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Retirement benefits | 12 Months Ended
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Dec. 31, 2017
Compensation and Retirement Disclosure [Abstract] |
Retirement benefits |
8 · Retirement benefits
Defined benefit plans. Substantially all of the employees of HEI and the Utilities participate in the Retirement Plan for Employees of Hawaiian Electric Industries, Inc. and Participating Subsidiaries (HEI Pension Plan). Substantially all of the employees of ASB participated in the American Savings Bank Retirement Plan (ASB Pension Plan) until it was frozen on December 31, 2007. The HEI Pension Plan and the ASB Pension Plan (collectively, the Plans) are qualified, noncontributory defined benefit pension plans and include, in the case of the HEI Pension Plan, benefits for utility union employees determined in accordance with the terms of the collective bargaining agreements between the Utilities and the union. The Plans are subject to the provisions of ERISA. In addition, some current and former executives and directors of HEI and its subsidiaries participate in noncontributory, nonqualified plans (collectively, Supplemental Plans). In general, benefits are based on the employees’ or directors’ years of service and compensation. The continuation of the Plans and the Supplemental Plans and the payment of any contribution thereunder are not assumed as contractual obligations by the participating employers. The Supplemental Plan for directors has been frozen since 1996. The ASB Pension Plan was frozen as of December 31, 2007. The HEI Supplemental Executive Retirement Plan and ASB Supplemental Executive Retirement, Disability, and Death Benefit Plan (noncontributory, nonqualified, defined benefit plans) were frozen as of December 31, 2008. No participants have accrued any benefits under these plans after the respective plan’s freeze and the plans will be terminated at the time all remaining benefits have been paid. Each participating employer reserves the right to terminate its participation in the applicable plans at any time, and HEI and ASB reserve the right to terminate their respective plans at any time. If a participating employer terminates its participation in the Plans, the interest of each affected participant would become 100% vested to the extent funded. Upon the termination of the Plans, assets would be distributed to affected participants in accordance with the applicable allocation provisions of ERISA and any excess assets that exist would be paid to the participating employers. Participants’ benefits in the Plans are covered up to certain limits under insurance provided by the Pension Benefit Guaranty Corporation. Postretirement benefits other than pensions. HEI and the Utilities provide eligible employees health and life insurance benefits upon retirement under the Postretirement Welfare Benefits Plan for Employees of Hawaiian Electric Company, Inc. and participating employers (Hawaiian Electric Benefits Plan). Eligibility of employees and dependents is based on eligibility to retire at termination, the retirement date and the date of hire. The plan was amended in 2011, changing eligibility for certain bargaining unit employees hired prior to May 1, 2011, based on new minimum age and service requirements effective January 1, 2012, per the collective bargaining agreement, and certain management employees hired prior to May 1, 2011 based on new eligibility minimum age and service requirements effective January 1, 2012. The minimum age and service requirements for management and bargaining unit employees hired May 1, 2011 and thereafter have increased and their dependents are not eligible to receive postretirement benefits. Employees may be eligible to receive benefits from the HEI Pension Plan but may not be eligible for postretirement welfare benefits if the different eligibility requirements are not met. The executive death benefit plan was frozen on September 10, 2009 for participants at benefit levels as of that date. The Company’s and Utilities' cost for OPEB has been adjusted to reflect the plan amendments, which reduced benefits and created prior service credits to be amortized over average future service of affected participants. The amortization of the prior service credit will reduce benefit