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Employee Retirement Plans | 12 Months Ended
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Sep. 30, 2022
Retirement Benefits [Abstract] |
Employee Retirement Plans | Note 8 — Employee Retirement Plans Defined Benefit Pension and Other Postretirement Plans The U.S. Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI Utilities, and certain of UGI’s other domestic wholly owned subsidiaries and (2) a defined benefit pension plan for substantially all Mountaineer employees. U.S. Pension Plans’ benefits are based on years of service, age and employee compensation. In addition, certain UGI International employees in France and Belgium are covered by defined benefit pension and postretirement plans. Although the disclosures in the tables below include amounts related to the UGI International plans, such amounts are not material. We also provide postretirement health care benefits to certain retirees and postretirement life insurance benefits to certain U.S. active and retired employees. The ABO of our other postretirement benefit plans was $22 and $31 as of September 30, 2022 and 2021, respectively. The fair value of the plan assets of our other postretirement benefit plans was $16 and $19 as of September 30, 2022 and 2021, respectively. The following table provides a reconciliation of the PBOs of our pension plans (the U.S. Pension Plans and the UGI International pension plans), plan assets, and the related funded status of our pension plans as of September 30, 2022 and 2021. ABO is the present value of benefits earned to date with benefits based upon current compensation levels. PBO is ABO increased to reflect estimated future compensation.
| Pension Benefits |  |
| 2022 |  | 2021 |  |  |  |
Change in benefit obligations: |  |  |  |  |  |  |
Benefit obligations — beginning of year | $ | 870 |  |  | $ | 782 |  |  |  |  |
Service cost | 16 |  |  | 12 |  |  |  |  |
Interest cost | 26 |  |  | 22 |  |  |  |  |
Actuarial gain | (240) |  |  | (30) |  |  |  |  |
Plan amendments | 1 |  |  | 2 |  |  |  |  |
Acquisitions | — |  |  | 114 |  |  |  |  |
Foreign currency | (6) |  |  | (1) |  |  |  |  |
Benefits paid | (34) |  |  | (31) |  |  |  |  |
| Pension Benefits |  |
| 2022 |  | 2021 |  |  |  |
Benefit obligations — end of year (a) | $ | 633 |  |  | $ | 870 |  |  |  |  |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets — beginning of year | $ | 736 |  |  | $ | 585 |  |  |  |  |
Actual (loss) gain on plan assets | (173) |  |  | 75 |  |  |  |  |
Foreign currency | (3) |  |  | — |  |  |  |  |
Employer contributions | 15 |  |  | 14 |  |  |  |  |
Acquisitions | — |  |  | 92 |  |  |  |  |
Benefits paid | (34) |  |  | (30) |  |  |  |  |
Fair value of plan assets — end of year | $ | 541 |  |  | $ | 736 |  |  |  |  |
Funded status of the plans — end of year (b) | $ | (92) |  |  | $ | (134) |  |  |  |  |
Amounts recorded in UGI Corporation stockholders’ equity (pre-tax): |  |  |  |  |  |  |
Prior service cost | $ | 3 |  |  | $ | 3 |  |  |  |  |
Net actuarial (gain) loss | (17) |  |  | 13 |  |  |  |  |
Total | $ | (14) |  |  | $ | 16 |  |  |  |  |
Amounts recorded in regulatory assets and liabilities (pre-tax): |  |  |  |  |  |  |
Net actuarial loss | 114 |  |  | 108 |  |  |  |  |
Total | $ | 114 |  |  | $ | 108 |  |  |  |  |
(a) The ABO for the U.S. Pension Plans was $570 and $756 as of September 30, 2022 and 2021, respectively. (b) Amounts are reflected in “Other noncurrent liabilities” and “Other assets” on the Consolidated Balance Sheets. Amounts reflected in “Other assets” are not material. In Fiscal 2022 and Fiscal 2021, the change in the pension plans’ PBO due to actuarial gains and losses is principally the result of changes in discount rates. Actuarial assumptions for our U.S. Pension Plans are described below. The discount rate assumption was determined by selecting a hypothetical portfolio of high quality corporate bonds appropriate to provide for the projected benefit payments of the plans. The discount rate was then developed as the single rate that equates the market value of the bonds purchased to the discounted value of the plans’ benefit payments. The expected rate of return on assets assumption is based on current and expected asset allocations as well as historical and expected returns on various categories of plan assets (as further described below).
