13. RETIREMENT PLANS

The Company has noncontributory defined benefit pension plans for eligible employees of its GTT and Viya subsidiaries who meet certain age and employment criteria. The Company also has a noncontributory defined medical, dental, vision, and life benefit plan for eligible employees of its Viya subsidiary who meet certain age and employment criteria. The Company acquired the Viya plans as a result of the July 2016 Viya Acquisition. The Company reviews the funded status of its pension plans and makes contributions based on that analysis. The benefits are based on the participants’ compensation during their employment and the credited service years earned by participants. The Company funds the other postretirement benefit plans as benefits are paid.

The weighted‑average rates assumed in the actuarial calculations for the pension and other postretirement benefit plans are as follows as of December 31, 2018, 2017 and 2016:


	2018		2017		2016
Discount Rate – Pension Benefit Obligation	4.7	%	4.2	%	4.6	%
Discount Rate – Pension Benefit Cost	4.3	%	4.6	%	4.3	%
Discount Rate – Postretirement Benefit Obligation	4.5	%	3.9	%	4.3	%
Discount Rate – Postretirement Benefit Cost	3.9	%	4.3	%	3.9	%
Annual salary increase	6.5	%	6.5	%	6.5	%
Expected long-term return on plan assets	6.1	%	6.1	%	6.3	%

The expected long‑term rate of return on plan assets was determined based on several factors including input from pension investment consultants, projected long‑term returns of equity and bond indices, and historical returns over the life of the related obligations of the fund. The Company, in conjunction with its pension investment consultants, reviews its asset allocation periodically and rebalances its investments when appropriate in an effort to earn the expected long‑term returns. The Company will continue to evaluate its long‑term rate of return assumptions at least annually and will adjust them as necessary.

The annual salary increase assumption reflects the Company’s estimated long term average rate of salary increases. The assumption is not applicable to the Viya pension and other postretirement plans as the obligations associated with these plans are not dependent on participant’s salaries.

The discount rate was determined based on a review of market data including yields on high quality corporate bonds with maturities approximating the remaining life of the project benefit obligations.

The other postretirement benefit plans healthcare cost trend assumptions is based on health care trend rates. The 2019 assumed medical health care cost trend rate is 6% trending to an ultimate rate of 4% in 2073. The 2019 and ultimate assumed dental care cost trend rate is 4%. The effect of a one-percentage-point increase in the assumed health care cost trend rates for each future year on the accumulated postretirement benefit obligation for health care benefits and the aggregate of the service and interest cost components of net periodic postretirement health care benefit cost is shown below:


	2018						2017
	Accumulated postretirement benefit obligation			Service cost plus interest cost			Accumulated postretirement benefit obligation			Service cost plus interest cost

At trend		4,013			308			5,308			389
At trend + 1%		4,305			338			5,723			429
Dollar Impact		292			30			415			40
Percentage Impact		7.3	%		9.7	%		7.8	%		10.3	%
At trend – 1%		3,755			282			4,944			355
Dollar Impact		(258)			(26)			(364)			(34)
Percentage Impact		(6.4)	%		(8.4)	%		(6.9)	%		(8.7)	%

Changes during the year in the projected benefit obligations and in the fair value of plan assets are as follows for 2018 and 2017 (in thousands):


	2018				2017

	Pension Benefits		Postretirement Benefits		Pension Benefits		Postretirement Benefits
Projected benefit obligations:
Balance at beginning of year:	$	80,355	$	5,307	$	76,119	$	5,108
Service cost		1,794		147		1,676		183
Interest cost		3,279		161		3,388		206
Benefits and settlements paid		(4,524)		(360)		(3,942)		(367)
Actuarial (gain) loss		(4,295)		(272)		3,114		177
Experience (gain) loss		291		(971)		—		—
Balance at end of year	$	76,900	$	4,012	$	80,355	$	5,307
Plan net assets:
Balance at beginning of year:	$	80,892	$	—	$	75,331	$	—
Actual return on plan assets		(730)		—		8,789		—
Company contributions		1,830		360		842		367
Benefits and settlements paid		(4,462)		(360)		(4,070)		(367)
Balance at end of year	$	77,530	$	—	$	80,892	$	—
Over/ (Under) funded status of plan	$	630	$	(4,012)	$	537	$	(5,307)

The Company reports an asset or liability on its balance equal to the funded status of its pension and other postretirement benefit plans. Plans in an overfunded status are aggregated and recorded as a net benefit asset in other assets. Plans in an underfunded status are aggregated and recorded as a net benefit liability in other liabilities. The funded status of the Company’s pension and other retirement benefit plans is below (in thousands):


