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Pension Plans and Other Benefits | 12 Months Ended
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Dec. 31, 2022
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] |
Pension Plans And Other Benefits | PENSION PLANS AND OTHER BENEFITS We sponsor pension and postretirement benefits through a variety of plans including defined benefit plans, defined contribution plans and postretirement benefit plans in North America and certain of our international locations. We reserve the right to amend, modify or terminate the Mosaic sponsored plans at any time, subject to provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”), prior agreements and our collective bargaining agreements. Defined Benefit During fiscal 2022, we terminated the defined benefit pension plan in the U.S, which was a frozen defined benefit pension plan at the time of termination. In connection with the plan termination, we settled all future obligations under the terminated plan through a combination of lump-sum payments to eligible participants who elected to receive them through a lump-sum window, and the transfer of any remaining benefit obligations under the terminated plans to a third-party insurance company under a group annuity contract. As a result of these actions, we recognized a non-cash pre-tax pension settlement charge of $41.9 million in our 2022 Consolidated Statements of Earnings (Loss) in Other (expense) income. The remaining over-funded plan assets of $11.4 million have been or will be utilized to fund remaining expenses related to the terminated plans, as well as obligations associated with other qualified retirement plans. We sponsor various defined benefit pension plans in Canada. Benefits are based on different combinations of years of service and compensation levels, depending on the plan. Generally, contributions to Canadian plans are made in accordance with Pension Benefits Acts instituted by the provinces of Saskatchewan and Ontario. Certain employees in Canada, whose pension benefits exceed Canada Revenue Agency limitations, are covered by supplementary non-qualified, unfunded pension plans. We sponsor various defined benefit pension plans in Brazil, and we acquired through the Acquisition multi-employer pension plans for certain of our Brazil associates. All our pension plans are governed by the Brazilian pension plans regulatory agency, National Superintendence of Supplementary Pensions. Our Brazil plans are not individually significant to the Company’s consolidated financial statements after factoring in the multi-employer pension plan indemnification that we acquired through the Acquisition. We made contributions to these plans, net of indemnification, of $0.2 million for the years ended December 31, 2022 and December 31, 2021, respectively and $0.4 million for the year ended December 31, 2020. Accounting for Pension Plans The year-end status of the North American pension plans was as follows:
| Pension Plans
| Years Ended December 31,
(in millions) | 2022 |  | 2021
Change in projected benefit obligation: |  |  |
Benefit obligation at beginning of period | $ | 739.6 |  |  | $ | 796.6 |
Service cost | 4.2 |  |  | 4.4 |
Interest cost | 16.8 |  |  | 14.6 |
Actuarial gain | (158.8) |  |  | (31.1) |
Currency fluctuations | (19.0) |  |  | 0.3 |
Benefits paid and transfers | (322.2) |  |  | (45.2) |
Liability loss due to curtailment/settlement | 38.9 |  |  | — |
Projected benefit obligation at end of period | $ | 299.5 |  |  | $ | 739.6 |
Change in plan assets: |  |  |
Fair value at beginning of period | $ | 807.0 |  |  | $ | 845.2 |
Currency fluctuations | (21.3) |  |  | 0.4 |
Actual return | (124.9) |  |  | 1.1 |
Company contribution | 7.0 |  |  | 5.5 |
Benefits paid and transfers | (322.2) |  |  | (45.2) |
Fair value at end of period | $ | 345.6 |  |  | $ | 807.0 |
Funded status of the plans as of the end of period | $ | 46.1 |  |  | $ | 67.4 |
Amounts recognized in the consolidated balance sheets: |  |  |
Noncurrent assets | $ | 52.9 |  |  | $ | 78.1 |
