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Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plans | 12 Months Ended
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Dec. 31, 2019
Retirement Benefits [Abstract] |
Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plan | Note 11 – Pension Benefits, Other Postretirement Benefits and Employee Savings and Investment Plan Pension and Other Postretirement Benefits Pension and Other Postretirement Benefit Plans As of December 31, 2019, we had two qualified noncontributory defined benefit pension plan, the Rogers Corporation Employees’ Pension Plan (the Union Plan) and the Rogers Corporation Defined Benefit Pension Plan (following its merger with the Hourly Employees Pension Plan of Arlon LLC, Microwave Material and Silicone Technologies Divisions, Bear, Delaware (collectively, the Merged Plan)), which were frozen and had ceased accruing benefits. The Merged Plan was terminated and substantially settled in late 2019, with remaining settlement efforts expected to be completed in the first half of 2020. There are no plans to terminate the Union Plan. Additionally, we sponsor other postretirement benefit plans including multiple fully insured or self-funded medical plans and life insurance plans for certain retirees. The measurement date for all plans is December 31 st for each respective plan year. Pension Plan Termination During the second quarter of 2019, following receipt of a determination letter from the Internal Revenue Service (IRS), the Company amended the Merged Plan to (a) terminate the Merged Plan (subject to discretionary approval by the Company’s Chief Executive Officer) and (b) add a lump sum distribution option in connection with the termination of the Merged Plan, if approved. The Company subsequently provided participants of the Merged Plan an option to elect either a lump sum distribution or an annuity. On October 17, 2019, the Company’s Chief Executive Officer approved the termination of the Merged Plan. A group annuity contract was purchased with an insurance company for all participants who did not elect a lump sum distribution, for $123.5 million, with a cash settlement date of October 24, 2019. The insurance company is responsible for administering and paying pension benefit payments effective January 1, 2020. The lump sum distributions, which totaled $38.9 million, were all paid out prior to December 31, 2019. The Merged Plan paid an additional $1.3 million of monthly pension benefit payments subsequent to the annuity purchase date during the transition period ending December 31, 2019. The Merged Plan had sufficient assets to satisfy all transaction obligations. The Merged Plan had $9.0 million of net assets remaining as of December 31, 2019. In addition, we recorded a total non-cash pre-tax settlement charge in connection with the termination of the Merged Plan of $53.2 million during the fourth quarter of 2019. This settlement charge consisted of the immediate recognition into expense of the related unrecognized losses within “Accumulated other comprehensive loss” in the consolidated statements of financial position as of the plan termination date. The settlement charge was recognized in “Pension settlement charges” in the consolidated statements of operations. We expect to incur an additional non-cash pre-tax settlement charge in connection with the remaining settlement efforts of the Merged Plan of approximately $0.7 million during the first half of 2020. Plan Assets and Plan Benefit Obligations The following table summarizes the change in plan benefit obligations and changes in plan assets:
| Pension Benefits |  | Other Postretirement Benefits
(Dollars in thousands) | 2019 |  | 2018 |  | 2019 |  | 2018
Change in plan benefit obligations: |  |  |  |  |  |  |
Benefit obligation as of January 1 | $ | 172,608 |  |  | $ | 185,760 |  |  | $ | 1,803 |  |  | $ | 2,037 |
Service cost | — |  |  | — |  |  | 61 |  |  | 73 |
Interest cost | 5,641 |  |  | 6,758 |  |  | 59 |  |  | 62 |
Actuarial (gain) loss | 23,797 |  |  | (10,805 | ) |  | (51 | ) |  | (5 | )
Benefit payments | (9,262 | ) |  | (9,105 | ) |  | (273 | ) |  | (364 | )
Pension settlements | (162,484 | ) |  | — |  |  | — |  |  | — |
Benefit obligation as of December 31 | $ | 30,300 |  |  | $ | 172,608 |  |  | $ | 1,599 |  |  | $ | 1,803 |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets as of January 1 | $ | 191,652 |  |  | $ | 180,056 |  |  | $ | — |  |  | $ | — |
Actual return on plan assets | 22,888 |  |  | (4,299 | ) |  | — |  |  | — |
Employer contributions | 41 |  |  | 25,000 |  |  | 273 |  |  | 364 |
Benefit payments | (9,262 | ) |  | (9,105 | ) |  | (273 | ) |  | (364 | )
Pension settlements | (162,484 | ) |  | — |  |  | — |  |  | — |
Fair value of plan assets as of December 31 | $ | 42,835 |  |  | $ | 191,652 |  |  | $ | — |  |  | $ | — |
Amount overfunded (underfunded) | $ | 12,535 |  |  | $ | 19,044 |  |  | $ | (1,599 | ) |  | $ | (1,803 | )
The decrease in our plan benefit obligations in 2019 was primarily driven by the termination and settlement of our Merged Plan benefit obligations, in addition to actuarial gains and benefit payments, partially offset by interest costs. The decrease in our benefit obligation in 2018 was primarily driven by actuarial gains and benefit payments made, partially offset by interest costs. Our pension-related balances reflected in the consolidated statements of financial position consisted of the following:
| Pension Benefits |  | Other Postretirement Benefits
| As of December 31, |  | As of December 31,
(Dollars in thousands) | 2019 |  | 2018 |  | 2019 |  | 2018