costs over the next few years until the various credit bases are fully recognized. Each participating employer reserves the right to terminate its participation in the Hawaiian Electric Benefits Plan at any time. Balance sheet recognition of the funded status of retirement plans. Employers must recognize on their balance sheets the funded status of defined benefit pension and other postretirement benefit plans with an offset to AOCI in shareholders’ equity (using the projected benefit obligation (PBO) and accumulated postretirement benefit obligation (APBO), to calculate the funded status). The PUC allowed the Utilities to adopt pension and OPEB tracking mechanisms in previous rate cases. The amount of the net periodic pension cost (NPPC) and net periodic benefits costs (NPBC) to be recovered in rates is established by the PUC in each rate case. Under the Utilities’ tracking mechanisms, any actual costs determined in accordance with GAAP that are over/under amounts allowed in rates are charged/credited to a regulatory asset/liability. The regulatory asset/liability for each utility will then be amortized over 5 years beginning with the respective utility’s next rate case. Accordingly, all retirement benefit expenses (except for executive life and nonqualified pension plan expenses, which amounted to $1.1 million and $0.9 million in 2017 and 2016, respectively) determined in accordance with GAAP will be recovered. Under the tracking mechanisms, amounts that would otherwise be recorded in AOCI (excluding amounts for executive life and nonqualified pension plans), net of taxes, as well as other pension and OPEB charges, are allowed to be reclassified as a regulatory asset, as those costs will be recovered in rates through the NPPC and NPBC in the future. The Utilities have reclassified to a regulatory asset/(liability) charges for retirement benefits that would otherwise be recorded in AOCI (amounting to the elimination of a potential charge to AOCI of $(128) million pretax and $47 million pretax for 2017 and 2016, respectively). Under the pension tracking mechanism, the Utilities are required to make contributions to the pension trust in the amount of the actuarially calculated NPPC, except when limited by the ERISA minimum contribution requirements or the maximum deductible contribution limit imposed by the Internal Revenue Code. The OPEB tracking mechanisms generally require the Utilities to make contributions to the OPEB trust in the amount of the actuarially calculated NPBC, (excluding amounts for executive life), except when limited by material, adverse consequences imposed by federal regulations. Defined benefit pension and other postretirement benefit plans information. The changes in the obligations and assets of the Company’s and Utilities' retirement benefit plans and the changes in AOCI (gross) for 2017 and 2016 and the funded status of these plans and amounts related to these plans reflected in the Company’s and Utilities' consolidated balance sheet as of December 31, 2017 and 2016 were as follows:
| 2017 |  | 2016
(in thousands) | Pension benefits |  | Other benefits |  | Pension benefits |  | Other benefits
HEI consolidated |  |  |  |  |  |  |
Benefit obligation, January 1 | $ | 1,935,494 |  |  | $ | 233,835 |  |  | $ | 1,798,030 |  |  | $ | 221,540 |
Service cost | 64,906 |  |  | 3,374 |  |  | 60,555 |  |  | 3,331 |
Interest cost | 81,185 |  |  | 9,453 |  |  | 81,549 |  |  | 9,670 |
Actuarial losses (gains) | 87,399 |  |  | (25,557 | ) |  | 67,741 |  |  | 7,831 |
Participants contributions | — |  |  | 2,078 |  |  | — |  |  | 1,405 |
Benefits paid and expenses | (74,628 | ) |  | (10,582 | ) |  | (72,381 | ) |  | (9,942 | )
Benefit obligation, December 31 | 2,094,356 |  |  | 212,601 |  |  | 1,935,494 |  |  | 233,835 |
Fair value of plan assets, January 1 | 1,369,701 |  |  | 174,251 |  |  | 1,271,474 |  |  | 170,687 |
Actual return on plan assets | 255,324 |  |  | 28,248 |  |  | 103,836 |  |  | 11,352 |
Employer contributions | 66,983 |  |  | — |  |  | 65,463 |  |  | 42 |
Participants contributions | — |  |  | 2,078 |  |  | — |  |  | 1,405 |
Benefits paid and expenses | (73,305 | ) |  | (10,582 | ) |  | (71,072 | ) |  | (9,235 | )
Fair value of plan assets, December 31 | 1,618,703 |  |  | 193,995 |  |  | 1,369,701 |  |  | 174,251 |
