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Pension and Postretirement Health and Life Benefits | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits, Description [Abstract] |
Pension and Postretirement Health and Life Benefits | PENSION AND POSTRETIREMENT HEALTH AND LIFE BENEFITS There are approximately 3,500 employees and retirees covered by qualified defined benefit pension plans providing retirement benefits based on compensation and years of service, and approximately 2,900 employees and retirees covered by postretirement health and life benefit plans. The DOE retained the obligation for postretirement health and life benefits for workers who retired prior to July 28, 1998. Pursuant to non-qualified supplemental pension plans, Centrus provides certain executive officers additional retirement benefits in excess of qualified plan limits imposed by tax law based on a targeted benefit objective. Employees hired on or after September 1, 2008, who are not covered by a collective bargaining agreement that provides for participation do not participate in a qualified defined benefit pension plan or postretirement health and life benefit plans. Changes in the projected benefit obligations and plan assets and the funded status of the plans follow:
| Defined Benefit Pension Plans |  | Postretirement Health and Life Benefit Plans
($ millions) | Year Ended December 31, |  | Year Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
Changes in Benefit Obligations: |  |  |  |  |  |  |
Obligations at beginning of period | $ | 696.2 |  |  | $ | 757.9 |  |  | $ | 131.1 |  |  | $ | 142.4 |
Actuarial (gains) losses, net | (138.0) |  |  | (28.7) |  |  | (27.0) |  |  | (2.3) |
Service costs | 2.7 |  |  | 2.7 |  |  | — |  |  | — |
Interest costs | 19.1 |  |  | 18.1 |  |  | 3.5 |  |  | 3.4 |
Benefits paid from Plan assets | (50.0) |  |  | (51.3) |  |  | (12.3) |  |  | (12.4) |
Benefits paid from Company assets | (0.4) |  |  | (0.4) |  |  | — |  |  | — |
Administrative expenses paid | (2.3) |  |  | (2.1) |  |  | — |  |  | — |
Obligations at end of period | 527.3 |  |  | 696.2 |  |  | 95.3 |  |  | 131.1 |
Changes in Plan Assets: |  |  |  |  |  |  |
Fair value of plan assets at beginning of period | 672.7 |  |  | 633.1 |  |  | 9.2 |  |  | — |
Actual return on plan assets | (137.1) |  |  | 57.8 |  |  | (0.1) |  |  | — |
Company contributions | 0.4 |  |  | 35.7 |  |  | 6.7 |  |  | 21.5 |
Benefits paid | (50.4) |  |  | (51.7) |  |  | (12.3) |  |  | (12.3) |
Administrative expenses paid | (2.3) |  |  | (2.2) |  |  | — |  |  | — |
Fair value of plan assets at end of period | 483.3 |  |  | 672.7 |  |  | 3.5 |  |  | 9.2 |
Unfunded status at end of period | $ | (44.0) |  |  | $ | (23.5) |  |  | $ | (91.8) |  |  | $ | (121.9) |
Amounts recognized in assets and liabilities: |  |  |  |  |  |  |
Current liabilities | $ | (0.4) |  |  | $ | (0.4) |  |  | $ | (7.3) |  |  | $ | (7.0) |
Non-current liabilities | (43.6) |  |  | (23.1) |  |  | (84.5) |  |  | (114.9) |
| $ | (44.0) |  |  | $ | (23.5) |  |  | $ | (91.8) |  |  | $ | (121.9) |
Amounts in accumulated other comprehensive income (loss), pre-tax: |  |  |  |  |  |  |
Prior service credit | $ | (0.7) |  |  | $ | (0.9) |  |  | $ | (1.9) |  |  | $ | (2.0) |
The current liabilities reflect expected contributions for benefit payments for the non-qualified plans and the postretirement health and life benefit plans in the following year. The discount rates below, rounded to the nearest 0.1%, are the estimated rates at which the benefit obligations could be effectively settled on the measurement date and are based on yields of high quality fixed income investments whose cash flows match the timing and amount of expected benefit payments of the plans. Plan assets and benefit obligations are remeasured each year as of the balance sheet date resulting in differences between actual and projected results for the year. These actuarial gains and losses are recognized in the Consolidated Statement of Operations in the fourth quarter. In addition, an interim remeasurement and recognition of gains or losses may be required for a plan during the year when lump sum payments exceed, or are expected to exceed, the sum of the service cost and interest cost components of the annual net periodic benefit cost for that plan for the current year. There were no interim remeasurements in 2022 and 2021. The defined benefit pension plans currently allow for a lump sum payment option to (a) active employees who are