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

 

10.

Pension and Employee Benefit Plans

We sponsor a non-contributory defined benefit pension plan for certain union employees.  The accrual of future benefits for all participants who are non-union employees was frozen effective December 31, 2008.  The plan is funded in accordance with the funding requirements of the Employee Retirement Income Security Act of 1974.


 

The following tables set forth the plan changes in benefit obligations, plan assets and funded status on the measurement dates:

 

 

 

December 31,

 

(table only in thousands)

 

2020

 

 

2019

 

 

2018

 

Change in projected benefit obligation:

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of year

 

$

35,985

 

 

$

32,998

 

 

$

36,327

 

Interest cost

 

 

1,034

 

 

 

1,303

 

 

 

1,190

 

Actuarial loss (gain)

 

 

3,323

 

 

 

3,704

 

 

 

(2,629

)

Benefits paid

 

 

(2,070

)

 

 

(2,020

)

 

 

(1,890

)

Projected benefit obligation at end of year

 

 

38,272

 

 

 

35,985

 

 

 

32,998

 

Change in plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

 

27,099

 

 

 

24,197

 

 

 

26,836

 

Actual return (loss) on plan assets

 

 

1,629

 

 

 

4,431

 

 

 

(1,388

)

Employer contribution

 

 

1,887

 

 

 

491

 

 

 

639

 

Benefits paid

 

 

(2,070

)

 

 

(2,020

)

 

 

(1,890

)

Fair value of plan assets at end of year

 

 

28,545

 

 

 

27,099

 

 

 

24,197

 

Funded status at end of year

 

$

(9,727

)

 

$

(8,886

)

 

$

(8,801

)

Weighted-average assumptions used to determine  benefit obligations for the year ended December 31:

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

2.10

%

 

 

2.95

%

 

 

4.05

%

 

The funded status as of December 31, 2020, 2019 and 2018, was $9.7 million, $8.8 million and $8.8 million, respectively and is recognized in our Consolidated Balance Sheets within other long-term liabilities.

 

The details of net periodic benefit cost for pension benefits included in the accompanying Consolidated Statements of Operations are as follows:

 

 

December 31,

 

(table only in thousands)

 

2020

 

 

2019

 

 

2018

 

Interest cost

 

$

1,034

 

 

$

1,303

 

 

$

1,190

 

Expected return on plan assets

 

 

(1,594

)

 

 

(1,254

)

 

 

(1,511

)

Amortization of net loss

 

 

266

 

 

 

263

 

 

 

238

 

Net periodic benefit (income) cost

 

$

(294

)

 

$

312

 

 

$

(83

)

 

Other changes in plan assets and benefit obligations recognized in other comprehensive income:

 

 

 

December 31,

 

(table only in thousands)

 

2020

 

 

2019

 

 

2018

 

Net loss

 

$

3,287

 

 

$

527

 

 

$

271

 

Amortization of net actuarial gain

 

 

(266

)

 

 

(263

)

 

 

(238

)

Total recognized in other comprehensive income (loss)

 

$

3,021

 

 

$

264

 

 

$

33

 

Total recognized in net periodic benefit cost and other comprehensive income (loss)

 

$

2,727

 

 

$

576

 

 

$

(50

)

 

The $3.3 million net loss arising in the year were primarily due to decreases in the discount rate, partially offset by higher actual returns on plan assets.

Weighted-average assumptions used to determine net periodic benefit costs

 

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

2018

 

Discount Rate

 

2.95%

 

 

4.05%

 

 

3.35%

 

Expected return on assets

 

6.00%

 

 

5.35%

 

 

5.75%

 

The basis of the long-term rate of return assumption reflects the current asset mix for the pension plan of approximately 30% to 40% debt securities and 60% to 70% equity securities with assumed average annual returns of approximately 4% to 6% for debt securities and 8% to 12% for equity securities. The investment portfolio for the pension plan will be adjusted periodically to maintain the current ratios of debt securities and equity securities. Additional consideration is given to the historical returns for the pension plan as well as

future long range projections of investment returns for each asset category.  The long-term rate of return also considers administrative expenses of the plan.

Benefits under the plan is not based on wages and, therefore, future wage adjustments have no effect on the projected benefit obligation.

During 2020, 2019 and 2018, the Company updated the mortality tables (RP-2019 Total Mortality Table, RP-2018 Total Mortality Table, and RP-2017 Total Mortality Table for each respective year) in the underlying assumptions used to determine the benefit obligation.

Pension plan assets are invested in trusts comprised primarily of investments in various debt and equity funds. A fiduciary committee establishes the target asset mix and monitors asset performance. The expected rate of return on assets includes the determination of a real rate of return for equity and fixed income investment applied to the portfolio based on their relative weighting, increased by an underlying inflation rate.