Assets & Liabilities: |  |  |  |  |  |  |
Non-current assets | $ | 12,790 |  |  | $ | 19,273 |  |  | $ | — |  |  | $ | — |
Current liabilities | (5 | ) |  | (4 | ) |  | (282 | ) |  | (334 | )
Non-current liabilities | (250 | ) |  | (225 | ) |  | (1,317 | ) |  | (1,469 | )
Net assets (liabilities) | $ | 12,535 |  |  | $ | 19,044 |  |  | $ | (1,599 | ) |  | $ | (1,803 | )
Accumulated Other Comprehensive Loss: |  |  |  |  |  |  |
Net actuarial (loss) gain | $ | (13,085 | ) |  | $ | (59,972 | ) |  | $ | 54 |  |  | $ | 68 |
Prior service benefit | — |  |  | — |  |  | 209 |  |  | 1,220 |
Accumulated other comprehensive (loss) income | $ | (13,085 | ) |  | $ | (59,972 | ) |  | $ | 263 |  |  | $ | 1,288 |
The projected benefit obligation (PBO), accumulated benefit obligation (ABO), and fair value of plan assets for the pension plan with a PBO or ABO in excess of its plan assets were immaterial as of December 31, 2019 and 2018. The PBO, ABO, and fair value of plan assets for the pension plan with plan assets in excess of its PBO or ABO were $30.0 million, $30.0 million and $42.8 million, respectively, as of December 31, 2019. The PBO, ABO, and fair value of plan assets for the pension plans with plan assets in excess of their PBO or ABO were $172.4 million, $172.4 million and $191.7 million, respectively, as of December 31, 2018. The PBO and ABO of plan assets for the other postretirement benefit plans with a PBO or ABO in excess of plan assets were both $1.6 million as of December 31, 2019. The PBO and ABO of plan assets for the other postretirement benefit plans with a PBO or ABO in excess of plan assets were both $1.8 million as of December 31, 2018. The other postretirement benefit plans did not have any plan assets as of December 31, 2019 or 2018. Components of Net Periodic Benefit Cost (Credit) The components of net periodic benefit cost (credit) were as follows:
| Pension Benefits |  | Other Postretirement Benefits
| Years Ended December 31, |  | Years Ended December 31,
(Dollars in thousands) | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Service cost | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 61 |  |  | $ | 73 |  |  | $ | 80 |
Interest cost | 5,641 |  |  | 6,758 |  |  | 7,356 |  |  | 59 |  |  | 62 |  |  | 71 |
Expected return of plan assets | (6,932 | ) |  | (8,662 | ) |  | (9,221 | ) |  | — |  |  | — |  |  | — |
Amortization of prior service credit | — |  |  | — |  |  | — |  |  | (1,011 | ) |  | (1,602 | ) |  | (1,602 | )
Amortization of net loss (gain) | 1,514 |  |  | 1,828 |  |  | 1,755 |  |  | — |  |  | — |  |  | — |
Settlement charge | 53,213 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Net periodic benefit cost (credit) | $ | 53,436 |  |  | $ | (76 | ) |  | $ | (110 | ) |  | $ | (891 | ) |  | $ | (1,467 | ) |  | $ | (1,451 | )
Plan Assumptions
| Pension Benefits |  | Other Postretirement Benefits
| 2019 |  | 2018 |  | 2019 |  | 2018
Weighted average assumptions used in benefit obligations: |  |  |  |  |  |  |
Discount rate | 3.25 | % |  | 4.25 | % |  | 2.75 | % |  | 3.75 | %
Weighted average assumptions used in net periodic benefit costs: |  |  |  |  |  |  |
Discount rate | 4.25 | % |  | 3.70 | % |  | 3.75 | % |  | 3.25 | %
Expected long-term rate of return on assets | 4.69 | % |  | 4.94 | % |  | — | % |  | — | %
For measurement purposes as of December 31, 2019, we assumed an annual health care cost trend rate of 6.75% for covered health care benefits for retirees pre-age 65 or post-age 65. The rate was assumed to decrease gradually by 0.25% annually until reaching 4.50% and remain at that level thereafter. For measurement purposes as of December 31, 2018, we assumed an annual health care cost trend rate of 7.00% for covered health care benefits for retirees pre-age 65 or post-age 65. Our pension plan assets are invested with the objective of achieving a total rate of return over the long-term that is sufficient to fund future pension obligations. In managing these assets and our investment strategy, we consider future cash contributions to the plan as well as the potential of the portfolio underperforming the market. We set asset allocation target ranges based on current funding status and future projections in order to mitigate the portfolio performance risk while maintaining its funded status. Fixed income securities comprise a substantial percentage of our plan assets portfolio. As of December 31, 2019, we held approximately 92% fixed income and short-term cash securities and 8% equity securities in our portfolio, compared to December 31, 2018 when we held approximately 99% fixed income and short-term cash securities and 1% equity securities. In determining our investment strategy and calculating the net benefit cost, we utilized an expected long-term rate of return on plan assets, which was developed based on several factors, including the plans’ asset allocation targets, the historical and projected performance on those asset classes, as well as the plan’s current asset composition. To justify our assumptions, we analyzed certain data points related to portfolio performance. For example, we analyze the actual historical performance of our total plan assets, which has generated a return of approximately 6.32% over the past 20-year period. Based on the historical returns and the projected future returns, we determined that a target return of 4.91% is appropriate for the current portfolio. The following table presents the fair value of the pension plan net assets by asset category and level, within the fair value hierarchy, as of December 31, 2019 and 2018.
