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POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2023
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]  
POSTRETIREMENT BENEFITS
We have historically provided certain health care benefits for a large number of retired U.S. employees. Employees hired prior to January 1, 2002 become eligible for benefits if they attain the appropriate years of service and age prior to retirement. Employees hired on January 1, 2002 or later are not eligible to participate in the plan. In addition to our retiree health care plan, we also have an inactive U.S. supplemental executive retirement plan ("SERP"). This plan is not adding new participants and all of the current participants are retired. The SERP has no plan assets, but our obligation is fully funded by investments in company-owned life insurance policies.

Obligations and funded status – Changes in our benefit obligation, plan assets and funded status for the years ended December 31 were as follows:
(in thousands)Postretirement benefit plan
Pension plan(1)
Change in benefit obligation:
Benefit obligation, December 31, 2021
$57,781 $3,060 
Interest cost1,069 52 
Net actuarial gain(13,839)(414)
Benefits paid from plan assets and company funds(5,302)(324)
Benefit obligation, December 31, 2022
39,709 2,374 
Interest cost1,874 111 
Net actuarial (gain) loss(785)128 
Benefits paid from plan assets and company funds(4,823)(324)
Benefit obligation, December 31, 2023
$35,975 $2,289 
Change in plan assets:
Fair value of plan assets, December 31, 2021
$144,800 $— 
Loss on plan assets(22,116)— 
Benefits paid(3,632)— 
Fair value of plan assets, December 31, 2022
119,052 — 
Return on plan assets15,241 — 
Benefits paid(3,379)— 
Fair value of plan assets, December 31, 2023
$130,914 $— 
Funded status, December 31, 2022
$79,343 $(2,374)
Funded status, December 31, 2023
$94,939 $(2,289)

(1) The accumulated benefit obligation equals the projected benefit obligation.

The funded status of our plans was recognized on the consolidated balance sheets as of December 31 as follows:
Postretirement benefit planPension plan
(in thousands)2023202220232022
Other non-current assets$94,939 $79,343 $— $— 
Accrued liabilities— — 324 324 
Other non-current liabilities— — 1,965 2,050 
Amounts included in accumulated other comprehensive loss as of December 31 that have not been recognized as components of postretirement benefit income were as follows:
(in thousands)20232022
Unrecognized net actuarial loss$(29,019)$(39,871)
Unrecognized prior service credit7,071 8,493 
Tax effect2,124 4,506 
Amount recognized in accumulated other comprehensive loss, net of tax
$(19,824)$(26,872)

Unrecognized net actuarial gains and losses result from experience different from that assumed and from changes in assumptions. The net actuarial gain recognized during 2023 was driven primarily by demographic and claims experience, partially offset by the decrease in the discount rate used to discount the benefit obligation. The net actuarial gain recognized during 2022 was driven primarily by the increase in the discount rate and a reduction in the number of plan participants. Unrecognized actuarial gains and losses for our postretirement benefit plan are amortized over the average remaining life expectancy of inactive plan participants, as a large percentage of the plan participants are classified as inactive. This amortization period is currently 12 years.

The unrecognized prior service credit relates to our postretirement benefit plan and is a result of previous plan amendments that reduced the accumulated postretirement benefit obligation. A reduction is first used to reduce any existing unrecognized prior service cost, then to reduce any remaining unrecognized transition obligation. The excess is the unrecognized prior service credit. The prior service credit is amortized on the straight-line basis over the remaining life expectancy of plan participants at the time of each plan amendment.

Postretirement benefit income – Postretirement benefit income for the years ended December 31 consisted of the following components:
(in thousands)202320222021
Interest cost$1,985 $1,121 $968 
Expected return on plan assets(7,320)(7,462)(7,498)
Amortization of prior service credit(1,421)(1,421)(1,421)
Amortization of net actuarial losses2,273 900 1,629 
Net periodic benefit income$(4,483)$(6,862)$(6,322)

Actuarial assumptions – In measuring the benefit obligations as of December 31, the following discount rate assumptions were used:
Postretirement benefit planPension plan
2023202220232022
Discount rate4.89 %5.09 %4.80 %5.00 %

In measuring net periodic benefit income for the years ended December 31, the following assumptions were used:

Postretirement benefit planPension plan
202320222021202320222021
Discount rate5.09 %2.61 %2.16 %5.00 %2.26 %1.74 %
Expected return on plan assets6.25 %5.25 %5.50 %— — — 

The discount rate assumption is based on the rates of return on high-quality, fixed-income instruments currently available whose cash flows approximate the timing and amount of expected benefit payments. In determining the expected long-term rate of return on plan assets, we utilize our historical returns and then adjust these returns for estimated inflation and projected market returns. Our inflation assumption is primarily based on analysis of historical inflation data.
In measuring the benefit obligation as of December 31 for our postretirement benefit plan, the following assumptions for health care cost trend rates were used. These rates are utilized to determine our periodic benefit income for the following year.

