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PENSIONS
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Pensions
25.PENSIONS
Defined contribution scheme

We operate a defined contribution scheme. The pension cost for the period represents contributions payable by us to the scheme. The charges to our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022 was $1.5 million, $1.6 million and $1.7 million, respectively.

Defined benefit schemes

We have two defined benefit pension plans both of which are closed to new entrants. Benefits are based on the employees' years of service and compensation. Net periodic pension plan costs are determined using the Projected Unit Credit Cost method. Our plans are funded by us in conformity with the funding requirements of the applicable government regulations. Plan assets consist of both fixed income and equity funds managed by professional fund managers. We use December 31 as the measurement date for our pension plans.

In May 2024, we entered into a buy-in insurance agreement in relation to one of our defined benefit pension plans which is expected to be converted to a settlement agreement within a year. Under the settlement agreement, our obligation would be fully transferred to the insurer, releasing us from further liabilities. This resulted in the disinvestment of the pension plan's assets previously held by a third-party financial institution and a net charge to other comprehensive income of $1.9 million. As a result, the UK pension plan assets were reclassified from Level 1 to Level 3 of the fair value hierarchy under ASC 820, as the annuity contract lacks an active market and is valued using significant unobservable inputs, including actuarial assumptions and insurer credit risk. The annuity policy is measured based on the projected benefit obligation, adjusted for known experience and solvency assumptions, which we believe reasonably approximates insurer pricing. Given the nature of these inputs, the fair value of the annuity contract is sensitive to changes in discount rates and mortality assumptions.
The components of net periodic benefit costs are as follows:
Year ended December 31,
(in thousands of $)202420232022
Service cost(27)(33)(75)
Interest cost(1,481)(1,622)(1,087)
Expected return on plan assets426 427 254 
Recognized actuarial loss(1,331)(307)(774)
Net periodic benefit cost(2,413)(1,535)(1,682)

The components of net periodic benefit costs are recognized in the consolidated statement of operations within "administrative expenses" and "vessel operating expenses" amounting to $1.2 million, (2023: $0.2 million) and $1.2 million (2023: $1.4 million), respectively. The estimated net loss amortized from accumulated other comprehensive income into net periodic pension benefit cost during the year ended December 31, 2024 was $1.3 million (2023: $0.3 million). The increase in estimated net loss amortization and the net periodic benefit costs reflects the impact of the buy-in insurance agreement, which shortened the amortization period from 15 years to 3 years.

The change in projected benefit obligation and plan assets and reconciliation of funded status for the years ended December 31, 2024 and 2023 are as follows:
(in thousands of $)20242023
Reconciliation of benefit obligation: 
Benefit obligation at January 133,433 34,078 
Service cost27 33 
Interest cost1,481 1,622 
Actuarial (gain)/loss (1)
(219)246 
Foreign currency exchange rate changes(137)383 
Benefit payments(2,952)(2,929)
Projected benefit obligation at December 31
31,633 33,433 
(1) Actuarial gain is sensitive to changes in key actuarial assumptions specifically discount rates, mortality rates and assumed future salary increases.
The accumulated benefit obligation at December 31, 2024 and 2023 was $31.6 million and $33.2 million, respectively.

(in thousands of $)20242023
Reconciliation of fair value of plan assets: 
Fair value of plan assets at January 19,962 9,809 
Actual return on plan assets(1,028)433 
Employer contributions2,290 2,175 
Foreign currency exchange rate changes(130)474 
Benefit payments(2,952)(2,929)
Fair value of plan assets at December 318,142 9,962 

The amounts recognized in accumulated other comprehensive income, as of December 31, 2024 and 2023, is $4.3 million and $4.5 million, respectively.

The actuarial loss recognized in other comprehensive income/(loss) is net of tax of $9 thousand, $0.4 million, and $0.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Employer contributions and benefits paid under the pension plans include $2.3 million and $2.2 million paid from employer assets for the years ended December 31, 2024 and 2023, respectively.
Our defined benefit pension plan is comprised of two schemes as follows:
 December 31, 2024
December 31, 2023
 
(in thousands of $)
UK SchemeMarine SchemeTotalUK SchemeMarine SchemeTotal
Fair value of benefit obligation(7,888)(23,745)(31,633)(7,597)(25,836)(33,433)
Fair value of plan assets (including annuity policy)
7,924 218 8,142 9,331 631 9,962 
Funded (unfunded) status at end of year36 (23,527)(23,491)1,734 (25,205)(23,471)

The fair value of our plan assets, by category, as of December 31, 2024 and 2023 are as follows:
(in thousands of $)20242023
Annuity policy
7,924 — 
Equity securities— 9,331 
Cash218 631 
 8,142 9,962 

The asset allocation for our Marine scheme at December 31, 2024 and 2023, by asset category are as follows:
Marine scheme
2024 (%)
2023 (%)
Cash100 100 
Total100 100 

The asset allocation for our UK scheme at December 31, 2024 and 2023, by asset category are as follows:
UK scheme2024 (%)2023 (%)
Annuity policy
99 — 
Equity— 99 
Cash
1 1 
Total100 100 

Our investment strategy is to balance risk and reward through the selection of professional investment managers and investing in pooled funds and annuity policy.

During the year ended December 31, 2024, we had made the following contributions to the schemes as follows:
(in thousands of $)UK schemeMarine scheme
Employer contributions171 2,119 

We are expected to make the following pension disbursements as follows:
Year ending December 31,
UK schemeMarine scheme
(in thousands of $)
2025500 2,500 
2026400 2,400 
2027415 2,300 
2028425 2,200 
2029440 2,100 
2030 - 2034
2,900 9,000 
The weighted average assumptions used to determine the benefit obligation for our defined benefit pension plans for the years ended December 31 are as follows:
 20242023
Discount rate5.10 %4.63 %
Rate of compensation increase2.48 %2.47 %

The weighted average assumptions used to determine the net periodic benefit cost for our defined benefit pension plans for the years ended December 31 are as follows:
 20242023
Discount rate5.12 %4.64 %
Expected return on plan assets4.31 %4.31 %
Rate of compensation increase2.55 %2.54 %

The overall expected long-term rate of return on assets assumption used to determine the net periodic benefit cost for our plans for the years ended December 31, 2024 and 2023 is based on the weighted average of various returns on assets using the asset allocation as of the beginning of 2024 and 2023. For equities and other asset classes, we have applied an equity risk premium over ten-year governmental bonds.