The NuStar Thrift Plan (the Thrift Plan) is a qualified defined contribution plan that became effective June 26, 2006. Participation in the Thrift Plan is voluntary and open to substantially all our domestic employees upon their dates of hire. Thrift Plan participants can contribute from 1% up to 30% of their total annual compensation to the Thrift Plan in the form of pre-tax and/or after tax employee contributions. We make matching contributions in an amount equal to 100% of each participant’s employee contributions up to a maximum of 6% of the participant’s total annual compensation. The matching contributions to the Thrift Plan for the years ended December 31, 2019, 2018 and 2017 totaled $7.6 million, $7.4 million and $6.9 million, respectively.

The NuStar Excess Thrift Plan (the Excess Thrift Plan) is a nonqualified deferred compensation plan that became effective July 1, 2006. The Excess Thrift Plan provides benefits to those employees whose compensation and/or annual contributions under the Thrift Plan are subject to the limitations applicable to qualified retirement plans under the Code.

We also maintain other defined contribution plans for certain international employees located in Canada. We maintained plans for international employees in the Caribbean Netherlands, United Kingdom and Netherlands prior to the St. Eustatius Disposition and the European Disposition on July 29, 2019 and November 30, 2018, respectively. For the years ended December 31, 2019, 2018 and 2017, our costs for these plans totaled $0.9 million, $2.5 million and $2.5 million, respectively.

The NuStar Pension Plan (the Pension Plan) is a qualified non-contributory defined benefit pension plan that provides eligible U.S. employees with retirement income as calculated under a cash balance formula. Under the cash balance formula, benefits are determined based on age, years of vesting service and interest credits, and employees become fully vested in their benefits upon attaining three years of vesting service. Prior to January 1, 2014, eligible employees were covered under either a cash balance formula or a final average pay formula (FAP). Effective January 1, 2014, the Pension Plan was amended to freeze the FAP benefits as of December 31, 2013, and going forward, all eligible employees are covered under the cash balance formula discussed above.

We also maintain an excess pension plan (the Excess Pension Plan), which is a nonqualified deferred compensation plan that provides benefits to a select group of management or other highly compensated employees. Neither the Excess Thrift Plan nor the Excess Pension Plan is intended to constitute either a qualified plan under the provisions of Section 401 of the Code or a funded plan subject to the Employee Retirement Income Security Act.

The Pension Plan and Excess Pension Plan are collectively referred to as the Pension Plans in the tables and discussion below. Our other postretirement benefit plans include a contributory medical benefits plan for U.S. employees who retired prior to April 1, 2014 and, for employees who retire on or after April 1, 2014, a partial reimbursement for eligible third-party health care premiums. We use December 31 as the measurement date for our pension and other postretirement plans.

The changes in the benefit obligation, the changes in fair value of plan assets, the funded status and the amounts recognized in the consolidated balance sheets for our Pension Plans and other postretirement benefit plans as of and for the years ended December 31, 2019 and 2018 were as follows:



	Pension Plans						Other Postretirement Benefit Plans
	2019			2018			2019			2018
	(Thousands of Dollars)
Change in benefit obligation:
Benefit obligation, January 1	$	141,833		$	149,817		$	10,908		$	12,410
Service cost	9,549			9,621			431			504
Interest cost	5,480			4,824			453			429
Benefits paid	(7,109		)	(7,929		)	(217		)	(255		)
Participant contributions	—			—			62			87
Actuarial loss (gain)	17,504			(14,500		)	1,559			(2,267		)
Benefit obligation, December 31	$	167,257		$	141,833		$	13,196		$	10,908
Change in plan assets:
Plan assets at fair value, January 1	$	126,949		$	129,878		$	—		$	—
Actual return on plan assets	28,064			(6,034		)	—			—
Employer contributions	11,132			11,034			155			168
Benefits paid	(7,109		)	(7,929		)	(217		)	(255		)
Participant contributions	—			—			62			87
Plan assets at fair value, December 31	$	159,036		$	126,949		$	—		$	—
Reconciliation of funded status:
Fair value of plan assets at December 31	$	159,036		$	126,949		$	—		$	—
Less: Benefit obligation at December 31	167,257			141,833			13,196			10,908
Funded status at December 31	$	(8,221	)	$	(14,884	)	$	(13,196	)	$	(10,908	)
Amounts recognized in the consolidated balance sheets (a):
Accrued liabilities	$	(303	)	$	(267	)	$	(368	)	$	(362	)
Other long-term liabilities	(7,918		)	(14,617		)	(12,828		)	(10,546		)
Net pension liability	$	(8,221	)	$	(14,884	)	$	(13,196	)	$	(10,908	)

The accumulated benefit obligation is the present value of benefits earned to date, assuming no future salary increases. The aggregate accumulated benefit obligation for our Pension Plans as of December 31, 2019 and 2018 was $164.2 million and $139.7 million, respectively. As of December 31, 2019 and 2018, the aggregate accumulated benefit obligation for the Pension Plans exceeded plan assets.



	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2019			2018			2017			2019			2018			2017
	(Thousands of Dollars)
Service cost	$	9,549		$	9,621		$	8,955		$	431		$	504		$	456
Interest cost	5,480			4,824			4,507			453			429			430
Expected return on plan assets	(8,015		)	(7,417		)	(6,411		)	—			—			—
Amortization of prior service credit	(2,057		)	(2,057		)	(2,059		)	(1,145		)	(1,145		)	(1,145		)
Amortization of net actuarial loss	846			2,174			1,484			42			214			191
Net periodic benefit cost (income)	$	5,803		$	7,145		$	6,476		$	(219	)	$	2		$	(68	)

We amortize prior service costs and credits on a straight-line basis over the average remaining service period of employees expected to receive benefits under our Pension Plans and other postretirement benefit plans (“Amortization of prior service credit” in table above). We amortize the actuarial gains and losses that exceed 10% of the greater of the projected benefit obligation or market-related value of plan assets (smoothed asset value) over the average remaining service period of active employees expected to receive benefits under our Pension Plans and other postretirement benefit plans (“Amortization of net actuarial loss” in table above).

