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Defined Benefit Plans
 12 Months Ended
Dec. 31, 2020
Compensation And Retirement Disclosure [Abstract]  
Defined Benefit Plans

14.    Defined Benefit Plans

We have a number of pension plans in the United States, covering many of the Company’s employees; however, the majority of these plans have been frozen to new participants and benefit accruals were frozen for active participants on December 31, 2016. The plans provide for payment of retirement benefits, mainly commencing between the ages of 55 and 65. After meeting certain qualifications, an employee acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length of service and/or earnings. Employer contributions to the plans are made, as necessary, to ensure legal funding requirements are satisfied. Also, from time to time, we may make contributions in excess of the legal funding requirements. Service cost for 2020 relates to benefit accruals for an hourly Union group within the defined benefit plan for our Outdoors & Security segment. All other benefit accruals under our defined benefit pension plans were frozen as of, or prior to, December 31, 2016.

Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value defined benefit plans or when assumptions change as they may each year. The primary factors contributing to actuarial gains and losses are changes in the discount rate used to value obligations as of the measurement date and the differences between expected and actual returns on pension plan assets.

In addition, the Company provides postretirement health care and life insurance benefits to certain retirees.

 

(In millions)

 

 

Pension Benefits

 

 

 

Postretirement Benefits

 

Obligations and Funded Status at December 31

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Change in the Projected Benefit Obligation (PBO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of year

 

 

$

877.1

 

 

 

$

763.2

 

 

 

$

3.6

 

 

 

$

1.4

 

Projected benefit obligation acquired(a)

 

 

 

—

 

 

 

 

—

 

 

 

 

9.6

 

 

 

 

—

 

Service cost

 

 

 

0.4

 

 

 

 

0.4

 

 

 

 

0.4

 

 

 

 

0.2

 

Interest cost

 

 

 

28.3

 

 

 

 

32.9

 

 

 

 

0.2

 

 

 

 

0.2

 

Plan amendments

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

1.6

 

Actuarial loss

 

 

 

70.6

 

 

 

 

121.6

 

 

 

 

0.2

 

 

 

 

1.0

 

Benefits paid

 

 

 

(42.9

)

 

 

 

(41.0

)

 

 

 

(0.6

)

 

 

 

(0.7

)

Curtailment gain

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(0.1

)

Projected benefit obligation at end of year

 

 

$

933.5

 

 

 

$

877.1

 

 

 

$

13.4

 

 

 

$

3.6

 

Accumulated benefit obligation at end of year

   (excludes the impact of future compensation increases)

 

 

$

933.5

 

 

 

$

877.1

 

 

 

$

—

 

 

 

$

—

 

Change in Plan Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

 

$

677.2

 

 

 

$

599.6

 

 

 

$

—

 

 

 

$

—

 

Actual return on plan assets

 

 

 

101.3

 

 

 

 

106.8

 

 

 

 

—

 

 

 

 

—

 

Employer contributions

 

 

 

49.3

 

 

 

 

11.8

 

 

 

 

0.6

 

 

 

 

0.7

 

Benefits paid

 

 

 

(42.9

)

 

 

 

(41.0

)

 

 

 

(0.6

)

 

 

 

(0.7

)

Fair value of plan assets at end of year

 

 

$

784.9

 

 

 

$

677.2

 

 

 

$

—

 

 

 

$

—

 

Funded status (Fair value of plan assets less PBO)

 

 

$

(148.6

)

 

 

$

(199.9

)

 

 

$

(13.4

)

 

 

$

(3.6

)

 

(a)

Related to the Larson acquisition discussed in Note 4.

The actuarial loss is primarily a result of changes in discount rates from year to year.

