |  | 0.4 |
2023 | 166.5 |  |  | 35.8 |  |  | 0.4 |
2024-2028 | 748.7 |  |  | 171.8 |  |  | 1.7 |
The following table provides the components of the plans’ actuarially determined net periodic benefits cost for each of the three years ended December 31, 2018, 2017 and 2016:
| Pension Benefits |  | Other Postretirement Benefits
(in millions) | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Components of Net Periodic Benefit Cost(1) |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 31.3 |  |  | $ | 30.0 |  |  | $ | 30.7 |  |  | $ | 5.0 |  |  | $ | 4.8 |  |  | $ | 5.0 |
Interest cost | 67.1 |  |  | 68.3 |  |  | 89.7 |  |  | 17.6 |  |  | 17.8 |  |  | 22.0 |
Expected return on assets | (142.3 | ) |  | (123.1 | ) |  | (132.9 | ) |  | (14.9 | ) |  | (15.9 | ) |  | (17.2 | )
Amortization of prior service cost (credit) | (0.4 | ) |  | (0.7 | ) |  | (0.2 | ) |  | (4.0 | ) |  | (4.4 | ) |  | (4.9 | )
Recognized actuarial loss | 40.6 |  |  | 52.9 |  |  | 61.2 |  |  | 3.8 |  |  | 3.0 |  |  | 3.1 |
Settlement loss | 18.5 |  |  | 13.7 |  |  | — |  |  | — |  |  | — |  |  | — |
Total Net Periodic Benefits Cost | $ | 14.8 |  |  | $ | 41.1 |  |  | $ | 48.5 |  |  | $ | 7.5 |  |  | $ | 5.3 |  |  | $ | 8.0 |
(1)Service cost is presented in "Operation and maintenance" on the Statements of Consolidated Income (Loss). Non-service cost components are presented within "Other, net." The following table provides the key assumptions that were used to calculate the net periodic benefits cost for our various plans:
| Pension Benefits |  | Other Postretirement Benefits
| 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Weighted-average Assumptions to Determine Net Periodic Benefit Cost |  |  |  |  |  |  |  |  |  |  |
Discount rate - service cost(1) | 3.79 | % |  | 4.40 | % |  | 4.24 | % |  | 3.89 | % |  | 4.58 | % |  | 4.33 | %
Discount rate - interest cost(1) | 3.15 | % |  | 3.31 | % |  | 4.24 | % |  | 3.27 | % |  | 3.48 | % |  | 4.33 | %
Expected Long-Term Rate of Return on Plan Assets | 7.00 | % |  | 7.25 | % |  | 8.00 | % |  | 5.80 | % |  | 6.99 | % |  | 7.85 | %
Rate of Compensation Increases | 4.00 | % |  | 4.00 | % |  | 4.00 | % |  | — |  |  | — |  |  | — |
(1) In January 2017, we changed the method used to estimate the service and interest components of net periodic benefit cost for pension and other postretirement benefits. This change, compared to the previous method, resulted in a decrease in the actuarially-determined service and interest cost components. Historically, we estimated service and interest cost utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. For fiscal 2017 and beyond, we now utilize a full yield curve approach to estimate these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. We believe it is appropriate to assume a 7.00% and 5.80% rate of return on pension and other postretirement plan assets, respectively, for our calculation of 2018 pension benefits cost. These rates are primarily based on asset mix and historical rates of return and were adjusted in the current year due to anticipated changes in asset allocation and projected market returns. The following table provides other changes in plan assets and projected benefit obligations recognized in other comprehensive income or regulatory asset or liability:
| Pension Benefits |  | Other Postretirement Benefits
(in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
Other Changes in Plan Assets and Projected Benefit Obligations Recognized in Other Comprehensive Income or Regulatory Asset or Liability |  |  |  |  |  |  |
Net prior service cost | $ | 0.2 |  |  | $ | 0.9 |  |  | $ | 0.1 |  |  | $ | 1.6 |
Net actuarial loss (gain) | 127.5 |  |  | (76.1 | ) |  | (5.0 | ) |  | 18.9 |
Settlements | (18.5 | ) |  | (13.7 | ) |  | — |  |  | — |
Less: amortization of prior service cost | 0.4 |  |  | 0.7 |  |  | 4.0 |  |  | 4.4 |
Less: amortization of net actuarial loss | (40.6 | ) |  | (52.9 | ) |  | (3.8 | ) |  | (3.0 | )
Total Recognized in Other Comprehensive Income or Regulatory Asset or Liability | $ | 69.0 |  |  | $ | (141.1 | ) |  | $ | (4.7 | ) |  | $ | 21.9 |
Amount Recognized in Net Periodic Benefits Cost and Other Comprehensive Income or Regulatory Asset or Liability | $ | 83.8 |  |  | $ | (100.0 | ) |  | $ | 2.8 |  |  | $ | 27.2 |
Based on a December 31 measurement date, the net unrecognized actuarial loss, unrecognized prior service cost (credit), and unrecognized transition obligation that will be amortized into net periodic benefit cost during 2019 for the pension plans are $45.5 million, $0.2 million and zero, respectively, and for other postretirement benefit plans are $2.4 million, $(3.2) million and zero, respectively.

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