11. Employee Benefit Plans

Domestic Pension Plan

We maintain a noncontributory defined benefit pension plan for all domestic nonunion employees employed on or prior to December 31, 2013, who meet certain requirements of age, length of service and hours worked per year. We amended the plan to eliminate credit for future service and compensation increases, effective September 2016. Plan benefits are based upon years of service and average compensation, as defined. The measurement dates for the plan were as of June 30, 2020, 2019 and 2018.

Changes in the projected benefit obligation, plan assets and funded status of the plan were:


For the Year Ended June 30	2020		2019
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	68,527	$	61,557
Interest cost		2,112		2,407
Benefits paid		(2,000)		(1,758)
Actuarial loss		10,714		6,321
Projected benefit obligation at end of year	$	79,353	$	68,527


For the Year Ended June 30	2020		2019
Change in plan assets
Fair value of plan assets at beginning of year	$	64,593	$	58,648
Actual return on plan assets		10,821		6,861
Employer contributions		2,377		842
Benefits paid		(2,000)		(1,758)
Fair value of plan assets at end of year	$	75,791	$	64,593
Funded status at end of year	$	(3,562)	$	(3,934)

The funded status is included in other liabilities in the consolidated balance sheets.

The Company expects to contribute approximately $1,562 to the plan during 2021. We seek to maintain an asset balance that meets the long-term funding requirements identified by actuarial projections while also satisfying ERISA fiduciary responsibilities.

Accumulated other comprehensive income (loss) related to the plan was:


For the Year Ended June 30	2020		2019
Accumulated other comprehensive income (loss) related to pension plan
Balance at beginning of period	$	(20,050)	$	(18,213)
Amortization of net actuarial loss and prior service costs		515		465
Current period net actuarial (loss)		(3,036)		(2,302)
Net change		(2,521)		(1,837)
Balance at end of period	$	(22,571)	$	(20,050)

Amortization of unrecognized net actuarial loss will be approximately $534 during 2021.

Net periodic pension expense was:


For the Year Ended June 30	2020		2019		2018
Interest cost on benefit obligation	$	2,112	$	2,407	$	2,157
Expected return on plan assets		(3,144)		(2,842)		(3,236)
Amortization of net actuarial loss and prior service costs		515		465		453
Net periodic pension expense (income)	$	(517)	$	30	$	(626)

Significant actuarial assumptions for the plan were:


For the Year Ended June 30	2020		2019		2018
Discount rate for interest cost	2.2	%	3.1	%	3.9	%
Expected rate of return on plan assets	4.9	%	4.9	%	5.6	%
Discount rate for year-end benefit obligation	2.8	%	3.6	%	4.2	%

The plan used the Aon Hewitt AA Bond Universe as a benchmark for its discount rate as of June 30, 2020, 2019 and 2018. The discount rate is determined by matching the plan’s timing and amount of expected cash outflows to a bond yield curve constructed from a population of AA-rated corporate bond issues that are generally non-callable and have at least $250 million par value outstanding. From this, the discount rate that results in the same present value is calculated.

Estimated future benefit payments are:


For the Year Ended June 30
2021	$	2,887
2022		3,138
2023		3,364
2024		3,531
2025		3,661
2026–2030		19,789

The plan’s target asset allocations for 2021 and the weighted-average asset allocation of plan assets as of June 30, 2020 and 2019 are:


	Target
	Allocation	Percentage of Plan Assets
For the Year Ended June 30	2021	2020	2019
Debt securities	57%–77%	66%	67%
Equity securities	18%–38%	27%	28%
Global asset allocation/risk parity(1)	0%–15%	5%	4%
Other	0%–10%	2%	1%

(1)

The global asset allocation/risk parity category consists of a variety of asset classes including, but not limited to, global bonds, global equities, real estate and commodities.

The expected long-term rate of return for the plan’s total assets generally is based on the plan’s asset mix. In determining the rate to use, we consider the expected long-term real returns on asset categories, expectations for inflation, estimates of the effect of active management and actual historical returns.

The investment policy and strategy is to earn a long-term investment return sufficient to meet the obligations of the plan, while assuming a moderate amount of risk in order to maximize investment return. In order to achieve this goal, assets are invested in a diversified portfolio consisting of equity securities, debt securities, and other investments in a manner consistent with ERISA’s fiduciary requirements.

The fair values of the plan assets by asset category were:


	Fair Value Measurements Using
As of June 30, 2020	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	1,812	$	—	$	—	$	1,812
Common-collective funds
Global large cap equities		—		16,678		4,038		20,716
Fixed income securities		—		49,902		—		49,902
Global asset allocations/risk parity		—		1,667		—		1,667
Other
Global asset allocations/risk parity		—		—		1,669		1,669
Other		—		—		25		25
	$	1,812	$	68,247	$	5,732	$	75,791


	Fair Value Measurements Using
As of June 30, 2019	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	215	$	—	$	—	$	215
Common-collective funds
Global large cap equities		—		13,995		4,016		18,011
Fixed income securities		—		43,288		—		43,288
Global asset allocations/risk parity		—		1,446		—		1,446
Other
Global asset allocations/risk parity		—		—		1,447		1,447
Other		—		—		186		186
	$	215	$	58,729	$	5,649	$	64,593

The table below provides a summary of the changes in the fair value of Level 3 assets:


Change in Fair Value Level 3 assets	2020		2019
Balance at beginning of period	$	5,649	$	6,960
Redemptions		(49)		(4,336)
Purchases		200		2,800
Change in fair value		(68)		225
Balance at end of period	$	5,732	$	5,649

The following outlines the valuation methodologies used to estimate the fair value of plan assets:

Cash and cash equivalents are valued at $1 per unit;

Common-collective funds are determined based on current market values of the underlying assets of the fund;

Mutual funds and foreign currency deposits are valued using quoted market prices in active markets; and

For Level 3 managed assets, business appraisers use a combination of valuations and appraisal methodologies, as well as a number of assumptions to create a price that brokers evaluate. For Level 3 non-managed assets, pricing is provided by various sources, such as issuer or investment manager.

Other employee benefit plans

We provide a 401(k) retirement savings plan, under which United States employees may make pre-tax and post-tax contributions. The Company contributes: (i) a matching contribution equal to 100% of the first 6% of an employee’s contribution; and, (ii) an additional discretionary contribution of up to 4.5% of compensation, depending on the employee’s age and years of service, provided that such contributions comply with ERISA non-discrimination requirements. Employee and Company contributions are subject to certain ERISA limitations. Employees are immediately vested in Company contributions. Our contribution expense was $5,566, $5,201, and $4,937, in 2020, 2019 and 2018, respectively.

Our consolidated balance sheets include other employee-related liabilities of $13,666 and $17,391 as of June 30, 2020 and 2019, respectively, including international retirement plans, supplemental retirement benefits and long-term incentive arrangements. Expense under these plans was $5,725, $5,685, and $4,009 in 2020, 2019 and 2018, respectively.