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)	2018		2017		2016

Service cost for benefits earned during the year	48		84		197
Interest cost on projected benefit obligation	5,754		5,394		6,061
Expected return on plan assets	(7,933	)	(7,878	)	(8,698	)
Amortization of net loss	2,025		2,947		2,397
Amortization of prior service benefit	(136	)	(136	)	(136	)
Net periodic pension cost (benefit)	(242	)	411		(179	)

Net periodic pension benefit of $56,000 is allocated to TNI in 2018, 2017 and 2016.

Changes in benefit obligations and plan assets are as follows:



(Thousands of Dollars)	2018		2017

Benefit obligation, beginning of year	191,645		202,158
Service cost	48		84
Interest cost	5,754		5,394
Actuarial loss (gain)	(9,464	)	(4,241	)
Benefits paid	(11,452	)	(11,750	)
Benefit obligation, end of year	176,531		191,645
Fair value of plan assets, beginning of year:	149,762		149,131
Actual return on plan assets	10,576		14,721
Benefits paid	(11,452	)	(11,750	)
Administrative expenses paid	(2,571	)	(2,340	)
Employer contributions	4,940		—
Fair value of plan assets, end of year	151,255		149,762
Funded status	(25,276	)	(41,883	)

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



(Thousands of Dollars)	September 30 2018		September 24 2017

Pension obligations	(25,276	)	(41,883	)
Accumulated other comprehensive loss (before income taxes)	(31,882	)	(43,307	)

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



(Thousands of Dollars)	September 30 2018		September 24 2017

Unrecognized net actuarial loss	(31,988	)	(43,550	)
Unrecognized prior service benefit	106		243
	(31,882	)	(43,307	)

We expect to recognize $1,136,000 and $100,000 of unrecognized net actuarial loss and unrecognized prior service benefit, respectively, in net periodic pension cost in 2019.

The accumulated benefit obligation for the plans total $176,531,000 at September 30, 2018 and $191,645,000 at September 24, 2017. 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 $176,531,000, $176,531,000 and $151,255,000, respectively, at September 30, 2018.

Assumptions

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



(Percent)	September 30 2018	September 24 2017

Discount rate	4.2	3.7

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



(Percent)	2018	2017	2016

Discount rate	3.7	3.5	4.2
Expected long-term return on plan assets	5.5	5.5	6.3

For 2019, 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 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 30 2018	September 30 2018	September 24 2017

Equity securities	50	50	50
Debt securities	35	32	33
TIPS	5	4	4
Hedge fund investments	10	10	12
Cash and cash equivalents	—	4	1

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 30, 2018 is as follows:



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

Cash and cash equivalents	—	5,537	—	—
Domestic equity securities	10,045	12,573	40,083	—
International equity securities	—	7,070	7,560	—
TIPS	—	6,535	—	—
Debt securities	—	25,673	22,523	—
Hedge fund investments	15,767	—	—	—

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	—	—	—

There were no purchases, sales or transfers of assets classified as Level 3 in 2018 or 2017.

Cash Flows

Based on our forecast at September 30, 2018, we expect to make contributions of $650,000 to our pension trust in 2019.

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



(Thousands of Dollars)

2019	12,481
2020	11,796
2021	11,743
2022	11,695
2023	11,720
2024-2028	57,083

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 $1,469,000 and $1,766,000 at September 30, 2018 and September 24, 2017, respectively, of which $0 and $113,000 is included in compensation and other accrued liabilities in the Consolidated Balance Sheet at September 30, 2018 and September 24, 2017, respectively.