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Retirement Plans and Postretirement Benefit Plans | 12 Months Ended
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Dec. 31, 2019
Retirement Plans and Postretirement Benefit Plans [Abstract] |
Pension and Other Postretirement Benefits Disclosure [Text Block] | Retirement Plans and Postretirement Benefit Plans Pension Plan and Restoration of Retirement Income Plan It is the Company's policy to fund the Pension Plan on a current basis based on the net periodic pension expense as determined by the Company's actuarial consultants. Such contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. The Company made a $20.0 million and $15.0 million contribution to its Pension Plan in 2019 and 2018, respectively. The Company has not determined whether it will need to make any contributions to the Pension Plan in 2020. Any contribution to the Pension Plan during 2020 would be a discretionary contribution, anticipated to be in the form of cash, and is not required to satisfy the minimum regulatory funding requirement specified by the Employee Retirement Income Security Act of 1974, as amended. The Company could be required to make additional contributions if the value of its pension trust and postretirement benefit plan trust assets are adversely impacted by a major market disruption in the future. In accordance with ASC Topic 715, "Compensation - Retirement Benefits," a one-time settlement charge is required to be recorded by an organization when lump sum payments or other settlements that relieve the organization from the responsibility for the pension benefit obligation during the plan year exceed the service cost and interest cost components of the organization's net periodic pension cost. During 2019, 2018 and 2017, the Company experienced an increase in both the number of employees electing to retire and the amount of lump sum payments paid to such employees upon retirement, which resulted in the Company recording pension plan settlement charges as presented in the net periodic benefit cost table below. The pension settlement charges did not require a cash outlay by the Company and did not increase the Company's total pension expense over time, as the charges were an acceleration of costs that otherwise would be recognized as pension expense in future periods. The Company provides a Restoration of Retirement Income Plan to those participants in the Company's Pension Plan whose benefits are subject to certain limitations of the Code. Participants in the Restoration of Retirement Income Plan receive the same benefits that they would have received under the Company's Pension Plan in the absence of limitations imposed by the federal tax laws. The Restoration of Retirement Income Plan is intended to be an unfunded plan. Obligations and Funded Status The following table presents the status of the Company's Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans for 2019 and 2018. These amounts have been recorded in Accrued Benefit Obligations with the offset in Accumulated Other Comprehensive Loss (except OG&E's portion, which is recorded as a regulatory asset as discussed in Note 1) in the Company's Consolidated Balance Sheets. The amounts in Accumulated Other Comprehensive Loss and those recorded as a regulatory asset represent a net periodic benefit cost to be recognized in the Consolidated Statements of Income in future periods. The benefit obligation for the Company's Pension Plan and the Restoration of Retirement Income Plan represents the projected benefit obligation, while the benefit obligation for the postretirement benefit plans represents the accumulated postretirement benefit obligation. The accumulated postretirement benefit obligation for the Company's Pension Plan and Restoration of Retirement Income Plan differs from the projected benefit obligation in that the former includes no assumption about future compensation levels. The accumulated postretirement benefit obligation for the Pension Plan and the Restoration of Retirement Income Plan at December 31, 2019 was $563.3 million and $8.1 million, respectively. The accumulated postretirement benefit obligation for the Pension Plan and the Restoration of Retirement Income Plan at December 31, 2018 was $561.9 million and $7.8 million, respectively. The details of the funded status of the Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans and the amounts included in the Consolidated Balance Sheets are included in the following table.
