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Pension and Other Postretirement Plans | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Pension and Other Postretirement Plans | Pension and Other Postretirement Plans We have a defined benefit pension plan in the United States covering many of the Company’s associates. However, the plan has been frozen to new participants and benefit accruals were frozen for active participants on or before December 31, 2016. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. Service cost for 2023 and 2022 relates to benefit accruals for an associate group in Mexico who receive statutorily-mandated retiree health and welfare benefits. The plans provide for payment of retirement benefits, mainly commencing between the ages of 55 and 65. After meeting certain qualifications, an associate acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an associate’s length of service and/or earnings. Employer contributions to the plans are made, as necessary, to ensure legal funding requirements are satisfied. Also, from time to time, we may make contributions in excess of the legal funding requirements. During 2023, the Board of Directors of MasterBrand, Inc. approved a plan to terminate the defined benefit pension plan. The termination and settlement process, which preserves retirement benefits due to participants but changes the ultimate payor of such benefits, is expected to take up to 24 months to complete, subject to receipt of customary regulatory approvals. During 2024, the Company expects to offer a lump-sum benefit payout option to certain plan participants. During 2025, we expect to complete the purchase of group annuity contracts that will transfer any remaining pension benefit obligation to an insurance company. Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value the plans or when assumptions change as they may each year. The primary factors contributing to actuarial gains and losses are changes in the discount rate used to value obligations as of the measurement date and the differences between expected and actual returns on pension plan assets.
(U.S. Dollars presented in millions) |  | Pension Benefits |  | Postretirement Benefits
Obligations and Funded Status |  | December 31, 2023 |  | December 25, 2022 |  | December 31, 2023 |  | December 25, 2022
Change in the Projected Benefit Obligation (PBO): |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of year |  | $ | 128.9 |  |  | $ | 173.3 |  |  | $ | 3.2 |  |  | $ | 3.5 |
Service cost |  | — |  |  | — |  |  | 0.5 |  |  | 0.5 |
Interest cost |  | 6.5 |  |  | 5.1 |  |  | 0.3 |  |  | 0.3 |
Actuarial loss (gain) |  | 7.9 |  |  | (41.1) |  |  | 0.5 |  |  | 0.4 |
Benefits paid |  | (7.7) |  |  | (8.4) |  |  | (0.2) |  |  | (0.9) |
Settlements/Curtailments gain |  | — |  |  | — |  |  | (0.2) |  |  | (0.6) |
Projected benefit obligation at end of year |  | $ | 135.6 |  |  | $ | 128.9 |  |  | $ | 4.1 |  |  | $ | 3.2 |
Accumulated benefit obligation at end of year (excludes the impact of future compensation increases) |  | $ | 135.6 |  |  | $ | 128.9 |  |  | $ | 2.9 |  |  | $ | 2.3 |
Change in Plan Assets |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 119.4 |  |  | $ | 166.2 |  |  | $ | — |  |  | $ | — |
Actual return on plan assets |  | 11.3 |  |  | (39.5) |  |  | — |  |  | — |
Employer contributions |  | 8.1 |  |  | 1.1 |  |  | 1.0 |  |  | 0.9 |
Benefits paid |  | (7.7) |  |  | (8.4) |  |  | (1.0) |  |  | (0.9) |
Fair value of plan assets at end of year |  | $ | 131.1 |  |  | $ | 119.4 |  |  | $ | — |  |  | $ | — |
Funded status (Fair value of plan assets less PBO) |  | $ | (4.5) |  |  | $ | (9.5) |  |  | $ | (4.1) |  |  | $ | (3.2) |
