8. BENEFIT PLANS The disclosures in this note apply to all Registrants except AEPTCo unless indicated otherwise. For a discussion of investment strategy, investment limitations, target asset allocations and the classification of investments within the fair value hierarchy, see “Fair Value Measurements of Assets and Liabilities” and “Investments Held in Trust for Future Liabilities” sections of Note 1. AEP sponsors a qualified pension plan and two unfunded non-qualified pension plans. Substantially all AEP employees are covered by the qualified plan or both the qualified and a non-qualified pension plan. AEP also sponsors OPEB plans to provide health and life insurance benefits for retired employees. Due to the Registrant Subsidiaries’ participation in AEP’s benefit plans, the assumptions used by the actuary, with the exception of the rate of compensation increase, and the accounting for the plans by each subsidiary are the same. This section details the assumptions that apply to all Registrants and the rate of compensation increase for each Registrant. The Registrants recognize the funded status associated with defined benefit pension and OPEB plans on the balance sheets. Disclosures about the plans are required by the “Compensation – Retirement Benefits” accounting guidance. The Registrants recognize an asset for a plan’s overfunded status or a liability for a plan’s underfunded status, and recognize, as a component of other comprehensive income, the changes in the funded status of the plan that arise during the year that are not recognized as a component of net periodic benefit cost. The Registrants record a regulatory asset instead of other comprehensive income for qualifying benefit costs of regulated operations that for rate-making purposes are deferred for future recovery. The cumulative funded status adjustment is equal to the remaining unrecognized deferrals for unamortized actuarial losses or gains, prior service costs and transition obligations, such that remaining deferred costs result in an AOCI equity reduction or regulatory asset and deferred gains result in an AOCI equity addition or regulatory liability. The weighted-average assumptions used in the measurement of the Registrants’ benefit obligations are shown in the following tables: (a) Rates are for base pay only. In addition, an amount is added to reflect target incentive compensation for exempt employees and overtime and incentive pay for nonexempt employees. Actuarial Assumptions for Benefit Obligations 293 Pension Plans OPEB December 31, Assumption 2020 2019 2020 2019 Discount Rate 2.50 % 3.25 % 2.55 % 3.30 % Interest Crediting Rate 4.00 % 4.00 % NA NA NA Not applicable. Pension Plans December 31, Assumption  –  Rate of Compensation Increase (a) 2020 2019 AEP 5.00  % 4.95  % AEP Texas 5.05  % 5.00  % APCo 4.85  % 4.80  % I&M 5.00  % 4.95  % OPCo 5.25  % 5.15  % PSO 5.05  % 5.05  % SWEPCo 4.90  % 4.90  %