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Retirement Plans | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
Retirement Plans | Retirement Plans DC Plans Domestic and international DC plans are available to eligible salaried and craft employees. Company contributions to DC plans are based on an employee's eligible compensation and participation rate. We recognized expense of $128 million, $130 million and $115 million associated with contributions to our DC plans during 2021, 2020 and 2019, respectively. DB Plans Certain DB plans are available to eligible international salaried employees. Contributions to DB plans are at least the minimum amounts required by applicable regulations. Benefit payments under these plans are generally based upon length of service and/or qualifying compensation. Net periodic pension expense for our DB Plans included the following components:
| Year Ended December 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Service cost | $ | 17,490 |  |  | $ | 18,129 |  |  | $ | 15,750 |
Interest cost | 7,333 |  |  | 9,899 |  |  | 19,617 |
Expected return on assets | (28,577) |  |  | (26,304) |  |  | (32,645) |
Amortization of prior service credit | (856) |  |  | (903) |  |  | (886) |
Recognized net actuarial loss | 5,875 |  |  | 5,806 |  |  | 10,303 |
Curtailments | 15 |  |  | — |  |  | — |
(Gain) loss on settlements | 198,132 |  |  | (406) |  |  | 137,898 |
Net periodic pension expense(1) | $ | 199,412 |  |  | $ | 6,221 |  |  | $ | 150,037 |
(1) Net periodic pension expense of $1 million, $2 million and $2 million during 2021, 2020 and 2019, respectively, was reported as Disc Ops. The service cost component of net periodic pension expense is presented in “Cost of revenue” and the other components of net periodic pension expense are presented in “G&A” and "(Gain) loss on pension settlement". Plan Settlements Our largest DB plan, which provided retirement benefits to certain employees in the Netherlands, was terminated in December 2021, at which point the remaining benefit obligations were transferred to a plan not sponsored by Fluor and we were substantially relieved of any further obligation. Our DB plan in the United Kingdom was terminated in December 2019, at which point the remaining benefit obligations were transferred to an insurer and we were relieved of any further obligation. The loss on settlement in both years consisted primarily of unrecognized actuarial losses included in AOCI and did not impact our cash position. Retirement benefits in these countries are now administered through DC plans. DB Plan Assumptions The ranges of assumptions indicated below cover DB plans in the Netherlands, Germany and the Philippines and are based on the economic environment in each host country at the end of each reporting period. The discount rates for the DB plans were determined primarily based on a hypothetical yield curve developed from the yields on high quality corporate and government bonds with durations consistent with the pension obligations in those countries. The expected long-term rate of return on asset assumptions utilizing historical returns, correlations and investment manager forecasts are established for all relevant asset classes including international equities and government, corporate and other debt securities.
| December 31,
| 2021 | 2020 | 2019
For determining PBO at year-end: |  |  |
Discount rates | 1.20-4.75% | 0.80-3.50% | 1.20-4.75%
Rates of increase in compensation levels | 2.25-5.00% | 2.25-6.00% | 2.25-6.00%
For determining net periodic cost for the year: |  |  |
Discount rates | 0.80-3.50% | 1.20-4.75% | 1.80-7.25%
Rates of increase in compensation levels | 2.25-6.00% | 2.25-6.00% | 2.25-7.00%
Expected long-term rates of return on assets | 0.80-5.70% | 1.20-5.60% | 1.80-8.20%
We evaluate the funded status of each of our DB plans using the above assumptions and determine the appropriate funding level in light of applicable regulatory requirements, tax deductibility, reporting considerations and other factors. The funding status of the plans is sensitive to changes in long-term interest rates and returns on plan assets, and funding obligations could increase substantially if interest rates fall dramatically or returns on plan assets are below expectations. Assuming no changes in current assumptions, we expect to contribute up to $13 million to our DB plans in 2022, which is expected to be in excess of the minimum funding required. If the discount rates were reduced by 25 basis points, plan liabilities would increase by approximately $5 million. DB Plan Assets The following table sets forth the target and actual allocations of plan assets:
|  | December 31,
| 2021 Target Allocation | 2021 | 2020
Asset category: |  |  |
Debt securities | 25% - 35% | 28 | % | 63 | %
Equity securities | 10% - 20% | 17 | % | 28 | %
Other | 50% - 60% | 55 | % | 9 | %
Total |  | 100 | % | 100 | %
Our investment strategy is to maintain asset allocations that appropriately manage risk within the context of seeking adequate returns. Investment allocations are determined by each plan's governing body. Asset allocations may be affected by local regulations. Long-term allocation guidelines are established with a target range allocation for each asset class. Short-term deviations from these allocations may exist from time to time for tactical investment or strategic implementation purposes. Investments in debt securities are used to provide stable investment returns while protecting the funding status of the plans. Investments in equity securities are utilized to generate long-term capital appreciation to mitigate the effects of increases in benefit obligations resulting from inflation, longer life expectancy and salary growth. While most of our plans may invest in the company's securities, there are no such direct investments at the present time. Plan assets included investments in common or collective trusts ("CCTs"), which offer efficient access to diversified investments across various asset categories. The estimated fair value of the investments in the CCTs represents the net asset value of the shares or units of such funds as determined by the issuer. At the present time, there no restrictions on how the plans may redeem their investments. Debt securities are comprised of corporate bonds, government securities and CCTs with underlying investments in corporate bonds, government and asset backed securities and interest rate swaps. Corporate bonds primarily consist of investment-grade rated bonds and notes, of which no significant concentration exists in any one rating category or industry. Government securities include international government bonds, some of which are inflation-indexed. Corporate bonds and government securities are valued based on pricing models, which are determined from a compilation of primarily observable market information, broker quotes in non-active markets or similar assets. Equity securities span various industries and are comprised of common stocks of international companies as well as CCTs with underlying investments in common and preferred stocks. Publicly traded corporate equity securities are valued based on the closing price of an active market or exchange. Inactive securities are valued at the last reported bid price. As of December 31, 2021 and 2020, direct investments in equity securities were concentrated in international securities. Other plan assets include guaranteed investment contracts and CCTs. Guaranteed investment contracts are insurance contracts that guarantee a principal repayment and a stated rate of interest. The estimated fair value of these insurance contracts, which are Level 3 assets, represents the discounted value of guaranteed benefit payments. CCTs hold underlying investments primarily in commodities. The following table delineates the fair value of the plan assets and liabilities of our DB Plans:
| December 31, 2021 |  | December 31, 2020
(in thousands) | Total | Level 1 | Level 2 | Level 3 |  | Total | Level 1 | Level 2 | Level 3
Assets: |  |  |  |  |  |  |  |  |
Equity securities: |  |  |  |  |  |  |  |  |
Common stock | $ | 4,798 |  | $ | 4,798 |  | $ | — |  | $ | — |  |  | $ | 5,252 |  | $ | 5,252 |  | $ | — |  | $ | — |
CCTs | 758 |  | — |  | 758 |  | — |  |  | 230,135 |  | — |  | 230,135 |  | — |
Debt securities: |  |  |  |  |  |  |  |  |
Corporate bonds | 45 |  | — |  | 45 |  | — |  |  | 532 |  | — |  | 532 |  | — |
Government securities | 9,287 |  | — |  | 9,287 |  | — |  |  | 12,036 |  | — |  | 12,036 |  | — |
CCTs | — |  | — |  | — |  | — |  |  | 507,691 |  | — |  | 507,691 |  | — |
Other: |  |  |  |  |  |  |  |  |