Current liabilities | (0.5) |  |  | (0.9) |
Noncurrent liabilities | (6.3) |  |  | (9.8) |
Amounts recognized in accumulated other comprehensive (income) loss |  |  |
Prior service cost | $ | 10.9 |  |  | $ | 13.7 |
Actuarial loss | 67.2 |  |  | 83.1 |
The accumulated benefit obligation for the defined benefit pension plans was $299.1 million and $739.1 million as of December 31, 2022 and 2021, respectively. The components of net annual periodic benefit costs and other amounts recognized in other comprehensive income include the following components:
|  | Pension Plans
(in millions) |  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Net Periodic Benefit Cost |  |  |  |  |  |
Service cost |  | $ | 4.2 |  |  | $ | 4.4 |  |  | $ | 4.2 |
Interest cost |  | 16.8 |  |  | 14.6 |  |  | 20.9 |
Expected return on plan assets |  | (26.1) |  |  | (30.4) |  |  | (34.2) |
Amortization of: |  |  |  |  |  |
Prior service cost |  | 2.1 |  |  | 2.1 |  |  | 2.3 |
Actuarial loss |  | 1.9 |  |  | 3.8 |  |  | 9.2 |
Preliminary net periodic benefit cost |  | $ | (1.1) |  |  | $ | (5.5) |  |  | $ | 2.4 |
Curtailment/settlement expense |  | 40.8 |  |  | — |  |  | 1.0 |
Total net periodic benefit cost |  | $ | 39.7 |  |  | $ | (5.5) |  |  | $ | 3.4 |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income |  |  |  |  |  |
Prior service credit |  | $ | (2.1) |  |  | $ | (2.1) |  |  | $ | (2.3) |
Net actuarial gain |  | (11.6) |  |  | (5.6) |  |  | (8.6) |
Total recognized in other comprehensive income (loss) |  | $ | (13.7) |  |  | $ | (7.7) |  |  | $ | (10.9) |
Total recognized in net periodic benefit income and other comprehensive income |  | $ | 26.0 |  |  | $ | (13.2) |  |  | $ | (7.5) |
The estimated net actuarial (gain) loss and prior service cost (credit) for the pension plans and postretirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2023 is $4.2 million. The following estimated benefit payments, which reflect estimated future service are expected to be paid by the related plans in the years ending December 31:
(in millions) | Pension Plans Benefit Payments |  | Other Postretirement Plans Benefit Payments |  | Medicare Part D Adjustments
2023 | $ | 23.9 |  |  | $ | 2.6 |  |  | $ | 0.1 |
2024 | 9.0 |  |  | 2.4 |  |  | 0.1 |
2025 | 9.7 |  |  | 2.2 |  |  | 0.1 |
2026 | 10.3 |  |  | 1.9 |  |  | — |
2027 | 10.8 |  |  | 1.8 |  |  | — |
2028-2032 | 46.1 |  |  | 6.8 |  |  | 0.1 |
In 2023, we expect to contribute cash of at least $4.1 million to the pension plans to meet minimum funding requirements. Plan Assets and Investment Strategies The Company’s overall investment strategy is to obtain sufficient return and provide adequate liquidity to meet the benefit obligations of our pension plans. The majority of investments are made in public securities to ensure adequate liquidity to support benefit payments. Domestic and international stocks and bonds provide diversification to the portfolio. For the Canadian pension plans the primary investment objective is to secure the promised pension benefits through capital preservation and appreciation to better manage the asset/liability gap and interest rate risk. A secondary investment objective is to most effectively manage investment volatility to reduce the variability of the Company’s required contributions. The plans are expected to achieve an annual overall return, over a five-year rolling period, consistent with or in excess of total fund benchmarks that reflect each plan’s strategic allocations and respective market benchmarks at the individual asset class level. Management of the asset/liability gap of the plans and performance results are reviewed quarterly. Currently, our policy includes an 80% allocation to fixed income and 20% to return-seeking strategies for the salaried and hourly plans. The Canadian Actual allocations may experience temporary fluctuations based on market movements and investment strategies. A significant amount of the assets are invested in funds that are managed by a group of professional investment