Accrued benefit asset (liability), December 31 | $ | (475,653 | ) |  | $ | (18,606 | ) |  | $ | (565,793 | ) |  | $ | (59,584 | )
Other assets | $ | 15,443 |  |  | $ | — |  |  | $ | 13,477 |  |  | $ | — |
Defined benefit pension and other postretirement benefit plans liability | (491,096 | ) |  | (18,606 | ) |  | (579,270 | ) |  | (59,584 | )
Accrued benefit asset (liability), December 31 | $ | (475,653 | ) |  | $ | (18,606 | ) |  | $ | (565,793 | ) |  | $ | (59,584 | )
AOCI debit, January 1 (excluding impact of PUC D&Os) | $ | 619,451 |  |  | $ | 42,290 |  |  | $ | 581,763 |  |  | $ | 32,550 |
Recognized during year – prior service credit | 55 |  |  | 1,793 |  |  | 57 |  |  | 1,793 |
Recognized during year – net actuarial losses | (26,496 | ) |  | (1,130 | ) |  | (24,832 | ) |  | (804 | )
Occurring during year – net actuarial losses (gains) | (65,180 | ) |  | (41,479 | ) |  | 62,463 |  |  | 8,751 |
AOCI debit before cumulative impact of PUC D&Os, December 31 | 527,830 |  |  | 1,474 |  |  | 619,451 |  |  | 42,290 |
Cumulative impact of PUC D&Os | (489,894 | ) |  | (2,767 | ) |  | (576,933 | ) |  | (43,974 | )
AOCI debit/(credit), December 31 | $ | 37,936 |  |  | $ | (1,293 | ) |  | $ | 42,518 |  |  | $ | (1,684 | )
Net actuarial loss | $ | 527,907 |  |  | $ | 10,183 |  |  | $ | 619,582 |  |  | $ | 52,792 |
Prior service gain | (77 | ) |  | (8,709 | ) |  | (131 | ) |  | (10,502 | )
AOCI debit before cumulative impact of PUC D&Os, December 31 | 527,830 |  |  | 1,474 |  |  | 619,451 |  |  | 42,290 |
Cumulative impact of PUC D&Os | (489,894 | ) |  | (2,767 | ) |  | (576,933 | ) |  | (43,974 | )
AOCI debit/(credit), December 31 | 37,936 |  |  | (1,293 | ) |  | 42,518 |  |  | (1,684 | )
Income taxes (benefits) | (9,986 | ) |  | 333 |  |  | (16,746 | ) |  | 656 |
AOCI debit/(credit), net of taxes (benefits), December 31 | $ | 27,950 |  |  | $ | (960 | ) |  | $ | 25,772 |  |  | $ | (1,028 | )
As of December 31, 2017 and 2016, the other postretirement benefit plans shown in the table above had ABOs in excess of plan assets.
| 2017 |  | 2016
(in thousands) | Pension benefits |  | Other benefits |  | Pension benefits |  | Other benefits
Hawaiian Electric consolidated |  |  |  |  |  |  |
Benefit obligation, January 1 | $ | 1,779,626 |  |  | $ | 225,723 |  |  | $ | 1,649,690 |  |  | $ | 213,990 |
Service cost | 63,059 |  |  | 3,353 |  |  | 58,796 |  |  | 3,284 |
Interest cost | 74,632 |  |  | 9,115 |  |  | 74,808 |  |  | 9,337 |
Actuarial losses (gains) | 80,186 |  |  | (25,172 | ) |  | 63,121 |  |  | 7,545 |
Participants contributions | — |  |  | 2,047 |  |  | — |  |  | 1,389 |
Benefits paid and expenses | (68,691 | ) |  | (10,419 | ) |  | (66,789 | ) |  | (9,822 | )
Transfers | (164 | ) |  | (3 | ) |  | — |  |  | — |
Benefit obligation, December 31 | 1,928,648 |  |  | 204,644 |  |  | 1,779,626 |  |  | 225,723 |
Fair value of plan assets, January 1 | 1,233,184 |  |  | 171,383 |  |  | 1,141,833 |  |  | 167,930 |
Actual return on plan assets | 237,830 |  |  | 27,806 |  |  | 93,441 |  |  | 11,168 |
Employer contributions | 65,669 |  |  | — |  |  | 64,236 |  |  | 11 |
Participants contributions | — |  |  | 2,047 |  |  | — |  |  | 1,389 |
Benefits paid and expenses | (68,225 | ) |  | (10,419 | ) |  | (66,326 | ) |  | (9,115 | )
Other | (55 | ) |  | (3 | ) |  | — |  |  | — |
Fair value of plan assets, December 31 | 1,468,403 |  |  | 190,814 |  |  | 1,233,184 |  |  | 171,383 |
Accrued benefit liability, December 31 | $ | (460,245 | ) |  | $ | (13,830 | ) |  | $ | (546,442 | ) |  | $ | (54,340 | )
Other liabilities (short-term) | (494 | ) |  | (633 | ) |  | (460 | ) |  | (596 | )
Defined benefit pension and other postretirement benefit plans liability | (459,751 | ) |  | (13,197 | ) |  | (545,982 | ) |  | (53,744 | )
Accrued benefit liability, December 31 | $ | (460,245 | ) |  | $ | (13,830 | ) |  | $ | (546,442 | ) |  | $ | (54,340 | )
AOCI debit, January 1 (excluding impact of PUC D&Os) | $ | 579,725 |  |  | $ | 40,967 |  |  | $ | 541,118 |  |  | $ | 31,485 |
Recognized during year – prior service credit (cost) | (8 | ) |  | 1,804 |  |  | (13 | ) |  | 1,803 |
Recognized during year – net actuarial losses | (24,392 | ) |  | (1,102 | ) |  | (22,693 | ) |  | (793 | )
Occurring during year – net actuarial losses (gains) | (61,861 | ) |  | (40,830 | ) |  | 61,313 |  |  | 8,472 |
