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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Defined Benefit Plans The Company maintains defined benefit pension plans in Japan and certain European countries.
| Years Ended December 31,
| 2021 |  | 2020
| (in millions)
Change in projected benefit obligation: |  |  |
Beginning of year | $ | 126.2 |  |  | $ | 105.2 |
Service cost | 6.5 |  |  | 6.3 |
Interest cost | 0.4 |  |  | 0.5 |
Participant contributions | 1.5 |  |  | 1.5 |
Actuarial loss | (6.1) |  |  | 2.9 |
Benefits paid | (2.5) |  |  | (0.6) |
Plan amendment | (0.5) |  |  | — |
Currency exchange rate changes and other | (7.6) |  |  | 10.4 |
End of year | $ | 117.9 |  |  | $ | 126.2 |
Change in fair value of plan assets: |  |  |
Beginning of year | $ | 73.3 |  |  | $ | 63.2 |
Actual return on plan assets | 5.8 |  |  | 0.4 |
Employer contributions | 3.1 |  |  | 2.8 |
Participant contributions | 1.5 |  |  | 1.5 |
Benefits paid | (2.5) |  |  | (0.6) |
Currency exchange rate changes and other | (4.3) |  |  | 6.0 |
End of year | $ | 76.9 |  |  | $ | 73.3 |
Funded Status |  |  |
Projected benefit obligation | $ | (117.9) |  |  | $ | (126.2) |
Plan assets at fair value | 76.9 |  |  | 73.3 |
Underfunded status | $ | (41.0) |  |  | $ | (52.9) |
Net amounts recognized on the consolidated balance sheet: |  |  |
Other long-term liabilities | $ | 41.0 |  |  | $ | 52.9 |
Accumulated other comprehensive loss, net of tax: |  |  |
Net actuarial loss | $ | (16.4) |  |  | $ | (30.8) |
Net prior service cost | 6.0 |  |  | 6.6 |
Deferred income tax benefit | 2.4 |  |  | 4.6 |
Total | $ | (8.0) |  |  | $ | (19.6) |
The accumulated benefit obligation ("ABO") for all defined benefit pension plans was $113.3 million and $120.9 million as of December 31, 2021 and 2020, respectively. The projected benefit obligation and ABO were in excess of plan assets for all pension plans as of December 31, 2021 and 2020. The components of net periodic pension benefit cost are as follows (in millions):
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
Service cost, net | $ | 6.5 |  |  | $ | 6.3 |  |  | $ | 5.2 |
Interest cost | 0.4 |  |  | 0.5 |  |  | 0.9 |
Expected return on plan assets | (1.1) |  |  | (1.0) |  |  | (1.4) |
Amortization of actuarial loss | 1.7 |  |  | 1.6 |  |  | 0.9 |
Amortization of prior service credit | (0.7) |  |  | (0.7) |  |  | (0.2) |
Net periodic pension benefit cost | $ | 6.8 |  |  | $ | 6.7 |  |  | $ | 5.4 |
Expected long-term returns for each of the plans' strategic asset classes were developed through consultation with investment advisors. Several factors were considered, including a survey of investment managers' expectations, current market data, minimum guaranteed returns in certain insurance contracts, and historical market returns over long periods. Using policy target allocation percentages and the asset class expected returns, a weighted-average expected return was calculated. To select the discount rates for the defined benefit pension plans, the Company uses a modeling process that involves matching the expected duration of its benefit plans to a yield curve constructed from a portfolio of AA-rated fixed-income debt instruments, or their equivalent. For each country, the Company uses the implied yield of this hypothetical portfolio at the appropriate duration as a discount rate benchmark. The weighted-average assumptions used to determine the benefit obligations are as follows:
| December 31,
| 2021 |  | 2020
Discount rate | 0.5 | % |  | 0.3 | %
Rate of compensation increase | 2.6 | % |  | 2.6 | %
Cash balance interest crediting rate | 2.5 | % |  | 2.5 | %
Social securities increase | 1.6 | % |  | 1.6 | %
Pension increase | 1.8 | % |  | 1.8 | %
The weighted-average assumptions used to determine the net periodic pension benefit cost are as follows:
| Years ended December 31,
| 2021 |  | 2020 |  | 2019
Discount rate | 0.3 | % |  | 0.5 | % |  | 0.9 | %
Expected return on plan assets | 1.5 | % |  | 1.5 | % |  | 2.3 | %
Rate of compensation increase | 2.6 | % |  | 2.7 | % |  | 2.8 | %
Cash balance interest crediting rate | 2.5 | % |  | 1.5 | % |  | 1.5 | %
Social securities increase | 1.6 | % |  | 1.6 | % |  | 1.8 | %
Pension increase | 1.8 | % |  | 1.8 | % |  | 1.8 | %
Plan Assets The Company's investment strategy for plan assets is to seek a competitive rate of return relative to an appropriate level of risk and to earn performance rates of return in accordance with the benchmarks adopted for each asset class. Risk management practices include diversification across asset classes and investment styles, and periodic rebalancing toward asset allocation targets. The Administrative and Investment Committee decides on the defined benefit plan provider in each location and that provider decides the target allocation for the Company's defined benefit plan at that location. The target asset allocation selected reflects a risk/return profile the Company feels is appropriate relative to the plans' liability structure and return goals. In certain plans, asset allocations may be governed by local requirements. Target weighted-average asset allocations at December 31, 2021, by asset category, are as follows:
Equity securities | 28.3 | %
Debt securities | 41.7 | %
Real estate | 9.8 | %
Other | 20.2 | %
Total | 100.0 | %
