The Company records the costs of postretir ement benefits during the employees’ years of active service.The Commissions have issued decisions tha t authorize rate recovery of tax deductible funding of postretirement benefits and permit recording of a regula tory asset for the portion of costs that will be recoverable in future rates. The following table reconciles the funded sta tus of the plans with the accrued pension liability and the net postretirement benefit liability as of December 31, 2002 and 2001: Pension Benefits Other Benefits In thousands 2002 2001 2002 2001 Change in benefit obligation: Beginning of year 60,359 $59,098 $ 14,708 $ 12,052 Service cost  2,968 2,786 815 625 Interest cost 4,404 4,333 1,037 858 Assumption change 30 1,326 699 1,943 Plan amendment 15,424 11 40 – Experience loss 660 2,289 845 15 Benefits paid (4,276) (9,484) (641)  (785) End of year 79,569 $60,359 $ 17,503 $ 14,708 Change in plan assets: Fair value of plan assets at beginning of year 57,340  $63,648 $ 2,300  $ 2,067 Actual return on plan assets (2,377) 1,356 (79) 237 Employer contributions 5,616 1,820 885 781 Retiree contributions – – 470 415 Benefits paid (4,276) (9,484) (1,111) (1,200) Fair value of plan assets at end of year 56,303 $57,340 $ 2,465 $ 2,300 Funded status $(23,266) $ (3,019) $(15,038) $(12,408) Unrecognized actuarial (gain) or loss 1,281 (6,191) 5,025 3,339 Unrecognized prior service cost 18,875 4,525 786 817 Unrecognized transition obligation – – 3,045 3,321 Unrecognized net initial asset – – (276) (276) Net amount recognized $ (3,110) $ (4,685) $ (6,458) $ (5,207) Amounts recognized on the balance sheet consist of: Pension Benefits Other Benefits In thousands 2002 2001 2002 2001 Accrued benefit costs $(3,110) $(4,685) $(6,458) $(5,207) Additional minimum liability (4,784) (1,396) – – Intangible asset 4,650 580 – – Accumulated other comprehensive loss 134 816 – – Net amount recognized $(3,110) $(4,685) $(6,458) $(5,207) Pension Benefits Other Benefits 2002 2001 2002 2001 Weighted average assumptions as of December 31: Discount rate 6.70% 7.00% 6.70% 7.00% Long-term rate of return on plan assets 8.00% 8.00% 8.00% 8.00% Rate of compensation increases 1.00 to 4.25% 4.25% – – 50 CALIFORNIA WATER SERVICE GROUP