AOCI debit before cumulative impact of PUC D&Os, December 31 | 493,464 |  |  | 839 |  |  | 579,725 |  |  | 40,967 |
Cumulative impact of PUC D&Os | (489,894 | ) |  | (2,767 | ) |  | (576,933 | ) |  | (43,974 | )
AOCI debit/(credit), December 31 | $ | 3,570 |  |  | $ | (1,928 | ) |  | $ | 2,792 |  |  | $ | (3,007 | )
Net actuarial loss | $ | 493,439 |  |  | $ | 9,531 |  |  | $ | 579,691 |  |  | $ | 51,463 |
Prior service cost (gain) | 25 |  |  | (8,692 | ) |  | 34 |  |  | (10,496 | )
AOCI debit before cumulative impact of PUC D&Os, December 31 | 493,464 |  |  | 839 |  |  | 579,725 |  |  | 40,967 |
Cumulative impact of PUC D&Os | (489,894 | ) |  | (2,767 | ) |  | (576,933 | ) |  | (43,974 | )
AOCI debit/(credit), December 31 | 3,570 |  |  | (1,928 | ) |  | 2,792 |  |  | (3,007 | )
Income taxes (benefits) | (920 | ) |  | 497 |  |  | (1,087 | ) |  | 1,170 |
AOCI debit/(credit), net of taxes (benefits), December 31 | $ | 2,650 |  |  | $ | (1,431 | ) |  | $ | 1,705 |  |  | $ | (1,837 | )
As of December 31, 2017 and 2016, the other postretirement benefit plan shown in the table above had ABOs in excess of plan assets. The dates used to determine retirement benefit measurements for the defined benefit plans were December 31 of 2017, 2016 and 2015. The Pension Protection Act of 2006 (Pension Protection Act), amended the Employee Retirement Income Security Act of 1974 (ERISA). Among other things, the Pension Protection Act changed the funding rules for qualified pension plans. In 2014, the Highway and Transportation Funding Act of 2014 (HATFA) further amended the Pension Protection Act. HATFA resulted in an increase of the Adjusted Funding Target Attainment Percentage (AFTAP) for benefit distribution purposes and eased funding requirements effective with the 2014 plan year. The funding relief was extended by the Bipartisan Budget Act of 2015. As a result, the minimum funding requirements for the HEI Retirement Plan under ERISA are less than the net periodic cost for 2016 and 2017. Nevertheless, to satisfy the requirements of the Utilities pension tracking mechanism, the Utilities contributed the net periodic cost in 2016 and 2017 and expect to contribute the net periodic cost in 2018. For purposes of calculating NPPC and NPBC, the Company and the Utilities have determined the market-related value of retirement benefit plan assets by calculating the difference between the expected return and the actual return on the fair value of the plan assets, then amortizing the difference over future years – 0% in the first year and 25% in each of years two through five – and finally adding or subtracting the unamortized differences for the past four years from fair value. The method includes a 15% range restriction around the fair value of such assets (i.e., 85% to 115% of fair value). A primary goal of the plans is to achieve long-term asset growth sufficient to pay future benefit obligations at a reasonable level of risk. The investment policy target for defined benefit pension and OPEB plans reflects the philosophy that long-term growth can best be achieved by prudent investments in equity securities while balancing overall fund volatility by an appropriate allocation to fixed income securities. In order to reduce the level of portfolio risk and volatility in returns, efforts have been made to diversify the plans’ investments by asset class, geographic region, market capitalization and investment style. The asset allocation of defined benefit retirement plans to equity and fixed income securities and related investment policy targets and ranges were as follows:
| Pension benefits 1 |  | Other benefits 2
|  |  |  |  | Investment policy |  |  |  |  |  | Investment policy
December 31 | 2017 |  |  | 2016 |  |  | Target |  |  | Range |  | 2017 |  |  | 2016 |  |  | Target |  |  | Range
Assets held by category |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities | 73 | % |  | 71 | % |  | 70 | % |  | 65-75 |  | 73 | % |  | 70 | % |  | 70 | % |  | 65-75
Fixed income securities | 27 |  |  | 29 |  |  | 30 |  |  | 25-35 |  | 27 |  |  | 30 |  |  | 30 |  |  | 25-35
| 100 | % |  | 100 | % |  | 100 | % |  |  |  | 100 | % |  | 100 | % |  | 100 | % |  |
1 | Asset allocation is applicable to only HEI and the Utilities. As of December 31, 2017 and 2016, nearly all of ASB's pension assets were invested in fixed income securities.