The fair values of the Company's defined benefit plan assets at December 31, 2021 and 2020, by asset category, are as follows (in millions):
December 31, 2021 | Level 1 |  | Level 2 |  | Level 3 |  | Total |  |  |
Asset Category |  |  |  |  |  |  |  |  |  |
Cash | $ | 5.4 |  |  | $ | — |  |  | $ | — |  |  | $ | 5.4 |  |  |  |
Equity securities: |  |  |  |  |  |  |  |  |  |
United States equities | 1.6 |  |  | — |  |  | — |  |  | 1.6 |  |  |  |
International equities | 16.3 |  |  | — |  |  | — |  |  | 16.3 |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |
United States government bonds | 6.2 |  |  | — |  |  | — |  |  | 6.2 |  |  |  |
International government bonds | 26.3 |  |  | — |  |  | — |  |  | 26.3 |  |  |  |
Real estate | — |  |  | 7.6 |  |  | — |  |  | 7.6 |  |  |  |
Mortgages | — |  |  | 3.5 |  |  | — |  |  | 3.5 |  |  |  |
Insurance contracts | — |  |  | — |  |  | 0.9 |  |  | 0.9 |  |  |  |
Total plan assets measured at fair value | $ | 55.8 |  |  | $ | 11.1 |  |  | $ | 0.9 |  |  | $ | 67.8 |  |  |  |
Alternative investments measured at net asset value (a) |  |  |  |  |  |  | 9.1 |  |  |  |
Total plan assets |  |  |  |  |  |  | $ | 76.9 |  |  |  |
December 31, 2020 | Level 1 |  | Level 2 |  | Level 3 |  | Total
Asset Category |  |  |  |  |  |  |
Cash | $ | 3.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 3.0 |
Equity securities: |  |  |  |  |  |  |
United States equities | 3.3 |  |  | — |  |  | — |  |  | 3.3 |
International equities | 16.1 |  |  | — |  |  | — |  |  | 16.1 |
Debt securities: |  |  |  |  |  |  |
United States government bonds | 7.4 |  |  | — |  |  | — |  |  | 7.4 |
International government bonds | 26.0 |  |  | — |  |  | — |  |  | 26.0 |
Real estate | — |  |  | 5.6 |  |  | — |  |  | 5.6 |
Mortgages | — |  |  | 3.1 |  |  | — |  |  | 3.1 |
Insurance contracts | — |  |  | — |  |  | 1.0 |  |  | 1.0 |
Total plan assets | $ | 55.8 |  |  | $ | 8.7 |  |  | $ | 1.0 |  |  | $ | 65.5 |
Alternative investments measured at net asset value (a) |  |  |  |  |  |  | 7.8 |
Total plan assets |  |  |  |  |  |  | $ | 73.3 |
_______________________________________ (a) Certain investments that were measured at net asset value per share have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the total plan assets. The following table summarizes the changes in fair value of the Company's defined benefit plan assets that have been classified as Level 3 for the years ended December 31, 2021 and 2020 (in millions):
| Insurance Contracts
Balance at December 31, 2019 | $ | 0.9 |
Currency exchange rate impact | 0.1 |
Balance at December 31, 2020 | 1.0 |
Currency exchange rate impact | (0.1) |
Balance at December 31, 2021 | $ | 0.9 |
Equity and debt securities are valued at fair value based on quoted market prices reported on the active markets on which the individual securities are traded. Real estate investments are valued by discounting to present value the cash flows expected to be generated by the specific properties. Investments in mortgages are valued at cost, which is deemed to approximate its fair value. The insurance contracts are valued at the cash surrender value of the contracts, which is deemed to approximate its fair value. Alternative investments include hedge funds, private equity funds and other miscellaneous investments, and are valued using the net asset value provided by the fund administrator as a practical expedient. The net asset value is based on the fair value of the underlying assets owned by the fund divided by the number of shares outstanding. The following benefit payments, which reflect expected future service, as appropriate, at December 31, 2021, are expected to be paid (in millions):
2022 | $ | 5.4 |
2023 | 6.7 |
2024 | 5.6 |
2025 | 5.2 |
2026 | 6.1 |
2024-2026 | 36.1 |
As of December 31, 2021, expected employer contributions for 2022 are $2.2 million. Defined Contribution Plans The Company's employees in the United States and Puerto Rico are eligible to participate in a qualified defined contribution plan. In the United States, participants may contribute up to 25% of their eligible compensation (subject to tax code limitation) to the plan. Edwards Lifesciences matches the first 4% of the participant's annual eligible compensation contributed to the plan on a dollar-for-dollar basis. Edwards Lifesciences matches the next 2% of the participant's annual eligible compensation to the plan on a 50% basis. In Puerto Rico, participants may contribute up to 25% of their annual compensation (subject to tax code limitation) to the plan. Edwards Lifesciences matches the first 4% of participant's annual eligible compensation contributed to the plan on a 50% basis. The Company also provides a 2% profit sharing contribution calculated on eligible earnings for each employee. Matching contributions relating to Edwards Lifesciences employees were $38.6 million, $36.6 million, and $31.4 million in 2021, 2020, and 2019, respectively. The Company also has nonqualified deferred compensation plans for a select group of employees. The plans provide eligible participants the opportunity to defer eligible compensation to future dates specified by the participant with a return based on investment alternatives selected by the participant. The amount accrued under these nonqualified plans was $130.9 million and $111.6 million at December 31, 2021 and 2020, respectively.

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