| Pension Plan |  | Restoration of Retirement Income Plan |  | Postretirement Benefit Plans |
December 31 (In millions) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018
Change in benefit obligation |  |  |  |  |  |
Beginning obligations | $ | 615.9 |  | $ | 687.5 |  | $ | 9.6 |  | $ | 8.1 |  | $ | 135.8 |  | $ | 149.4 |
Service cost | 12.9 |  | 14.9 |  | 0.5 |  | 0.4 |  | 0.2 |  | 0.3 |
Interest cost | 20.7 |  | 23.8 |  | 0.4 |  | 0.3 |  | 5.6 |  | 5.4 |
Plan settlements | (83.1) |  | (73.7) |  | (1.2) |  | (2.0) |  | — |  | — |
Plan amendments | — |  | — |  | 0.3 |  | — |  | — |  | — |
Participants' contributions | — |  | — |  | — |  | — |  | 4.1 |  | 3.8 |
Actuarial losses (gains) | 64.3 |  | (22.0) |  | 0.7 |  | 2.8 |  | 2.9 |  | (9.6) |
Benefits paid | (14.6) |  | (14.6) |  | — |  | — |  | (12.1) |  | (13.5) |
Ending obligations | $ | 616.1 |  | $ | 615.9 |  | $ | 10.3 |  | $ | 9.6 |  | $ | 136.5 |  | $ | 135.8 |
Change in plans' assets |  |  |  |  |  |
Beginning fair value | $ | 522.8 |  | $ | 635.3 |  | $ | — |  | $ | — |  | $ | 45.3 |  | $ | 50.2 |
Actual return on plans' assets | 85.2 |  | (39.2) |  | — |  | — |  | 4.6 |  | (0.6) |
Employer contributions | 20.0 |  | 15.0 |  | 1.2 |  | 2.0 |  | 5.1 |  | 5.4 |
Plan settlements | (83.1) |  | (73.7) |  | (1.2) |  | (2.0) |  | — |  | — |
Participants' contributions | — |  | — |  | — |  | — |  | 4.1 |  | 3.8 |
Benefits paid | (14.6) |  | (14.6) |  | — |  | — |  | (12.1) |  | (13.5) |
Ending fair value | $ | 530.3 |  | $ | 522.8 |  | $ | — |  | $ | — |  | $ | 47.0 |  | $ | 45.3 |
Funded status at end of year | $ | (85.8) |  | $ | (93.1) |  | $ | (10.3) |  | $ | (9.6) |  | $ | (89.5) |  | $ | (90.5) |
Net Periodic Benefit Cost The following table presents the net periodic benefit cost components, before consideration of capitalized amounts, of the Company's Pension Plan, Restoration of Retirement Income Plan and postretirement benefit plans that are included in the Consolidated Financial Statements. Service cost is presented within Other Operation and Maintenance, and interest cost, expected return on plan assets, amortization of net loss, amortization of unrecognized prior service cost and settlement cost are presented within Other Net Periodic Benefit Expense in the Company's Consolidated Statements of Income. OG&E recovers specific amounts of pension and postretirement medical costs in rates approved in its Oklahoma rate reviews. In accordance with approved orders, OG&E defers the difference between actual pension and postretirement medical expenses and the amount approved in its last Oklahoma rate review as a regulatory asset or regulatory liability. These amounts have been recorded in the Pension tracker in the regulatory assets and liabilities table in Note 1 and within Other Net Periodic Benefit Expense in the Company's Consolidated Statements of Income.
| Pension Plan |  |  | Restoration of Retirement Income Plan |  |  | Postretirement Benefit Plans |  |
Year Ended December 31 (In millions) | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017
Service cost | $ | 12.9 |  | $ | 14.9 |  | $ | 15.5 |  | $ | 0.5 |  | $ | 0.4 |  | $ | 0.3 |  | $ | 0.2 |  | $ | 0.3 |  | $ | 0.6 |
Interest cost | 20.7 |  | 23.8 |  | 26.2 |  | 0.4 |  | 0.3 |  | 0.3 |  | 5.6 |  | 5.4 |  | 7.2 |
Expected return on plan assets | (36.1) |  | (44.1) |  | (42.6) |  | — |  | — |  | — |  | (1.9) |  | (2.0) |  | (2.2) |
Amortization of net loss | 17.3 |  | 16.2 |  | 17.4 |  | 0.5 |  | 0.7 |  | 0.4 |  | 2.0 |  | 3.8 |  | 2.0 |
Amortization of unrecognized prior service cost (A) | — |  | — |  | (0.1) |  | — |  | 0.1 |  | 0.1 |  | (8.4) |  | (8.4) |  | (3.5) |
Settlement cost | 27.6 |  | 25.1 |  | 15.3 |  | 0.5 |  | 1.0 |  | — |  | — |  | — |  | 0.6 |
Total net periodic benefit cost | 42.4 |  | 35.9 |  | 31.7 |  | 1.9 |  | 2.5 |  | 1.1 |  | (2.5) |  | (0.9) |  | 4.7 |
Less: Amount paid by unconsolidated affiliates | 2.9 |  | 2.5 |  | 4.3 |  | 0.1 |  | 0.1 |  | — |  | (0.6) |  | (0.5) |  | 0.3 |
Net periodic benefit cost | $ | 39.5 |  | $ | 33.4 |  | $ | 27.4 |  | $ | 1.8 |  | $ | 2.4 |  | $ | 1.1 |  | $ | (1.9) |  | $ | (0.4) |  | $ | 4.4 |
