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Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2022
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]  
Pension and Other Postretirement Benefits
We provide defined contribution plans and noncontributory defined benefit retirement plans that cover certain of our employees. Benefits under the defined benefit retirement plans reflect the employees’ compensation, years of service and age at retirement. Additionally, we provide health care and life insurance benefits for certain retired employees. The majority of employees may become eligible for these benefits if they reach retirement age while working for us. The expected cost of such benefits is accrued during the employees’ years of service. Current rates of rate-regulated companies include postretirement benefit costs, including amortization of the regulatory assets that arose prior to inclusion of these costs in rates. For most plans, cash contributions are remitted to grantor trusts.
Our Pension and Other Postretirement Benefit Plans’ Asset Management. The Board has delegated oversight of the pension and other postretirement benefit plans’ assets to the NiSource Benefits Committee (“the Committee”). The Committee has adopted investment policy statements for the pension and other postretirement benefit plans’ assets. For the pension plans, we employ a liability-driven investing strategy. A total return approach is utilized for the other postretirement benefit plans’ assets. A mix of diversified investments are used to maximize the long-term return of plan assets and hedge the liabilities at a prudent level of risk. The investment portfolio includes U.S. and non-U.S. equities, real estate, long-term and intermediate-term fixed income and alternative investments. Risk tolerance is established through careful consideration of plan liabilities, funded status, and asset class volatility. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset/liability studies.
In determining the expected long-term rate of return on plan assets, historical markets are studied, relationships between equities and fixed income are analyzed and current market factors, such as inflation and interest rates are evaluated with consideration of diversification and rebalancing. Our expected long-term rate of return on assets is based on assumptions regarding target asset allocations and corresponding long-term capital market assumptions for each asset class. The pension plans’ investment policy calls for a gradual reduction in the allocation of return-seeking assets (equities, real estate and private equity) and a corresponding increase in the allocation of liability-hedging assets (fixed income) as the funded status of the plans’ increase.
As of December 31, 2022 and December 31, 2021, the acceptable minimum and maximum ranges established by the policy for the pension and other postretirement benefit plans are as follows:
December 31, 2022
Defined Benefit Pension PlanPostretirement Benefit Plan
Asset CategoryMinimumMaximumMinimumMaximum
Domestic Equities7%27%0%55%
International Equities3%13%0%25%
Fixed Income69%81%20%100%
Real Estate0%3%0%0%
Private Equity0%3%0%0%
Short-Term Investments0%10%0%10%
December 31, 2021
Defined Benefit Pension PlanPostretirement Benefit Plan
Asset CategoryMinimumMaximumMinimumMaximum
Domestic Equities7%27%0%55%
International Equities3%13%0%25%
Fixed Income69%81%20%100%
Real Estate0%3%0%0%
Private Equity0%3%0%0%
Short-Term Investments0%10%0%10%
The actual Pension Plan and Postretirement Plan Asset Mix at December 31, 2022 and December 31, 2021 are as follows:
Defined Benefit
Pension Assets(1)
December 31,
2022		Postretirement
Benefit Plan Assets		December 31,
2022
Asset Class (in millions)
Asset Value% of Total AssetsAsset Value% of Total Assets
Domestic Equities$231.1 16.2 %$86.9 38.6 %
International Equities119.0 8.4 %36.6 16.3 %
Fixed Income1,004.3 70.6 %94.7 42.1 %
Real Estate5.0 0.3 %— — 
Cash/Other63.4 4.5 %6.7 3.0 %
Total$1,422.8 100.0 %$224.9 100.0 %
    
Defined Benefit Pension Assets(1)
December 31,
2021		Postretirement Benefit Plan AssetsDecember 31,
2021
Asset Class (in millions)
Asset Value% of Total AssetsAsset Value% of Total Assets
Domestic Equities$324.3 16.4 %$118.6 40.4 %
International Equities150.9 7.6 %50.5 17.2 %
Fixed Income1,382.3 69.7 %118.8 40.4 %
Real Estate37.2 1.9 %— — 
Cash/Other87.0 4.4 %5.8 2.0 %
Total$1,981.7 100.0 %$293.7 100.0 %
(1)Total includes accrued dividends and pending trades with brokers.
The categorization of investments into the asset classes in the tables above are based on definitions established by the Committee.
Fair Value Measurements. The following table sets forth, by level within the fair value hierarchy, the pension and other postretirement benefits investment assets at fair value as of December 31, 2022 and 2021. Assets are classified in their entirety based on the observability of inputs used in determining the fair value measurement. There were no investment assets in the pension and other postretirement benefits trusts classified within Level 3 for the years ended December 31, 2022 and 2021.