| Pension Plans |  |
| 2022 |  | 2021 |  | 2020 |  |  |  |  |  |
Weighted-average assumptions: |  |  |  |  |  |  |  |  |  |  |
Discount rate – benefit obligations | 5.70 | % |  | 3.13 | % |  | 2.90 | % |  |  |  |  |  |
Discount rate – benefit cost | 3.13 | % |  | 2.90 | % |  | 3.30 | % |  |  |  |  |  |
Expected return on plan assets | 7.10 | % |  | 7.10 | % |  | 7.20 | % |  |  |  |  |  |
Rate of increase in salary levels | 3.25 | % |  | 3.25 | % |  | 3.25 | % |  |  |  |  |  |
The service cost component of our pension and other postretirement plans, net of amounts capitalized, is reflected in “Operating and administrative expenses” on the Consolidated Statements of Income. The non-service cost components, net of amounts capitalized by Utilities as a regulatory asset, are reflected in “Other non-operating income (expense), net” on the Consolidated Statements of Income. Other postretirement benefit cost was not material for all periods presented. Net periodic pension cost includes the following components:
| Pension Benefits |  |
| 2022 |  | 2021 |  | 2020 |  |  |  |  |  |
Service cost | $ | 16 |  |  | $ | 12 |  |  | $ | 11 |  |  |  |  |  |  |
Interest cost | 26 |  |  | 22 |  |  | 23 |  |  |  |  |  |  |
Expected return on assets | (50) |  |  | (40) |  |  | (38) |  |  |  |  |  |  |
Curtailment gain | — |  |  | — |  |  | (1) |  |  |  |  |  |  |
Amortization of: |  |  |  |  |  |  |  |  |  |  |
Prior service cost | — |  |  | — |  |  | 1 |  |  |  |  |  |  |
Actuarial loss | 7 |  |  | 14 |  |  | 15 |  |  |  |  |  |  |
Net benefit (income) cost | $ | (1) |  |  | $ | 8 |  |  | $ | 11 |  |  |  |  |  |  |
It is our general policy to fund amounts for U.S. Pension Plans benefits equal to at least the minimum required contribution set forth in applicable employee benefit laws. From time to time, we may, at our discretion, contribute additional amounts. During Fiscal 2022, Fiscal 2021 and Fiscal 2020, we made cash contributions to the U.S. Pension Plans of $14, $13 and $13, respectively. The minimum required contributions in Fiscal 2023 are not expected to be material. UGI Utilities has established a VEBA trust to pay certain retiree health care and life insurance benefits by depositing into the VEBA the annual amount of postretirement benefits costs, if any. Assets associated with the VEBA are not material and we do not expect to be required to make any contributions to the VEBA during Fiscal 2023. Expected payments for postretirement benefits over the next 10 years are not material. Expected payments for pension benefits are as follows:
| Pension Benefits |  |
Fiscal 2023 | $ | 37 |  |  |
Fiscal 2024 | $ | 38 |  |  |
Fiscal 2025 | $ | 40 |  |  |
Fiscal 2026 | $ | 41 |  |  |
Fiscal 2027 | $ | 43 |  |  |
Fiscal 2028 - 2032 | $ | 229 |  |  |
We also sponsor unfunded and non-qualified supplemental executive defined benefit retirement plans. At September 30, 2022 and 2021, the PBOs of these plans, including obligations for amounts held in grantor trusts, totaled $44 and $57, respectively. Costs associated with these plans were not material for all periods presented and are excluded from the tables above. Amounts recorded in UGI’s stockholders’ equity for these plans include pre-tax losses of $1 and $10 at September 30, 2022 and 2021, respectively, principally representing unrecognized actuarial losses. In Fiscal 2023, the estimated amount that will be amortized from such pre-tax actuarial losses into retiree benefit cost is not material. During Fiscal 2021, the Company made $12 of payments for the supplemental executive defined benefit retirement plans. During Fiscal 2022 and Fiscal 2020, the payments the Company made with respect to the supplemental executive defined benefit retirement plans were not material. The total fair value of the grantor trust investment assets associated with the supplemental executive defined benefit retirement plans, which are included in “Other assets” on the Consolidated Balance Sheets, totaled $31 and $44 at September 30, 2022 and 2021, respectively. U.S. Pension Plans’ Assets The assets of the U.S. Pension Plans are held in trust. The investment policies and asset allocation strategies for the assets in these trusts are determined by the Retirement Plan Committee comprising certain members of UGI’s senior management. The overall investment objective is to minimize projected funded status volatility by more closely aligning the duration of the U.S. Pension Plans’ fixed income portfolio to the duration of its liabilities. The proportion of plan assets allocated to fixed income investments will increase as the funded status increases. Investments are made principally in common collective trust funds that consist of equity index investments, bond index investments and short-term investments, and, to a much less extent, UGI Common Stock. The targets and actual allocations for the U.S. Pension Plans’ trust assets at September 30 are as follows:
| Actual |  | Target Asset Allocation (b) |  |
| 2022 |  | 2021 |  | 2022 |  | 2021 |  |
Equity investments: |  |  |  |  |  |  |  |  |
U.S. equities | 26.5 | % |  | 22.2 | % |  | 24.7 | % |  | 25.3 | % |  |
Non-U.S. equities | 20.9 | % |  | 21.7 | % |  | 20.9 | % |  | 21.4 | % |  |
Global equities (a) | 13.8 | % |  | 16.0 | % |  | 13.1 | % |  | 13.1 | % |  |
Total | 61.2 | % |  | 59.9 | % |  | 58.7 | % |  | 59.8 | % |  |
Fixed income funds & cash equivalents | 35.5 | % |  | 36.4 | % |  | 35.0 | % |  | 34.4 | % |  |
Alternative investments | 3.3 | % |  | 3.7 | % |  | 6.3 | % |  | 5.8 | % |  |
Total | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  |
(a) Comprises investment funds that consist of a mix of U.S. and Non-U.S. equity securities. (b) There is a permitted range for the allocation of the trust assets for the U.S. Pension Plans, excluding the defined benefit pension plan for Mountaineer employees, which is 5% less than and greater than the target allocation. Common collective trust funds in the U.S. Pension Plans primarily include investments in U.S., Non-U.S. and global (a mix of U.S. and Non-U.S.) equities, fixed income and short-term investments. The fair values of common collective trust funds and cash equivalents are valued at the NAV of units of the collective trusts. The NAVs, as provided by the trustee, are used as a practical expedient to estimate fair value based on the fair values of the underlying investments held by the funds less their liabilities. The fair values of the U.S. Pension Plans trust assets by asset class as of September 30, 2022 and 2021 are as follows:
| 2022 |  | 2021
U.S. Pension Plans: |  |  |
Domestic equity investments: |  |  |
UGI Corporation Common Stock | $ | 26 |  |  | $ | 35 |
Total domestic equity investments (a) | 26 |  |  | 35 |
Common collective trust funds: |  |  |
U.S. equity index investments | 113 |  |  | 124 |
Non-U.S. equity index investments | 110 |  |  | 155 |
Global equity index investments | 72 |  |  | 115 |
Bond index investments | 177 |  |  | 254 |
Cash equivalents | 10 |  |  | 7 |
Total common collective trust funds (b) | 482 |  |  | 655 |
Alternative investments (b) | 17 |  |  | 27 |
Total | $ | 525 |  |  | $ | 717 |
(a) Level 1 investments within the fair value hierarchy. (b) Assets measured at NAV and therefore excluded from the fair value hierarchy. The expected long-term rates of return on U.S. Pension Plans’ trust assets have been developed using a best estimate of expected returns, volatilities and correlations for each asset class. The estimates are based on historical capital market performance data and future expectations provided by independent consultants. Future expectations are determined by using simulations that provide a wide range of scenarios of future market performance. The market conditions in these simulations consider the long-term relationships between equities and fixed income as well as current market conditions at the start of the simulation. The expected rate begins with a risk-free rate of return with other factors being added such as inflation, duration, credit spreads and equity risk premiums. The rates of return derived from this process are applied to our target asset allocation to develop a reasonable return assumption. Defined Contribution Plans We sponsor 401(k) savings plans for eligible employees of UGI and certain of UGI’s domestic subsidiaries. Generally, participants in these plans may contribute a portion of their compensation on either a before-tax basis, or on both a before-tax and after-tax basis. These plans also provide for employer matching contributions at various rates. The cost of benefits under the savings plans totaled $21 in Fiscal 2022, $21 in Fiscal 2021 and $21 in Fiscal 2020. The Company also sponsors certain nonqualified supplemental defined contribution executive retirement plans. These plans generally provide supplemental benefits to certain executives that would otherwise be provided under retirement plans but are prohibited due to limitations imposed by the IRC. The Company makes payments to self-directed grantor trusts with respect to these supplemental defined contribution plans. Such payments during Fiscal 2022, Fiscal 2021 and Fiscal 2020 were not material. At September 30, 2022 and 2021, the total fair values of these grantor trust investment assets, which amounts are included in “Other assets” on the Consolidated Balance Sheets, were $7 and $9, respectively.

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