(A)Unamortized prior service cost is amortized on a straight-line basis over the average remaining service period to the first eligibility age of participants who are expected to receive a benefit and are active at the date of the plan amendment. In addition to the net periodic benefit cost amounts recognized, as presented in the table above, for the Pension and Restoration of Retirement Income Plans in 2019, 2018 and 2017, the Company recognized the following:
Year Ended December 31 (In millions) | 2019 | 2018 | 2017
Decrease of pension expense to maintain allowed recoverable amount in Oklahoma jurisdiction (A) | $ | (16.1) |  | $ | (14.1) |  | $ | (2.3) |
Deferral of pension expense related to pension settlement charges: |  |  |
Oklahoma jurisdiction (A) | $ | 17.9 |  | $ | 22.1 |  | $ | 13.2 |
Arkansas jurisdiction (A) | $ | 1.7 |  | $ | 2.1 |  | $ | 1.1 |
(A) Included in the pension regulatory asset or liability in each jurisdiction, as indicated in the regulatory assets and liabilities table in Note 1. In addition to the net periodic benefit income and cost amounts recognized, as presented in the table above, for the postretirement benefit plans in 2019, 2018 and 2017, the Company recognized the following:
Year Ended December 31 (In millions) | 2019 | 2018 | 2017
Increase of postretirement expense to maintain allowed recoverable amount in Oklahoma jurisdiction (A) | $ | 1.0 |  | $ | 4.4 |  | $ | 6.2 |
(A) Included in the pension regulatory asset or liability in each jurisdiction, as indicated in the regulatory assets and liabilities table in Note 1.
(In millions) | 2019 | 2018 | 2017
Capitalized portion of net periodic pension benefit cost | $ | 3.6 |  | $ | 3.8 |  | $ | 4.4 |
Capitalized portion of net periodic postretirement benefit cost | $ | 0.2 |  | $ | 0.2 |  | $ | 1.2 |
Rate Assumptions
| Pension Plan and Restoration of Retirement Income Plan |  |  | Postretirement Benefit Plans |  |
Year Ended December 31 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017
Assumptions to determine benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate | 3.15 | % | 4.20 | % | 3.60 | % | 3.25 | % | 4.30 | % | 3.70 | %
Rate of compensation increase | 4.20 | % | 4.20 | % | 4.20 | % | N/A | N/A | N/A |
Assumptions to determine net periodic benefit cost: |  |  |  |  |  |
Discount rate | 3.63 | % | 3.73 | % | 4.00 | % | 4.30 | % | 3.70 | % | 4.20 | %
Expected return on plan assets | 7.50 | % | 7.50 | % | 7.50 | % | 4.00 | % | 4.00 | % | 4.00 | %
Rate of compensation increase | 4.20 | % | 4.20 | % | 4.20 | % | N/A | N/A |  | 4.20 | %
N/A - not applicable The discount rate used to compute the present value of plan liabilities is based generally on rates of high-grade corporate bonds with maturities similar to the average period over which benefits will be paid. The discount rate used to determine net benefit cost for the current year is the same discount rate used to determine the benefit obligation as of the previous year's balance sheet date, unless a plan settlement occurs during the current year that requires an updated discount rate for net periodic cost measurement. For 2019 and 2018, the Pension Plan discount rates used to determine net periodic benefit cost are disclosed on a weighted-average basis. The overall expected rate of return on plan assets assumption was 7.50 percent in both 2019 and 2018, which was used in determining net periodic benefit cost due to recent returns on the Company's long-term investment portfolio. The rate of return on plan assets assumption is the average long-term rate of earnings expected on the funds currently invested and to be invested for the purpose of providing benefits specified by the Pension Plan or postretirement benefit plans. This assumption is reexamined at least annually and updated as necessary. The rate of return on plan assets assumption reflects a combination of historical return analysis, forward-looking return expectations and the plans' current and expected asset allocation. The assumed health care cost trend rates have a significant effect on the amounts reported for postretirement medical benefit plans. Future health care cost trend rates are assumed to be 7.00 percent in 2020 with the rates trending downward to 4.50 percent by 2030. The effects of a one-percentage point change in the assumed health care cost trend rate are presented in the following tables.