terminated as a result of Company reductions in force and (b) terminated vested participants who have not yet begun receiving their benefits and have been terminated as a result of a reduction in force by the Company, or due to voluntary termination or involuntary termination, other than involuntary termination as a termination for cause. As part of the Company’s continued effort to reduce the size and volatility of its pension obligations and administrative costs, the Company transferred approximately $30.4 million of pension plan assets and approximately $30.4 million of related benefit obligations to an insurance company through the purchase of a group annuity contract in the fourth quarter of 2020. Projected benefit obligations are based on actuarial assumptions including possible future increases in compensation. Accumulated benefit obligations are based on actuarial assumptions but do not include possible future increases in compensation. Effective August 2013, accrued benefits under the defined benefit pension plans are fixed and no longer increase to reflect changes in compensation or company service. Therefore, the accumulated benefit obligation equaled the projected benefit obligation of $527.3 million and $696.2 million as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, none of Centrus’ plans had fair value of plan assets in excess of accumulated benefit obligations. Components of Net Periodic Benefit Costs and Other Amounts Recognized in Other Comprehensive Income The Company reports service costs for its defined benefit pension plans and its postretirement health and life benefit plans in Cost of Sales and Selling, General and Administrative Expenses. The remaining components of net periodic benefit (credits) costs are reported as Nonoperating Components of Net Periodic Benefit Income.
| Defined Benefit Pension Plans |  | Postretirement Health and Life Benefit Plans
(in millions) | Year Ended December 31, |  | Year Ended December 31,
| 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Net Periodic Benefit (Credits) Costs |  |  |  |  |  |  |  |  |  |  |
Service costs | $ | 2.7 |  |  | $ | 2.7 |  |  | $ | 3.5 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest costs | 19.1 |  |  | 18.1 |  |  | 24.3 |  |  | 3.5 |  |  | 3.4 |  |  | 4.8 |
Expected return on plan assets | (35.6) |  |  | (38.3) |  |  | (37.5) |  |  | (0.1) |  |  | — |  |  | — |
Amortization of prior service credits, net | (0.2) |  |  | (0.2) |  |  | (0.2) |  |  | (0.1) |  |  | (0.1) |  |  | (0.1) |
Actuarial (gains) losses, net | 34.7 |  |  | (48.2) |  |  | 8.9 |  |  | (26.9) |  |  | (2.3) |  |  | (1.7) |
Net periodic benefit (credits) costs | $ | 20.7 |  |  | $ | (65.9) |  |  | $ | (1.0) |  |  | $ | (23.6) |  |  | $ | 1.0 |  |  | $ | 3.0 |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |
Amortization of prior service costs, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (1.9) |  |  | $ | (2.0) |  |  | $ | (2.1) |
Prior service credit | (0.7) |  |  | (0.9) |  |  | (1.1) |  |  | — |  |  | — |  |  | — |
Total recognized in other comprehensive loss, pre-tax | $ | (0.7) |  |  | $ | (0.9) |  |  | $ | (1.1) |  |  | $ | (1.9) |  |  | $ | (2.0) |  |  | $ | (2.1) |
Total recognized in net periodic benefit costs (income) and other comprehensive income (loss), pre-tax | $ | 20.0 |  |  | $ | (66.8) |  |  | $ | (2.1) |  |  | $ | (25.5) |  |  | $ | (1.0) |  |  | $ | 0.9 |
Net periodic benefit costs include service and interest costs of providing pension benefits that are accrued over the years employees render service. Prior service costs or credits are amortized over the employees’ average remaining years of service from age 40 until the date of full benefit eligibility or the average expected future lifetime of all plan participants, as applicable. Participants in the postretirement health and life benefit plans are generally eligible for benefits at retirement after age 50 with 10 years of continuous credited service at the time of retirement. On September 7, 2021, the Company collected $43.5 million from the DOE, of which $33.8 million was contributed to the pension plan in September 2021 for its subsidiary Enrichment Corp. and $9.7 million was deposited in October 2021 in a trust for payment of postretirement health benefits payable by Enrichment Corp. Refer to Note 16, Commitments and Contingencies and Note 2, Revenue And Contracts with Customers. Effective January 1, 2014, or for certain plan participants formerly represented