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Retirement Plans and Post Retirement Benefits | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
Retirement Plans and Postretirement Benefits | RETIREMENT PLANS AND POST-RETIREMENT BENEFITS We sponsor various defined contribution retirement plans and benefit pension plans that provide retirement benefits to substantially all our employees. Most regularly scheduled employees are eligible to participate in the defined contribution retirement plans except those covered by a collective bargaining agreement unless the collective bargaining agreement explicitly allows for participation in our plans. We contribute to a multiemployer plan for certain employees covered by collective bargaining agreements. We also provide other post-retirement benefits consisting primarily of healthcare benefits to certain retirees who meet age and service requirements. The defined benefit pension plans were limited to active and retired employees that were eligible prior to the plans being frozen. The defined benefit pension plans were substantially settled through lump sum distributions and purchase of third-party annuity contracts in 2022. Defined Benefit Pension Plans In November 2021, the Company initiated the termination of our frozen U.S. and Canadian defined benefit pension plans (collectively, the Plan). Plan participants were provided the opportunity to receive their full accrued benefits from Plan assets by either electing immediate lump sum distributions or annuity contracts with a qualifying third-party annuity provider. During the year ended December 31, 2022, we contributed $5 million to fund the liquidation of the Plan. Plan assets of $247 million were liquidated to fund lump sum distributions to participants and purchase annuity contracts. As a result, a substantial portion of the Plan was settled during the year ended December 31, 2022, resulting in recognition of non-cash, pre-tax charges of $82 million from Accumulated comprehensive loss to Other non-operating items in our Consolidated Statements of Income. Upon final termination of the Plan, we expect to recognize the remaining unrecognized pre-tax charges within Accumulated comprehensive loss ($6 million as of December 31, 2022). Liquidation of remaining Plan assets in surplus of the defined benefit pension obligation will be made once the Plan satisfies all regulatory requirements, which is expected to be completed during 2023. The projected benefit obligation is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated salary increases. The following table details information regarding our pension plans at December 31, 2022, and 2021 (dollars in millions):
| 2022 |  | 2021
Change in benefit obligation: |  |  |
Beginning of year balance | $ | 301 |  |  | $ | 319 |
Service cost | 3 |  |  | 1 |
Interest cost | 7 |  |  | 7 |
Actuarial (gains) losses, net | (47) |  |  | (8) |
Foreign exchange rate changes | (2) |  |  | 1 |
Benefits paid | (13) |  |  | (19) |
Pension settlements | (247) |  |  | — |
End of year balance | $ | 3 |  |  | $ | 301 |
Change in assets (fair value): |  |  |
Beginning of year balance | $ | 296 |  |  | $ | 310 |
Actual return on plan assets | (33) |  |  | 5 |
Employer contribution | 5 |  |  | — |
Foreign exchange rate changes | (2) |  |  | 1 |
Benefits paid | (13) |  |  | (19) |
Pension settlements | (247) |  |  | — |
End of year balance | $ | 6 |  |  | $ | 296 |
Plan assets less than benefit obligations | $ | 2 |  |  | $ | (6) |
Amounts included in the balance sheet: |  |  |
Non-current pension assets, included in “Other assets” | $ | 4 |  |  | $ | 6 |
Current pension liabilities, included in “Accounts payable and accrued liabilities” | — |  |  | — |
Non-current pension liabilities, included in “Other long-term liabilities” | (2) |  |  | (12) |
Net amount recognized | $ | 2 |  |  | $ | (6) |
Amounts in accumulated comprehensive loss: |  |  |
Net actuarial loss | $ | (1) |  |  | $ | (95) |
Prior service costs | (6) |  |  | (6) |
Total pre-tax amounts in accumulated comprehensive loss | $ | (6) |  |  | $ | (101) |