ONE-PERCENTAGE POINT INCREASE |  |  |
Year Ended December 31 (In millions) | 2019 | 2018 | 2017
Effect on aggregate of the service and interest cost components | $ | — |  | $ | — |  | $ | — |
Effect on accumulated postretirement benefit obligations | $ | 0.1 |  | $ | 0.1 |  | $ | 0.1 |
ONE-PERCENTAGE POINT DECREASE |  |  |
Year Ended December 31 (In millions) | 2019 | 2018 | 2017
Effect on aggregate of the service and interest cost components | $ | — |  | $ | — |  | $ | — |
Effect on accumulated postretirement benefit obligations | $ | 0.3 |  | $ | 0.3 |  | $ | 0.3 |
Pension Plan Pension Plan Investments, Policies and Strategies The Pension Plan assets are held in a trust which follows an investment policy and strategy designed to reduce the funded status volatility of the Plan by utilizing liability driven investing. The purpose of liability-driven investing is to structure the asset portfolio to more closely resemble the pension liability and thereby more effectively hedge against changes in the liability. The investment policy follows a glide path approach that shifts a higher portfolio weighting to fixed income as the Plan's funded status increases. The table below sets forth the targeted fixed income and equity allocations at different funded status levels.
Projected Benefit Obligation Funded Status Thresholds | <90% | 95% |  | 100% |  | 105% |  | 110% |  | 115% |  | 120% |
Fixed income | 50% |  | 58% |  | 65% |  | 73% |  | 80% |  | 85% |  | 90% |
Equity | 50% |  | 42% |  | 35% |  | 27% |  | 20% |  | 15% |  | 10% |
Total | 100% |  | 100% |  | 100% |  | 100% |  | 100% |  | 100% |  | 100% |
Within the portfolio's overall allocation to equities, the funds are allocated according to the guidelines in the table below.
Asset Class | Target Allocation | Minimum | Maximum
Domestic Large Cap Equity | 40% |  | 35% |  | 60% |
Domestic Mid-Cap Equity | 15% |  | 5% |  | 25% |
Domestic Small-Cap Equity | 25% |  | 5% |  | 30% |
International Equity | 20% |  | 10% |  | 30% |
The Company has retained an investment consultant responsible for the general investment oversight, analysis, monitoring investment guideline compliance and providing quarterly reports to certain of the Company's members and the Company's Investment Committee. The various investment managers used by the trust operate within the general operating objectives as established in the investment policy and within the specific guidelines established for each investment manager's respective portfolio. The portfolio is rebalanced at least on an annual basis to bring the asset allocations of various managers in line with the target asset allocation listed above. More frequent rebalancing may occur if there are dramatic price movements in the financial markets which may cause the trust's exposure to any asset class to exceed or fall below the established allowable guidelines. To evaluate the progress of the portfolio, investment performance is reviewed quarterly. It is, however, expected that performance goals will be met over a full market cycle, normally defined as a three to five year period. Analysis of performance is within the context of the prevailing investment environment and the advisors' investment style. The goal of the trust is to provide a rate of return consistently from three percent to five percent over the rate of inflation (as measured by the national Consumer Price Index) on a fee adjusted basis over a typical market cycle of no less than three years and no more than five years. Each investment manager is expected to outperform its respective benchmark. Below is a list of each asset class utilized with appropriate comparative benchmark(s) each manager is evaluated against:
Asset Class | Comparative Benchmark(s)
Active Duration Fixed Income | Bloomberg Barclays Aggregate
Long Duration Fixed Income | Duration blended Barclays Long Government/Credit & Barclays Universal
Equity Index | Standard & Poor's 500 Index
Mid-Cap Equity | Russell Midcap Index
| Russell Midcap Value Index
Small-Cap Equity | Russell 2000 Index
| Russell 2000 Value Index
International Equity | Morgan Stanley Capital International ACWI ex-U.S.