	2018						2017

	GTT Pension Benefit		Viya Pension Benefit		Postretirement Benefits		GTT Pension Benefit		Viya Pension Benefit		Postretirement Benefits

Projected benefit obligation	$	14,712	$	62,188	$	4,012	$	13,205	$	67,150	$	5,307
Plan Net Assets		14,105		63,425		—		10,307		70,585		—
Over/ (Under) funded status of plan	$	(607)	$	1,237	$	(4,012)	$	(2,898)	$	3,435	$	(5,307)

The Company’s investment policy for its pension assets is to have a reasonably balanced investment approach, with a long‑term bias toward debt investments. The Company’s strategy allocates plan assets among equity, debt and other assets to achieve long‑term returns without significant risk to principal. The GTT pension fund has limitations from investing in the equity, debt or other securities of the employer, its subsidiaries or associates of the employer or any company of which the employer is a subsidiary or an associate. Furthermore, the GTT plan must invest between 70% - 80% of its total plan assets within Guyana.

The fair values for the pension plan’s net assets, by asset category, at December 31, 2018 are as follows (in thousands):


Asset Category	Total		Level 1		Level 2		Level 3
Cash, cash equivalents, money markets and other	$	5,173	$	5,173	$	—	$	—
Common stock		23,052		18,760		4,292		—
Mutual funds - fixed income		16,444		—		16,444		—
Mutual funds - equities		13,099		4,748		8,351		—
Fixed income securities		18,095		—		18,095		—
Other		1,667		1,177		—		490
Total	$	77,530	$	29,858	$	47,182	$	490

The fair values for the pension plan’s net assets, by asset category, at December 31, 2017 are as follows (in thousands):


Asset Category	Total		Level 1		Level 2		Level 3
Cash, cash equivalents, money markets and other	$	6,363	$	6,363	$	—	$	—
Common stock		28,467		25,312		3,155		—
Mutual funds - equities		9,248		9,248		—		—
Exchange traded funds - equities		904		904		—		—
Fixed income securities		35,414		—		35,414		—
Annuities		496		—		—		496
Total	$	80,892	$	41,827	$	38,569	$	496

The plan’s weighted‑average asset allocations at December 31, 2018 and 2017, by asset category are as follows:


	2018		2017
Cash, cash equivalents, money markets and other	7	%	8	%
Common stock	30		35
Mutual funds - fixed income	21		—
Mutual funds - equities	17		11
Fixed income securities	23		44
Other	2		2
Total	100	%	100	%

Amounts recognized on the Company’s consolidated balance sheets consist of (in thousands):


	As of December 31,
	2018				2017
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits

Accrued and current liabilities	$	—	$	271	$	—	$	392
Other Liabilities		744		3,742		2,898		4,915
Other Assets		1,375		—		3,435		—
Accumulated other comprehensive income, net of tax		938		1,350		2,953		174

Amounts recognized in accumulated other comprehensive loss consist of (in thousands):


	As of December 31,
	2018				2017
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits

Net actuarial gain	$	30	$	1,350	$	1,408	$	174
Accumulated other comprehensive income, pre-tax		30		1,350		1,408		174
Accumulated other comprehensive income, net of tax		938		1,350		2,953		174

Components of the plan’s net periodic pension cost are as follows for the years ended December 31, 2018, 2017 and 2016 (in thousands):


	2018				2017				2016
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits

Service cost	$	1,794	$	147	$	1,676	$	183	$	1,308	$	97
Interest cost		3,279		161		3,388		206		2,002		97
Expected return on plan assets		(4,835)		—		(4,470)		—		(2,024)		—
Amortization of actuarial (gain) loss		121		(67)		716		—		1,271		—
Curtailment		—		—		—		—		128		—
Net periodic pension cost	$	359	$	241	$	1,310	$	389	$	2,685	$	194

The Company does not plan to make any contributions to its pension and postretirement benefit plans during the year ending December 31, 2019.

The following estimated benefits, which reflect expected future service, as appropriate, are expected to be paid over the next ten years as indicated below (in thousands):


	Pension		Postretirement
Fiscal Year	Benefits		Benefits
2019	$	5,022	$	277
2020		4,292		255
2021		4,452		237
2022		5,079		261
2023		4,355		236
2024-2028		23,534		1,535
	$	46,734	$	2,801