Our defined benefit pension plan asset allocation by asset category is as follows:

 

 

 

Target

Allocation

 

 

Percentage of

Plan Assets

 

 

 

2020

 

 

2020

 

 

2019

 

Asset Category:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

0%

 

 

6%

 

 

2%

 

Equity securities

 

70%

 

 

66%

 

 

73%

 

Debt securities

 

30%

 

 

27%

 

 

25%

 

Total

 

100%

 

 

100%

 

 

100%

 

 

Estimated pension plan cash obligations are $2.2 million, $2.2 million, $2.2 million, $2.2 million, and $2.2 million for 2021 through 2025, respectively, and a total of $10.3 million for the years 2026 through 2030.

Fair Value Measurements of Pension Plan Assets

Following is a description of the valuation methodologies used for pension assets measured at fair value:

 

•

Cash and cash equivalents: Cash and cash equivalents consist primarily of cash on deposit in money market funds. Cash and cash equivalents are stated at cost, which approximates fair value.

 

•

Equity securities: Equity securities consist of various managed funds that invest primarily in common stocks. These securities are valued at the net asset value of shares held by the plan at year end. The net asset value is calculated based on the underlying shares and investments held by the funds.

 

•

Debt securities: Debt securities consist of U.S. government and agency securities, corporate bonds and notes, and managed funds that invest in fixed income securities. U.S governmental and agency securities are valued at closing prices reported in the active market in which the individual securities are traded. Corporate bonds and notes are valued using market inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Inputs may be prioritized differently at certain times based on market conditions. Managed funds are valued at the net asset value of shares held by the plan at year end. The net asset value is calculated based on the underlying investments held by the fund.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The levels assigned to the defined benefit plan assets as of December 31, 2020, are summarized in the tables below:

 

(table only in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Pension assets, at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,984

 

 

$

—

 

 

$

—

 

 

$

1,984

 

Equity securities

 

 

18,987

 

 

 

—

 

 

 

—

 

 

 

18,987

 

Debt securities

 

 

7,574

 

 

 

—

 

 

 

—

 

 

 

7,574

 

Total assets

 

$

28,545

 

 

$

—

 

 

$

—

 

 

$

28,545

 

 

 

The levels assigned to the defined benefit plan assets as of December 31, 2019, are summarized in the tables below:

 

(table only in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Pension assets, at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

578

 

 

$

—

 

 

$

—

 

 

$

578

 

Equity securities

 

 

19,702

 

 

 

—

 

 

 

—

 

 

 

19,702

 

Debt securities

 

 

6,819

 

 

 

—

 

 

 

—

 

 

 

6,819

 

Total assets

 

$

27,099

 

 

$

—

 

 

$

—

 

 

$

27,099

 

 

The Company contributes to a number of multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

 

•

Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

 

•

If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

 

•

If the Company chooses to stop participating in some of its multiemployer plans, CECO may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans for the year ended December 31, 2020, is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employer Identification Number and the three-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available in 2020 is for the plan’s year-end at December 31, 2019. The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject.

 

Pension Fund

 

EIN/Pension

Plan Number

 

Pension

Protection

Act Zone

Status

2012

 

FIF/RP Status Pending/

Implemented

 

Surcharge

Imposed

 

Expiration

of Collective

Bargaining

Agreement

Sheet Metal Workers’ National Pension Fund

 

52-6112463/001

 

Yellow

 

FIF: Yes -Implemented 

RP: Yes -

Implemented

 

No

 

Various

Sheet Metal Workers Local 224 Pension Plan

 

31-6171353/001

 

Yellow

 

FIF: Yes - Implemented

 

No

 

May 31, 2022

Sheet Metal Workers Local No. 177 Pension

   Fund

 

62-6093256/001

 

Green

 

Is not subject

 

No

 

April 30, 2023

 

Kirk and Blum was listed in the Sheet Metal Workers Local No. 177 Pension Fund’s Form 5500 as providing more than five percent of total contributions for the year ended December 31, 2019. The Company was not listed in any of the other plans’ Forms 5500 as

providing more than five percent of the total contributions for the plans and plan years. At the date the financial statements were issued, Forms 5500 were not available for the plan years ended December 31, 2020.

We have no current intention of withdrawing from any plan and, therefore, no liability has been provided in the accompanying consolidated financial statements.

Amounts charged to pension expense under the above plans including the multi-employer plans totaled $1.0 million, $1.7 million and $1.4 million in 2020, 2019 and 2018, respectively.

We have a 401(k) savings retirement plan for employees of certain of our subsidiaries. The plan covers substantially all employees who have 30 days of service, and who have attained 18 years of age. The plan allows us to make discretionary contributions and provides for employee salary deferrals of up to 100%.  We made aggregate matching contributions and discretionary contributions of $1.6 million, $1.7 million, and $1.7 million during 2020, 2019 and 2018, respectively.