2 | Asset allocation is applicable to only HEI and the Utilities. ASB does not fund its other benefits.
Assets held in various trusts for the retirement benefit plans are measured at fair value on a recurring basis and were as follows:
| Pension benefits |  | Other benefits
|  |  | Fair value measurements using |  |  |  | Fair value measurements using
(in millions) | December 31 |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Significant unobservable inputs (Level 3) |  | December 31 |  | Level 1 |  | Level 2 |  | Level 3
2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 568 |  |  | $ | 568 |  |  | $ | — |  |  | $ | — |  |  | $ | 75 |  |  | $ | 75 |  |  | $ | — |  |  | $ | — |
Equity index funds | 435 |  |  | 435 |  |  | — |  |  | — |  |  | 52 |  |  | 52 |  |  | — |  |  | — |
Equity investments at net asset value (NAV) | 76 |  |  | — |  |  | — |  |  | — |  |  | 12 |  |  | — |  |  | — |  |  | — |
Total equity investments | 1,079 |  |  | 1,003 |  |  | — |  |  | — |  |  | 139 |  |  | 127 |  |  | — |  |  | — |
Fixed income securities and public mutual funds | 297 |  |  | 81 |  |  | 216 |  |  | — |  |  | 46 |  |  | 43 |  |  | 3 |  |  | — |
Fixed income investments at NAV | 203 |  |  | — |  |  | — |  |  | — |  |  | 4 |  |  | — |  |  | — |  |  | — |
Total fixed income investments | 500 |  |  | 81 |  |  | 216 |  |  | — |  |  | 50 |  |  | 43 |  |  | 3 |  |  | — |
Cash equivalents at NAV | 36 |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | — |  |  | — |  |  | — |
Total | $ | 1,615 |  |  | $ | 1,084 |  |  | $ | 216 |  |  | $ | — |  |  | $ | 194 |  |  | $ | 170 |  |  | $ | 3 |  |  | $ | — |
Cash, receivables and payables, net | 4 |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  |  |
Fair value of plan assets | $ | 1,619 |  |  |  |  |  |  |  |  |  |  |  | $ | 194 |  |  |  |  |  |  |  |  |  |
2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities | $ | 692 |  |  | $ | 692 |  |  | $ | — |  |  | $ | — |  |  | $ | 94 |  |  | $ | 94 |  |  | $ | — |  |  | $ | — |
Equity index funds | 129 |  |  | 129 |  |  | — |  |  | — |  |  | 17 |  |  | 17 |  |  | — |  |  | — |
Equity investments at NAV | 56 |  |  | — |  |  | — |  |  | — |  |  | 9 |  |  | — |  |  | — |  |  | — |
Total equity investments | 877 |  |  | 821 |  |  | — |  |  | — |  |  | 120 |  |  | 111 |  |  | — |  |  | — |
Fixed income securities and public mutual funds | 276 |  |  | 84 |  |  | 192 |  |  | — |  |  | 44 |  |  | 42 |  |  | 2 |  |  | — |
Fixed income investments at NAV | 180 |  |  | — |  |  | — |  |  | — |  |  | 4 |  |  | — |  |  | — |  |  | — |
Total fixed income investments | 456 |  |  | 84 |  |  | 192 |  |  | — |  |  | 48 |  |  | 42 |  |  | 2 |  |  | — |
Cash equivalents at NAV | 33 |  |  | — |  |  | — |  |  | — |  |  | 6 |  |  | — |  |  | — |  |  | — |
Total | 1,366 |  |  | $ | 905 |  |  | $ | 192 |  |  | $ | — |  |  | 174 |  |  | $ | 153 |  |  | $ | 2 |  |  | $ | — |
Cash, receivables and payables, net | 4 |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  |  |
Fair value of plan assets | $ | 1,370 |  |  |  |  |  |  |  |  |  |  |  | $ | 174 |  |  |  |  |  |  |  |  |  |
| Pension benefits |  | Other benefits
Measured at net asset value | December 31 |  |  | Redemption frequency |  | Redemption notice period |  | December 31 |  |  | Redemption frequency |  | Redemption notice period
(in millions) |  |  |  |  |  |  |  |  |  |  |
2017 |  |  |  |  |  |  |  |  |  |  |
Non U.S. equity funds (a) | 76 |  |  | Daily-Monthly |  | 5 - 30 days |  | 12 |  |  | Daily-Monthly |  | 5-30 days
Fixed income investments (b) | 203 |  |  | Monthly |  | 15 days |  | 4 |  |  | Monthly |  | 15 days
Cash equivalents (c) | 36 |  |  | Daily |  | 0-1 day |  | 5 |  |  | Daily |  | 0-1 day
| $ | 315 |  |  |  |  |  |  | $ | 21 |  |  |  |  |
2016 |  |  |  |  |  |  |  |  |  |  |
Non U.S. equity funds (a) | 56 |  |  | Daily - Quarterly |  | 0 - 30 days |  | 9 |  |  | Monthly - Quarterly |  | 10-30 days
Fixed income investments (b) | 180 |  |  | Monthly |  | 10 days |  | 4 |  |  | Monthly |  | 10 days
Cash equivalents (c) | 33 |  |  | Daily |  | 0-1 day |  | 6 |  |  | Daily |  | 0-1 day
| $ | 269 |  |  |  |  |  |  | $ | 19 |  |  |  |  |
None of the investments presented in the tables above have unfunded commitments.