The fixed income managers are expected to use discretion over the asset mix of the trust assets in their efforts to maximize risk-adjusted performance. Exposure to any single issuer, other than the U.S. government, its agencies or its instrumentalities (which have no limits), is limited to five percent of the fixed income portfolio as measured by market value. At least 75 percent of the invested assets must possess an investment-grade rating at or above Baa3 or BBB- by Moody's Investors Service, S&P's Global Ratings or Fitch Ratings. The portfolio may invest up to 10 percent of the portfolio's market value in convertible bonds as long as the securities purchased meet the quality guidelines. A portfolio may invest up to 15 percent of the portfolio's market value in private placement, including 144A securities with or without registration rights and allow for futures to be traded in the portfolio. The purchase of any of the Company's equity, debt or other securities is prohibited. The domestic value equity managers focus on stocks that the manager believes are undervalued in price and earn an average or less than average return on assets and often pays out higher than average dividend payments. The domestic growth equity manager will invest primarily in growth companies which consistently experience above average growth in earnings and sales, earn a high return on assets and reinvest cash flow into existing business. The domestic mid-cap equity portfolio manager focuses on companies with market capitalizations lower than the average company traded on the public exchanges with the following characteristics: price/earnings ratio at or near the Russell Midcap Index, small dividend yield, return on equity at or near the Russell Midcap Index and an earnings per share growth rate at or near the Russell Midcap Index. The domestic small-cap equity manager will purchase shares of companies with market capitalizations lower than the average company traded on the public exchanges with the following characteristics: price/earnings ratio at or near the Russell 2000, small dividend yield, return on equity at or near the Russell 2000 and an earnings per share growth rate at or near the Russell 2000. The international global equity manager invests primarily in non-dollar denominated equity securities. Investing internationally diversifies the overall trust across the global equity markets. The manager is required to operate under certain restrictions including regional constraints, diversification requirements and percentage of U.S. securities. The Morgan Stanley Capital International All Country World ex-U.S. Index is the benchmark for comparative performance purposes. The Morgan Stanley Capital International All Country World ex-U.S. Index is a market value weighted index designed to measure the combined equity market performance of developed and emerging markets countries, excluding the U.S. All of the equities which are purchased for the international portfolio are thoroughly researched. All securities are freely traded on a recognized stock exchange, and there are no over-the-counter derivatives. The following investment categories are excluded: options (other than traded currency options), commodities, futures (other than currency futures or currency hedging), short sales/margin purchases, private placements, unlisted securities and real estate (but not real estate shares). For all domestic equity investment managers, no more than five percent can be invested in any one stock at the time of purchase and no more than 10 percent after accounting for price appreciation. Options or financial futures may not be purchased unless prior approval of the Company's Investment Committee is received. The purchase of securities on margin is prohibited as is securities lending. Private placement or venture capital may not be purchased. All interest and dividend payments must be swept on a daily basis into a short-term money market fund for re-deployment. The purchase of any of the Company's equity, debt or other securities is prohibited. The purchase of equity or debt issues of the portfolio manager's organization is also prohibited. The aggregate positions in any company may not exceed one percent of the fair market value of its outstanding stock. Pension Plan Investments The following tables summarize the Pension Plan's investments that are measured at fair value on a recurring basis at December 31, 2019 and 2018. There were no Level 3 investments held by the Pension Plan at December 31, 2019 and 2018.
(In millions) | December 31, 2019 | Level 1 | Level 2 | Net Asset Value (A)
Common stocks | $ | 202.0 |  | $ | 202.0 |  | $ | — |  | $ | — |
U.S. Treasury notes and bonds (B) | 134.8 |  | 134.8 |  | — |  | — |
Mortgage- and asset-backed securities | 45.8 |  | — |  | 45.8 |  | — |
Corporate fixed income and other securities | 130.5 |  | — |  | 130.5 |  | — |
Commingled fund (C) | 23.9 |  | — |  | — |  | 23.9 |
Foreign government bonds | 3.0 |  | — |  | 3.0 |  | — |
U.S. municipal bonds | 1.1 |  | — |  | 1.1 |  | — |
Money market fund | 7.5 |  | — |  | — |  | 7.5 |
Mutual fund | 2.4 |  | 2.4 |  | — |  | — |
Preferred stocks | 0.7 |  | 0.7 |  | — |  | — |
Futures: |  |  |  |
U.S. Treasury futures (receivable) | 22.9 |  | — |  | 22.9 |  | — |
U.S. Treasury futures (payable) | (10.9) |  | — |  | (10.9) |  | — |
Cash collateral | 0.6 |  | 0.6 |  | — |  | — |
Forward contracts: |  |  |  |
Receivable (foreign currency) | 0.1 |  | — |  | 0.1 |  | — |
Total Pension Plan investments | 564.4 |  | $ | 340.5 |  | $ | 192.5 |  | $ | 31.4 |
Interest and dividends receivable | 2.4 |  |  |  |
Payable to broker for securities purchased | (36.5) |  |  |  |
Total Pension Plan assets | $ | 530.3 |  |  |  |
(A)GAAP allows the measurement of certain investments that do not have a readily determinable fair value at the net asset value. These investments do not consider the observability of inputs; therefore, they are not included within the fair value hierarchy. (B)This category represents U.S. Treasury notes and bonds with a Moody's Investors Service rating of Aaa and Government Agency Bonds with a Moody's Investors Service rating of A1 or higher. (C)This category represents units of participation in a commingled fund that primarily invested in stocks of international companies and emerging markets.
