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Retirement and Deferred Compensation Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Retirement and Deferred Compensation Plans

(9) Retirement and Deferred Compensation Plans

For all of our United States defined benefit and retiree health care plans, we adopted the Society of Actuaries’ Pri-2012 Mortality Table with MP-2021 Mortality Improvement Scale in determining the plans’ benefit obligations as of December 31, 2021.

Defined Benefit Pension Plans

We sponsor several qualified and nonqualified pension plans covering permanent employees.

In 2020, we fully settled our United States Qualified Retirement Plan (the “Plan”) liability. We purchased annuities of $19.2 and settled lump sum payments of $3.2 from the Plan in January and February 2020, respectively. The completion of lump sum payments in February and transfer of remaining participants to the Pension Benefit Guarantee Corporation (“PBGC”) in March triggered final settlement of the plan. Upon settlement of the pension liability, we reclassified the related pension losses of $6.6, net of tax, recorded in accumulated other comprehensive loss to the Consolidated Statements of Comprehensive Income (Loss). The total amount of the required payout to plan participants was determined based on employee elections and market conditions at the time of settlement. The standard PBGC audit was completed in March 2021, and the remaining plan assets of $16.6 which were in excess of the pension liability upon settlement are being utilized to fund qualified 401(k) plan contributions in current and future years.

In our Switzerland pension plan, we recognized a partial settlement as a result of local regulations and turnover common to our industry and reclassified pension losses of $1.0 and $2.7 in 2021 and 2020, respectively, net of tax, recorded in accumulated other comprehensive loss to the Consolidated Statements of Comprehensive Income (Loss).

The reconciliation of the changes in the plans’ benefit obligations, the fair value of plan assets and the funded status of the plans are as follows. The actuarial (gain) loss related to the non-United States plans' benefit obligation as of December 31, 2021, was primarily related to changes in discount rates. The settlements and transfers of the non-United States plans in 2021 represent transfers in and out of temporary associates within our Switzerland plan.

 

 

 

United States Plans

 

 

Non-United States Plans

 

Year Ended December 31

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

Change in Benefit Obligation

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation, beginning of year

 

$

28.5

 

 

$

52.8

 

 

$

965.6

 

 

$

794.8

 

Service cost

 

 

—

 

 

 

—

 

 

 

22.0

 

 

 

21.0

 

Interest cost

 

 

0.4

 

 

 

0.8

 

 

 

5.7

 

 

 

8.6

 

Settlements

 

 

—

 

 

 

(22.3

)

 

 

(61.7

)

 

 

(42.2

)

Transfers

 

 

—

 

 

 

—

 

 

 

52.8

 

 

 

27.0

 

Actuarial (gain) loss

 

 

(0.6

)

 

 

(0.4

)

 

 

(47.3

)

 

 

90.9

 

Plan participant contributions

 

 

—

 

 

 

—

 

 

 

14.1

 

 

 

11.6

 

Benefits paid

 

 

(2.3

)

 

 

(2.4

)

 

 

(12.8

)

 

 

(13.2

)

Currency exchange rate changes

 

 

—

 

 

 

—

 

 

 

(40.5

)

 

 

67.1

 

Benefit obligation, end of year

 

$

26.0

 

 

$

28.5

 

 

$

897.9

 

 

$

965.6

 

 

 

 

United States Plans

 

 

Non-United States Plans

 

Year Ended December 31

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

Change in Plan Assets

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets, beginning of year

 

$

—

 

 

$

38.8

 

 

$

753.6

 

 

$

655.4

 

Actual return on plan assets

 

 

—

 

 

 

0.1

 

 

 

24.3

 

 

 

49.7

 

Settlements

 

 

—

 

 

 

(22.3

)

 

 

(61.7

)

 

 

(42.2

)

Transfers

 

 

—

 

 

 

—

 

 

 

52.8

 

 

 

26.2

 

Plan participant contributions

 

 

—

 

 

 

—

 

 

 

14.1

 

 

 

11.6

 

Company contributions

 

 

2.3

 

 

 

(14.2

)

 

 

18.7

 

 

 

16.1

 

Benefits paid

 

 

(2.3

)

 

 