by a collective bargaining unit, January 1, 2015, plan participants age 65 or older (“post-65”) have access to a range of medical plan choices with varying costs and benefits through a Medicare Exchange implemented by the Company. The Company provides an annual stipend for each of the post-65 retirees and post-65 spouses who enroll in the coverage through the exchange. Depending on the level of benefits elected by the participant, the participant may be required to make contributions in excess of the stipend amount. The transition to the post-65 Medicare Exchange was reflected as a plan amendment that reduced plan obligations by $6.8 million as of December 31, 2014. This reduction in obligation was recognized in other comprehensive income in 2014 as a prior service credit. The prior service credit is being amortized into net periodic benefit cost as a credit over time. The post-65 Medicare Exchange stipend amount was increased for 2017. This increase in obligation of $3.6 million as of December 31, 2016, was recognized in other comprehensive income in 2016 as a prior service cost and is being amortized into net periodic benefit cost over time. The post-65 Medicare Exchange stipend amount was increased in 2018, as specified in a settlement agreement with the former collective bargaining unit. The settlement agreement also specifies the addition of catastrophic drug coverage effective January 1, 2019. The benefit enhancement for 2019 has been applied to all post-65 participants regardless of past representation by the collective bargaining agreement. The increase in obligation of $10.0 million as a result of the settlement agreement was recognized in net periodic benefit costs in 2017 as a plan change resulting from a legal settlement and is reported in Nonoperating Components of Net Periodic Benefit Income. The defined benefits pension plans were amended in March 2019 making permanent the option for pension-eligible employees to receive a lump sum payment upon termination, regardless of benefit size, which decreased plan obligations by $1.3 million. The effect of these plan changes has been added to Accumulated Other Comprehensive Income (Loss) as an unrecognized prior service cost to be amortized over the average future service of active employees starting in 2020. Assumptions Used to Determine Net Periodic Benefit Costs
| Defined Benefit Pension Plans |  | Postretirement Health and Life Benefit Plans
| Year Ended December 31, |  | Year Ended December 31,
| 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Discount rate | 5.5% |  | 2.8% |  | 2.5% |  | 5.5% |  | 2.8% |  | 2.5%
Expected return on plan assets | 5.5% |  | 6.3% |  | 6.4% |  | 0.8% |  | — |  | —
The expected return on plan assets is based on the weighted average of long-term return expectations for the composition of the plans’ equity and debt securities. Expected returns on equity securities are based on historical long-term returns of equity markets. Expected returns on debt securities are based on the current interest rate environment. Healthcare cost trend rates used to measure postretirement health benefit obligations follow:
| December 31,
| 2022 |  | 2021
Healthcare cost trend rate for the following year | 7.0% |  | 6.0%
Long-term rate that the healthcare cost trend rate gradually declines to | 5% |  | 5%
Year that the healthcare cost trend rate is expected to reach the long-term rate | 2031 |  | 2026
Benefit Plan Assets Independent advisors manage investment assets of Centrus’ defined benefit pension plans and postretirement health and life benefit plans. Centrus has the fiduciary responsibility for reviewing performance of the various investment advisors. The goal of the investment policy of the plans is to maximize portfolio returns within reasonable and prudent levels of risk in order to meet projected liabilities and maintain sufficient cash to make timely payments of all participant benefits. Risk is reduced by diversifying plan assets and following a strategic asset allocation approach. Additionally, as the plans are frozen and funding status has improved, the Company has shifted the investment allocations to lower risk investments in order to minimize market exposure and will continue to do so based upon approved funding milestones. Asset classes and target weights are adjusted periodically to optimize the long-term portfolio risk/return trade off, to provide liquidity for benefit payments, and to align portfolio risk with the underlying obligations. The investment policy of the plans prohibits the use of leverage, direct investments in tangible assets, or any investment prohibited by applicable laws or regulations. The allocation of plan assets between equity and debt securities and the target allocation range by asset category for the defined benefit pension plans follows:
| December 31, |  |
| 2022 |  | 2021 |  | 2023 Target
Equity securities | 36 | % |  | 45 | % |  | 35 |  | - | 50%
Debt securities | 62 | % |  | 51 | % |  | 50 |  | - | 65%
Cash | 2 | % |  | 4 | % |  | 0 | - | 5%
| 100 | % |  | 100 | % |  |  |  |
Plan assets are measured at fair value. Following are the plan investments as of December 31, 2022 and 2021, categorized by the fair value hierarchy levels described in Note 10, Fair Value:
| Defined Benefit Pension and Postretirement Health and Life Benefit Plans
(in millions) | Level 1 |  | Level 2 |  | Level 3 |  | Total
| 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021 |  | 2022 |  | 2021
U.S. government securities | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 13.0 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 13.0 |
Corporate debt | — |  |  | — |  |  | 60.3 |  |  | 56.4 |  |  | — |  |  | — |  |  | 60.3 |  |  | 56.4 |
Municipal bonds and non-U.S. government securities | — |  |  | — |  |  | — |  |  | 1.7 |  |  | — |  |  | — |  |  | — |  |  | 1.7 |
Mutual funds (b) | 320.4 |  |  | 582.9 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 320.4 |  |  | 582.9 |
Mortgage and asset backed securities | — |  |  | — |  |  | — |  |  | 7.9 |  |  | — |  |  | — |  |  | — |  |  | 7.9 |
Fair value of investments by hierarchy level | $ | 320.4 |  |  | $ | 582.9 |  |  | $ | 60.3 |  |  | $ | 79.0 |  |  | $ | — |  |  | $ | — |  |  | 380.7 |  |  | 661.9 |
Investments measured at NAV (a) |  |  |  |  |  |  |  |  |  |  |  |  | 105.8 |  |  | 20.1 |
Accrued interest receivable |  |  |  |  |  |  |  |  |  |  |  |  | 0.6 |  |  | 1.2 |
Unsettled transactions |  |  |  |  |  |  |  |  |  |  |  |  | (0.3) |  |  | (1.4) |
Plan assets |  |  |  |  |  |  |  |  |  |  |  |  | $ | 486.8 |  |  | $ | 681.8 |
(a) Equity, bond and money market investments held in collective trusts are valued based on the NAV provided by the administrator of the funds. The NAV for each fund is based on the underlying assets owned by the fund, less any expenses accrued against the fund, divided by the number of fund shares outstanding. While the underlying investments are traded on an exchange, the funds are not. Fair values for the collective trust investments are measured using the NAVs as a practical expedient and are not categorized in the fair value hierarchy. (b) Postretirement Health and Life Benefit Plan assets of $3.5 million are all contained within Level 1 mutual funds. Benefit Plan Cash Flows The Company expects to contribute $0 to the qualified defined benefit pension plans, $0.4 million to the non-qualified defined benefit pension plans, and $7.3 million to the postretirement health and life benefit plans in 2023. There is no required contribution for the postretirement health and life benefit plans under Employee Retirement Income Security Act of 1974. Estimated future benefit plan payments follow (in millions):
| Defined Benefit Pension Plans |  | Postretirement Health and Life Benefit Plans
2023 | $ | 50.5 |  |  | $ | 10.9 |
2024 | 48.8 |  |  | 10.2 |
2025 | 47.3 |  |  | 9.6 |
2026 | 47.1 |  |  | 9.1 |
2027 | 44.8 |  |  | 8.5 |
2028 to 2032 | 206.2 |  |  | 34.1 |
Other Plans The Company sponsors a 401(k) defined contribution plan for employees. Employee contributions are matched at established rates. Amounts contributed are invested in a range of investment options available to participants and the funds are administered by an independent trustee. Matching cash contributions by the Company amounted to $2.1 million in 2022 and $2.0 million in 2021. Under the Executive Deferred Compensation Plan, qualified employees may defer compensation on a tax-deferred basis subject to plan limitations. Any matching contributions under the Company’s 401(k) plan that are foregone due to annual compensation limitations of the Code are eligible to be received from the Company under the Executive Deferred Compensation Plan, provided that the employee deferred the maximum allowable pre-tax contribution in the 401(k) plan. The Company matching contributions amounted to less than $0.1 million in 2022 and 2021.

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