For the year ended December 31, 2023, the actuarial loss is primarily due to declining discount rates and the decision to terminate the plan, which resulted in the adoption of plan termination assumptions that results in an increase to the liability. These liability losses were offset slightly by asset returns greater than expected. For the year ended December 25, 2022, the actuarial gain is primarily a result of the difference in the expected long-term rate of return compared to the actual return on plan assets. The accumulated benefit obligation exceeds the fair value of the pension plan assets. Amounts recognized in the consolidated balance sheets consist of:
|  | Pension Benefits |  | Postretirement Benefits
(U.S. Dollars presented in millions) |  | December 31, 2023 |  | December 25, 2022 |  | December 31, 2023 |  | December 25, 2022
Current liabilities |  | $ | (0.1) |  |  | $ | (0.1) |  |  | $ | (0.6) |  |  | $ | (0.4) |
Noncurrent liabilities |  | (4.4) |  |  | (9.4) |  |  | (3.5) |  |  | (2.8) |
Net amount recognized |  | $ | (4.5) |  |  | $ | (9.5) |  |  | $ | (4.1) |  |  | $ | (3.2) |
As of December 31, 2023, we utilized the Society of Actuaries’ base MP-2021 mortality projection scale without adjustment, resulting in an immaterial increase in plan benefit obligation and ongoing expenses. As of December 25, 2022, we utilized an aggregate Pri-2012 mortality table with the Society of Actuaries’ MP-2021 projection scale and an adjustment to reflect increased rates of mortality subsequent to the Society of Actuaries’ MP-2021 projection scale, resulting in an immaterial decrease in plan benefit obligation and ongoing expenses. The amounts in accumulated other comprehensive loss on the Consolidated Balance Sheets that have not yet been recognized as components of net periodic benefit cost were as follows:
(In U.S. Dollars in millions) |  | Pension Benefits |  | Postretirement Benefits
Net actuarial loss at December 26, 2021 |  | $ | 7.2 |  |  | $ | 0.4 |
Recognition of actuarial loss |  | (0.2) |  |  | (0.4) |
Current year actuarial loss |  | 5.8 |  |  | 0.3 |
Current year net actuarial gain due to curtailment |  | — |  |  | (0.3) |
Net actuarial loss at December 25, 2022 |  | $ | 12.8 |  |  | $ | — |
Recognition of actuarial loss |  | (2.9) |  |  | (0.3) |
Current year actuarial loss |  | 3.6 |  |  | 0.5 |
Net actuarial loss at December 31, 2023 |  | $ | 13.5 |  |  | $ | 0.2 |
Components of net periodic cost (benefit) were as follows:
Components of Net Periodic Cost (Benefit) |  | Pension Benefits |  | Postretirement Benefits
(U.S. Dollars presented in millions) |  | 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Service cost |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 0.5 |  |  | $ | 0.5 |  |  | $ | 0.4 |
Interest cost |  | 6.5 |  |  | 5.1 |  |  | 4.7 |  |  | 0.3 |  |  | 0.3 |  |  | 0.2 |
Expected return on plan assets |  | (7.1) |  |  | (7.3) |  |  | (7.5) |  |  | — |  |  | — |  |  | — |
Recognition of actuarial losses |  | 2.9 |  |  | 0.2 |  |  | — |  |  | — |  |  | 0.7 |  |  | 0.2 |
Settlement/Curtailment loss/(gain) |  | — |  |  | — |  |  | — |  |  | 0.3 |  |  | (0.3) |  |  | — |
Net periodic cost (benefit) |  | $ | 2.3 |  |  | $ | (2.0) |  |  | $ | (2.8) |  |  | $ | 1.1 |  |  | $ | 1.2 |  |  | $ | 0.8 |
Assumptions |  | Pension Benefits |  | Postretirement Benefits
|  | 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Weighted-average assumptions used to determine benefit obligations at balance sheet date: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 4.8 | % |  | 5.2 | % |  | 3.0 | % |  | 9.2 | % |  | 9.5 | % |  | 7.8 | %
Weighted-average assumptions used to determine net cost (benefit) for years ended: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 5.2% |  | 3.0% |  | 2.7% |  | 9.4% |  | 8.9% |  | 7.0 | %
Expected long-term rate of return on plan assets |  | 3.8% |  | 6.2% |  | 4.5% |  | —% |  | —% |  | —%
Plan Assets The fair value of the pension assets by major category of plan assets as of December 31, 2023 and December 25, 2022 were as follows:
(U.S. Dollars presented in millions) |  | Total as of balance sheet date
|  | 2023 |  | 2022
Collective trusts: |  |  |  |