(a) | Represents investments in funds that primarily invest in non-U.S., emerging markets equities. Redemption frequency for pension benefits assets as of December 31, 2017 were: daily, 32% and monthly, 68% and as of December 31, 2016 were: daily, 31%; monthly, 31%; and quarterly, 38%. Redemption frequency for other benefits assets as of December 31, 2017 were: daily, 26% and monthly, 74% and as of December 31, 2016 were: monthly, 57%; and quarterly, 42%.
(b ) | Represents investments in fixed income securities invested in a US-dollar denominated fund that seeks to exceed the Barclays Capital Long Corporate A or better Index through investments in US-dollar denominated fixed income securities and commingled vehicles.
(c) | Represents investments in cash equivalent funds. This class includes funds that invest primarily in securities issued or guaranteed by the U.S. government or its agencies or instrumentalities. For pension benefits, the fund may also invest in fixed income securities of investment grade issuers.
The fair values of the investments shown in the table above represent the Company’s best estimates of the amounts that would be received upon sale of those assets in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset at the measurement date, the fair value measurement reflects the Company’s judgments about the assumptions that market participants would use in pricing the asset. Those judgments are developed by the Company based on the best information available in the circumstances. The fair value of investments measured at net asset value presented in the tables above are intended to permit reconciliation to the fair value of plan assets amounts. The Company used the following valuation methodologies for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2017 and 2016. Equity securities, equity index funds, U.S. Treasury fixed income securities and public mutual funds (Level 1). Equity securities, equity index funds, U.S. Treasury fixed income securities and public mutual funds are valued at the closing price reported on the active market on which the individual securities or funds are traded. Fixed income securities (Level 2). Fixed income securities, other than those issued by the U.S. Treasury, are valued based on yields currently available on comparable securities of issuers with similar credit ratings. The following weighted-average assumptions were used in the accounting for the plans:
| Pension benefits |  | Other benefits
December 31 | 2017 |  | 2016 |  | 2015 |  | 2017 |  | 2016 |  | 2015
Benefit obligation |  |  |  |  |  |  |  |  |  |  |
Discount rate | 3.74 | % |  | 4.26 | % |  | 4.60 | % |  | 3.72 | % |  | 4.22 | % |  | 4.57 | %
Rate of compensation increase | 3.5 |  |  | 3.5 |  |  | 3.5 |  |  | NA |  |  | NA |  |  | NA |
Net periodic pension/benefit cost (years ended) |  |  |  |  |  |  |  |  |  |  |
Discount rate | 4.26 |  |  | 4.60 |  |  | 4.22 |  |  | 4.22 |  |  | 4.57 |  |  | 4.17 |
Expected return on plan assets 1 | 7.50 |  |  | 7.75 |  |  | 7.75 |  |  | 7.50 |  |  | 7.75 |  |  | 7.75 |
Rate of compensation increase 2 | 3.5 |  |  | 3.5 |  |  | 3.5 |  |  | NA |  |  | NA |  |  | NA |
NA Not applicable 1 For 2017 and 2016, HEI's and Utilities' plan assets only. For 2017 and 2016, ASB's expected return on plan assets was 4.46% and 4.80%, respectively. 2 The Company and the Utilities use a graded rate of compensation increase assumption based on age. The rate provided above is an average across all future years of service for the current population. The Company and the Utilities based their selection of an assumed discount rate for 2018 NPPC and NPBC and December 31, 2017 disclosure on a cash flow matching analysis that utilized bond information provided by Bloomberg for all non-callable, high quality bonds (generally rated Aa or better) as of December 31, 2017. In selecting the expected rate of return on plan assets for 2018 NPPC and NPBC: a) HEI and the Utilities considered economic forecasts for the types of investments held by the plans (primarily equity and fixed income investments), the Plans’ asset allocations, industry and corporate surveys