We use the following valuation techniques to determine fair value. For the year ended December 31, 2022, there were no significant changes to valuation techniques to determine the fair value of our pension and other postretirement benefits' assets.
Level 1 Measurements
Most common and preferred stocks are traded in active markets on national and international securities exchanges and are valued at closing prices on the last business day of each period presented. Cash is stated at cost, which approximates fair value, with the exception of cash held in foreign currencies which fluctuates with changes in the exchange rates. Short-term bills and notes are priced based on quoted market values.
Level 2 Measurements
Most U.S. Government Agency obligations, mortgage/asset-backed securities, and corporate fixed income securities are generally valued by benchmarking model-derived prices to quoted market prices and trade data for identical or comparable securities. To the extent that quoted prices are not available, fair value is determined based on a valuation model that includes inputs such as interest rate yield curves and credit spreads. Securities traded in markets that are not considered active are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Other fixed income includes futures and options which are priced on bid valuation or settlement pricing.
Level 3 Measurements
Investments with unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities are classified as level 3 investments.
Not Classified
Commingled funds, private equity limited partnerships and real estate partnerships are not classified within the fair value hierarchy. Instead, these assets are measured at estimated fair value using the net asset value per share of the investments. Commingled funds' underlying assets are principally marketable equity and fixed income securities. Units held in commingled funds are valued at the unit value as reported by the investment managers. Private equity funds invest capital in non-public companies and real estate funds invest in commercial and distressed real estate directly or through related debt instruments. The fair value of these investments is determined by reference to the funds’ underlying assets.
Fair Value Measurements at December 31, 2022: 
(in millions)December 31,
2022		Quoted Prices in  Active Markets for
 Identical Assets
(Level 1)		Significant Other
Observable Inputs (Level 2)		Significant
Unobservable Inputs
 (Level 3)
Pension plan assets:
Cash$2.5 $2.0 $0.5 $— 
Equity securities
International equities0.5 0.5 — — 
Fixed income securities
Government316.3 — 316.3 — 
Corporate407.8 — 407.8 — 
Mortgages/ Asset Backed Securities2.3 — 2.3 — 
Other fixed income1.9 1.9 — — 
Mutual Funds
U.S. multi-strategy97.4 97.4 — — 
International equities29.0 29.0 — — 
Fixed income0.2 0.2 — — 
Private equity limited partnerships(3)
U.S. multi-strategy(1)
6.3 — — — 
International multi-strategy(2)
2.3 — — — 
Distressed opportunities0.1 — — — 
Real estate(3)
5.0 — — — 
Commingled funds(3)
Short-term money markets46.2 — — — 
U.S. equities133.7 — — — 
International equities89.6 — — — 
Fixed income275.9 — — — 
Pension plan assets subtotal$1,417.0 $131.0 $726.9 $— 
Other postretirement benefit plan assets:
Mutual funds
U.S. multi-strategy76.2 76.2 — — 
International equities16.3 16.3 — — 
Fixed income94.7 94.7 — — 
Commingled funds(3)
Short-term money markets17.4 — — — 
U.S. equities10.7 — — — 
International equities20.3 — — — 
Other postretirement benefit plan assets subtotal$235.6 $187.2 $— $— 
Due to brokers, net(4)
(2.0)— (2.0)— 
Receivables/payables(10.7)— (10.7)— 
Accrued income/dividends7.8 7.8 — — 
Total pension and other postretirement benefit plan assets$1,647.7 $326.0 $714.2 $— 
(1)This class includes limited partnerships/fund of funds that invest in a diverse portfolio of private equity strategies, including buy-outs, growth capital, special situations and secondary markets, primarily inside the United States. 
(2)This class includes limited partnerships/fund of funds that invest a in diverse portfolio of private equity strategies, including buy-outs, growth capital, special situations and secondary markets, primarily outside the United States.
(3)This class of investments is measured at fair value using the net asset value per share and has not been classified in the fair value hierarchy.
(4)This class represents pending trades with brokers.
The table below sets forth a summary of unfunded commitments, redemption frequency and redemption notice periods for certain investments that are measured at fair value using the net asset value per share for the year ended December 31, 2022:
(in millions)Fair ValueUnfunded CommitmentsRedemption FrequencyRedemption Notice Period
Commingled Funds
Short-term money markets$63.6 $— Daily1 day
U.S. equities144.4 — Daily
1 day - 5 days
International equities109.9 — Monthly
10 days-30 days
Fixed income275.9 — Daily3 days
Private Equity and Real Estate Limited Partnerships(1)
13.7 11.6 N/AN/A
Total$607.5 $11.6 
(1)Private equity and real estate limited partnerships typically call capital over a 3-5 year period and pay out distributions as the underlying investments are liquidated. The typical expected life of these limited partnerships is 0-15 years, and these investments typically cannot be redeemed prior to liquidation.
