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Pension Plans
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Pension Plans

Note 5 – Pension Plans

The Company maintains a noncontributory defined benefit pension plan ("Plan") covering eligible U.S. employees and a defined contribution plan to provide retirement benefits for employees as well as other international defined benefit plans. These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA"), local statutory law or as determined by the Board of Directors. The plans generally provide benefits based upon years of service and compensation. The Company also established arrangements for certain key employees, which provide for supplemental retirement benefits. The Company's plans are funded except for a U.S. non-qualified plan for certain key employees and certain foreign plans.

Within the U.S., hourly employees of the Company who meet specific requirements as to age and length and date of service are covered by a defined benefit pension plan. On December 12, 2012, the Company approved a freeze on further benefit accruals under the Plan and notified the participants of the freeze on December 19, 2012. Beginning February 1, 2013, participants ceased earning additional benefits under the Plan and no new participants entered the Plan. The Company uses a December 31 measurement date for its Plan.

A summary of the Plan follows for the year ended December 31:

 

 

 

 

2022

 

 

2021

 

 

2020

 

Service cost

 

 

 

$

—

 

 

$

—

 

 

$

—

 

Interest cost

 

 

 

 

1,185

 

 

 

1,138

 

 

 

1,301

 

Expected return on plan assets

 

 

 

 

(2,455

)

 

 

(2,343

)

 

 

(2,251

)

Recognized net actuarial loss

 

 

 

 

445

 

 

 

614

 

 

 

475

 

Net periodic pension income

 

 

 

$

(825

)

 

$

(591

)

 

$

(475

)

 

Components of net pension benefit, other than service cost, are included in other income, net in the Consolidated Statement of Income.

The following tables set forth the changes in benefit obligations, the change in plan assets, the funded status, and amounts recognized in the consolidated financial statements for the Plan at December 31:

 

 

 

 

2022

 

 

2021

 

Projected benefit obligation at beginning of the year

 

 

 

$

41,410

 

 

$

42,582

 

Interest cost

 

 

 

 

1,185

 

 

 

1,138

 

Actuarial gain

 

 

 

 

(12,185

)

 

 

(958

)

Benefits paid

 

 

 

 

(1,397

)

 

 

(1,352

)

Projected benefit obligation at end of year

 

 

 

$

29,013

 

 

$

41,410

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of the year

 

 

 

$

37,757

 

 

$

36,756

 

Actual return on plan assets

 

 

 

 

(8,859

)

 

 

2,353

 

Employer contributions

 

 

 

 

2,132

 

 

 

—

 

Benefits paid

 

 

 

 

(1,398

)

 

 

(1,352

)

Fair value of plan assets at end of the year

 

 

 

$

29,632

 

 

$

37,757

 

 

 

 

 

 

 

 

 

 

Pension (asset) obligation

 

 

 

$

(619

)

 

$

3,653

 

 

The actuarial gain in 2022 was primarily the result of an increase in the Plan discount rate from 2.92% in 2021 to 5.55% in 2022.

In 2022, in accordance with ASC 715-20, the Company recognized the over-funded status of the Plan as a non-current asset. The amount recognized in Accumulated other comprehensive loss related to the Plan at December 31 is comprised of the following:

 

 

 

 

2022

 

 

2021

 

Balance at January 1

 

 

 

$

(5,496

)

 

$

(6,704

)

 

 

 

 

 

 

 

 

 

Reclassification adjustments:

 

 

 

 

 

 

 

 

Pre-tax amortized net actuarial loss

 

 

 

 

445

 

 

 

614

 

Tax provision

 

 

 

 

(105

)

 

 

(145

)

 

 

 

 

 

340

 

 

 

469

 

 

 

 

 

 

 

 

 

 

Adjustment to recognize gain on pension asset:

 

 

 

 

 

 

 

 

Pre-tax gain

 

 

 

 

870

 

 

 

968

 

Tax provision

 

 

 

 

(206

)

 

 

(229

)

 

 

 

 

 

664

 

 

 

739

 

 

 

 

 

 

 

 

 

 

Balance at December 31

 

 

 

$

(4,492

)

 

$

(5,496

)

 

The 2022 pre-tax unfunded pension gain of $12.2 million included a gain of $12.0 million due to a 2.63% increase in the discount rate to 5.55%, and a loss of $0.2 million due to demographic changes. There were no changes in the mortality rate used this year, and as a result, no mortality gain or loss whereas there was a loss of $0.3 million in the prior year. Negative asset performance was below the expected 6.50% rate of return assumption and resulted in an asset loss of $11.3 million. There is no prior service cost to be amortized in the future.

