XML 48 R25.htm IDEA: XBRL DOCUMENT v3.25.0.1
Retirement Plans
 12 Months Ended
Dec. 31, 2024
Retirement Plans [Abstract]  
Retirement Plans (18) Retirement Plans:

We sponsor a noncontributory defined benefit pension plan covering a significant number of our former and current employees and other postretirement benefit plans that provide medical, dental, life insurance and other benefits for covered retired employees and their beneficiaries and covered dependents. The pension plan and postretirement benefit plans are closed to the majority of our newly hired employees. The benefits are based on years of service and final average pay or career average pay. Contributions are made in amounts sufficient to meet ERISA funding requirements while considering tax deductibility. Plan assets are invested in a diversified portfolio of equity and fixed-income securities and alternative investments.

The accounting results for pension and other postretirement benefit costs and obligations are dependent upon various actuarial assumptions applied in the determination of such amounts. These actuarial assumptions include the following: discount rates, expected long-term rate of return on plan assets, future compensation increases, employee turnover, healthcare cost trend rates, expected retirement age, optional form of benefit and mortality. We review these assumptions for changes on an interim and annual basis with our independent actuaries. We consider our discount rate and expected long-term rate of return on plan assets to be our most critical assumptions.

The discount rate is used to value, on a present value basis, our pension and other postretirement benefit obligations as of the balance sheet date. The same rate is also used in the interest cost component of the pension and postretirement benefit cost determination for the following year. The measurement date used in the selection of our discount rate is the balance sheet date. Our discount rate assumption is determined annually with assistance from our independent actuaries based on the pattern of expected future benefit payments and the prevailing rates available on long-term, high quality corporate bonds that approximate the benefit obligation.

As of December 31, 2024, 2023 and 2022, we utilized an estimation technique that is based upon a settlement model (Bond:Link) that permits us to closely match cash flows to the expected payments to participants. This rate can change from year-to-year based on market conditions that affect corporate bond yields.

As a result of the technique described above, we are utilizing a discount rate of 5.60% as of December 31, 2024 for our qualified pension plan, compared to rates of 5.20% and 5.50% in 2023 and 2022, respectively. The discount rate for postretirement plans as of December 31, 2024 was 5.70% compared to 5.20% in 2023 and 5.50% in 2022.

The expected long-term rate of return on plan assets is applied in the determination of periodic pension and postretirement benefit cost as a reduction in the computation of the expense. In developing the expected long-term rate of return assumption, we considered published surveys of expected market returns, 10 and 20 year actual returns of various major indices, and our own historical 5 year, 10 year and 20 year investment returns. The expected long-term rate of return on plan assets is based on an asset allocation assumption of 65% in long-duration fixed income securities, and 35% in equity securities and other investments. We review our asset allocation at least annually and make changes when considered appropriate. Our pension asset investment allocation decisions are made by the Retirement Investment & Administration Committee (RIAC), a committee comprised of members of management, pursuant to a delegation of authority by the Board of Directors. Asset allocation decisions take into account expected market return assumptions of various asset classes as well as expected pension benefit payment streams. When analyzing anticipated benefit payments, management considers both the absolute amount of the payments as well as the timing of such payments. Our expected long-term rate of return on plan assets was 7.50% in 2023 and 2022. For the period January 1, 2024 – September 30, 2024, our expected long-term rate of return on plan assets was 7.50%. For the period October 1, 2024 to December 31, 2024, our expected long-term rate of return on plan assets was 6.65%. Our actual return on plan assets for the year ended December 31, 2024, was a gain of 5%, for the year ended December 31, 2023, was a gain of 15% and for the year ended December 31, 2022, was a loss of 20%. For 2025, we expect to assume a rate of return of 6.65%. Our pension plan assets are valued at fair value as of the measurement date.

During 2024, we capitalized $18 million of pension and OPEB expense into the cost of our capital expenditures as the costs relate to our engineering and plant construction activities. During 2023, and 2022, we capitalized $18 million and $21 million of pension and OPEB expense into the cost of our capital expenditures, respectively.

Pension Benefits

The following tables set forth the pension plan’s projected benefit obligations, fair values of plan assets and the pension benefit liability recognized on our consolidated balance sheets at the end of each period, and the components of total pension benefit cost for each period:

For the year ended

For the year ended

December 31,

December 31,

($ in millions)

2024

2023

Change in projected benefit obligation (PBO)

PBO at the beginning of the period

$

2,442 

$

2,510 

Service cost

47 

51 

Interest cost

126 

129 

Actuarial gain

(5)

(44)

Benefits paid

(187)

(204)

Special/contractual termination benefits

12 

-

PBO at the end of the period

$

2,435 

$

2,442 

Change in plan assets

Fair value of plan assets at the beginning of the period

$

2,268 

$

2,033 

Actual return on plan assets, net of expenses

114 

305 

Employer contributions

133 

134 

Benefits paid

(187)