(2.4

)

 

 

(12.8

)

 

 

(13.2

)

Currency exchange rate changes

 

 

—

 

 

 

—

 

 

 

(26.5

)

 

 

50.0

 

Fair value of plan assets, end of year

 

$

—

 

 

$

—

 

 

$

762.5

 

 

$

753.6

 

Funded Status at End of Year

 

 

 

 

 

 

 

 

 

 

 

 

Funded status, end of year

 

$

(26.0

)

 

$

(28.5

)

 

$

(135.4

)

 

$

(211.9

)

Amounts Recognized

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent assets

 

$

—

 

 

$

—

 

 

$

51.2

 

 

$

32.1

 

Current liabilities

 

 

(2.3

)

 

 

(2.4

)

 

 

(0.8

)

 

 

(1.2

)

Noncurrent liabilities

 

 

(23.7

)

 

 

(26.1

)

 

 

(185.8

)

 

 

(242.8

)

Net amount recognized

 

$

(26.0

)

 

$

(28.5

)

 

$

(135.4

)

 

$

(211.9

)

 

Amounts recognized in accumulated other comprehensive loss, net of tax, consisted of:

 

 

 

United States Plans

 

 

Non-United States Plans

 

Year Ended December 31

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

Net loss

 

$

7.8

 

 

$

8.6

 

 

$

41.8

 

 

$

95.2

 

Prior service cost

 

 

—

 

 

 

—

 

 

 

7.1

 

 

 

7.6

 

Total

 

$

7.8

 

 

$

8.6

 

 

$

48.9

 

 

$

102.8

 

 

 

The accumulated benefit obligation (ABO) for all qualified defined benefit pension plans was $891.7 and $957.0 as of December 31, 2021 and 2020, respectively. The ABO for plans that have plan assets was $787.5 and $841.6 as of December 31, 2021 and 2020, respectively. The accumulated benefit obligation for some of our plans exceeded the fair value of plan assets as follows:

 

December 31

 

 

2021

 

 

2020

 

Accumulated benefit obligation

 

$

181.8

 

 

$

491.5

 

Plan assets

 

 

99.4

 

 

 

368.8

 

 

In 2021, one of our larger plans became additionally funded and its plan assets exceeded its accumulated benefit obligation as of December 31, 2021. As a result, this plan was included in the amounts disclosed above for 2020 but not for 2021.

 

The projected benefit obligation (PBO) for all qualified defined benefit pension plans was $923.9 and $994.1 as of December 31, 2021 and 2020, respectively. The PBO for some of our plans exceeded the fair value of plan assets as follows:

 

December 31

 

 

2021

 

 

2020

 

Projected benefit obligation

 

$

188.3

 

 

$

503.2

 

Plan assets

 

 

99.4

 

 

 

368.8

 

 

By their nature, certain of our plans do not have plan assets. The accumulated benefit obligation for these plans was $104.2 and $115.4 as of December 31, 2021 and 2020, respectively.

The components of the net periodic benefit cost and other amounts recognized in other comprehensive income (loss) for all plans were as follows:

 

Year Ended December 31

 

 

2021

 

 

2020

 

 

2019

 

Net Periodic Benefit Cost

 

 

 

 

 

 

 

 

 

Service cost

 

$

22.0

 

 

$

21.0

 

 

$

15.1

 

Interest cost

 

 

6.1

 

 

 

9.4

 

 

 

12.7

 

Expected return on assets

 

 

(12.2

)

 

 

(13.5

)

 

 

(12.9

)

Settlements

 

 

1.0

 

 

 

13.8

 

 

 

0.4

 

Net loss

 

 

4.6

 

 

 

2.7

 

 

 

1.2

 

Prior service cost

 

 

0.7

 

 

 

0.7

 

 

 

0.7

 

Net periodic benefit cost

 

 

22.2

 

 

 

34.1

 

 

 

17.2

 

Other Changes in Plan Assets and Benefit Obligation Recognized in Other Comprehensive Income/Loss

 

 

 

 

 

 

 

 

 

Net (gain) loss

 

 

(60.0

)

 

 

44.1

 

 

 

45.5

 

Prior service cost

 

 