The service cost component of net periodic benefit cost (income) is reported in “General and administrative expenses” and “Operating expenses” on the consolidated statements of (loss) income, and the remaining components of net periodic benefit cost (income) are reported in “Other income (expense), net.”



	Pension Plans									Other Postretirement Benefit Plans
	Year Ended December 31,									Year Ended December 31,
	2019			2018			2017			2019			2018			2017
	(Thousands of Dollars)
Net unrecognized gain (loss) arising during the year:
Net actuarial gain (loss)	$	2,545		$	1,049		$	(4,235	)	$	(1,559	)	$	2,267		$	(590	)
Net (gain) loss reclassified into income:
Amortization of prior service credit	(2,057		)	(2,057		)	(2,059		)	(1,145		)	(1,145		)	(1,145		)
Amortization of net actuarial loss	846			2,174			1,484			42			214			191
Net (gain) loss reclassified into income	(1,211		)	117			(575		)	(1,103		)	(931		)	(954		)

Reclassification of stranded tax effects	—			(74		)	—			—			—			—
Income tax benefit (expense)	14			(69		)	162			—			(25		)	22
Total changes to other comprehensive income (loss)	$	1,348		$	1,023		$	(4,648	)	$	(2,662	)	$	1,311		$	(1,522	)



	Pension Plans						Other Postretirement Benefit Plans
	December 31,						December 31,
	2019			2018			2019			2018
	(Thousands of Dollars)
Unrecognized actuarial loss	$	(24,564	)	$	(27,955	)	$	(3,190	)	$	(1,673	)
Prior service credit	12,490			14,547			7,174			8,319
Deferred tax asset	90			76			—			—
Accumulated other comprehensive (loss) income, net of tax	$	(11,984	)	$	(13,332	)	$	3,984		$	6,646

The investment policies and strategies for the assets of our qualified Pension Plan incorporate a well-diversified approach that is expected to earn long-term returns from capital appreciation and a growing stream of current income. This approach recognizes that assets are exposed to risk, and the market value of the Pension Plan’s assets may fluctuate from year to year. Risk tolerance is determined based on our financial ability to withstand risk within the investment program and the willingness to accept return volatility. In line with the investment return objective and risk parameters, the Pension Plan’s mix of assets includes a diversified portfolio of equity and fixed-income instruments. The aggregate asset allocation is reviewed on an annual basis. As of December 31, 2019, the target allocations for plan assets were 65% equity securities and 35% fixed income investments, with certain fluctuations permitted.

The overall expected long-term rate of return on plan assets for the Pension Plan is estimated using various models of asset returns. Model assumptions are derived using historical data with the assumption that capital markets are informationally efficient. Three models are used to derive the long-term expected returns for each asset class. Since each method has distinct advantages and disadvantages and differing results, an equal weighted average of the methods’ results is used.

We disclose the fair value for each major class of plan assets in the Pension Plan into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs for which little or no market data exists.



	December 31, 2019
	Level 1		Level 2		Level 3		Total
	(Thousands of Dollars)
Cash equivalent securities	$	160	$	—	$	—	$	160
Equity securities:
U.S. large cap equity fund (a)	—		92,737		—		92,737
International stock index fund (b)	17,473		—		—		17,473
Fixed income securities:
Bond market index fund (c)	48,666		—		—		48,666
Total	$	66,299	$	92,737	$	—	$	159,036



	December 31, 2018
	Level 1		Level 2		Level 3		Total
	(Thousands of Dollars)
Cash equivalent securities	$	608	$	—	$	—	$	608
Equity securities:
U.S. large cap equity fund (a)	—		70,525		—		70,525
International stock index fund (b)	13,391		—		—		13,391
Fixed income securities:
Bond market index fund (c)	42,425		—		—		42,425
Total	$	56,424	$	70,525	$	—	$	126,949

For the year ended December 31, 2019, we contributed $11.1 million and $0.2 million to the Pension Plans and other postretirement benefit plans, respectively. During 2020, we expect to contribute approximately $11.3 million and $0.4 million to the Pension Plans and other postretirement benefit plans, respectively, which principally represent contributions either required by regulations or laws, or with respect to unfunded plans, necessary to fund current benefits.



	Pension Plans						Other Postretirement Benefit Plans
	Year Ended December 31,						Year Ended December 31,
	2019		2018		2017		2019		2018		2017
Discount rate	4.40	%	3.72	%	4.33	%	4.53	%	3.82	%	4.49	%
Expected long-term rate of return on plan assets	6.50	%	6.50	%	6.00	%	n/a		n/a		n/a
Rate of compensation increase	3.51	%	3.51	%	3.51	%	n/a		n/a		n/a

We sponsor a contributory postretirement health care plan for employees who retired prior to April 1, 2014. The plan has an annual limitation (a cap) on the increase of the employer’s share of the cost of covered benefits. The cap on the increase in employer’s cost is 2.5% per year. The assumed increase in total health care cost exceeds the 2.5% indexed cap, so increasing or decreasing the health care cost trend rate by 1% does not materially change our obligation or expense for the postretirement health care plan.