14. Defined Benefit Plans

We have a number of pension plans in the United States, covering many of the Company’s employees, however these plans have been closed to new hires. The plans provide for payment of retirement benefits, mainly commencing between the ages of 55 and 65, and also for payment of certain disability benefits. After meeting certain qualifications, an employee acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length of service and/or earnings. Employer contributions to the plans are made, as necessary, to ensure legal funding requirements are satisfied. Also, from time to time, we may make contributions in excess of the legal funding requirements. As previously communicated to our employees, benefits under our defined benefit plans were frozen as of December 31, 2016.

In addition, the Company provides postretirement health care and life insurance benefits to certain retirees.



(In millions)	Pension Benefits						Postretirement Benefits

Obligations and Funded Status at December 31	2016			2015			2016			2015
Change in the Projected Benefit Obligation (PBO):
Projected benefit obligation at beginning of year	$	767.7		$	808.6		$	15.6		$	20.1
Service cost		9.6			11.5			—			0.1
Interest cost		34.4			33.7			0.3			0.6
Plan amendments		0.1			—			(12.3	)		0.1
Actuarial loss (gain)		11.7			(54.1	)		1.6			(1.3	)
Benefits paid		(31.8	)		(31.4	)		(1.6	)		(2.6	)
Medicare Part D reimbursement		—			—			—			0.3
Plan curtailment gain		—			(0.6	)		—			—
Plan settlement gain		—			—			—			(1.6	)
Foreign exchange		—			—			—			(0.1	)
Projected benefit obligation at end of year	$	791.7		$	767.7		$	3.6		$	15.6
Accumulated benefit obligation at end of year (excludes the impact of future compensation increases)	$	791.7		$	759.8
Change in Plan Assets:
Fair value of plan assets at beginning of year	$	561.9		$	608.2		$	—		$	—
Actual return on plan assets		46.6			(18.2	)		—			—
Employer contributions		1.0			3.3			1.5			2.3
Medicare Part D reimbursement		—			—			—			0.3
Benefits paid		(31.8	)		(31.4	)		(1.5	)		(2.6	)
Fair value of plan assets at end of year	$	577.7		$	561.9		$	—		$	—
Funded status (Fair value of plan assets less PBO)	$	(214.0	)	$	(205.8	)	$	(3.6	)	$	(15.6	)

The accumulated benefit obligation exceeds the fair value of assets for all pension plans. Amounts recognized in the consolidated balance sheets consist of:



	Pension Benefits						Postretirement Benefits

(In millions)	2016			2015			2016			2015
Current benefit payment liability	$	(1.0	)	$	(1.1	)	$	(0.4	)	$	(2.0	)
Accrued benefit liability		(213.0	)		(204.7	)		(3.2	)		(13.6	)
Net amount recognized	$	(214.0	)	$	(205.8	)	$	(3.6	)	$	(15.6	)

In the first quarter of 2013, the Company communicated a plan amendment to reduce health benefits to certain retired employees. Due to the risk of litigation at the time of the initial communication, the Company elected to defer the full recognition of the benefit arising from the plan amendment. Following a favorable court decision in the first quarter of 2016, the Company determined that it was now probable that it would realize the benefit from the plan amendment. As a result, the Company performed a re-measurement of the affected retiree plan liability as of March 31, 2016. This remeasurement resulted in a $10.7 million reduction of accrued retiree benefit plan liabilities and a corresponding increase in prior service credits. In accordance with accounting requirements, the liability reduction from this remeasurement is recorded as amortization of prior service credits in net income. In addition, we recorded a $0.9 million actuarial loss during the first quarter of 2016.

In the third quarter of 2015, we recognized actuarial losses of $6.1 million related to curtailment accounting due to the sale of the Waterloo tool storage business in discontinued operations in addition to the $2.5 million of actuarial losses reflected below in net periodic benefit cost.

In the first quarter of 2014, we communicated our decision to amend certain postretirement benefit plans to reduce health benefits for certain current and retired employees. The reduction in accrued retiree benefit plan liabilities was $15.3 million and we recorded actuarial losses of $0.6 million and prior service credits of $3.5 million.

As of December 31, 2016, we adopted the new Society of Actuaries MP-2016 mortality tables, resulting in a decrease in our postretirement obligations of approximately $0.1 million, and a corresponding decrease in deferred actuarial losses in accumulated other comprehensive income. As of December 31, 2015, we adopted the Society of Actuaries RP-2015 mortality tables, resulting in a decrease in our postretirement obligations of approximately $0.5 million, and a corresponding decrease in deferred actuarial losses in accumulated other comprehensive income.

The amounts in accumulated other comprehensive loss on the consolidated balance sheets that have not yet been recognized as components of net periodic benefit cost were as follows:



(In millions)	Pension Benefits			Postretirement Benefits
Net actuarial loss at December 31, 2014	$	76.5		$	1.2
Recognition of actuarial (loss) gain		(9.0	)		0.4
Current year actuarial gain (loss)		4.2			(1.3	)
Net actuarial loss due to curtailment		(0.6	)		—
Net actuarial loss at December 31, 2015	$	71.1		$	0.3
Recognition of actuarial loss		—			(1.9	)
Current year actuarial gain		2.3			1.6
Net actuarial loss at December 31, 2016	$	73.4		$	—
Net prior service cost (credit) at December 31, 2014	$	0.4		$	(21.2	)
Prior service credit recognition due to plan amendments		—			0.1
Amortization		(0.1	)		13.5
Prior service cost recognition due to curtailment		(0.2	)		—
Prior service credit recognition due to settlement		—			1.2
Net prior service cost (credit) at December 31, 2015	$	0.1		$	(6.4	)
Prior service cost recognition due to plan amendments		—			(12.2	)
Amortization		—			13.5
Prior service cost recognition due to curtailment		(0.1	)		—
Net prior service cost (credit) at December 31, 2016	$	—		$	(5.1	)
Total at December 31, 2016	$	73.4		$	(5.1	)

The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year are amortization of net prior service credits related pension benefits of zero and postretirement benefits of $(5.1) million.

