PENSION PLANS

We have several non-contributory defined benefit pension plans that together cover selected employees. Benefits under the plans were generally based on salary and years of service. Effective in 2012, substantially all benefits are frozen and only a small amount of additional benefits are being accrued. Our liability and related expense for benefits under the plans are recorded over the service period of employees based upon annual actuarial calculations. Plan funding strategies are influenced by government regulations. Plan assets consist primarily of domestic and foreign corporate equity securities, government and corporate bonds, hedge fund investments and cash.

The net periodic cost (benefit) components of our pension plans are as follows:



(Thousands of Dollars)	2017		2016		2015

Service cost for benefits earned during the year	84		197		232
Interest cost on projected benefit obligation	5,394		6,061		8,122
Expected return on plan assets	(7,878	)	(8,698	)	(9,863	)
Amortization of net loss	2,947		2,397		1,682
Amortization of prior service benefit	(136	)	(136	)	(136	)
Net periodic pension cost (benefit)	411		(179	)	37

Net periodic pension benefit of $56,000 is allocated to TNI in 2017, 2016 and 2015.

Changes in benefit obligations and plan assets are as follows:



(Thousands of Dollars)	2017		2016

Benefit obligation, beginning of year	202,158		193,751
Service cost	84		197
Interest cost	5,394		6,061
Actuarial loss (gain)	(4,241	)	13,630
Benefits paid	(11,750	)	(11,481	)
Benefit obligation, end of year	191,645		202,158
Fair value of plan assets, beginning of year:	149,131		143,288
Actual return on plan assets	14,721		14,819
Benefits paid	(11,750	)	(11,481	)
Administrative expenses paid	(2,340	)	(2,099	)
Employer contributions	—		4,604
Fair value of plan assets, end of year	149,762		149,131
Funded status	(41,883	)	(53,027	)

Disaggregated amounts recognized in the Consolidated Balance Sheets are as follows:



(Thousands of Dollars)	September 24 2017		September 25 2016

Pension obligations	(41,883	)	(53,027	)
Accumulated other comprehensive loss (before income taxes)	(43,307	)	(54,862	)

Amounts recognized in accumulated other comprehensive income (loss) are as follows:



(Thousands of Dollars)	September 24 2017		September 25 2016

Unrecognized net actuarial loss	(43,550	)	(55,241	)
Unrecognized prior service benefit	243		379
	(43,307	)	(54,862	)

We expect to recognize $2,025,000 and $137,000 of unrecognized net actuarial loss and unrecognized prior service benefit, respectively, in net periodic pension cost in 2018.

The accumulated benefit obligation for the plans total $191,645,000 at September 24, 2017 and $202,158,000 at September 25, 2016. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets are $191,645,000, $191,645,000 and $149,762,000, respectively, at September 24, 2017.

Assumptions

Weighted-average assumptions used to determine benefit obligations are as follows:



(Percent)	September 24 2017	September 25 2016

Discount rate	3.7	3.5

Weighted-average assumptions used to determine net periodic benefit cost are as follows:



(Percent)	2017	2016	2015

Discount rate	3.5	4.2	4.2
Expected long-term return on plan assets	5.5	6.3	6.8

For 2018, the expected long-term return on plan assets is 5.5%. The assumptions related to the expected long-term return on plan assets are developed through an analysis of historical market returns, current market conditions and composition of plan assets.

Plan Assets

The primary objective of our investment strategy is to satisfy our pension obligations at a reasonable cost. Assets are actively invested to balance real growth of capital through appreciation and reinvestment of dividend and interest income and safety of invested funds. Pension assets included below include assets of plans described below under the heading Other Plans.

Our investment policy outlines the governance structure for decision making, sets investment objectives and restrictions and establishes criteria for selecting and evaluating investment managers. The use of derivatives is strictly prohibited, except on a case-by-case basis where the manager has a proven capability, and only to hedge quantifiable risks such as exposure to foreign currencies. An investment committee, consisting of certain of our executives and supported by independent consultants, is responsible for monitoring compliance with the investment policy. Assets are periodically redistributed to maintain the appropriate policy allocation.

The weighted-average asset allocation of our pension assets is as follows:



(Percent)	Policy Allocation	Actual Allocation
Asset Class	September 24, 2017	September 24 2017	September 25 2016

Equity securities	50	50	50
Debt securities	35	33	33
TIPS	5	4	4
Hedge fund investments	10	12	11
Cash and cash equivalents	—	1	2

Plan assets include no Company securities. Assets include cash and cash equivalents and receivables from time to time due to the need to reallocate assets within policy guidelines.

Fair Value Measurements

The fair value hierarchy of pension assets at September 24, 2017 is as follows:



(Thousands of Dollars)	NAV	Level 1	Level 2	Level 3

Cash and cash equivalents	—	1,882	—	—
Domestic equity securities	—	10,484	49,483	—
International equity securities	—	7,290	8,047	—
TIPS	—	6,553	—	—
Debt securities	14,711	26,015	8,266	—
Hedge fund investments	19,067	—	—	—

The fair value hierarchy of pension assets at September 25, 2016 is as follows:



(Thousands of Dollars)	NAV	Level 1	Level 2	Level 3

Cash and cash equivalents	—	2,757	—	—
Domestic equity securities	—	9,669	49,809	—
International equity securities	—	6,773	7,755	—
TIPS	—	6,883	—	—
Debt securities	14,558	25,612	9,648	—
Hedge fund investments	17,531	—	—	—

There were no purchases, sales or transfers of assets classified as Level 3 in 2017 or 2016.

Cash Flows

Based on our forecast at September 24, 2017, we expect to make contributions of $4,940,000 to our pension trust in 2018.

We anticipate future benefit payments to be paid from the pension trust as follows:



(Thousands of Dollars)

2018	12,500
2019	11,873
2020	11,809
2021	11,782
2022	11,748
2023-2027	58,047

Other Plans

We are obligated under an unfunded plan to provide fixed retirement payments to certain former employees. The plan is frozen and no additional benefits are being accrued. The accrued liability under the plan is $1,766,000 and $2,232,000 at September 24, 2017 and September 25, 2016, respectively, of which $113,000 is included in compensation and other accrued liabilities in the Consolidated Balance Sheet at September 24, 2017 and September 25, 2016, respectively.