Guaranteed investment contracts | 17,931 |  | — |  | — |  | 17,931 |  |  | 20,588 |  | — |  | — |  | 20,588 |
CCTs | — |  | — |  | — |  | — |  |  | 51,679 |  | — |  | 51,679 |  | — |
Plan assets measured at fair value, net | $ | 32,819 |  | $ | 4,798 |  | $ | 10,090 |  | $ | 17,931 |  |  | $ | 827,913 |  | $ | 5,252 |  | $ | 802,073 |  | $ | 20,588 |
Plan assets not measured at fair value, net | 55 |  |  |  |  |  | 1,507 |  |  |  |
Total plan assets, net | $ | 32,874 |  |  |  |  |  | $ | 829,420 |  |  |  |
The following table presents information about Level 3 fair value measurements:
(in thousands) | 2021 | 2020
Balance at beginning of year | $ | 20,588 |  | $ | 19,650 |
Actual return on plan assets: |  |
Assets still held at reporting date | (1,565) |  | 2,092 |
Assets sold during the period | — |  | — |
Purchases | 224 |  | 343 |
Settlements | (1,316) |  | (1,497) |
Balance at end of year | $ | 17,931 |  | $ | 20,588 |
The following table presents expected future benefit payments related to our DB Plans:
Year Ended December 31, | (in thousands)
2022 | $ | 4,383 |
2023 | 4,186 |
2024 | 4,141 |
2025 | 4,116 |
2026 | 3,987 |
2027 — 2031 | 25,810 |
The following table sets forth the change in PBO, plan assets and funded status of the plans:
| December 31,
(in thousands) | 2021 | 2020
Change in PBO: |  |
Benefit obligation at beginning of year | $ | 869,835 |  | $ | 748,784 |
Service cost | 17,490 |  | 18,129 |
Interest cost | 7,333 |  | 9,899 |
Employee contributions | 2,643 |  | 2,860 |
Currency translation | (32,064) |  | 72,178 |
Actuarial (gain)/loss (primarily due to plan experience in 2021 and assumption changes in 2020) | 52,190 |  | 58,258 |
Benefits paid | (15,582) |  | (17,224) |
Curtailments | (415) |  | (6,574) |
Settlements | (798,679) |  | (16,475) |
PBO at end of year | 102,751 |  | 869,835 |
Change in plan assets: |  |
Plan assets at beginning of year | 829,420 |  | 710,663 |
Actual return on plan assets | 30,326 |  | 55,819 |
Company contributions | 12,886 |  | 24,752 |
Employee contributions | 2,643 |  | 2,860 |
Currency translation | (28,140) |  | 69,025 |
Benefits paid | (15,582) |  | (17,224) |
Settlements | (798,679) |  | (16,475) |
Plan assets at end of year | 32,874 |  | 829,420 |
Funded status — (Under)/overfunded | $ | (69,877) |  | $ | (40,415) |
Amounts recognized in the Consolidated Balance Sheet: |  |
Pension assets included in other assets | $ | — |  | $ | — |
Pension liabilities included in other accrued liabilities | — |  | — |
Pension liabilities included in current liabilities related to assets held for sale | (22,248) |  | (25,617) |
Pension liabilities included in noncurrent liabilities | (47,629) |  | (14,798) |
AOCI (pre-tax) | $ | 3,042 |  | $ | 161,534 |
Plans with PBO in excess of plan assets: |  |
PBO | $ | 102,751 |  | $ | 869,835 |
Plan assets | 32,874 |  | 829,420 |
Plans with ABO in excess of plan assets: |  |
ABO | $ | 40,374 |  | $ | 45,757 |
Plan assets | 17,931 |  | 20,588 |
The total ABO for all DB Plans as of December 31, 2021 and 2020 was $55 million and $793 million, respectively. Multiemployer Pension Plans In addition to our DB plans, we participate in multiemployer pension plans for unionized construction and maintenance craft employees. Company contributions are based on the hours worked by employees covered under various collective bargaining agreements and totaled $44 million, $38 million and $32 million during 2021, 2020 and 2019, respectively. Upon withdrawal from a multiemployer plan, we may have an obligation to make additional contributions for our share of any unfunded benefit obligation, but only if we do not meet the requirements of any applicable exemptions. For one of our discontinued operations, we participate in a multiemployer plan in which we are aware of a significant unfunded benefit obligation. However, we believe we qualify for an exemption and do not believe we have a probable payment to the plan. Therefore, we have not recognized a liability related to this unfunded benefit obligation. The preceding information does not include amounts related to benefit plans applicable to employees associated with certain contracts with the U.S. Department of Energy because we are not responsible for the current or future funding of these plans.

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