managers through Mosaic’s investment advisor. These funds are mainly commingled funds. Performance is reviewed by Mosaic management monthly by comparing each fund’s return to a benchmark with an in-depth quarterly review presented by Mosaic’s investment advisor to the Global Pension Investment Committee. We do not have significant concentrations of credit risk or industry sectors within the plan assets. Assets may be indirectly invested in Mosaic stock, but any risk related to this investment would be immaterial due to the insignificant percentage of the total pension assets that would be invested in Mosaic stock. Fair Value Measurements of Plan Assets The following tables provide fair value measurement, by asset class, of the Company’s defined benefit plan assets:
(in millions) |  | December 31, 2022
Pension Plan Asset Category - U.S. and Canadian |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Cash |  | $ | 3.9 |  |  | $ | 3.9 |  |  | $ | — |  |  | $ | — |
Equity securities(a) |  | 33.8 |  |  | — |  |  | 33.8 |  |  | — |
Fixed income(b) |  | 269.0 |  |  | — |  |  | 269.0 |  |  | — |
Private equity funds |  | 22.3 |  |  | — |  |  | — |  |  | 22.3 |
Remaining U.S. plan assets cash |  | 16.6 |  |  | 16.6 |  |  | — |  |  | — |
Total assets at fair value |  | $ | 345.6 |  |  | $ | 20.5 |  |  | $ | 302.8 |  |  | $ | 22.3 |
(in millions) |  | December 31, 2021
Pension Plan Asset Category - U.S. and Canadian |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Cash |  | $ | 5.2 |  |  | $ | 5.2 |  |  | $ | — |  |  | $ | — |
Equity securities(a) |  | 71.3 |  |  | — |  |  | 71.3 |  |  | — |
Fixed income(b) |  | 720.0 |  |  | — |  |  | 720.0 |  |  | — |
Private equity funds |  | 10.5 |  |  | — |  |  | — |  |  | 10.5 |
Total assets at fair value |  | $ | 807.0 |  |  | $ | 5.2 |  |  | $ | 791.3 |  |  | $ | 10.5 |
______________________________ (a)This class, which includes several funds, was invested approximately 63% in U.S. equity securities and 36% in international equity securities as of December 31, 2022, and 44% in U.S. equity securities and 56% in international equity securities as of December 31, 2021. (b)This class, which includes several funds, was invested approximately 32% in corporate debt securities, 66% in governmental securities in the U.S. and Canada and 2% in other foreign entity debt securities as of December 31, 2022, and 44% in corporate debt securities, 49% in governmental securities in the U.S. and Canada and 7% in other foreign entity debt securities as of December 31, 2021. Rates and Assumptions The approach used to develop the discount rate for the pension and postretirement plans is commonly referred to as the yield curve approach. Under this approach, we use a hypothetical curve formed by the average yields of available corporate bonds rated AA and above and match it against the projected benefit payment stream. Each category of cash flow of the projected benefit payment stream is discounted back using the respective interest rate on the yield curve. Using the present value of projected benefit payments, a weighted-average discount rate is derived. The approach used to develop the expected long-term rate of return on plan assets combines an analysis of historical performance, the drivers of investment performance by asset class and current economic fundamentals. For returns, we utilized a building block approach starting with inflation expectations and added an expected real return to arrive at a long-term nominal expected return for each asset class. Long-term expected real returns are derived from future expectations of the U.S. Treasury real yield curve. Weighted average assumptions used to determine benefit obligations were as follows:
| Pension Plans
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Discount rate | 5.05 | % |  | 2.84 | % |  | 2.40 | %
Expected return on plan assets | 4.89 | % |  | 3.25 | % |  | 3.89 | %
Rate of compensation increase | 3.00 | % |  | 3.00 | % |  | 3.00 | %
Weighted-average assumptions used to determine net benefit cost were as follows:
| Pension Plans
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
Discount rate | 2.84 | % |  | 2.44 | % |  | 3.12 | %
Service cost discount rate | 3.05 | % |  | 2.64 | % |  | 3.15 | %
Interest cost discount rate | 2.40 | % |  | 1.90 | % |  | 2.83 | %
Expected return on plan assets | 3.25 | % |  | 3.89 | % |  | 4.88 | %
Rate of compensation increase | 3.00 | % |  | 3.00 | % |  | 3.00 | %
Defined Contribution Plans Eligible salaried and non-union hourly employees in the U.S. participate in a defined contribution investment plan which permits employees to defer a portion of their compensation through payroll deductions and provides matching contributions. We match 100% of the first 3% of the participant’s contributed pay plus 50% of the next 3% of the participant’s contributed pay, subject to Internal Revenue Service limits. Participant contributions, matching contributions and the related earnings immediately vest. Mosaic also provides an annual non-elective employer contribution feature for eligible salaried and non-union hourly employees based on the employee’s age and eligible pay. Participants are generally vested in the non-elective employer contributions after three years of service. In addition, a discretionary feature of the plan allows the Company to make additional contributions to employees. Certain union employees participate in a defined contribution retirement plan based on collective bargaining agreements. Canadian salaried and non-union hourly employees participate in an employer funded plan with employer contributions similar to the U.S. plan. The plan provides a profit sharing component which is paid each year. We also sponsor one mandatory union plan in Canada. Benefits in these plans vest after two years of consecutive service. The expense attributable to defined contribution plans in the U.S. and Canada was $55.7 million, $55.8 million and $48 million for 2022, 2021 and 2020, respectively. Postretirement Medical Benefit Plans We provide certain health care benefit plans for certain retired employees (“Retiree Health Plans”) which may be either contributory or non-contributory and contain certain other cost-sharing features such as deductibles and coinsurance. The North American Retiree Health Plans are unfunded and the projected benefit obligation was $22.6 million and $31.1 million as of December 31, 2022 and 2021, respectively. This liability should continue to decrease due to our limited exposure. The related income statement effects of the Retiree Health Plans are not material to the Company. We anticipate contributing cash of at least $2.6 million in 2023 to the postretirement medical benefit plans to fund anticipated benefit payments. The year-end status of the Brazil postretirement medical benefit plans with a discount rate of 10.30% and 7.69% on each of December 31, 2022 and December 31, 2021, respectively was as follows:
| Postretirement Medical Benefits
| Years Ended December 31,
(in millions) | 2022 |  | 2021
Change in accumulated postretirement benefit obligation (“APBO”): |  |  |
APBO at beginning of year | $ | 58.0 |  |  | $ | 96.8 |
Service cost | 0.1 |  |  | 0.3 |
Interest cost | 5.8 |  |  | 6.6 |
Actuarial gain | (7.6) |  |  | (22.8) |
Currency fluctuations | 3.8 |  |  | (3.9) |
Benefits paid | (1.0) |  |  | (1.7) |
Plan Amendments | — |  |  | (17.3) |
APBO at end of year | $ | 59.1 |  |  | $ | 58.0 |
Change in plan assets: |  |  |
Company contribution | $ | 1.0 |  |  | $ | 1.7 |
Benefits paid | (1.0) |  |  | (1.7) |
Fair value at end of year | $ | — |  |  | $ | — |
Unfunded status of the plans as of the end of the year | $ | (59.1) |  |  | $ | (58.0) |
Amounts recognized in the consolidated balance sheets: |  |  |
Current liabilities | $ | (1.2) |  |  | $ | — |
Noncurrent liabilities | (57.9) |  |  | (58.0) |
Amounts recognized in accumulated other comprehensive income |  |  |
Prior service credit | $ | (14.1) |  |  | $ | (14.8) |
Actuarial loss | $ | 6.6 |  |  | $ | 16.1 |

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