 

The accumulated benefit obligation exceeds the fair value of assets for all pension plans. Amounts recognized in the consolidated balance sheets consist of:

 

 

 

Pension Benefits

 

 

 

Postretirement Benefits

 

(In millions)

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Current benefit payment liability

 

$

(1.4

)

 

 

$

(1.4

)

 

 

$

(1.1

)

 

 

$

(0.7

)

Accrued benefit liability

 

 

(147.2

)

 

 

 

(198.5

)

 

 

 

(12.3

)

 

 

 

(2.9

)

Net amount recognized

 

$

(148.6

)

 

 

$

(199.9

)

 

 

$

(13.4

)

 

 

$

(3.6

)

 

As of December 31, 2020, we adopted the new Society of Actuaries MP-2020 mortality tables resulting in an immaterial decrease in plan benefit obligation and ongoing expenses. As of December 31, 2019, we adopted the new Society of Actuaries MP-2019 mortality tables, resulting in an immaterial increase in plan benefit obligation, and deferred actuarial losses in accumulated other comprehensive income.

The amounts in accumulated other comprehensive loss on the consolidated balance sheets that have not yet been recognized as components of net periodic benefit cost were as follows:

 

(In millions)

 

Pension Benefits

 

 

 

Postretirement Benefits

 

Net actuarial loss (gain) at December 31, 2018

 

$

71.8

 

 

 

$

(0.3

)

Recognition of actuarial loss

 

 

(34.1

)

 

 

 

(0.6

)

Current year actuarial loss

 

 

50.1

 

 

 

 

0.6

 

Net actuarial loss due to curtailment

 

 

(0.1

)

 

 

 

—

 

Net actuarial loss (gain) at December 31, 2019

 

$

87.7

 

 

 

$

(0.3

)

Recognition of actuarial loss

 

 

(2.7

)

 

 

 

(0.1

)

Current year actuarial loss

 

 

2.1

 

 

 

 

1.0

 

Net actuarial loss due to curtailment

 

 

(0.6

)

 

 

 

—

 

Net actuarial loss at December 31, 2020

 

$

86.5

 

 

 

$

0.6

 

 

Components of net periodic benefit cost were as follows:

Components of Net Periodic Benefit (Income) Cost

 

Pension Benefits

 

 

 

Postretirement Benefits

 

(In millions)

 

2020

 

 

 

2019

 

 

2018

 

 

 

2020

 

 

 

2019

 

 

2018

 

Service cost

 

$

0.4

 

 

 

$

0.4

 

 

$

0.5

 

 

 

$

0.4

 

 

 

$

0.2

 

 

$

—

 

Interest cost

 

 

28.3

 

 

 

 

32.9

 

 

 

30.7

 

 

 

 

0.2

 

 

 

 

0.2

 

 

 

—

 

Expected return on plan assets

 

 

(32.8

)

 

 

 

(35.2

)

 

 

(41.0

)

 

 

 

—

 

 

 

 

—

 

 

 

—

 

Recognition of actuarial losses (gains)

 

 

2.7

 

 

 

 

34.1

 

 

 

3.9

 

 

 

 

0.1

 

 

 

 

0.6

 

 

 

(0.1

)

Settlement/Curtailment losses (gains)

 

 

0.6

 

 

 

 

0.1

 

 

 

—

 

 

 

 

—

 

 

 

 

(0.1

)

 

 

—

 

Amortization of prior service credits

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

 

0.2

 

 

 

—

 

Net periodic benefit cost (income)

 

$

(0.8

)

 

 

$

32.3

 

 

$

(5.9

)

 

 

$

0.7

 

 

 

$

1.1

 

 

$

(0.1

)

 

 

Assumptions

 

Pension Benefits

 

 

 

Postretirement Benefits

 

 

 

2020

 

 

 

2019

 

 

2018

 

 

 

2020

 

 

 

2019

 

 

2018

 

Weighted-Average Assumptions Used to

   Determine Benefit Obligations at

   December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

2.6

%

 

 

 

3.3

%

 

 

4.4

%

 

 

 

5.9

%

 

 

 

6.4

%

 

 

4.2

%

Weighted-Average Assumptions Used to

   Determine Net Cost for Years Ended

   December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

3.3

%

 

 

 

4.4

%

 

 

3.8

%

 

 

 

6.4

%

 

 

 

4.2

%

 

 

3.4

%

Expected long-term rate of return on plan

   assets

 

 

4.5

%

 

 

 

4.9

%

 

 

6.0

%

 

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

 

Postretirement Benefits

 

 

2020

 

 

 

2019

 

 

Assumed Health Care Cost Trend Rates Used to Determine

   Benefit Obligations and Net Cost at December 31:

 

 

 

 

 

 

 

 

Health care cost trend rate assumed for next year

 

6.4/7.4

%

(a)

 

6.7/7.8

%

(a)

Rate that the cost trend rate is assumed to decline

   (the ultimate trend rate)

 

4.5

%

 

 

4.5

%

 

Year that the rate reaches the ultimate trend rate

 

2027

 

 

 

2027

 

 

 

 

(a)

The pre-65 initial health care cost trend rate is shown first / followed by the post-65 rate.