(In millions) | December 31, 2018 | Level 1 | Level 2 | Net Asset Value (A)
Common stocks | $ | 169.3 |  | $ | 169.3 |  | $ | — |  | $ | — |
U.S. Treasury notes and bonds (B) | 137.9 |  | 137.9 |  | — |  | — |
Mortgage- and asset-backed securities | 65.9 |  | — |  | 65.9 |  | — |
Corporate fixed income and other securities | 143.2 |  | — |  | 143.2 |  | — |
Commingled fund (C) | 19.7 |  | — |  | — |  | 19.7 |
Foreign government bonds | 4.4 |  | — |  | 4.4 |  | — |
U.S. municipal bonds | 0.6 |  | — |  | 0.6 |  | — |
Money market fund | 0.3 |  | — |  | — |  | 0.3 |
Mutual fund | 8.0 |  | 8.0 |  | — |  | — |
Futures: |  |  |  |
U.S. Treasury futures (receivable) | 27.0 |  | — |  | 27.0 |  | — |
U.S. Treasury futures (payable) | (20.4) |  | — |  | (20.4) |  | — |
Cash collateral | 0.7 |  | 0.7 |  | — |  | — |
Forward contracts: |  |  |  |
Receivable (foreign currency) | 0.1 |  | — |  | 0.1 |  | — |
Total Pension Plan investments | 556.7 |  | $ | 315.9 |  | $ | 220.8 |  | $ | 20.0 |
Interest and dividends receivable | 3.0 |  |  |  |
Payable to broker for securities purchased | (36.9) |  |  |  |
Total Pension Plan assets | $ | 522.8 |  |  |  |
(A)GAAP allows the measurement of certain investments that do not have a readily determinable fair value at the net asset value. These investments do not consider the observability of inputs; therefore, they are not included within the fair value hierarchy. (B)This category represents U.S. Treasury notes and bonds with a Moody's Investors Service rating of Aaa and Government Agency Bonds with a Moody's Investors Service rating of A1 or higher. (C)This category represents units of participation in a commingled fund that primarily invested in stocks of international companies and emerging markets. As defined in the fair value hierarchy, Level 1 inputs are quoted prices in active markets for identical unrestricted assets or liabilities that are accessible by the Pension Plan at the measurement date. Level 2 inputs are inputs other than quoted prices in active markets included within Level 1 that are either directly or indirectly observable at the reporting date for the asset or liability for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 inputs are prices or valuation techniques for the asset or liability that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Unobservable inputs reflect the Plan's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Expected Benefit Payments The following table summarizes the benefit payments the Company expects to pay related to OGE Energy's Pension Plan and Restoration of Retirement Income Plan. These expected benefits are based on the same assumptions used to measure the Company's benefit obligation at the end of the year and include benefits attributable to estimated future employee service.
(In millions) | Projected Benefit Payments
2020 | $ | 58.4 |
2021 | $ | 56.8 |
2022 | $ | 56.2 |
2023 | $ | 55.7 |
2024 | $ | 56.6 |
After 2024 | $ | 249.4 |
Postretirement Benefit Plans In addition to providing pension benefits, the Company provides certain medical and life insurance benefits for eligible retired members. Regular, full-time, active employees hired prior to February 1, 2000 whose age and years of credited service total or exceed 80 or have attained at least age 55 with 10 or more years of service at the time of retirement are entitled to postretirement medical benefits, while employees hired on or after February 1, 2000 are not entitled to postretirement medical benefits. Eligible retirees must contribute such amount as the Company specifies from time to time toward the cost of coverage for postretirement benefits. The benefits are subject to deductibles, co-payment provisions and other limitations. OG&E charges postretirement benefit costs to expense and includes an annual amount as a component of the cost-of-service in future ratemaking proceedings. The Company's contribution to the medical costs for pre-65 aged eligible retirees are fixed at the 2011 level, and the Company covers future annual medical inflationary cost increases up to five percent. Increases in excess of five percent annually are covered by the pre-65 aged retiree in the form of premium increases. The Company provides Medicare-eligible retirees and their Medicare-eligible spouses an annual fixed contribution to a Company-sponsored health reimbursement arrangement. Medicare-eligible retirees are able to purchase individual insurance policies supplemental to Medicare through a third-party administrator and use their health reimbursement arrangement funds for reimbursement of medical premiums and other eligible medical expenses. Postretirement Plans Investments The following tables summarize the postretirement benefit plans' investments that are measured at fair value on a recurring basis at December 31, 2019 and 2018. There were no Level 2 investments held by the postretirement benefit plans at December 31, 2019 and 2018.