—

 

 

 

0.4

 

 

 

1.0

 

Amortization of net loss

 

 

(5.6

)

 

 

(6.3

)

 

 

(1.6

)

Amortization of prior service cost

 

 

(0.7

)

 

 

(0.7

)

 

 

(0.7

)

Total recognized in other comprehensive income/loss

 

 

(66.3

)

 

 

37.5

 

 

 

44.2

 

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

 

$

(44.1

)

 

$

71.6

 

 

$

61.4

 

 

The weighted-average assumptions used in the measurement of the benefit obligation were as follows:

 

 

 

United States Plans

 

 

Non-United States Plans

 

Year Ended December 31

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

Discount rate

 

 

2.6

%

 

 

2.1

%

 

 

1.0

%

 

 

0.6

%

Rate of compensation increase

 

 

1.3

%

 

 

—

%

 

 

1.7

%

 

 

1.7

%

 

 

The weighted-average assumptions used in the measurement of the net periodic benefit cost were as follows:

 

 

 

United States Plans

 

 

Non-United States Plans

 

Year Ended December 31

 

 

2021

 

 

2020

 

 

2019

 

 

 

2021

 

 

2020

 

 

2019

 

Discount rate

 

 

2.1

%

 

 

2.5

%

 

 

4.2

%

 

 

0.6

%

 

 

1.1

%

 

 

1.8

%

Expected long-term return on plan assets

 

N/A

 

 

N/A

 

 

 

4.3

%

 

 

1.8

%

 

 

2.2

%

 

 

2.7

%

Rate of compensation increase

 

 

—

%

 

 

—

%

 

 

3.0

%

 

 

1.7

%

 

 

1.7

%

 

 

1.7

%

Interest crediting rates for cash balance plans

 

N/A

 

 

N/A

 

 

N/A

 

 

 

1.9

%

 

 

2.0

%

 

 

2.0

%

 

We determine our assumption for the discount rate based on an index of high-quality corporate bond yields and matched-funding yield curve analysis as of the end of each fiscal year.

Our overall expected long-term rate of return used in the measurement of the 2021 net periodic benefit cost on non-United States plans varied by country and ranged from (0.1)% to 3.0%. For a majority of our plans, a building block approach has been employed to establish this return. Historical markets are studied and long-term historical relationships between equity securities and fixed income instruments are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over time. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established with proper consideration of diversification and rebalancing. We also use guaranteed insurance contracts for four of our foreign plans. Peer data and historical returns are reviewed to check for reasonableness and appropriateness of our expected rate of return. None of our United States plans had plan assets as of December 31, 2020 and 2021 due to the settlement of the Qualified Retirement Plan liability during the first quarter of 2020.

Projected salary levels utilized in the determination of the projected benefit obligation for the pension plans are based upon historical experience and the future expectations for each respective country.

Our plans’ investment policies are to optimize the long-term return on plan assets at an acceptable level of risk and to maintain careful control of the risk level within each asset class. Our long-term objective is to minimize plan expenses and contributions by outperforming plan liabilities. We have historically used a balanced portfolio strategy based primarily on a target allocation of equity securities and fixed-income instruments, which vary by location. These target allocations, which are similar to the 2021 allocations, are determined based on the favorable risk tolerance characteristics of the plan and, at times, may be adjusted within a specified range to advance our overall objective.

The fair values of our Level 1 and Level 2 pension plan assets are primarily determined by using market quotes and other relevant information that is generated by market transactions involving identical or comparable assets. Insurance contracts and annuity contracts are measured at the present value of expected future benefit payments primarily using associated interest curves. Hedge funds consist of a number of diversified funds including those investing in international securities, equity and private partnership interests valued using market available data and various models and assumptions.