and the past performance of the plans’ assets in selecting 7.50% and b) ASB considered its liability driven investment strategy in selecting 3.94%, which is consistent with the assumed discount rate as of December 31, 2017 with a 20 basis point active manager premium. For 2017, retirement benefit plans' assets of HEI and the Utilities had a net return of 19.3%. The Company and the Utilities adopted mortality tables published in October 2014 by the Society of Actuaries as its mortality assumptions as of December 31, 2014. The use of the RP-2014 Tables and the Mortality Improvement Scale MP-2014 had a significant effect on the Company’s and the Utilities’ benefit obligations and increased their costs and required contributions for 2015. The Company and the Utilities adopted revised mortality tables for their mortality assumptions as of December 31, 2017 and 2016 (based on information published by the Society of Actuaries in October 2016 and 2015, respectively), the use of which lowered obligations of the Company and Utilities as of December 31, 2017 and 2016. As of December 31, 2017, the assumed health care trend rates for 2018 and future years were as follows: medical, 7.5%, grading down to 5% for 2028 and thereafter; dental, 5%; and vision, 4%. As of December 31, 2016, the assumed health care trend rates for 2017 and future years were as follows: medical, 7.75%, grading down to 5% for 2028 and thereafter; dental, 5%; and vision, 4%. The components of NPPC and NPBC were as follows:
| Pension benefits |  | Other benefits
(in thousands) | 2017 |  | 2016 |  | 2015 |  | 2017 |  | 2016 |  | 2015
HEI consolidated |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 64,906 |  |  | $ | 60,555 |  |  | $ | 66,260 |  |  | $ | 3,374 |  |  | $ | 3,331 |  |  | $ | 3,927 |
Interest cost | 81,185 |  |  | 81,549 |  |  | 76,960 |  |  | 9,453 |  |  | 9,670 |  |  | 9,011 |
Expected return on plan assets | (102,745 | ) |  | (98,559 | ) |  | (88,554 | ) |  | (12,326 | ) |  | (12,273 | ) |  | (11,664 | )
Amortization of net prior service (gain) cost | (55 | ) |  | (57 | ) |  | 4 |  |  | (1,793 | ) |  | (1,793 | ) |  | (1,793 | )
Amortization of net actuarial losses | 26,496 |  |  | 24,832 |  |  | 36,800 |  |  | 1,130 |  |  | 804 |  |  | 1,796 |
Net periodic pension/benefit cost | 69,787 |  |  | 68,320 |  |  | 91,470 |  |  | (162 | ) |  | (261 | ) |  | 1,277 |
Impact of PUC D&Os | (18,004 | ) |  | (18,117 | ) |  | (40,011 | ) |  | 1,211 |  |  | 1,343 |  |  | (240 | )
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os) | $ | 51,783 |  |  | $ | 50,203 |  |  | $ | 51,459 |  |  | $ | 1,049 |  |  | $ | 1,082 |  |  | $ | 1,037 |
Hawaiian Electric consolidated |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 63,059 |  |  | $ | 58,796 |  |  | $ | 64,262 |  |  | $ | 3,353 |  |  | $ | 3,284 |  |  | $ | 3,870 |
Interest cost | 74,632 |  |  | 74,808 |  |  | 70,529 |  |  | 9,115 |  |  | 9,337 |  |  | 8,700 |
Expected return on plan assets | (95,892 | ) |  | (91,633 | ) |  | (82,541 | ) |  | (12,147 | ) |  | (12,096 | ) |  | (11,495 | )
Amortization of net prior service (gain) cost | 8 |  |  | 13 |  |  | 40 |  |  | (1,804 | ) |  | (1,803 | ) |  | (1,804 | )
Amortization of net actuarial losses | 24,392 |  |  | 22,693 |  |  | 33,371 |  |  | 1,102 |  |  | 793 |  |  | 1,754 |
Net periodic pension/benefit cost | 66,199 |  |  | 64,677 |  |  | 85,661 |  |  | (381 | ) |  | (485 | ) |  | 1,025 |
Impact of PUC D&Os | (18,004 | ) |  | (18,117 | ) |  | (40,011 | ) |  | 1,211 |  |  | 1,343 |  |  | (240 | )
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os) | $ | 48,195 |  |  | $ | 46,560 |  |  | $ | 45,650 |  |  | $ | 830 |  |  | $ | 858 |  |  | $ | 785 |
The estimated prior service credit and net actuarial loss for defined benefit plans that will be amortized from AOCI or regulatory assets into NPPC and NPBC during 2018 is as follows:
| HEI consolidated |  | Hawaiian Electric consolidated
(in millions) | Pension benefits |  | Other benefits |  | Pension benefits |  | Other benefits
Estimated prior service credit | $ | — |  |  | $ | (1.8 | ) |  | $ | — |  |  | $ | (1.8 | )
Net actuarial loss | 29.6 |  |  | — |  |  | 26.8 |  |  | — |
