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Employee Retirement Benefits
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Employee Retirement Benefits Employee Retirement Benefits
401(k) Savings Plan and Other Defined Contribution Plan

On July 1, 2016, the Company established the Herc Holdings Savings Plan covering all of its U.S. employees. Contributions to the plans are made by both the employee and the Company. Company contributions to these plans are based on the level of employee contributions and formulas determined by the Company. Expenses for the defined contribution plans for the years ended December 31, 2022, 2021 and 2020 were approximately $15.8 million, $12.8 million and $10.9 million, respectively.

Defined Benefit Pension and Postretirement Plans

The Company sponsors the Herc Holdings Retirement Plan (the "Plan"), a U.S. qualified pension plan. The Plan has been frozen to new participants since it was established in July 2016.

Postretirement benefits, other than pensions, provide healthcare benefits, and in some instances, life insurance benefits for certain eligible retired employees in the U.S.

The Company reflects the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability. This amount is defined as the difference between the fair value of plan assets and the benefit obligation. The Company is required to recognize as a component of other comprehensive income (loss), net of tax, the actuarial gains/losses and prior service credits that arise but were not previously required to be recognized as components of net periodic benefit cost. Other comprehensive income (loss) is adjusted as these amounts are later recognized in the statement of operations as components of net periodic benefit cost.

The Company’s policy for funded plans is to contribute, at a minimum, amounts required by applicable laws, regulations and union agreements. The Plan represents approximately 99% of the Company's defined benefit plan obligations and 100% of its plan assets. The Company did not make a contribution in 2022 or 2021, however, made cash contributions to the Plan of $2.5 million in 2020. The level of future contributions will vary and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation.

Additionally, pursuant to various collective bargaining agreements, certain union-represented employees participate in multiemployer pension plans.
The following table provides a reconciliation of benefit obligations and plan assets of the Company’s pension plans and postretirement benefit plans (in millions):
PensionPostretirement
2022202120222021
Change in Projected Benefit Obligations
Benefit obligations at beginning of year$168.4 $176.8 $1.0 $1.1 
Interest cost4.5 4.1 0.1 — 
Plan settlements(10.8)(5.9)— — 
Benefits paid(0.3)(0.3)— — 
Actuarial gain(27.5)(6.3)(0.3)(0.1)
Benefit obligations at end of year$134.3 $168.4 $0.8 $1.0 
Change in Fair Value of Plan Assets
Fair value of plan assets at beginning of year$156.4 $157.5 $— $— 
Actual return on plan assets(32.4)5.1 — — 
Plan settlements(10.8)(5.9)— — 
Benefits paid(0.3)(0.3)— — 
Fair value of plan assets at end of year$112.9 $156.4 $— $— 
Funded Status$(21.4)$(12.0)$(0.8)$(1.0)
Accumulated benefit obligations$134.3 $168.4 

PensionPostretirement
2022202120222021
Amounts Recognized in Balance Sheet
Accrued liabilities$(0.3)$(0.1)$(0.1)$(0.1)
Other long-term liabilities(21.1)(11.9)(0.7)(0.9)
Net amount recognized$(21.4)$(12.0)$(0.8)$(1.0)
Amounts Recognized in Accumulated Other Comprehensive Loss
Net actuarial gain (loss)$(24.0)$(15.7)$0.5 $0.2 
Prior service credits— — (0.1)— 
Net amount recognized$(24.0)$(15.7)$0.4 $0.2 
Weighted‑Average Assumptions Used to Determine Projected Benefit Obligations
Discount rate5.4 %2.7 %5.4 %2.7 %
Average rate of increase in compensation— %— %— %— %
Interest credit rate3.8 %3.8 %— %— %
Initial healthcare cost trend rateN/AN/A6.1 %5.6 %
Ultimate healthcare cost trend rateN/AN/A4.0 %4.0 %
The benefit obligations and fair value of plan assets for the Company’s qualified and non-qualified pension and postretirement plans with projected benefit obligations or accumulated benefit obligations in excess of plan assets are as follows (in millions):
 PensionPostretirement
 2022202120222021
Plans with Benefit Obligations in Excess of Plan Assets
Projected benefit obligations$134.3 $168.4 $0.8 $1.0 
Accumulated benefit obligations134.3 168.4 — — 
Fair value of plan assets112.9 156.4 — — 