 

The fair value of our pension plan assets by asset category was as follows:

 

 

 

 

Fair Value Measurements Using

 

 

December 31, 2021

 

 

Quoted Prices
in Active Markets for
Identical Assets
(Level 1)

 

 

Significant Other
Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

Asset Category

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

18.8

 

 

$

18.8

 

 

$

—

 

 

$

—

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

141.5

 

 

 

141.5

 

 

 

—

 

 

 

—

 

Common stock

 

37.7

 

 

 

37.7

 

 

 

—

 

 

 

—

 

Fixed income instruments:

 

 

 

 

 

 

 

 

 

 

 

Fixed income funds

 

175.0

 

 

 

—

 

 

 

175.0

 

 

 

—

 

Annuity contract

 

51.7

 

 

 

—

 

 

 

—

 

 

 

51.7

 

Bonds

 

44.9

 

 

 

—

 

 

 

44.9

 

 

 

—

 

Guaranteed insurance contracts

 

21.3

 

 

 

—

 

 

 

21.3

 

 

 

—

 

Other types of investments:

 

 

 

 

 

 

 

 

 

 

 

Insurance contracts

 

129.6

 

 

 

—

 

 

 

—

 

 

 

129.6

 

Real estate funds

 

102.1

 

 

 

—

 

 

 

100.8

 

 

 

1.3

 

Hedge funds

 

29.2

 

 

 

—

 

 

 

12.6

 

 

 

16.6

 

Other

 

10.7

 

 

 

—

 

 

 

3.4

 

 

 

7.3

 

 

$

762.5

 

 

$

198.0

 

 

$

358.0

 

 

$

206.5

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements Using

 

 

 

December 31, 2020

 

 

Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Asset Category

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

16.1

 

 

$

16.1

 

 

$

—

 

 

$

—

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

 

116.1

 

 

 

116.1

 

 

 

—

 

 

 

—

 

Common stock

 

 

25.4

 

 

 

25.4

 

 

 

—

 

 

 

—

 

Fixed income instruments:

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income funds

 

 

185.6

 

 

 

—

 

 

 

185.6

 

 

 

—

 

Annuity contract

 

 

56.2

 

 

 

—

 

 

 

—

 

 

 

56.2

 

Bonds

 

 

41.4

 

 

 

—

 

 

 

41.4

 

 

 

—

 

Guaranteed insurance contracts

 

 

21.0

 

 

 

—

 

 

 

21.0

 

 

 

—

 

Other types of investments:

 

 

 

 

 

 

 

 

 

 

 

 

Insurance contracts

 

 

157.8

 

 

 

—

 

 

 

—

 

 

 

157.8

 

Real estate funds

 

 

92.1

 

 

 

—

 

 

 

90.8

 

 

 

1.3

 

Hedge funds

 

 

32.0

 

 

 

—

 

 

 

11.4

 

 

 

20.6

 

Other

 

 

9.9

 

 

 

—

 

 

 

3.2

 

 

 

6.7

 

 

 

$

753.6

 

 

$

157.6

 

 

$

353.4

 

 

$

242.6

 

 

The following table summarizes the changes in fair value of the pension assets that are measured using Level 3 inputs. We determined that transfers between fair-value-measurement levels occurred on the date of the event that caused the transfer.

 

Year Ended December 31

 

2021

 

 

2020

 

Balance, beginning of year

 

$

242.6

 

 

$

214.8

 

Actual return on plan assets

 

 

(21.6

)

 

 

16.4

 

Purchases, sales and settlements, net

 

 

(3.1

)

 

 

(6.3

)

Currency exchange rate changes

 

 

(11.4

)

 

 

17.7

 

Balance, end of year

 

$

206.5

 

 

$

242.6

 

 

Retiree Health Care Plan

We provide medical and dental benefits to certain eligible retired employees in the United States. Due to the nature of the plan, there are no plan assets. The reconciliation of the changes in the plan’s benefit obligation and the statement of the funded status of the plan were as follows:

 

Year Ended December 31

 

2021

 

 

2020

 

Change in Benefit Obligation

 

 

 

 

 

 

Benefit obligation, beginning of year

 

$

14.6

 

 

$

14.1

 

Interest cost

 

 

0.2

 

 

 

0.4

 

Actuarial loss

 

 

0.1

 

 

 

1.0

 

Benefits paid

 

 

(0.8

)

 

 

(0.9

)

Benefit obligation, end of year

 

$

14.1

 

 

$

14.6

 

Funded Status at End of Year

 

 

 

 

 

 

Funded status, end of year

 

$

(14.1

)

 

$

(14.6

)

Amounts Recognized

 

 

 

 

 

 

Current liabilities

 

$

(1.2

)

 

$

(1.1

)

Noncurrent liabilities

 

 

(12.9

)

 

 

(13.5

)

Net amount recognized

 

$

(14.1

)

 

$

(14.6

)

 

The amount recognized in accumulated other comprehensive loss, net of tax, consists of a net loss of $2.2 and $2.3 as of December 31, 2021 and 2020, respectively, and a prior service credit of $2.3 and $2.9 as of December 31, 2021 and 2020, respectively.