Fair Value Measurements at December 31, 2021: 
(in millions)December 31,
2021		Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other
Observable Inputs (Level 2)		Significant
Unobservable Inputs 
(Level 3)
Pension plan assets:
Cash$10.3 $9.7 $0.6 $— 
Equity securities
International equities0.5 0.5 — — 
Fixed income securities
Government387.3 — 387.3 — 
Corporate645.9 — 645.9 — 
Mutual Funds
U.S. multi-strategy128.4 128.4 — — 
International equities38.7 38.7 — — 
Private equity limited partnerships(3)
U.S. multi-strategy(1)
10.9 — — — 
International multi-strategy(2)
4.5 — — — 
Distressed opportunities0.1 — — — 
Real estate(3)
37.2 — — — 
Commingled funds(3)
Short-term money markets55.0 — — — 
U.S. equities195.9 — — — 
International equities111.7 — — — 
Fixed income349.1 — — — 
Pension plan assets subtotal$1,975.5 $177.3 $1,033.8 $— 
Other postretirement benefit plan assets:
Mutual funds
U.S. multi-strategy103.8 103.8 — — 
International equities24.4 24.4 — — 
Fixed income118.5 118.5 — — 
Commingled funds(3)
Short-term money markets5.8 — — — 
U.S. equities14.8 — — — 
International equities26.1 — — — 
Other postretirement benefit plan assets subtotal$293.4 $246.7 $— $— 
Due to brokers, net(4)
(1.8)— (1.8)— 
Receivables/payables0.3 — 0.3 — 
Accrued income/dividends8.0 8.0 — — 
Total pension and other postretirement benefit plan assets$2,275.4 $432.0 $1,032.3 $— 
(1)This class includes limited partnerships/fund of funds that invest in a diverse portfolio of private equity strategies, including buy-outs, venture capital, growth capital, special situations and secondary markets, primarily inside the United States. 
(2)This class includes limited partnerships/fund of funds that invest in diverse portfolio of private equity strategies, including buy-outs, venture capital, growth capital, special situations and secondary markets, primarily outside the United States.
(3)This class of investments is measured at fair value using the net asset value per share and has not been classified in the fair value hierarchy.
(4)This class represents pending trades with brokers.
The table below sets forth a summary of unfunded commitments, redemption frequency and redemption notice periods for certain investments that are measured at fair value using the net asset value per share for the year ended December 31, 2021:
(in millions)Fair ValueUnfunded CommitmentsRedemption FrequencyRedemption Notice Period
Commingled Funds
Short-term money markets$60.8 $— Daily1 day
U.S. equities210.7 — Daily
1 day -5 days
International equities137.8 — Monthly
10 days - 30 days
Fixed income349.1 — Daily3 days
Private Equity and Real Estate Limited Partnerships(1)
20.4 12.1 N/AN/A
Total$778.8 $12.1 
(1)Private equity and real estate limited partnerships typically call capital over a 3-5 year period and pay out distributions as the underlying investments are liquidated. The typical expected life of these limited partnerships is 0-15 years, and these investments typically cannot be redeemed prior to liquidation.
 
Our Pension and Other Postretirement Benefit Plans’ Funded Status and Related Disclosure. The following table provides a reconciliation of the plans’ funded status and amounts reflected in our Consolidated Balance Sheets at December 31 based on a December 31 measurement date:
 Pension BenefitsOther Postretirement Benefits
(in millions)2022202120222021
Change in projected benefit obligation(1)
Benefit obligation at beginning of year$1,852.4 $2,058.4 $556.2 $590.8 
Service cost27.8 30.2 6.5 6.2 
Interest cost40.5 31.4 12.0 9.9 
Plan participants’ contributions— — 4.1 4.2 
Plan amendments0.2 — 2.1 0.1 
Actuarial gain(2)
(318.7)(68.7)(89.9)(14.8)
Benefits paid(174.8)(198.9)(42.3)(40.6)
Estimated benefits paid by incurred subsidy— — 0.3 0.4 
Projected benefit obligation at end of year$1,427.4 $1,852.4 $449.0 $556.2 
Change in plan assets
Fair value of plan assets at beginning of year$1,981.7 $2,117.7 $293.7 $286.4 
Actual return on plan assets(386.8)58.9 (51.9)23.9 
Employer contributions2.7 4.0 21.3 19.8 
Plan participants’ contributions— — 4.1 4.2 
Benefits paid(174.8)(198.9)(42.3)(40.6)
Fair value of plan assets at end of year$1,422.8 $1,981.7 $224.9 $293.7 
Funded Status at end of year$(4.6)$129.3 $(224.1)$(262.5)
Amounts recognized in the statement of financial position consist of:
Noncurrent assets18.3 159.3 — — 
Current liabilities(2.6)(2.8)(1.0)(1.0)
Noncurrent liabilities(20.3)(27.2)(223.1)(261.5)
Net amount recognized at end of year(3)
$(4.6)$129.3 $(224.1)$(262.5)
Amounts recognized in accumulated other comprehensive income or regulatory asset/liability(4)
Unrecognized prior service credit$0.4 $0.3 $(3.4)$(7.8)
Unrecognized actuarial loss564.2 438.0 64.0 88.5 
 Net amount recognized at end of year$564.6 $438.3 $60.6 $80.7 
(1)The change in benefit obligation for Pension Benefits represents the change in Projected Benefit Obligation while the change in benefit obligation for Other Postretirement Benefits represents the change in accumulated postretirement benefit obligation.