202320222021
Participants under age 65Participants age 65 and olderParticipants under age 65Participants age 65 and olderParticipants under age 65Participants age 65 and older
Health care cost trend rate assumed for next year
6.6 %7.3 %6.6 %7.3 %6.9 %7.6 %
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.5 %4.5 %4.5 %4.5 %4.5 %4.5 %
Year that the rate reaches the ultimate trend rate
203020302030203020302030

Plan assets – The allocation of plan assets by asset category as of December 31 was as follows:
Postretirement benefit plan
20232022
U.S. corporate debt securities54 %55 %
International equity securities20 %20 %
U.S. large capitalization equity securities18 %17 %
Mortgage-backed securities5 %5 %
U.S. small and mid-capitalization equity securities3 %3 %
Total100 %100 %

Our postretirement benefit plan has assets that are intended to meet long-term obligations. In order to meet these obligations, we employ a total return investment approach that considers cash flow needs and balances long-term projected returns against expected asset risk, as measured using projected standard deviations. Risk tolerance is established through consideration of projected plan liabilities, the plan's funded status, projected liquidity needs and our financial condition.

The target asset allocation percentages for our postretirement benefit plan are based on our liability and asset projections. The targeted allocation of plan assets is 59% fixed income securities, 20% international equity securities, 18% large capitalization equity securities and 3% small and mid-capitalization equity securities.

Information regarding fair value measurements of plan assets was as follows as of December 31, 2023:
Fair value measurements using
Quoted prices in active markets for identical assetsSignificant other observable inputsSignificant unobservable inputsInvestments measured at net asset value
Fair value as of
December 31, 2023
(in thousands)(Level 1) (Level 2)(Level 3)
U.S. corporate debt securities$— $71,225 $— $— $71,225 
International equity securities— 26,441 — — 26,441 
U.S. large capitalization equity securities
— 23,143 — — 23,143 
Mortgage-backed securities— 6,540 — — 6,540 
U.S. small and mid-capitalization equity securities
— 3,565 — — 3,565 
Plan assets$— $130,914 $— $— $130,914 

    
Information regarding fair value measurements of plan assets was as follows as of December 31, 2022:
Fair value measurements using
Quoted prices in active markets for identical assetsSignificant other observable inputsSignificant unobservable inputsInvestments measured at net asset value
Fair value as of
December 31, 2022
(in thousands)(Level 1) (Level 2)(Level 3)
U.S. corporate debt securities$— $65,700 $— $— $65,700 
International equity securities— 23,835 — — 23,835 
U.S. large capitalization equity securities
— 20,496 — — 20,496 
Mortgage-backed securities— 5,959 — — 5,959 
U.S. small and mid-capitalization equity securities
— 3,062 — — 3,062 
Plan assets$— $119,052 $— $— $119,052 

The Level 2 investments relate to investment funds that publish daily net asset value ("NAV") per unit. The daily NAV is available to participants in the funds and redemptions can be made daily at the current NAV. The fair value and units are determined and published, and are the basis for current transactions. The investments are not eligible for the NAV practical expedient. However, they are measured at the published NAV because the quoted NAV per unit represents the price at which the investment would be sold in a transaction between independent market participants. Our policy is to recognize transfers between fair value levels as of the end of the reporting period in which the transfer occurred.

Cash flows – We made no contributions to plan assets during the past 3 years.

We have fully funded the SERP obligation with investments in company-owned life insurance policies. The cash surrender value of these policies is included in long-term investments on the consolidated balance sheets and totaled $7,713 as of December 31, 2023 and $7,429 as of December 31, 2022.

The following benefit payments are expected to be paid during the years indicated:
(in thousands)Postretirement benefit planPension plan
2024$4,711 $320 
20254,356 300 
20263,907 280 
20273,560 260 
20283,277 250 
2029 - 203313,049 910 
401(k) plan – We maintain a 401(k) plan to provide retirement benefits for certain employees. The plan covers a majority of full-time employees, as well as some part-time employees. Employees generally become eligible to participate in the plan after completing 30 days of service.

401(k) contributions are made by both employees and Deluxe. Employees may contribute up to 50% of eligible wages, subject to IRS limitations and the terms and conditions of the plan. For the majority of employees, we typically match 100% of the first 1% of wages contributed and 50% of the next 5% of wages contributed. Effective April 1, 2020, we suspended the company matching contribution to maintain liquidity during the COVID-19 pandemic. The company match was reinstated on January 1, 2022. Expense recognized for the 401(k) plan matching contribution was $12,046 for 2023, $12,958 for 2022 and $763 for 2021. The expense recognized during 2021 related to First American, which was acquired on June 1, 2021 (Note 6). All employee and employer contributions are remitted to the plan's trustee. Benefits provided by the plan are paid from accumulated funds of the trust.

Employees are provided a broad range of investment options to choose from when investing their 401(k) plan funds. Investing in our common stock is not one of these options, although funds selected by employees may at times hold our common stock.