XML 36 R17.htm IDEA: XBRL DOCUMENT v3.20.4
Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Benefit Plans Benefit Plans
Pension Plans
SJW Group maintains noncontributory defined benefit pension plans for its eligible employees. SJWC and CTWS employees hired before March 31, 2008 and January 1, 2009, respectively, are entitled to benefits under the pension plans based on the employee’s years of service and compensation. For SJWC employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee. Certain employees hired before March 1, 2012, and covered by a plan merged into the CTWS plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation. Interest is credited based on the annual yield on 30-year Treasury bonds as of October for the preceding plan year with a minimum annual rate of 3.25% and a maximum annual rate of 6.00%. For the year ended December 31, 2020, interest credits assumption was 3.50%. CTWS employees hired on or after January 1, 2009 are entitled to an additional 1.5% of eligible compensation to their company sponsored savings plan. SJW Group does not have multi-employer plans.
The pension plans are administered by their respective committees where the investment strategy of the investments of the various pension and post-retirement benefit plans are reviewed and approved to achieve the goals of income generation and long-term capital preservation. SJW Group engages third-party investment managers to assist with, among other things, asset allocation strategy, investment policy advice, performance monitoring, and investment manager due diligence. Individual investment decisions have been delegated by the pension plan committees to the investment managers who are also monitored by an investment consultant. Investment managers are not permitted to invest outside of the asset class or strategy under the pension plans’ investment guidelines. The committees ensure that the plans establish a target mix that is expected to achieve its investment objectives, by assuring a broad diversification of investment assets among investment types, while minimizing volatility of the target asset mix, unless market conditions make such a change appropriate to reduce risk. The pension plans require a minimum portion of plan assets to be allocated to fixed income securities and provide guidelines and restrictions on equity investments for the assets.
Plan assets are marked to market at each measurement date, resulting in unrealized actuarial gains or losses. Unrealized actuarial gains and losses on pension assets are amortized over the expected future working lifetime of participants for actuarial expense calculation purposes. Market gains in 2019 decreased pension expense by approximately $5,464 in 2020 and market losses in 2018 increased pension expense by approximately $4,485 in 2019. For the year ended December 31, 2020, the net actuarial loss of the benefit obligation was related primarily a loss from changes of discount rate of $46,443, a $489 loss in data and other changes, and a gain from mortality changes of $2,139.
Generally, it is expected of the investment managers that the performance of the assets held in the pension plans, computed on a total annual rate of return basis, should meet or exceed specific performance standards over a three-to-five-year period and/or full market cycle. These standards include specific absolute and risk-adjusted performance standards over a three-to-five-year period and/or full market cycle. The expected long-term rate of return on the pension plan assets is between 6.50% and 6.75% for the year ended December 31, 2020.
SJW Group calculates the market-related value of defined benefit pension plan assets, which is defined under FASB ASC Topic 715—“Compensation—Retirement Benefits” as a balance used to calculate the expected return on plan assets, using fair value. The fair value is based on quoted prices in active markets for identical assets and significant observable inputs.
Senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CTWS are eligible to receive additional retirement benefits under the supplemental executive retirement plans and retirement contracts (collectively, “SERP”). SJWC’s senior management hired on or after March 31, 2008 are eligible to receive additional retirement benefits under SJWC’s Cash Balance Executive Supplemental Retirement Plan ("Cash Balance Executive Supplemental Retirement Plan"). Both of the
plans are non-qualified plans in which only senior management and other designated members of management may participate. The annual cost of the plans has been included in the determination of the net periodic benefit cost shown below. The SERP and Cash Balance Executive Supplemental Retirement Plan had a projected benefit obligation of $50,757 and $41,768 as of December 31, 2020 and 2019, respectively, and net periodic pension cost of $4,480, $3,219 and $2,905 for 2020, 2019 and 2018, respectively. SJWC’s plans are unfunded while CTWS’s SERP is funded through investments consisting primarily of life insurance contracts and assets in a Rabbi Trust. As of December 31, 2020 and 2019, total investments made to fund CTWS’s SERP was $7,470 and $7,070, respectively, which is included in “Investments” in SJW Group’s Consolidated Balance Sheets. The life insurance contracts are valued at cash surrender value of the policies as reported by the insurer. As of December 31, 2020 and 2019, the value of the life insurance contracts was $4,311 and $3,829, respectively.