(2)The pension actuarial gain was primarily driven by the increase in discount rate. The postretirement benefit gain was also primarily driven by an increase in discount rates.
(3)We recognize our Consolidated Balance Sheets underfunded and overfunded status of our various defined benefit postretirement plans, measured as the difference between the fair value of the plan assets and the benefit obligation.
(4)We determined that for certain rate-regulated subsidiaries the future recovery of pension and other postretirement benefits costs is probable. These rate-regulated subsidiaries recorded regulatory assets and liabilities of $607.5 million and zero, respectively, as of December 31, 2022, and $512.1 million and zero, respectively, as of December 31, 2021 that would otherwise have been recorded to accumulated other comprehensive loss.
Our accumulated benefit obligation for our pension plans was $1,416.8 million and $1,834.4 million as of December 31, 2022 and 2021, respectively. The accumulated benefit obligation at each date is the actuarial present value of benefits attributed by the pension benefit formula to employee service rendered prior to that date and based on current and past compensation levels. The accumulated benefit obligation differs from the projected benefit obligation disclosed in the table above in that it includes no assumptions about future compensation levels. 
We are required to reflect the funded status of our pension and postretirement benefit plans on the Consolidated Balance Sheet. The funded status of the plans is measured as the difference between the plan assets' fair value and the projected benefit obligation. We present the noncurrent aggregate of all underfunded plans within "Accrued liability for postretirement and postemployment benefits." The portion of the amount by which the actuarial present value of benefits included in the projected
benefit obligation exceeds the fair value of plan assets, payable in the next 12 months, is reflected in "Accrued compensation and other benefits." We present the aggregate of all overfunded plans within "Deferred charges and other."
Information for pension plans with a projected benefit obligation in excess of plan assets:
December 31,
20222021
Accumulated Benefit Obligation$22.9 $30.0 
Funded Status
Projected Benefit Obligation22.9 30.0 
Funded Status of Underfunded Pension Plans at End of Year(1)
$(22.9)$(30.0)
(1)As of December 31, 2022 and 2021, only our nonqualified plans were underfunded. These plans have no assets as they are not funded until benefits are paid.
Information for pension plans with plan assets in excess of the projected benefit obligation:
December 31,
20222021
Accumulated Benefit Obligation$1,393.8 $1,804.3 
Funded Status
Projected Benefit Obligation1,404.5 1,822.4 
Fair Value of Plan Assets1,422.8 1,981.7 
Funded Status of Overfunded Pension Plans at End of Year$18.3 $159.3 
Our pension plans were underfunded, in aggregate, by $4.6 million at December 31, 2022 compared to being overfunded by $129.3 million at December 31, 2021. The decline in the funded status was primarily due to unfavorable asset returns offset by an increase in discount rates. We contributed $2.7 million and $4.0 million to our pension plans in 2022 and 2021, respectively.
Our other postretirement benefit plans were underfunded by $224.1 million at December 31, 2022 compared to being underfunded by $262.5 million at December 31, 2021. The improvement in funded status was primarily due to increased discount rates offset by unfavorable asset returns. We contributed $21.3 million and $19.8 million to our other postretirement benefit plans in 2022 and 2021, respectively.
In 2022 and 2021, some of our qualified pension plans paid lump sum payouts in excess of the respective plan's service cost plus interest cost, thereby meeting the requirement for settlement accounting. We recorded settlement charges of $12.4 million and $11.4 million in 2022 and 2021, respectively. Net periodic pension benefit cost increased by $5.7 million and $4.0 million in 2022 and 2021, respectively, as the result of the remeasurement.