The discount rate used in the measurement of the benefit obligation was 2.6% and 2.2% in 2021 and 2020, respectively. The discount rate used in the measurement of net periodic benefit cost was 2.2%, 3.0% and 4.2% in 2021, 2020, and 2019, respectively.

 

The components of net periodic benefit cost and other amounts recognized in other comprehensive loss for this plan were as follows:

 

Year Ended December 31

 

2021

 

 

2020

 

 

2019

 

Net Periodic Benefit Credit

 

 

 

 

 

 

 

 

 

Interest cost

 

$

0.2

 

 

$

0.4

 

 

$

0.5

 

Net loss

 

 

0.2

 

 

 

0.1

 

 

 

—

 

Prior service credit

 

 

(0.8

)

 

 

(0.8

)

 

 

(0.8

)

Net periodic benefit credit

 

$

(0.4

)

 

$

(0.3

)

 

$

(0.3

)

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income/Loss

 

 

 

 

 

 

 

 

 

Net loss

 

$

0.2

 

 

$

1.1

 

 

$

0.8

 

Amortization of net loss

 

 

(0.2

)

 

 

(0.1

)

 

 

—

 

Amortization of prior service credit

 

 

0.8

 

 

 

0.8

 

 

 

0.8

 

Total recognized in other comprehensive income/loss

 

 

0.8

 

 

 

1.8

 

 

 

1.6

 

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

 

$

0.4

 

 

$

1.5

 

 

$

1.3

 

 

The estimated net loss and prior service credit for the retiree health care plan that will be amortized from accumulated other comprehensive income/loss into net periodic benefit cost during 2022 are $0.2 and $0.8, respectively.

 

The health care cost trend rate is assumed to be 6.4% for 2022, decreasing gradually to an ultimate rate of 4.5% in 2030. Assumed health care cost trend rates are not expected to have a material effect on the amounts reported.

 

Future Contributions and Payments

During 2022, we plan to contribute approximately $15.0 to our pension plans and to fund our retiree health care payments as incurred. Projected benefit payments from the plans as of December 31, 2021 were estimated as follows:

 

Year

 

Pension Plans

 

 

Retiree Health
Care Plan

 

2022

 

$

71.8

 

 

$

1.1

 

2023

 

 

45.0

 

 

 

1.1

 

2024

 

 

34.2

 

 

 

1.1

 

2025

 

 

29.1

 

 

 

1.0

 

2026

 

 

29.5

 

 

 

1.1

 

2027–2030

 

 

158.1

 

 

 

4.7

 

Total projected benefit payments

 

$

367.7

 

 

$

10.1

 

 

Defined Contribution Plans and Deferred Compensation Plans

We have defined contribution plans covering substantially all permanent United States employees and various other employees throughout the world. With our company-sponsored plans, employees may elect to contribute a portion of their salary to the plans and we match a portion of their contributions up to a maximum percentage of the employee’s salary. In addition, profit sharing contributions are made if a targeted earnings level is reached at management’s discretion. The total expense for our match and any profit sharing contributions was $17.3, $16.6 and $16.9 for the years ended December 31, 2021, 2020 and 2019, respectively. In certain countries with statutory defined contribution plans, we pay a percentage of the employees' salary in pension premiums. The total expense for the statutory defined contribution plans was $32.2, $27.5 and $32.1 for the years ended December 31, 2021, 2020 and 2019, respectively.

 

We also have deferred compensation plans in the United States. One of the plans had an asset and liability of $136.9 and $118.4 as of December 31, 2021 and 2020, respectively, with the remaining plans holding immaterial amounts of assets and liabilities.