The following tables summarize the fair values of the Rabbi Trust investment assets to fund CTWS’s SERP by major categories as of December 31, 2020 and 2019 :

  Fair Value Measurements at December 31, 2020
Asset CategoryTotalQuoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Money market funds$83 83 — — 
Mutual funds2,101 2,101 — — 
Fixed income830 830 — — 
Total$3,014 3,014 — — 
  Fair Value Measurements at December 31, 2019
Asset CategoryTotalQuoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Money market funds$20 20 — — 
Mutual funds834 834 — — 
Fixed income2,329 2,329 — — 
Total$3,183 3,183 — — 
Other Postretirement Benefits
In addition to providing pension and savings benefits, the company also provides health care and life insurance benefits for eligible retired employees under the respective employer-sponsored post-retirement benefits other than pension plans. The benefits are paid by the company and not from plan assets due to limitations imposed by Internal Revenue Service.
Flexible Spending Plan
SJW Group sponsors flexible spending account plans for its employees for the purpose of providing eligible employees with the opportunity to choose from among the fringe benefits available under the plans. The flexible spending plan is intended to qualify as a cafeteria plan under the provisions of the Internal Revenue Code Section 125. The flexible spending plan allows employees to save pre-tax income in a Health Care Spending Account (“HCSA”) and/or a Dependent Care Spending Account (“DCSA”) to help defray the cost of out-of-pocket medical and dependent care expenses. The annual maximum limit under the HCSA and DCSA plans is $2.5 and $5, respectively.
Savings Plans for Employees
SJW Group also sponsors salary deferral plans which are defined contribution plans that allow employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the company. For CTWS’s employees hired on or after January 1, 2009 and ineligible to participate in the defined benefit pension plan, CTWS contributes an additional 1.5% of eligible contributions. SJW Group contributions were $2,824, $2,046 and $1,569 in 2020,
2019 and 2018, respectively. All of the company’s contributions are invested at the direction of the employees in funds offered under the plans.
Special Deferral Election Plans and Deferral Election Program
SJW Group maintains a special deferral election plan and a deferred compensation plan and agreements for senior management and a deferral election program for non-employee directors allowing for the deferral of a portion of their earnings each year and to realize an investment return on those funds during the deferral period. Senior management and non-employee directors have to make an election on the deferral and distribution method of the deferrals before services are rendered. CTWS’s deferred compensation plan allows the company to make discretionary contributions. Senior management and non-employee directors had deferred $6,144, $7,834 and $4,244 under the plans as of December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020 and 2019, $4,130 and $3,801, respectively, of the total amount deferred is related to CTWS agreements that were assumed as part of the merger transaction on October 9, 2019.
Assumptions Utilized on Actuarial Calculations
Net periodic cost for the defined benefit plans and other postretirement benefits was calculated using the following weighted-average assumptions:
 Pension BenefitsOther Benefits
 202020192018202020192018
%%%%%%
Discount rate3.05 - 3.233.04 - 4.163.522.59 - 3.182.52 - 4.093.45
Expected return on plan assets6.50, 6.757.00, 7.257.004.20, 6.504.00, 7.007.00
Rate of compensation increase4.004.004.00N/AN/AN/A
The expected rate of return on plan assets was determined based on a review of historical returns, for the pension plans and for medium- to large-sized defined benefit pension funds with similar asset allocations. This review generated separate expected returns for each asset class. These expected future returns were then blended based on the pension plans’ target asset allocations.
Benefit obligations for the defined benefit plans and other postretirement benefits were calculated using the following weighted-average assumptions as of December 31:
 Pension BenefitsOther Benefits
 2020201920202019
 %%%%
Discount rate2.29 - 2.483.05 - 3.232.18 - 2.412.59 - 3.18
Rate of compensation increase4.004.00N/AN/A
SJW Group utilized each plan’s projected benefit stream in conjunction with the FTSE Pension Discount Curve (formerly the Citigroup Pension Discount Curve) and the FTSE Above Median Double-A Curve for SJWC and CTWS, respectively, in determining the discount rate used in calculating the pension and other postretirement benefits liabilities at the measurement date.

In 2020 and 2019, SJW Group adopted the newly then issued MP-2020 and MP-2019, respectively, Mortality Improvement Scales to determine mortality assumptions. The tables and scales reflect increasing life expectancies of participants in the United States. See also “Reconciliation of Funded Status” below.