The Company recorded pension expense of $33 million, $33 million and $35 million and OPEB expense of $1.0 million, $1.0 million and $0.9 million in 2017, 2016 and 2015, respectively, and charged the remaining amounts primarily to electric utility plant. The Utilities recorded pension expense of $30 million, $30 million and $29 million and OPEB expense of $0.8 million, $0.7 million and $0.7 million in 2017, 2016 and 2015, respectively, and charged the remaining amounts primarily to electric utility plant. The health care cost trend rate assumptions can have a significant effect on the amounts reported for other benefits. As of December 31, 2017, for the Company, a one-percentage-point increase in the assumed health care cost trend rates would have increased the total service and interest cost by $0.1 million and the accumulated postretirement benefit obligation (APBO) by $2.7 million, and a one-percentage-point decrease would have reduced the total service and interest cost by $0.2 million and the APBO by $3.1 million. As of December 31, 2017, for the Utilities, a one-percentage-point increase in the assumed health care cost trend rates would have increased the total service and interest cost by $0.1 million and the APBO by $2.7 million, and a one-percentage-point decrease would have reduced the total service and interest cost by $0.2 million and the APBO by $3.1 million. Additional information on the defined benefit pension plans' accumulated benefit obligations (ABOs), which do not consider projected pay increases (unlike the PBOs shown in the table above), PBOs and assets were as follows:
| HEI consolidated |  | Hawaiian Electric consolidated
December 31 | 2017 |  | 2016 |  | 2017 |  | 2016
(in billions) |  |  |  |  |  |  |
Defined benefit plans - ABOs | $ | 1.8 |  |  | $ | 1.7 |  |  | $ | 1.7 |  |  | $ | 1.5 |
Defined benefit plans with ABO in excess of plan assets |  |  |  |  |  |  |
ABOs | 1.7 |  |  | 1.6 |  |  | 1.7 |  |  | 1.5 |
Plan assets | 1.5 |  |  | 1.3 |  |  | 1.5 |  |  | 1.2 |
Defined benefit plans with PBOs in excess of plan assets |  |  |  |  |  |  |
PBOs | 2.0 |  |  | 1.8 |  |  | 1.9 |  |  | 1.8 |
Plan assets | 1.5 |  |  | 1.3 |  |  | 1.5 |  |  | 1.2 |
HEI consolidated. The Company estimates that the cash funding for the qualified defined benefit pension plans in 2018 will be $62 million, which should fully satisfy the minimum required contributions to those plans, including requirements of the Utilities’ pension tracking mechanisms and the Plan’s funding policy. The Company's current estimate of contributions to its other postretirement benefit plans in 2018 is nil. As of December 31, 2017, the benefits expected to be paid under all retirement benefit plans in 2018, 2019, 2020, 2021, 2022 and 2023 through 2027 amount to $86 million, $89 million, $92 million, $95 million, $99 million and $552 million, respectively. Hawaiian Electric consolidated. The Utilities estimate that the cash funding for the qualified defined benefit pension plan in 2018 will be $61 million, which should fully satisfy the minimum required contributions to that Plan, including requirements of the pension tracking mechanisms and the Plan’s funding policy. The Utilities' current estimate of contributions to its other postretirement benefit plans in 2018 is nil. As of December 31, 2017, the benefits expected to be paid under all retirement benefit plans in 2018, 2019, 2020, 2021, 2022 and 2023 through 2027 amounted to $79 million, $81 million, $84 million, $87 million, $90 million and $504 million, respectively. Defined contribution plans information. For 2017, 2016 and 2015, the Company’s expenses for its defined contribution pension plans under the HEIRSP and the ASB 401(k) Plan were $7 million, $5 million and $6 million, respectively, and cash contributions were $6 million, $5 million and $5 million, respectively. The Utilities’ expenses and cash contributions for its defined contribution pension plan under the HEIRSP Plan for 2017, 2016 and 2015 were $2.0 million, $1.5 million and $1.5 million, respectively.

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