Components of net periodic benefit cost were as follows:



Components of Net Periodic Benefit Cost	Pension Benefits									Postretirement Benefits

(In millions)	2016			2015			2014			2016			2015			2014
Service cost	$	9.6		$	11.5		$	10.4		$	—		$	0.1		$	0.1
Interest cost		34.4			33.7			32.9			0.3			0.6			0.8
Expected return on plan assets		(37.2	)		(40.2	)		(42.2	)		—			—			—
Recognition of actuarial losses (gains)		—			2.9			12.5			1.9			(0.4	)		1.2
Amortization of prior service cost (credits)		—			0.1			0.1			(13.5	)		(13.5	)		(27.6	)
Net periodic benefit cost	$	6.8		$	8.0		$	13.7		$	(11.3	)	$	(13.2	)	$	(25.5	)



Assumptions	Pension Benefits			Postretirement Benefits

	2016	2015	2014	2016	2015	2014
Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31:
Discount rate	4.3%	4.6%		3.4%	4.1%
Rate of compensation increase	4.0%	4.0%		—	—
Weighted-Average Assumptions Used to Determine Net Cost for Years Ended December 31:
Discount rate	4.6%	4.2%	5.0%	4.1%	3.5%	4.3%
Expected long-term rate of return on plan assets	6.6%	6.8%	7.4%	—	—	—
Rate of compensation increase	4.0%	4.0%	4.0%	—	—	—



	Postretirement Benefits

	2016			2015
Assumed Health Care Cost Trend Rates Used to Determine Benefit Obligations and Net Cost at December 31:
Health care cost trend rate assumed for next year		7.3/8.2	%^(a)		7.3/8.2	%^(a)
Rate that the cost trend rate is assumed to decline (the ultimate trend rate)		4.5	%		4.5	%
Year that the rate reaches the ultimate trend rate		2025			2024

^(a)	The pre-65 initial health care cost trend rate is shown first / followed by the post-65 rate.

A one-percentage-point change in assumed health care cost trend rates would have had the following effects in 2016:



(In millions)	1-Percentage- Point Increase			1-Percentage- Point Decrease
Effect on total of service and interest cost	$	—		$	(0.1	)
Effect on postretirement benefit obligation		(0.1	)		(0.1	)

Plan Assets

The fair value of the pension assets by major category of plan assets as of December 31, 2016 and 2015 were as follows:



(In millions)	Total as of balance sheet date

	2016		2015
Group annuity/insurance contracts (Level 3)	$	22.8	$	22.3
Collective trusts:
Cash and cash equivalents		6.9		5.8
Equity		258.8		249.1
Fixed income		235.4		233.8
Multi-strategy hedge funds		23.1		22.3
Real estate		30.7		28.6
Total	$	577.7	$	561.9

A reconciliation of Level 3 measurements was as follows:



	Group annuity/ insurance contracts

(In millions)	2016		2015
January 1	$	22.3	$	21.8
Actual return on assets related to assets still held		0.5		0.5
December 31	$	22.8	$	22.3

Our defined benefit plans Master Trust own a variety of investment assets. All of these investment assets, except for group annuity/insurance contracts are measured using net asset value per share as a practical expedient per ASC 820. Following the retrospective adoption of ASU 2015-07 (Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share) we excluded all investments measured using net asset value per share in the amount of $554.9 million and $539.6 million as of December 31, 2016 and 2015, respectively, from the tabular fair value hierarchy disclosure.

The terms and conditions for redemptions vary for each class of the investment assets valued at net asset value per share as a practical expedient. Real estate assets may be redeemed quarterly with a 45 day redemption notice period. Investment assets in multi-strategy hedge funds may be redeemed semi-annually with a 95 day redemption notice period. Equity, fixed income and cash and cash equivalents have no specified redemption frequency and notice period and may be redeemed daily. As of December 31, 2016 we do not have an intent to sell or otherwise dispose of these investment assets at prices different than the net asset value per share.

Our investment strategy is to optimize investment returns through a diversified portfolio of investments, taking into consideration underlying plan liabilities and asset volatility. The defined benefit asset allocation policy of the plans allow for an equity allocation of 0% to 75%, a fixed income allocation of 25% to 100%, a cash allocation of up to 25% and other investments of up to 20%. Asset allocations are based on the underlying liability structure. All retirement asset allocations are reviewed periodically to ensure the allocation meets the needs of the liability structure.

Our 2017 expected blended long-term rate of return on plan assets of 6.6% was determined based on the nature of the plans’ investments, our current asset allocation and projected long-term rates of return from pension investment consultants.

Estimated Future Retirement Benefit Payments

The following retirement benefit payments are expected to be paid:



(In millions)	Pension Benefits		Postretirement Benefits
2017	$	36.3	$	0.4
2018		37.6		0.3
2019		39.3		0.3
2020		40.7		0.3
2021		42.2		0.2
Years 2022-2026		229.1		0.7

Estimated future retirement benefit payments above are estimates and could change significantly based on differences between actuarial assumptions and actual events and decisions related to lump sum distribution options that are available to participants in certain plans.

Defined Contribution Plan Contributions

We sponsor a number of defined contribution plans. Contributions are determined under various formulas. Cash contributions by the Company related to these plans amounted to $22.7 million, $18.3 million and $21.5 million in 2016, 2015 and 2014, respectively.