NOTE J — RETIREMENT PLANS The assumptions used as of December 31, 2001, 2000 and 1999 in determining pension cost and liability shown above were as follows: EMCOR’s United Kingdom subsidiary has a defined benefit pension plan covering substantially all eligible employees. The benefits under the plan are based on wages and years of service with the subsidiary. EMCOR’s policy is to fund the minimum amount required by law. The change in benefit obligation and plan assets for the years ended December 31, 2001 and 2000 consisted of the following components (in thousands): For measurement purposes, a 2.5% annual rate of increase in the per capita cost of covered pension benefits was assumed for 2001 and 2000. The components of net periodic pension benefit cost for the years ended December 31, 2001, 2000 and 1999 were as follows (in thousands): NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2001 2000 1999 Discount rate 6.0% 6.0% 6.0% Annual rate of salary provision 4.0% 4.0% 4.0% Annual rate of return  on plan assets 7.0% 7.0% 7.5% 2001 2000 1999 Service cost $ 5,693 $ 6,028 $ 6,285 Interest cost 6,083 5,553 5,243 Expected return  on plan assets (6,781) 1,359 (17,810) Net amortization  of prior service cost  and actuarial  (gain)/loss 69 (8,549) 11,690 Net periodic  pension benefit cost $ 5,064 $ 4,391 $ 5,408 2001 2000 Change in pension benefit obligation: Benefit obligation at  beginning of year $ 101,488 $ 97,217 Service cost 5,693 6,028 Interest cost 6,083 5,553 Plan participants’ contributions 2,943 2,529 Actuarial gain 89 1,747 Benefits paid (3,176) (4,209) Foreign currency  exchange rate changes (2,522) (7,377) Benefit obligation at end of year $ 110,598 $ 101,488 Change in pension plan assets: Fair value of plan assets  at beginning of year $ 95,882 $ 101,247 Actual return on plan assets (10,322) (1,359) Employer contributions 6,108 5,357 Plan participants’ contributions 2,943 2,529 Benefits paid (3,176) (4,209) Foreign currency  exchange rate changes (2,382) (7,683) Fair values of plan assets  at end of year $ 89,053 $ 95,882 Funded status $ (21,545) $ (5,606) Unrecognized transition amount (199) (278) Unrecognized prior service cost 331 409 Unrecognized losses/(gains) 21,441 4,433 Net amount recognized $ 28 $ (1,042) Amounts recognized  in the Consolidated  Financial Statements: Employer contributions $ 6,108 $ 5,357 Net periodic pension benefit cost (5,064) (4,391) Accrued pension cost  brought forward (1,042) (2,173) Foreign currency exchange  rate changes 26 165 Net amount recognized  as accrued pension  asset (liability) $ 28 $ (1,042) EMCOR contributes to various union defined contribution pension funds based upon wages paid to union employees  of EMCOR. Such contributions approximated $92.0 million, $88.9 million and $71.1 million for the years ended December 31, 2001, 2000 and 1999, respectively. EMCOR has a defined contribution retirement plan that covers its U.S. non-union eligible employees. Contributions to this plan are based on a percentage of the employee’s base compensation. The expense recognized for the years ended December 31, 2001, 2000 and 1999 for the defined contribution plan was $3.2 million, $2.9 million and $2.2 million, respectively.