| Fair Value of Plan Assets as of December 31, 2019
(Dollars in thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Fixed income bonds | $ | — |  |  | $ | 27,704 |  |  | $ | — |  |  | $ | 27,704 |
Mutual funds | 3,277 |  |  | — |  |  | — |  |  | 3,277 |
Pooled separate accounts | — |  |  | 10,516 |  |  | — |  |  | 10,516 |
Guaranteed deposit account | — |  |  | — |  |  | 1,338 |  |  | 1,338 |
Total plan assets at fair value | $ | 3,277 |  |  | $ | 38,220 |  |  | $ | 1,338 |  |  | $ | 42,835 |
| Fair Value of Plan Assets as of December 31, 2018
(Dollars in thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Total
Fixed income bonds | $ | — |  |  | $ | 186,385 |  |  | $ | — |  |  | $ | 186,385 |
Mutual funds | 2,691 |  |  | — |  |  | — |  |  | 2,691 |
Pooled separate accounts | — |  |  | 1,216 |  |  | — |  |  | 1,216 |
Guaranteed deposit account | — |  |  | — |  |  | 1,360 |  |  | 1,360 |
Total plan assets at fair value | $ | 2,691 |  |  | $ | 187,601 |  |  | $ | 1,360 |  |  | $ | 191,652 |
The following table presents a summary of changes in the fair value of the guaranteed deposit account’s Level 3 assets for the year ended December 31, 2019:
| Guaranteed Deposit Account
Balance as of January 1, 2019 | $ | 1,360 |
Change in unrealized gain (loss) | 41 |
Purchases, sales, issuances and settlements (net) | (63 | )
Balance as of December 31, 2019 | $ | 1,338 |
Cash Flows We were not required to make any contributions to our qualified noncontributory defined benefit pension plans in 2019 and 2018. We made a voluntary contribution of $25.0 million to the Merged Plan in 2018 as part of the proposed plan termination process. We made expected benefit payments for our defined benefit pension plans, as well as substantially settled the Merged Plan benefit obligations, through the utilization of plan assets for the funded pension plans in 2019 and 2018. As there is no funding requirement for the other postretirement benefit plans, we funded benefit payments, which were immaterial in 2019 and 2018, as incurred using cash from operations. The benefit payments are based on the same assumptions used to measure our benefit obligations as of December 31, 2019. The following table sets forth the expected benefit payments to be paid for the pension plans and the other postretirement benefit plans:
| Pension Benefits |  | Other Postretirement Benefits
2020 | $ | 2,780 |  |  | $ | 282 |
2021 | $ | 1,870 |  |  | $ | 160 |
2022 | $ | 1,818 |  |  | $ | 121 |
2023 | $ | 1,832 |  |  | $ | 131 |
2024 | $ | 1,818 |  |  | $ | 116 |
2025-2029 | $ | 8,928 |  |  | $ | 774 |
Employee Savings and Investment Plan We sponsor the Rogers Employee Savings and Investment Plan (RESIP), a 401(k) plan for domestic employees. Employees can defer an amount they choose, up to the annual IRS limit of $19,000. Certain eligible participants are also allowed to contribute the maximum catch-up contribution per IRS regulations. Our matching contribution is 6% of an eligible employee’s annual pre-tax contribution at a rate of 100% for the first 1% of the employee’s salary and 50% for the next 5% of the employee’s salary for a total match of 3.5%. Unless otherwise indicated by the participant, the matching dollars are invested in the same funds as the participant’s contributions. RESIP related expense amounted to $4.4 million in 2019, $5.6 million in 2018 and $4.0 million in 2017, which related solely to our matching contributions.

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