(204)

Fair value of plan assets at the end of the period

$

2,328 

$

2,268 

Funded status

$

(107)

$

(174)

Amounts recognized in the consolidated balance sheet

Pension and other postretirement benefits - current

$

-

$

-

Pension and other postretirement benefits - noncurrent

$

(107)

$

(174)

Accumulated other comprehensive loss

$

-

$

-

For the year ended

For the year ended

For the year ended

December 31,

December 31,

December 31,

($ in millions)

2024

2023

2022

Components of total pension benefit cost (income)

Service cost

$

47

$

51

$

69

Interest cost on projected benefit obligation

126

129

106

Expected return on plan assets

(164)

(148)

(181)

(Gain) / Loss recognized

45

(202)

(218)

Net periodic pension benefit cost (income)

54

(170)

(224)

Pension settlement costs

-

-

55 

Special/contractual termination benefits

12

-

-

Total pension benefit cost (income)

$

66

$

(170)

$

(169)

The pension plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. These payments are recorded as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic pension benefit cost.

During 2024, lump sum pension payments to terminated or retired individuals amounted to $108 million. As we did not exceed the settlement threshold of $173 million, we did not recognize any non-cash settlement charges for 2024. As of December 31, 2024, the pension plan was funded at 96%.

As a result of special termination benefit enhancements related to a voluntary separation plan, Frontier remeasured its pension plan obligations, resulting in a remeasurement loss of $45 million, of which $38 million relates to special termination benefits, for the year ended December 31, 2024. The Company’s accounting policy is to recognize actuarial gains and losses in the period in which they occur. As such, this loss was recorded in “Investment and other income, net” on our consolidated statements of operations.

During 2023, lump sum pension payments to terminated or retired individuals amounted to $129 million. As we did not exceed the settlement threshold of $180 million, we did not recognize any non-cash settlement charges for 2023.

During 2023, we had actuarial gains of $44 million, driven by favorable lump sum conversion interest rates and cash balance interest crediting rates and updated census data to January 1, 2023, offset by a decrease of 30 basis points in the discount rate. The Company’s accounting policy is to recognize actuarial gains and losses in the period in which they occur. As such, this gain was recorded in “Investment and other income, net” on our consolidated statements of operations.

During 2022, lump sum pension settlement payments to terminated or retired individuals amounted to $200 million, which exceeded the settlement threshold of $175 million, and as a result, we recognized non-cash settlement charges totaling $55 million during the period. During 2022, we had actuarial gains of $867 million, driven by an increase of 260 basis points in the discount rate, favorable lump sum annuity conversion interest rates and cash balance interest crediting rates, and updated census data to January 1, 2022. The Company’s accounting policy is to recognize actuarial gains and losses in the period in which they occur. As such, this gain was recorded in “Investment and other income, net” on our consolidated statements of operations.

The plan’s weighted average asset allocations at December 31, 2024 and 2023 by asset category are as follows:

2024

2023

Asset category:

Equity securities

26

%

49

%

Debt securities

62

%

40

%

Alternative and other investments

12

%

11

%

Total

100 

%

100 

%

The plan’s expected benefit payments over the next 10 years are as follows:

($ in millions)

Amount

    

2025

$

256

2026

245

2027

240

2028

238

2029

233

2030-2034

1,074

Total

$

2,286

We made pension plan contributions of $133 million and $134 million, in 2024 and 2023, respectively.


‎

Assumptions used in the computation of annual pension costs and valuation of the beginning/end of period obligations were as follows:

12/31/2024

12/31/2023

12/31/2022

Discount rate - used at period end to value obligation

5.60 

%

5.20 

%

5.50 

%

Discount rate - used to compute annual cost

5.00 - 5.80

%

5.50 

%

2.90 - 5.60

%

Expected long-term rate of return on plan assets

7.50 - 6.65

%

7.50 

%

7.50 

%

Rate of increase in compensation levels

3.00 

%

3.00 

%

3.00 

%

Postretirement Benefits Other Than Pensions - “OPEB”

The following tables set forth the OPEB plans’ benefit obligations, fair values of plan assets and the postretirement benefit liability recognized on our consolidated balance sheets as of December 31, 2024 and 2023 and the components of total postretirement benefit cost for the years ended December 31, 2024, 2023 and 2022.