Cash and cash equivalents |  | $ | 23.2 |  |  | $ | 5.4 |
Equity |  | 28.5 |  |  | 31.0 |
Fixed income |  | 73.6 |  |  | 76.6 |
Multi-strategy hedge funds |  | 3.0 |  |  | 3.4 |
Real estate |  | 2.8 |  |  | 3.0 |
Total |  | $ | 131.1 |  |  | $ | 119.4 |
A reconciliation of Level 3 measurements was as follows:
|  | Group annuity/ insurance contracts
(U.S. Dollars presented in millions) |  | 2023 |  | 2022
Beginning of year |  | $ | — |  |  | $ | 4.8 |
Assets liquidated |  | — |  |  | (4.8) |
End of year |  | $ | — |  |  | $ | — |
Our defined benefit plan Master Trust owns a variety of investment assets. All of these investment assets, except for group annuity/insurance contracts which were liquidated during our 2022 fiscal year as shown in the table above, are measured using net asset value per share as a practical expedient per ASC 820. Following the retrospective adoption of ASU 2015-07 (Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share) we excluded all investments measured using net asset value per share in the amount of $131.1 million and $119.4 million as of December 31, 2023 and December 25, 2022, respectively, from the tabular fair value hierarchy disclosure. The terms and conditions for redemptions vary for each class of the investment assets valued at net asset value per share as a practical expedient. Real estate assets may be redeemed quarterly with a 105 day redemption notice period. Investment assets in multi-strategy hedge funds have a 1-year lockup with a 95 day redemption notice period. Equity, fixed income and cash and cash equivalents have no specified redemption frequency and notice period and may be redeemed daily. As of December 31, 2023, we did not have an intent to sell or otherwise dispose of these investment assets at prices different than the net asset value per share. Our investment strategy is to optimize investment returns through a diversified portfolio of investments, taking into consideration underlying plan liabilities and asset volatility. The defined benefit asset allocation policy of the plan allows for an equity allocation of up to 75 percent, a fixed income allocation of 25 percent to 100 percent, a cash allocation of up to 25 percent and other investments of up to 20 percent. Asset allocations are based on the underlying liability structure. All retirement asset allocations are reviewed periodically to ensure the allocation meets the needs of the liability structure. Our 2024 expected blended long-term rate of return on plan assets of 3.8 percent was determined based on the nature of the plans’ investments, our current asset allocation and projected long-term rates of return from pension investment consultants. The asset allocation for plan investments has shifted to mirror the revised expected timing of the disbursement of plan assets in conjunction with the plan termination. Estimated Future Retirement Benefit Payments The following retirement benefit payments are expected to be paid by the respective plans:
(U.S. Dollars presented in millions) |  | Pension Benefits |  | Postretirement Benefits
2024 |  | $ | 47.6 |  |  | $ | 0.5 |
2025 |  | $ | 7.2 |  |  | $ | 0.5 |
2026 |  | $ | 7.2 |  |  | $ | 0.4 |
2027 |  | $ | 7.2 |  |  | $ | 0.4 |
2028 |  | $ | 7.1 |  |  | $ | 0.4 |
Years 2029-2033 |  | $ | 33.7 |  |  | $ | 2.5 |
Estimated future retirement benefit payments listed are estimates and could change significantly based on differences between actuarial assumptions and actual events and decisions related to lump sum distribution options that are available to certain participants. Defined Contribution Plan Contributions We sponsor a number of defined contribution plans. Contributions are determined under various formulas. Cash contributions by the Company related to these plans amounted to $18.2 million, $14.0 million, and $15.3 million in 2023, 2022 and 2021, respectively.

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