Pension and post-retirement benefits

Prior to the Separation, WestRock offered various long-term benefits to its employees, including Ingevity employees. In these cases, the participation of our employees in these plans is reflected in the Consolidated and Combined Financial Statements as though the Company participated in a multi-employer plan with the other businesses of WestRock. For periods prior to the Separation, assets and liabilities of such plans were retained by WestRock. Net periodic benefit costs allocated to Ingevity associated with these pension plans, prior to the Separation, for the three and six months ended June 30, 2016 were $1.1 million and $3.2 million, respectively. For the three and six months ended June 30, 2015, net periodic benefit costs were $2.6 million and $4.7 million, respectively.

In conjunction with the Separation, Ingevity employees stopped participating in WestRock pension and post-retirement benefit plans. As further defined by the EMA, Ingevity assumed certain domestic and international pension and other post-retirement benefit obligations from WestRock on the date of Separation. The assumed retirement obligations consisted of accrued defined benefit obligations earned by Ingevity domestic hourly union employees as of the day of Separation net of contributed assets; accrued obligations from a frozen non-qualified defined benefit pension plan for certain salaried and former salaried employees of Ingevity; and other post-retirement medical and life insurance benefits.

On May 16, 2016, Ingevity established new qualified and non-qualified benefit plans, similar in design to the WestRock plans, to continue the pension and post-retirement benefits provided to our employees and retirees based on the obligations assumed from WestRock. Prior to May 16, 2016 Ingevity adopted the Ingevity Corporation Retirement Savings Plan (401(k) plan) effective January 1, 2016 as Ingevity employees ceased participating in the WestRock 401(k) plan on December 31, 2015. For our domestic salaried employees who will no longer participate in the WestRock pension plan, Ingevity provides an enhanced 401(k) contribution. The enhanced benefits consist of a transition contribution of four or ten percent of the employee’s eligible compensation for employees who were grandfathered in the WestRock cash balance and final average pay pension respectively. The transition contributions will continue to December 31, 2020, unless grandfathered employee terminates employment sooner.

The following table summarizes the assumptions used in valuing the obligations assumed from WestRock and components of our defined benefit pension and post-retirement benefit plans as of the date of Separation.



(in million, excepted percentages)
Qualified Union Hourly Defined Benefit Pension Plan
Discount Rate ⁽¹⁾	4.00		%

Projected Benefit Obligation	$	19.3
Fair value of Plan Assets	19.8
Funded (unfunded) Status ⁽²⁾	$	0.5

Non-Qualified Defined Benefit Pension Plan
Discount Rate ⁽¹⁾	3.75		%

Projected Benefit Obligation ⁽³⁾	$	4.9

Other Post-retirement Benefit Plans
Discount Rate ⁽¹⁾	3.75		%

Projected Benefit Obligation ⁽³⁾	$	0.8

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(1)

The discount rate used to calculate pension and other post-retirement obligations was based on a review of available yields on high-quality corporate bonds as of the date of Separation. In selecting a discount rate, we placed particular emphasis on a discount rate yield-curve provided by our third-party actuary which takes into consideration the projected cash flows that represent the expected timing and amount of our plans' benefit payments.


(2)	Included in "Other Assets" on the Consolidated and Combined Balance Sheet. The projected benefit obligation assumed and assets acquired were calculated as of the date of spin and finalized subsequent to June 30, 2016. The fair value of plan assets recorded on our June 30, 2016 Consolidated Balance Sheet represent a receivable in the amount of the actual assets received on July 22, 2016.

(3) Included in "Other Liabilities" on the Consolidated and Combined Balance Sheet.

We did not make any voluntary cash contributions to our Union Hourly defined benefit pension plan in the three and six months ended June 30, 2016 nor do we expect to make any voluntary cash contributions in 2016.