The 2022 actuarial gains of $47 million were primarily related to a change in interest rates from prior year-end to those effective for settling the benefit plan obligations and actual return on Plan assets of $33 million was primarily related to market returns realized prior to the pension settlement dates. The 2021 actuarial losses of $(8) million were primarily related to the impact of Plan termination assumptions on the discount rate. The year ended December 31, 2022 includes $247 million of benefits paid in accordance with the settlement of our defined benefit pension plan. The changes recognized in other comprehensive loss were as follows (dollars in millions):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Pension settlements, net of tax | $ | 62 |  |  | $ | 2 |  |  | $ | — |
Net actuarial gain (loss) and prior service (cost) arising during the period, net of tax | 5 |  |  | (1) |  |  | 3 |
Amortization of actuarial loss, prior service cost, net of tax | 4 |  |  | 5 |  |  | 5 |
Total amounts recognized in other comprehensive income | $ | 71 |  |  | $ | 5 |  |  | $ | 8 |
Weighted-average assumptions used to calculate our benefit obligations at December 31, 2022, and 2021 were as follows:
| 2022 |  | 2021
Discount rate: |  |  |
U.S. | 2.3 | % |  | 2.6 | %
Canada | 3.8 | % |  | 2.6 | %
Rate of compensation increase: |  |  |
U.S. | NA |  | NA
Canada | NA |  | NA
Benefit obligations by plan category are as follows (dollars in millions):
| 2022
| U.S. |  | Canada |  | Total
Fair value of plan assets | $ | 1 |  |  | $ | 4 |  |  | $ | 6 |
Benefit obligation | 2 |  |  | 2 |  |  | 3 |
Funded Status | $ | — |  |  | $ | 3 |  |  | $ | 2 |
| 2021
| U.S. |  | Canada |  | Total
Fair value of plan assets | $ | 237 |  |  | $ | 59 |  |  | $ | 296 |
Benefit obligation | 247 |  |  | 54 |  |  | 301 |
Funded Status | $ | (11) |  |  | $ | 5 |  |  | $ | (6) |
The following table sets forth the net periodic pension cost for our defined benefit pension plans. The components of our net periodic pension costs consisted of the following (dollars in millions):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Service cost | $ | 3 |  |  | $ | 1 |  |  | $ | 1 |
Other components of net periodic pension cost: |  |  |  |  |
Interest cost | 7 |  |  | 7 |  |  | 9 |
Expected return on plan assets | (7) |  |  | (13) |  |  | (14) |
Amortization of prior service cost and net transition asset | 1 |  |  | 1 |  |  | 1 |
Amortization of net actuarial loss | 5 |  |  | 6 |  |  | 6 |
Net periodic pension cost before loss due to settlement | 8 |  |  | 2 |  |  | 2 |
Loss due to pension settlement | 82 |  |  | 2 |  |  | — |
Total net periodic pension cost | $ | 91 |  |  | $ | 4 |  |  | $ | 2 |
Net periodic pension cost included in cost of sales | $ | — |  |  | $ | — |  |  | $ | — |
Net periodic pension cost included in selling, general, and administrative expenses | 3 |  |  | 1 |  |  | 1 |
Net periodic pension cost included in other non-operating items | 88 |  |  | 3 |  |  | 1 |
| $ | 91 |  |  | $ | 4 |  |  | $ | 2 |
Weighted average assumptions used to calculate our net periodic pension costs for the years ended December 31, 2022, 2021, and 2020 were as follows:
| 2022 |  | 2021 |  | 2020
Discount rate: |  |  |  |  |
U.S. | 2.6 | % |  | 2.3 | % |  | 3.1 | %
Canada | 2.6 | % |  | 2.3 | % |  | 3.0 | %
Expected return on plan assets: |  |  |  |  |
U.S. | 3.0 | % |  | 5.3 | % |  | 5.8 | %
Canada | 2.0 | % |  | 2.3 | % |  | 3.2 | %
Rate of compensation increase: |  |  |  |  |
U.S. | NA |  | NA |  | NA
Canada | NA |  | NA |  | 3.5 | %
The expected long-term rate of return on plan assets reflects the weighted average expected long-term rates of return for the broad categories of investments currently held in the plans (adjusted for expected changes), based on historical rates of return for each broad category, as well as factors that may constrain or enhance returns in the broad categories in the future. The expected long-term rate of return on plan assets is adjusted when there are fundamental changes in expected returns in one or more broad asset categories and when the weighted average mix of assets in the plans changes significantly. Asset allocation targets are established based upon the long-term returns and volatility characteristics of the investment classes and recognize the benefits of diversification and the profits of the plans’ liabilities. The actual and target allocations at the measurement dates are as follows:
| Target Allocation 2022 |  | Actual Allocation
2022 |  | 2021
Asset category |  |  |  |  |
U.S. Plans |  |  |  |  |
Debt securities | — | % |  | — | % |  | 76 | %
Cash and cash equivalents | 100 | % |  | 100 | % |  | 24 | %
Total Allocation for U.S. Plans | 100 | % |  | 100 | % |  | 100 | %
Non-U.S. Plans |  |  |  |  |
Debt securities | — | % |  | — | % |  | 22 | %
