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Pension Benefits
 3 Months Ended
Mar. 31, 2021
Pension Benefits  
Pension Benefits

18.  Pension Benefits

The Company has a noncontributory defined benefit pension plan covering certain employees who work at least 1,000 hours per year. The participants have a vested interest in their accrued benefit after five full years of service. The benefits of the plan are based upon the employee’s years of service and average annual earnings for the highest five consecutive calendar years during the final ten-year period of employment. Plan assets are primarily debt securities (including U.S. Treasury and Agency securities, corporate notes and bonds), listed common stocks (including shares of AmeriServ Financial, Inc. common stock which is limited to 10% of the plan’s assets), mutual funds, and short-term cash equivalent instruments. The net periodic pension cost for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

    

March 31, 

 

    

 

 

2021

    

2020

    

 

COMPONENTS OF NET PERIODIC BENEFIT COST:

 

 

  

 

 

  

 

 

Service cost

 

$

463

 

$

441

 

 

Interest cost

 

 

221

 

 

319

 

 

Expected return on plan assets

 

 

(946)

 

 

(817)

 

 

Recognized net actuarial loss

 

 

720

 

 

648

 

 

Net periodic pension cost

 

$

458

 

$

591

 

 

 

The service cost component of net periodic benefit cost is included in salaries and employee benefits and all other components of net periodic benefit cost are included in other expense on the Consolidated Statements of Operations.

The Company implemented a soft freeze of its defined benefit pension plan to provide that non-union employees hired on or after January 1, 2013 and union employees hired on or after January 1, 2014 are not eligible to participate in the pension plan. Instead, such employees are eligible to participate in a qualified 401(k) plan. This change was made to help reduce pension costs in future periods.