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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2018
Retirement Benefits [Abstract] |
Employee Benefit Plans | Employee Benefit Plans We have defined benefit pension plans for our U.K.-based union employees (the “U.K. Plan”) and certain Canadian-based employees (the “Canadian Plan”). Collectively these two plans are referred to as the “Pension Plans”. Retirement benefits under the U.K. Plan are generally based on an employee’s average compensation over the two years preceding retirement. Retirement benefits under the Canadian Plan are generally based on the number of years of credited service. Our policy is to fund the minimum contributions permissible by the applicable authorities. We estimate that $3.6 million will be contributed to the Pension Plans in fiscal year 2019. Our pension benefit costs are calculated using various actuarial assumptions and methodologies. These assumptions include discount rates, inflation, compensation increase rates, expected returns on plan assets, mortality rates and other factors. The assumptions used in recording the obligations under our plans represent our best estimates, and we believe that they are reasonable, based on information as to historical experience and performance and other factors that might cause future expectations to differ from past trends. Differences in actual experience or changes in assumptions may affect our pension obligations and future expense. The primary factors contributing to actuarial gains and losses each year are (1) changes in the discount rate used to value pension benefit obligations as of the measurement date and (2) differences between the expected and the actual return on plan assets. The following table sets forth the combined funded status of the Pension Plans and their reconciliation to the related amounts recognized in our Consolidated Financial Statements at our December 31, 2018 and 2017 measurement dates:
|  | December 31,
|  | 2018 |  | 2017
Change in benefit obligation: |  |  |  |
Benefit obligation at beginning of year |  | $ | 133.8 |  |  | $ | 121.0 |
Service cost |  | 2.5 |  |  | 2.4 |
Interest cost |  | 3.8 |  |  | 4.2 |
Participant contributions |  | 0.9 |  |  | 1.0 |
Actuarial (gain) loss |  | (6.6 | ) |  | 1.2 |
Benefits paid |  | (3.8 | ) |  | (6.0 | )
Other, principally foreign exchange |  | (5.5 | ) |  | 10.0 |
Benefit obligation at end of year |  | $ | 125.1 |  |  | $ | 133.8 |
Change in plan assets: |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 115.5 |  |  | $ | 99.3 |
Actual (loss) gain on plan assets |  | (4.1 | ) |  | 10.4 |
Employer contributions |  | 3.2 |  |  | 3.1 |
Participant contributions |  | 0.9 |  |  | 1.0 |
Benefits paid |  | (3.8 | ) |  | (6.0 | )
Other, principally foreign exchange |  | (4.8 | ) |  | 7.7 |
Fair value of assets at end of year |  | $ | 106.9 |  |  | $ | 115.5 |
Amounts recognized in the consolidated balance sheets: |  |  |  |
Funded status (current) |  | $ | — |  |  | $ | — |
Funded status (non-current) |  | (18.2 | ) |  | (18.3 | )
Accumulated other comprehensive loss: |  |  |  |
Unrecognized actuarial loss |  | 24.7 |  |  | 20.6 |
Unrecognized prior service cost |  | 0.5 |  |  | 0.5 |
Deferred taxes |  | (4.7 | ) |  | (4.7 | )
Net amount recognized |  | $ | 2.3 |  |  | $ | (1.9 | )
The following table presents the components of our net periodic pension benefit cost:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Components of net periodic pension benefit cost: |  |  |  |  |  |
Service cost |  | $ | 2.5 |  |  | $ | 2.4 |  |  | $ | 2.2 |
Interest cost |  | 3.8 |  |  | 4.2 |  |  | 4.1 |
Expected return on plan assets |  | (5.4 | ) |  | (5.9 | ) |  | (5.8 | )
Amortization of actuarial losses |  | 1.0 |  |  | 1.4 |  |  | 0.3 |
Net periodic cost |  | $ | 1.9 |  |  | $ | 2.1 |  |  | $ | 0.8 |
The accumulated benefit obligation for the Pension Plans was $125.1 million and $134.0 million as of December 31, 2018 and 2017, respectively. The underfunded status of the Pension Plans recorded as a long-term liability in our Consolidated Balance Sheets as of December 31, 2018 and 2017 was 18.2 million and $18.3 million, respectively. The amounts included in accumulated other comprehensive loss as of December 31, 2018 expected to be recognized as components of net periodic pension benefit cost during the fiscal year ending December 31, 2019 are presented below:
Unrecognized loss |  | $ | 1.8 |
Unrecognized prior service cost |  | (0.5 | )
Net amount expected to be recognized |  | $ | 1.3 |
The U.K. Plan is closed to new participants and pensionable earnings used to calculate retirement benefits are limited to a 2% annual increase while the plan is less than 100% funded. The investment policy is to maximize long-term financial return commensurate with security and minimizing risk. This is achieved by holding a portfolio of marketable investments that avoids over-concentration of investment and spreads assets both over industries and geographies. In setting investment strategy, we considered the lowest risk strategy that it could adopt in relation to the plan's liabilities and designed the asset allocation to achieve a higher return while maintaining a cautious approach to meeting the plan's liabilities. We considered a full range of asset classes, the risks and rewards of a range of alternative asset allocation strategies, the suitability of each asset class and the need for appropriate diversification. The current strategy in the U.K. Plan is to hold approximately 23% in a global return fund, approximately 4.9% in U.K. equities, approximately 6.9% in real estate, approximately 30% in non-U.K. equities, approximately 19% in Liability Driven Investments (LDI) and approximately 16% in corporate bonds. The current strategy in the Canadian Plan is to hold approximately 22% in Canadian equities, approximately 43% in non-Canadian equities and approximately 35% in bonds. The fair value of the plan assets for the Pension Plans at December 31, 2018 by asset category is presented below:
Asset Category |  | Market Value at 12/31/2018 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Equity securities(a) |  | $ | 51.5 |  |  | $ | 29.9 |  |  | $ | 21.6 |  |  | $ | — |
Global return fund(a) |  | 13.8 |  |  | — |  |  | 13.8 |  |  | — |
Corporate bonds(a) |  | 14.5 |  |  | — |  |  | 14.5 |  |  | — |
Government bonds |  | 10.6 |  |  | — |  |  | 10.6 |  |  | — |
Real estate |  | 4.2 |  |  | — |  |  | — |  |  | 4.2 |
LDI (Liability Driven Investment) |  | 11.3 |  |  | — |  |  | 11.3 |  |  | — |
Cash and cash equivalents(b) |  | 1.0 |  |  | 1.0 |  |  | — |  |  | — |
Total pension assets |  | $ | 106.9 |  |  | $ | 30.9 |  |  | $ | 71.8 |  |  | $ | 4.2 |
(a) The assets are invested through managed funds that are valued using inputs derived principally from quoted prices in active markets for the underlying assets in the fund. (b) The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments.