The following table sets forth the net periodic pension cost (benefit) (in millions):
Years Ended December 31,
202220212020
Components of Net Periodic Pension Cost (Benefit)
Interest cost$4.5 $4.1 $5.1 
Expected return on plan assets(5.4)(6.5)(6.1)
Net amortization of actuarial net loss— 0.5 0.7 
Settlement loss1.9 0.6 1.0 
Net periodic pension cost (benefit)$1.0 $(1.3)$0.7 
Weighted‑Average Assumptions Used to Determine Net Periodic Pension Cost (Benefit)
Discount rate2.7 %2.3 %3.2 %
Expected return on assets4.6 %4.8 %5.2 %
Average rate of increase in compensation— %— %— %
Interest credit rate3.8 %3.8 %3.8 %

The net periodic postretirement cost was immaterial in 2022, 2021 and 2020.

The discount rate reflects the rate the Company would have to pay to purchase high-quality investments that would provide cash sufficient to settle its current pension obligations. The discount rate is determined based on a range of factors, including the rates of return on high-quality, fixed-income corporate bonds and the related expected duration of the obligations. The discount rate for the Plan is based on the rate from the Mercer Pension Discount Curve-Above Mean Yield that is appropriate for the duration of the obligations. The discount rate used to measure the pension obligation at the end of the year is also used to measure pension cost in the following year.

The expected return on plan assets for the U.S. qualified plan is based on expected future investment returns considering the target investment mix of plan assets. It reflects the average rate of earnings expected on the funds invested, or to be invested, to provide for the benefits included in the projected benefit obligations. In determining the expected long-term rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance.

There was no average rate of increase in compensation for 2022, 2021 or 2020 as there are no longer any employees in the Plan accruing benefits.

The ultimate healthcare cost trend rates for the postretirement benefit plans are expected to be reached in 2046.

Plan Assets

The Company has a long-term investment outlook for its Plan assets, which is consistent with the long-term nature of the Plan's respective liabilities.
The Plan currently has a target asset allocation of 25% equity and 75% fixed income. The equity portion of the assets is actively managed in U.S. small/mid cap and international funds and an allocation to a passively managed U.S. large cap index fund. The fixed income portion of the assets is actively managed in long/intermediate duration government/credit funds and small allocations to an actively managed high yield fund, a bank loan fund, a preferred securities fund and an emerging market debt fund. A modest amount of cash is maintained to facilitate payment of benefits and plan expenses.

The fair value measurements of most plan assets are based upon significant other observable inputs (Level 2), except for the high yield mutual fund and cash which are based upon quoted market prices in active markets for identical assets (Level 1). The following represents the Company's pension plan assets (in millions):
Asset CategoryDecember 31, 2022December 31, 2021
Cash$3.1 $2.0 
Short Term Investments1.4 1.4 
Equity Securities:
U.S. Large Cap12.2 16.1 
U.S. Mid Cap1.8 2.7 
U.S. Small Cap0.2 1.2 
International Developed10.2 15.2 
International Emerging Markets3.4 3.9 
Fixed Income Securities:
U.S. Treasuries20.7 28.7 
Corporate Bonds36.0 53.0 
Government Bonds7.0 9.4 
Municipal Bonds2.2 3.3 
Mortgage-Backed Securities0.2 2.3 
Asset-Backed Securities1.1 1.1 
Bank Loans5.4 7.9 
Preferreds5.9 7.7 
Other2.1 0.5 
Total fair value of pension plan assets$112.9 $156.4 

Estimated Future Benefit Payments

The following table presents estimated future benefit payments (in millions):
PensionPostretirement
2023$8.3 $0.1 
20249.3 0.1 
202510.2 0.1 
202611.7 0.1 
202712.9 0.1 
2028-203269.0 0.3 
$121.4 $0.8