For the year ended

For the year ended

December 31,

December 31,

($ in millions)

2024

2023

Change in benefit obligation

Benefit obligation at the beginning of the period

$

561

$

606

Service cost

7

8

Interest cost

28

31

Plan amendments

-

(45)

Plan participants' contributions

10

11

Actuarial (gain) loss

(35)

3

Benefits paid

(48)

(53)

Benefit obligation at the end of the period

$

523

$

561

Change in plan assets

Fair value of plan assets at the beginning of the period

$

-

$

-

Plan participants' contributions

10

11

Employer contribution

38

42

Benefits paid

(48)

(53)

Fair value of the plan assets at end of the period

$

-

$

-

Funded status

$

(523)

$

(561)

Amounts recognized in the consolidated balance sheet

Pension and other postretirement benefits - current

$

(39)

$

(38)

Pension and other postretirement benefits - noncurrent

$

(484)

$

(523)

Accumulated other comprehensive gain

$

(100)

$

(125)

For the year ended

For the year ended

For the year ended

December 31,

December 31,

December 31,

($ in millions)

2024

2023

2022

Components of total postretirement benefit cost / (income)

Service cost

$

7 

$

8 

$

13 

Interest cost on projected benefit obligation

28 

31 

31 

Amortization of prior service credit

(25)

(22)

(13)

(Gain) loss recognized

(35)

3 

(248)

Total postretirement benefit cost / (income)

$

(25)

$

20 

$

(217)

As a result of special termination benefit enhancements related to a voluntary separation plan, Frontier remeasured its postretirement benefit plan, resulting in a remeasurement gain of $35 million year ended December 31, 2024.

During 2023, we amended the medical coverage for certain postretirement benefit plans, which necessitated remeasurements of our OPEB obligations. These remeasurements along with the period end remeasurement resulted in the recognition of a net actuarial loss of $3 million, which was driven primarily from a higher assumed discount rate relative to the previous measurement dates, offset by updated census data to January 1, 2023. The Company’s accounting policy is to recognize actuarial gains and losses in the period in which they occur. As such, this loss was recorded in “Investment and other income, net” on our consolidated statements of operations. The remeasurements of our OPEB obligations during 2023 due to the amendments to the medical coverage for certain postretirement benefit plans also resulted in remeasurement of prior service credits of $45 million which were deferred in Accumulated comprehensive income as December 31, 2023.

During 2022, we amended the medical coverage for certain postretirement benefit plans, which necessitated remeasurements of our OPEB obligations. These remeasurements along with the period end remeasurement resulted in the recognition of a net actuarial gain of $248 million, which was driven primarily from a higher assumed discount rate relative to the previous measurement dates. The Company’s accounting policy is to recognize actuarial gains and losses in the period in which they occur. As such, this gain was recorded in “Investment and other income, net” on our consolidated statements of operations. The remeasurements of our OPEB obligations during 2022 due to the amendments to the medical coverage for certain postretirement benefit plans also resulted in remeasurement of prior service credits of $40 million which were deferred in Accumulated comprehensive income as December 31, 2022.

Assumptions used in the computation of annual OPEB costs and valuation of the beginning/end of period OPEB obligations were as follows:

12/31/2024

12/31/2023

12/31/2022

Discount rate - used at period end to value obligation

5.70%

5.20%

5.50%

Discount rate - used to compute annual cost

5.00% - 5.80%

5.00% - 6.40%

3.00% - 5.60%

The OPEB plan’s expected benefit payments over the next 10 years are as follows:

($ in millions)

Gross Benefit

Medicare Part D Subsidy

Total

    

2025

$

40

$

-

$

40

2026

41

-

41

2027

42

-

42

2028

44

-

44

2029

45

-

45

2030-2034

235

-

235

Total

$

447

$

-

$

447

For purposes of measuring year-end benefit obligations, we used, depending on medical plan coverage for different retiree groups, a 6.75% annual rate of increase in the per-capita cost of covered medical benefits, gradually decreasing to 4.75% in the year 2032 and remaining at that level thereafter.

The amounts in accumulated other comprehensive (income) loss before tax that have not yet been recognized as components of net periodic benefit cost at December 31, 2024 and 2023 are as follows:

OPEB

($ in millions)

2024

2023

Prior service cost (credit)

$

(100)

$

(125)

The amounts recognized as a component of accumulated other comprehensive loss for the years ended December 31, 2024 and 2023 are as follows:

For the year ended

For the year ended

OPEB

December 31,

December 31,

($ in millions)

2024

2023

Accumulated other comprehensive loss (gain) at

the beginning of the period

$

(125)

$

(102)

Prior service (cost) credit amortized during the period

25

22

Prior service cost (credit) occurring during the period

-

(45)

Net amount recognized in comprehensive

loss for the period

25

(23)

Accumulated other comprehensive loss (gain) at

end of the period

$

(100)

$

(125)

401(k) Savings Plans

We sponsor employee retirement savings plans under section 401(k) of the Internal Revenue Code. The plans cover substantially all full-time employees. Under certain plans, we provide matching contributions. Employer contributions were $38 million, $37 million and $38 million in 2024, 2023 and 2022, respectively.