The fair value of the plan assets for both of the Pension Plans at December 31, 2017 by asset category is presented below:
Asset Category |  | Market Value at 12/31/2017 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Equity securities(a) |  | $ | 56.1 |  |  | $ | 31.4 |  |  | $ | 24.7 |  |  | $ | — |
Global return fund(a) |  | 14.6 |  |  | — |  |  | 14.6 |  |  | — |
Corporate bonds(a) |  | 13.9 |  |  | — |  |  | 13.9 |  |  | — |
Government bonds |  | 10.6 |  |  | — |  |  | 10.6 |  |  | — |
Real estate |  | 4.2 |  |  | — |  |  | — |  |  | 4.2 |
LDI (Liability Driven Investment) |  | 13.3 |  |  | — |  |  | 13.3 |  |  | — |
Cash and cash equivalents(b) |  | 2.8 |  |  | 2.8 |  |  | — |  |  | — |
Total pension assets |  | $ | 115.5 |  |  | $ | 34.2 |  |  | $ | 77.1 |  |  | $ | 4.2 |
(a) The assets are invested through managed funds that are valued using inputs derived principally from quoted prices in active markets for the underlying assets in the fund. (b) The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of these instruments.
The change in fair value of the Pension Plan assets valued using significant unobservable inputs (Level 3) is presented below:
| 2018 |  | 2017
Significant unobservable inputs (Level 3), beginning of period | $ | 4.2 |  |  | $ | 10.9 |
Unrealized gain (loss) on asset still held | — |  |  | (6.7 | )
Significant unobservable inputs (Level 3), end of period | $ | 4.2 |  |  | $ | 4.2 |
The table below presents the weighted-average actuarial assumptions used to determine the benefit obligation and net periodic benefit cost for the Pension Plans.
|  | U.K. Plan |  | Canadian Plan
|  | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Discount rates: |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation |  | 2.90 | % |  | 2.60 | % |  | 2.80 | % |  | 3.90 | % |  | 4.00 | % |  | 4.00 | %
Net periodic pension cost |  | 2.60 | % |  | 2.80 | % |  | 4.00 | % |  | 3.60 | % |  | 3.60 | % |  | 4.15 | %
Rate of compensation increase |  | 1.00 | % |  | 1.00 | % |  | 1.00 | % |  | 1.00 | % |  | 3.00 | % |  | 3.00 | %
Expected return on assets |  | 5.00 | % |  | 4.80 | % |  | 5.70 | % |  | 5.70 | % |  | 6.00 | % |  | 6.25 | %
The overall expected long-term rate of return on assets assumption for the U.K. Plan has been determined as a weighted-average of the expected returns on the above asset classes for the U.K. Plan. The expected return on bonds is taken as the current redemption yield on the appropriate index. The expected return on equities and property is determined by assuming a measure of out performance over the gilt-yield. The expected return on cash is related to the Bank of England base rate. Returns so determined are reduced to allow for investment manager expenses. The overall expected long-term rate of return on assets assumption for the Canadian Plan has been determined by consideration of the current level of expected returns on risk-free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class based on our active management of certain portfolio classes. We expect benefit payments between $3.0 million and $4.6 million annually, which reflect expected future service, for each of the next five years. Additionally, we expect benefit payments of $28.1 million for benefit payments during the five years from 2024 to 2028. U.S. plan We have a 401(k) plan for U.S.-based employees. Those employees who participate in our 401(k) plan are eligible to receive matching contributions from us for the first 6% of participant contributions. We match contributions of 35.0% of any participant’s contributions, up to the first 6% of their compensation (as defined in the plan document). Contribution expense for the years ended December 31, 2018, 2017 and 2016 amounted to $11.5 million, $10.8 million and $10.7 million, respectively.

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