 

Plan Assets

The fair value of the pension assets by major category of plan assets as of December 31, 2020 and 2019 were as follows:

 

(In millions)

 

Total as of

balance sheet date

 

 

 

2020

 

 

2019

 

Group annuity/insurance contracts (level 3)

 

$

24.8

 

 

$

24.2

 

Collective trusts:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

16.0

 

 

 

7.8

 

Equity

 

 

287.6

 

 

 

245.3

 

Fixed income

 

 

410.0

 

 

 

355.0

 

Multi-strategy hedge funds

 

 

24.6

 

 

 

23.2

 

Real estate

 

 

21.9

 

 

 

21.7

 

Total

 

$

784.9

 

 

$

677.2

 

 

A reconciliation of Level 3 measurements was as follows:

 

 

Group annuity/

insurance contracts

 

(In millions)

 

2020

 

 

 

2019

 

January 1

 

$

24.2

 

 

 

$

23.6

 

Actual return on assets related to assets still held

 

 

0.6

 

 

 

 

0.6

 

December 31

 

$

24.8

 

 

 

$

24.2

 

 

Our defined benefit plans Master Trust own a variety of investment assets. All of these investment assets, except for group annuity/insurance contracts are measured using net asset value per share as a practical expedient per ASC 820. Following the retrospective adoption of ASU 2015-07 (Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share) we excluded all investments measured using net asset value per share in the amount of $760.1 million and $653.0 million as of December 31, 2020 and 2019, respectively, from the tabular fair value hierarchy disclosure.

The terms and conditions for redemptions vary for each class of the investment assets valued at net asset value per share as a practical expedient. Real estate assets may be redeemed quarterly with a 45 day redemption notice period. Investment assets in multi-strategy hedge funds may be redeemed semi-annually with a 95 day redemption notice period. Equity, fixed income and cash and cash equivalents have no specified redemption frequency and notice period and may be redeemed daily. As of December 31, 2020 we do not have an intent to sell or otherwise dispose of these investment assets at prices different than the net asset value per share.

Our investment strategy is to optimize investment returns through a diversified portfolio of investments, taking into consideration underlying plan liabilities and asset volatility. The defined benefit asset allocation policy of the plans allow for an equity allocation of 0% to 75%, a fixed income allocation of 25% to 100%, a cash allocation of up to 25% and other investments of up to 20%. Asset allocations are based on the underlying liability structure. All retirement asset allocations are reviewed periodically to ensure the allocation meets the needs of the liability structure.

Our 2021 expected blended long-term rate of return on plan assets of 4.5% was determined based on the nature of the plans’ investments, our current asset allocation and projected long-term rates of return from pension investment consultants.

Estimated Future Retirement Benefit Payments

The following retirement benefit payments are expected to be paid:

(In millions)

 

Pension

Benefits

 

 

 

Postretirement

Benefits

 

2021

 

$

42.0

 

 

 

$

1.0

 

2022

 

 

43.1

 

 

 

 

0.9

 

2023

 

 

44.2

 

 

 

 

0.9

 

2024

 

 

45.3

 

 

 

 

1.0

 

2025

 

 

46.3

 

 

 

 

1.1

 

Years 2026-2030

 

 

238.7

 

 

 

 

5.7

 

 

Estimated future retirement benefit payments above are estimates and could change significantly based on differences between actuarial assumptions and actual events and decisions related to lump sum distribution options that are available to participants in certain plans.

Defined Contribution Plan Contributions

We sponsor a number of defined contribution plans. Contributions are determined under various formulas. Cash contributions by the Company related to these plans amounted to $36.7 million, $36.3 million and $29.5 million in 2020, 2019 and 2018, respectively.