(In millions) | December 31, 2019 | Level 1 | Level 3
Group retiree medical insurance contract | $ | 34.8 |  | $ | — |  | $ | 34.8 |
Mutual funds | 10.9 |  | 10.9 |  | — |
Money market fund | 1.2 |  | 1.2 |  | — |
Total plan investments | $ | 46.9 |  | $ | 12.1 |  | $ | 34.8 |
(In millions) | December 31, 2018 | Level 1 | Level 3
Group retiree medical insurance contract | $ | 36.0 |  | $ | — |  | $ | 36.0 |
Mutual funds | 8.9 |  | 8.9 |  | — |
Cash | 0.9 |  | 0.9 |  | — |
Total plan investments | $ | 45.8 |  | $ | 9.8 |  | $ | 36.0 |
The group retiree medical insurance contract invests in a pool of common stocks, bonds and money market accounts, of which a significant portion is comprised of mortgage-backed securities. The unobservable input included in the valuation of the contract includes the approach for determining the allocation of the postretirement benefit plans' pro-rata share of the total assets in the contract. The following table summarizes the postretirement benefit plans' investments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
Year Ended December 31 (In millions) | 2019
Group retiree medical insurance contract: |
Beginning balance | $ | 36.0 |
Claims paid | (3.8) |
Investment fees | (0.1) |
Net unrealized gains related to instruments held at the reporting date | 1.4 |
Interest income | 0.8 |
Dividend income | 0.5 |
Ending balance | $ | 34.8 |
Medicare Prescription Drug, Improvement and Modernization Act of 2003 The Medicare Prescription Drug, Improvement and Modernization Act of 2003 expanded coverage for prescription drugs. The following table summarizes the gross benefit payments the Company expects to pay related to its postretirement benefit plans, including prescription drug benefits.
(In millions) | Gross Projected Postretirement Benefit Payments
2020 | $ | 11.2 |
2021 | $ | 11.2 |
2022 | $ | 11.1 |
2023 | $ | 9.5 |
2024 | $ | 9.4 |
After 2024 | $ | 42.3 |
Post-Employment Benefit Plan Disabled employees receiving benefits from the Company's Group Long-Term Disability Plan are entitled to continue participating in the Company's Medical Plan along with their dependents. The post-employment benefit obligation represents the actuarial present value of estimated future medical benefits that are attributed to employee service rendered prior to the date as of which such information is presented. The obligation also includes future medical benefits expected to be paid to current employees participating in the Company's Group Long-Term Disability Plan and their dependents, as defined in the Company's Medical Plan. The post-employment benefit obligation is determined by an actuary on a basis similar to the accumulated postretirement benefit obligation. The estimated future medical benefits are projected to grow with expected future medical cost trend rates and are discounted for interest at the discount rate and for the probability that the participant will discontinue receiving benefits from the Company's Group Long-Term Disability Plan due to death, recovery from disability or eligibility for retiree medical benefits. The Company's post-employment benefit obligation was $2.1 million and $1.9 million at December 31, 2019 and 2018, respectively. 401(k) Plan The Company provides a 401(k) Plan, and each regular full-time employee of the Company or a participating affiliate is eligible to participate in the 401(k) Plan immediately. All other employees of the Company or a participating affiliate are eligible to become participants in the 401(k) Plan after completing one year of service as defined in the 401(k) Plan. Participants may contribute each pay period any whole percentage between two percent and 19 percent of their compensation, as defined in the 401(k) Plan, for that pay period. Participants who have reached age 50 before the close of a year are allowed to make additional contributions referred to as "Catch-Up Contributions," subject to certain limitations of the Code. Participants may designate, at their discretion, all or any portion of their contributions as: (i) a before-tax contribution under Section 401(k) of the Code subject to the limitations thereof, (ii) a contribution made on a non-Roth after-tax basis or (iii) a Roth contribution. The 401(k) Plan also includes an eligible automatic contribution arrangement and provides for a qualified default investment alternative consistent with the U.S. Department of Labor regulations. Participants may elect, in accordance with the 401(k) Plan procedures, to have their future salary deferral rate to be automatically increased annually on a date and in an amount as specified by the participant in such election. For employees hired or rehired on or after December 1, 2009, the Company contributes to the 401(k) Plan, on behalf of each participant, 200 percent of the participant's contributions up to five percent of compensation. No