The Plan had assets in excess of accumulated benefit obligations as follows:

 

 

 

 

2022

 

 

2021

 

Accumulated benefit obligation

 

 

 

$

29,013

 

 

$

41,410

 

Fair market value of assets

 

 

 

 

29,632

 

 

 

37,757

 

 

 

Weighted-average assumptions used to determine benefit obligations at December 31:

 

2022

 

2021

Discount rate

 

 

 

5.55%

 

2.92%

Rate of compensation increase

 

 

 

n/a

 

n/a

 

 

Weighted-average assumptions used to determine net periodic benefit cost at December 31:

 

2022

 

2021

 

2020

Discount rate

 

 

 

2.92%

 

2.69%

 

3.50%

Rate of compensation increase

 

 

 

n/a

 

n/a

 

n/a

Expected long-term return on plan assets

 

 

 

6.50%

 

6.50%

 

7.00%

 

The net periodic pension cost for 2022 was based on a long-term asset rate-of-return of 6.50%. This rate is based upon management’s estimate of future long-term rates of return on similar assets and is consistent with historical returns on such assets.

At December 31, 2022 and 2021, the Plan’s pooled investment funds were measured at fair value using the net asset value ("NAV"). The NAV is based on the value of the assets owned by the plan, less liabilities. These pooled assets are not quoted on an active exchange. The fair value of the Plan assets at December 31, 2022 and 2021 was $29.6 million and $37.8 million, respectively.

The Plan weighted-average asset allocations at December 31, 2022 and 2021, by asset category, are as follows:

 

 

 

 

Plan assets

 

 

 

 

 

 

at December 31

 

 

Asset category

 

 

 

2022

 

 

2021

 

 

Equity securities

 

 

 

 

37

 

%

 

49

 

%

Debt securities

 

 

 

 

63

 

 

 

51

 

 

 

 

 

 

 

100

 

%

 

100

 

%

 

Management seeks to maximize the long-term total return of financial assets consistent with the fiduciary standards of ERISA. The ability to achieve these returns is dependent upon the need to accept moderate risk to achieve long-term capital appreciation.

In recognition of the expected returns and volatility from financial assets, Plan assets are invested in the following ranges with the target allocation noted:

 

 

Range

 

Target

Equities

 

30-50%

 

40%

Fixed Income

 

50-70%

 

60%

Cash Equivalents

 

0-10%

 

0%

 

Investment in these markets is projected to provide performance consistent with expected long-term returns with appropriate diversification.

The Company's policy is to fund amounts deductible for federal income tax purposes. The Company is currently evaluating the option to contribute to the Plan in 2023.

The benefits expected to be paid out of the Plan assets in each of the next five years and the aggregate benefits expected to be paid for the subsequent five years are as follows:

Year

 

Pension Benefits

 

2023

 

$

1,470

 

2024

 

 

1,548

 

2025

 

 

1,617

 

2026

 

 

1,672

 

2027

 

 

1,780

 

2028-2032

 

 

9,885

 

 

Other Benefit Plans

The Company also provides retirement benefits through various defined contribution plans including PLP-USA’s Profit Sharing Plan. Expense for these defined contribution plans was $6.3 million in 2022, $5.8 million in 2021 and $5.9 million in 2020.

The Company also provides retirement benefits through the Supplemental Profit Sharing Plan. To the extent an employee’s award under PLP-USA’s Profit Sharing Plan exceeds the maximum allowable contribution permitted under existing tax laws, the excess is accrued for (but not funded) under a non-qualified Supplemental Profit Sharing Plan. The Supplemental Profit Sharing Plan allows participants the ability to hypothetically invest their proportionate award into various investment options, which primarily includes mutual funds. The benefit (expense) for the Supplemental Profit Sharing Plan for the year ended December 31, 2022, 2021 and 2020 was $1.3 million, ($0.9) million and $1.1 million, respectively. The Supplemental Profit Sharing Plan unfunded status for the years ended December 31, 2022 and 2021 was $7.3 million and $8.6 million, respectively, and is included in Other noncurrent liabilities.

The Company also has established nonqualified foreign defined benefit plans, which provide post-employment benefits based on years of service. For the periods ending December 31, 2022 and 2021, the Company's benefit obligations related to these unfunded programs were $2.1 million and $3.0 million, respectively. During 2022, 2021 and 2020, the Company recorded benefit costs relating to these programs of $0.2 million, $0.3 million, and $0.1 million, respectively.