Net Periodic Pension Costs
Net periodic costs for the defined benefit plans and other postretirement benefits for the years ended December 31 was as follows:
 Pension BenefitsOther Benefits
 202020192018202020192018
Components of net periodic benefit cost
Service cost$8,659 5,947 5,790 $900 581 616 
Interest cost10,484 8,506 6,879 956 775 627 
Expected return on assets(15,715)(10,118)(9,255)(857)(475)(450)
Amortization of prior service cost41 48 51 97 197 197 
Recognized actuarial loss4,971 3,984 3,986 229 240 321 
Net periodic benefit cost$8,440 8,367 7,451 $1,325 1,318 1,311 
Reconciliation of Funded Status
For the defined benefit plans and other postretirement benefits, the benefit obligation is the projected benefit obligation and the accumulated benefit obligation, respectively. The projected benefit obligations and the funded status of the defined benefit pension and other postretirement plans as of December 31 were as follows:
 Pension BenefitsOther Benefits
 2020201920202019
Change in benefit obligation
Benefit obligation at beginning of year$338,240 187,877 $32,546 17,489 
Service cost8,659 5,947 900 581 
Interest cost10,484 8,506 956 775 
Business combination— 108,162 — 12,537 
Actuarial (gain)/loss42,164 35,502 2,421 2,027 
Implicit rate subsidy— — (211)(217)
Plan participants contributions— — 254 85 
Administrative expenses paid(163)(10)— — 
Benefits paid(13,293)(7,744)(1,072)(731)
Benefit obligation at end of year$386,091 338,240 $35,794 32,546 
Change in plan assets
Fair value of assets at beginning of year$243,521 127,610 $17,226 5,849 
Actual return on plan assets32,869 34,807 2,383 1,972 
Business combination— 79,382 — 9,314 
Employer contributions16,609 9,476 675 738 
Plan participants contributions— — 254 85 
Administrative expenses paid(163)(10)(54)(55)
Benefits paid(14,712)(7,744)(1,005)(677)
Fair value of plan assets at end of year278,124 243,521 19,479 17,226 
Funded status at end of year$(107,967)(94,719)$(16,315)(15,320)
The amounts recognized on the balance sheet as of December 31 were as follows:
 Pension BenefitsOther Benefits
 2020201920202019
Current liabilities$2,760 1,899 $133 96 
Noncurrent liabilities105,207 92,820 16,182 15,224 
$107,967 94,719 $16,315 15,320 
SJW Group recorded a regulatory asset on the projected benefit obligation of the postretirement benefit plans as follows:
20202019
Funded status of obligation$124,282 110,039 
Accrued benefit cost(28,723)(36,514)
Regulatory asset, amount to be recovered in future rates$95,559 73,525 

Plan Assets
Plan assets as of December 31 were as follows:
 Pension BenefitsOther Benefits
 2020201920202019
Fair value of assets at end of year:
Debt securities$95,935 86,288 $5,684 5,608 
35 %36 %29 %33 %
Equity securities170,747 146,210 12,762 10,840 
61 %60 %66 %63 %
Cash and equivalents11,442 11,023 1,033 778 
4 %5 %5 %5 %
Total$278,124 243,521 $19,479 17,226 
The following tables summarize the fair values of plan assets by major categories as of December 31, 2020 and 2019:
  Fair Value Measurements at December 31, 2020
Asset CategoryTotalQuoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash and cash equivalents$12,475 12,475 — — 
Equity securities (a)183,509 183,509 — — 
Fixed Income (b)101,619 36,012 65,607 — 
Total$297,603 231,996 65,607 — 
___________________________________
(a)Actively managed portfolio of equity securities with the goal to exceed the benchmark performance.
(b)Actively managed portfolio of fixed income securities with the goal to exceed the benchmark performance
  Fair Value Measurements at December 31, 2019
Asset CategoryTotalQuoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash and cash equivalents$11,801 11,801 — — 
Equity securities (a)157,050 149,265 7,785 — 
Fixed Income (b)91,896 31,686 60,210 — 
Total$260,747 192,752 67,995 — 
___________________________________
(a)Actively managed portfolio of equity securities with the goal to exceed the benchmark performance.
(b)Actively managed portfolio of fixed income securities with the goal to exceed the benchmark performance
In 2021, SJW Group expects to make required and discretionary cash contributions of up to $8,481 to the pension plans and other postretirement benefit plans.
Benefits expected to be paid in the next five years and in the aggregate for the five years thereafter are:
Pension PlanOther Postretirement
Benefit Plan
2021$15,707 $1,441 
202215,097 1,511 
202315,979 1,596 
202416,023 1,676 
202516,541 1,671 
2026 - 203091,120 8,857