Company contributions are made with respect to a participant's Catch-Up Contributions, rollover contributions or with respect to a participant's contributions based on overtime payments, pay-in-lieu of overtime for exempt personnel, special lump-sum recognition awards and lump-sum merit awards included in compensation for determining the amount of participant contributions. Once made, the Company's contribution may be directed to any available investment option in the 401(k) Plan. The Company match contributions vest over a three-year period. After two years of service, participants become 20 percent vested in their Company contribution account and become fully vested on completing three years of service. In addition, participants fully vest when they are eligible for normal or early retirement under the Pension Plan requirements, in the event of their termination due to death or permanent disability or upon attainment of age 65 while employed by the Company or its affiliates. The Company contributed $14.4 million, $13.2 million and $13.2 million in 2019, 2018 and 2017, respectively, to the 401(k) Plan. Deferred Compensation Plan The Company provides a nonqualified deferred compensation plan which is intended to be an unfunded plan. The plan's primary purpose is to provide a tax-deferred capital accumulation vehicle for a select group of management, highly compensated employees and non-employee members of the Board of Directors of the Company and to supplement such employees' 401(k) Plan contributions as well as offering this plan to be competitive in the marketplace. Eligible employees who enroll in the plan have the following deferral options: (i) eligible employees may elect to defer up to a maximum of 70 percent of base salary and 100 percent of annual bonus awards or (ii) eligible employees may elect a deferral percentage of base salary and bonus awards based on the deferral percentage elected for a year under the 401(k) Plan with such deferrals to start when maximum deferrals to the qualified 401(k) Plan have been made because of limitations in that plan. Eligible directors who enroll in the plan may elect to defer up to a maximum of 100 percent of directors' meeting fees and annual retainers. The Company matches employee (but not non-employee director) deferrals to make up for any match lost in the 401(k) Plan because of deferrals to the deferred compensation plan and to allow for a match that would have been made under the 401(k) Plan on that portion of either the first six percent of total compensation or the first five percent of total compensation, depending on prior participant elections, deferred that exceeds the limits allowed in the 401(k) Plan. Matching credits vest based on years of service, with full vesting after three years or, if earlier, on retirement, disability, death, a change in control of the Company or termination of the plan. Deferrals, plus any Company match, are credited to a recordkeeping account in the participant's name. Earnings on the deferrals are indexed to the assumed investment funds selected by the participant. In 2019, those investment options included a Company Common Stock fund, whose value was determined based on the stock price of the Company's common stock. The Company accounts for the contributions related to the Company's executive officers in this plan as Accrued Benefit Obligations, and the Company accounts for the contributions related to the Company's directors in this plan as Other Deferred Credits and Other Liabilities in the Consolidated Balance Sheets. The investment associated with these contributions is accounted for as Other Property and Investments in the Consolidated Balance Sheets. The appreciation of these investments is accounted for as Other Income, and the increase in the liability under the plan is accounted for as Other Expense in the Consolidated Statements of Income. Supplemental Executive Retirement Plan The Company provides a supplemental executive retirement plan in order to attract and retain lateral hires or other executives designated by the Compensation Committee of the Company's Board of Directors who may not otherwise qualify for a sufficient level of benefits under the Company's Pension Plan and Restoration of Retirement Income Plan. The supplemental executive retirement plan is intended to be an unfunded plan and not subject to the benefit limitations of the Code. For the actuarial equivalence calculations, the supplemental executive retirement plan provides that (i) mortality rates shall be based on the unisex mortality table issued under Internal Revenue Service Notice 2018-02 for purposes of determining the minimum present value under Code Section 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2019 calendar year and (ii) the interest rate shall be five percent.

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