Multi-Strategy Funds | — | % |  | — | % |  | 59 | %
Cash and cash equivalents | 100 | % |  | 100 | % |  | 19 | %
Total Allocation for Non-U.S. Plans | 100 | % |  | 100 | % |  | 100 | %
Our investment policies for the defined benefit pension plans are allocated to reduce risk in assets as a result of the termination and final expected settlements of the Plan in fiscal 2023. These policies are set by an administrative committee with the goal of maximizing long-term investment returns within acceptable levels of volatility and risk. Our plans do not currently invest directly in derivative securities, although such investments may be considered in the future to increase returns and/or reduce volatility. To the extent the expected return on Plan assets varies from the actual return, an actuarial gain or loss results. The fair value of our pension plan assets and fair value asset categories and the level of inputs as defined in Note 1 at December 31, 2022, and 2021, are as follows (dollars in millions):
| December 31, 2022
Asset Category | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Net Asset Value
Fixed-income investment funds: |  |  |  |  |  |  |  |  |
Domestic bond funds | — |  |  | — |  |  | — |  |  | — |  |  | — |
International bond funds | — |  |  | — |  |  | — |  |  | — |  |  | — |
Cash and cash equivalents | 6 |  |  | 6 |  |  | — |  |  | — |  |  | — |
Total | $ | 6 |  |  | $ | 6 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
| December 31, 2021
Asset Category | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Net Asset Value
Equity investment funds: |  |  |  |  |  |  |  |  |
Domestic stock funds | 180 |  |  | — |  |  | 180 |  |  | — |  |  | — |
International stock funds | 47 |  |  | — |  |  | 13 |  |  | — |  |  | 34 |
Cash and cash equivalents | 68 |  |  | 58 |  |  | 11 |  |  | — |  |  | — |
Total | $ | 296 |  |  | $ | 58 |  |  | $ | 204 |  |  | $ | — |  |  | $ | 34 |
Defined Contribution Plans We also sponsor defined contribution plans in the U.S. and Canada. In the U.S., these plans are primarily 401(k) plans for hourly and salaried employees that allow for pre-tax employee deferrals and a Company match of up to five percent of an employee’s eligible wages (subject to certain limits). Under the profit-sharing feature of these plans, we may elect to contribute a discretionary amount as a percentage of eligible wages. Included in the assets of the 401(k) and profit-sharing plans are one million shares of LP common stock that represented approximately eight percent of the total market value of plan assets at December 31, 2022. In Canada, we sponsor both defined contribution plans and Registered Retirement Savings Plans for hourly and salaried employees that allow for employee tax deferrals. We provide a base contribution of three percent of eligible earnings and match 50% of an employee’s deferrals up to a maximum of three percent of each employee’s eligible earnings (subject to certain limits). Expenses related to the U.S. and Canadian defined contribution plans and the Registered Retirement Savings Plans, including the profit-sharing feature, were $23 million, $21 million, and $15 million in 2022, 2021, and 2020, respectively. Other Benefit Plans We have several plans that provide post-retirement benefits other than pensions, primarily for salaried employees in the U.S. and certain groups of Canadian employees. The obligation at December 31, 2022, and 2021, for these post-retirement benefits was $7 million and $10 million, respectively. The net expense related to these plans was not significant in 2022, 2021, or 2020. In 2004, we adopted the Louisiana-Pacific Corporation 2004 Executive Deferred Compensation Plan (the Deferred Compensation Plan). Pursuant to the Deferred Compensation Plan, participants are eligible to defer up to 90% of their base salary and annual cash incentives that exceed the limitation as set forth by the I.R.S. and receive a five percent match on their contributions. Each Deferred Compensation Plan participant is fully vested in all employee deferred compensation and earnings credited associated with employee contributions. Employer contributions and associated earnings vest over periods not exceeding five years. The liability under the Deferred Compensation Plan amounted to $2 million as of December 31, 2022, and 2021, and is included in Other long-term liabilities on our Consolidated Balance Sheets.

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