The following table provides the key assumptions that were used to calculate the pension and other postretirement benefits obligations for our various plans as of December 31:
 Pension BenefitsOther Postretirement  Benefits
  
2022202120222021
Weighted-average assumptions to Determine Benefit Obligation
Discount Rate5.14 %2.76 %5.17 %2.85 %
Rate of Compensation Increases4.00 %4.00 %N/AN/A
Interest Crediting Rates4.00 %4.00 %N/AN/A
Health Care Trend Rates
Trend for Next YearN/AN/A6.69 %6.20 %
Ultimate TrendN/AN/A4.75 %4.50 %
Year Ultimate Trend ReachedN/AN/A20322030
We expect to make contributions of approximately $2.6 million to our pension plans and approximately $23.7 million to our postretirement medical and life plans in 2023.
The following table provides benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter. The expected benefits are estimated based on the same assumptions used to measure our benefit obligation at the end of the year and include benefits attributable to the estimated future service of employees:
(in millions)Pension BenefitsOther
Postretirement Benefits		Federal
Subsidy Receipts
Year(s)
2023$150.5 $38.9 $0.4 
2024145.2 38.5 0.2 
2025141.2 37.8 0.2 
2026133.8 36.9 0.2 
2027128.1 36.4 0.2 
2028-2032563.2 172.0 0.9 
The following table provides the components of the plans’ actuarially determined net periodic benefits cost for each of the three years ended December 31, 2022, 2021 and 2020:
 Pension BenefitsOther Postretirement
Benefits
(in millions)202220212020202220212020
Components of Net Periodic Benefit (Income) Cost(1)
Service cost$27.8 $30.2 $32.0 $6.5 $6.2 $6.6 
Interest cost40.5 31.4 51.6 12.0 9.9 15.4 
Expected return on assets(90.8)(101.6)(111.6)(16.2)(15.3)(14.4)
Amortization of prior service cost (credit)0.1 0.1 0.7 (2.2)(2.2)(2.1)
Recognized actuarial loss20.3 21.7 33.8 2.6 4.6 4.9 
Settlement/curtailment loss12.4 11.4 10.5 — — 1.5 
Total Net Periodic Benefits (Income) Cost$10.3 $(6.8)$17.0 $2.7 $3.2 $11.9 
(1)Service cost is presented in "Operation and maintenance" on the Statements of Consolidated Income (Loss). Non-service cost components are presented within "Other, net."
The following table provides the key assumptions that were used to calculate the net periodic benefits cost for our various plans:
 Pension Benefits Other Postretirement
Benefits
  
202220212020202220212020
Weighted-average Assumptions to Determine Net Periodic Benefit Cost
Discount rate - service cost3.08 %2.81 %3.39 %3.21 %3.00 %3.52 %
Discount rate - interest cost2.11 %1.57 %2.65 %2.24 %1.73 %2.76 %
Expected Long-Term Rate of Return on Plan Assets4.80 %5.20 %5.70 %5.72 %5.50 %5.67 %
Rate of Compensation Increases4.00 %4.00 %4.00 %N/AN/AN/A
Interest Crediting Rates4.00 %4.00 %4.00 %N/AN/AN/A
We assumed a 4.80% and 5.72% rate of return on pension and other postretirement plan assets, respectively, for our calculation of 2022 pension benefits and other postretirement benefits costs. These rates were primarily based on asset mix and historical rates of return and were adjusted in 2022 due to anticipated changes in asset allocation and projected market returns.
The following table provides other changes in plan assets and projected benefit obligations recognized in other comprehensive income or regulatory asset or liability:
  
Pension BenefitsOther Postretirement
Benefits
(in millions)2022202120222021
Other Changes in Plan Assets and Projected Benefit Obligations 
Recognized in Other Comprehensive Income or Regulatory Asset 
or Liability
Net prior service cost $0.2 $— $2.1 $0.1 
Net actuarial loss (gain) 158.9 (26.0)(21.8)(23.3)
Settlements/curtailments(12.4)(11.4)— — 
Less: amortization of prior service cost(0.1)(0.1)2.2 2.2 
Less: amortization of net actuarial loss(20.3)(21.7)(2.6)(4.6)
Total Recognized in Other Comprehensive Income or Regulatory 
Asset or Liability		$126.3 $(59.2)$(20.1)$(25.6)
Amount Recognized in Net Periodic Benefits Cost and Other 
Comprehensive Income or Regulatory Asset or Liability		$136.6 $(66.0)$(17.4)$(22.4)