Notes To Consolidated Financial Statements 70 |  FREEPORT-McMoRan COPPER & GOLD INC. The components of net periodic benefit cost for PT Freeport Indonesia’s and Atlantic Copper’s pension plans  follow (in thousands): The components of net periodic benefit cost for FCX’s, including the SERP and director plan, and, since  October 1, 2002, FM Services Company’s pension plans follow (in thousands): a. Employer contributions for 2005 are expected to approximate $3.8 million for the PT Fr eeport Indonesia plan (based on a December 31, 2004, exchange rate of 9,270  Indonesian rupiah to one U.S. dollar), $9.8 million for the Atlantic Copper plan (based  on a December 31, 2004, exchange rate of $1.36 per euro) and none for the FCX plan. b. As discussed above, FCX and FM Services Company elected to terminate their defined be nefit pension plans and ceased accruing benefits on June 30, 2000. The assumptions  shown only relate to the SERP. c. Rate of compensation increase assumption for 2005 is 10.0 percent for staff employees  and 14.0 percent for non-staff employees and 8.0 percent for all years thereafter. FCX (U.S. and  PT Freeport Indonesia  Atlantic Copper e xpatri ate employees)  (Indonesian employees)  (Spanish retirees) 2004 2003  2004  2003  2004  2003 Change in benefit obligation: Benefit obligation at beginning of year  $(2 9,4 9 5)  $(29,723)  $(37,224)  $(25,553)  $(85,089)  $(74,732) SERP and director plan additions   (2 1,3 0 0)  —  —  —  —  — Service cost  (7 3 1)  —  (3,355)  (3,148)  —  — Interest cost  ( 2,6 3 3)  (1,085)  (3,365)  (3,366)  (5,035)  (4,821) Actuarial gains (losses)  8 8  —  (3,819)  (1,246)  (608)  (235) Effect of changes in law  — —  —  (5,031)  —  — Foreign exchange gain (loss)  — —  3,632  (1,686)  (4,572)   (11,595) Benefits paid  8,0 7 7  1,313  3,243  2,806  7,805  6,294 Benefit obligation at end of year   (4 5,1 9 4)   (29,495)   (40,888)   (37,224)   (87,499)   (85,089) Change in plan assets: Fair value of plan assets at beginning of year   2 4,0 7 1   24,633   18,536   13,861  8,275  6,071 Actual return on plan assets  4 8 1  751  3,084  1,541  —  — Employer contributions$^{a}$  1 3 5  —  3,694  3,281  9,370  8,498 Foreign exchange (loss) gain  — —  (4,260)  1,551  —  — Benefits paid  ( 8,0 7 7)  (1,313)  (2,098)  (1,698)  (7,805)  (6,294) Fair value of plan assets at end of year   1 6,6 1 0   24,071   18,956   18,536  9,840  8,275 Funded status   (2 8,5 8 4)  (5,424)   (21,932)   (18,688)   (77,659)   (76,814) Unrecognized net actuarial (gain) loss  (6 5 1)  —   12,075  6,994  7,892  8,801 Unrecognized prior service cost   1 5,6 4 7  —  6,897  8,601  —  — Intangible asset/minimum liability adjustment   (1 4,1 3 5)  —  (4,643)  (2,220)  —  — Accrued benefit cost  $(2 7,7 2 3)  $ (5,424)  $ (7,603)  $ (5,313)  $(69,767)  $(68,013) Accumulated benefit obligation  $(4 5,1 9 4)  $(29,495)  $(25,166)  $(23,849)  $(87,499)  $(85,089) Weighted-average assumptions used to determine benefit obligations (per c ent): Discount rate  6. 0 b N/A  10.00  10.00  6.77  6.77 Rate of compensation increase  N / A b N/A  8.00$^{c}$  8.00  —  — Weighted-average assumptions to determine net periodic benefit co st (percent): Discount rate  6. 2 5 b N/A  10.00  10.00  6.77  6.77 Expected return on plan assets  N / A b N/A  7.50  10.00  —  — Rate of compensation increase  N / A b N/A  8.00 c 8.00  —  — 2004  2003  2002 Service cost  $ 731  $  —  $ — Amortization of prior service cost   5,416  —  — Interest cost   2,633   1,085   887 Actual return on plan assets  (481)  (751)   (639) Net periodic benefit cost  $8,299  $ 334  $ 248