XML 36 R20.htm IDEA: XBRL DOCUMENT v3.25.0.1
POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2024
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]  
POSTRETIREMENT BENEFITS
We have historically offered certain health care benefits to a large number of our retired U.S. employees. Employees who were hired before January 1, 2002 become eligible for these benefits if they meet the required years of service and age criteria
before retiring. Employees hired on or after January 1, 2002 are not eligible to participate in the plan. In addition to our retiree health care plan, we also maintain an inactive U.S. supplemental executive retirement plan (SERP). This plan is no longer adding new participants and all current participants are retired. The SERP does not have any plan assets, but our obligation under this plan is fully funded through 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, 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 
Interest cost1,639 103 
Net actuarial (gain) loss(3,072)52 
Benefits paid from plan assets and company funds(3,932)(324)
Benefit obligation, December 31, 2024
$30,610 $2,120 
Change in plan assets:
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 — 
Return on plan assets9,729 — 
Benefits paid(2,509)— 
Fair value of plan assets, December 31, 2024
$138,134 $— 
Funded status, December 31, 2023
$94,939 $(2,289)
Funded status, December 31, 2024
$107,524 $(2,120)

(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)2024202320242023
Other non-current assets$107,524 $94,939 $— $— 
Accrued liabilities— 324 324 
Other non-current liabilities— — 1,796 1,965 

Amounts included in accumulated other comprehensive loss that have not been recognized as components of postretirement benefit income were as follows as of December 31:
(in thousands)20242023
Unrecognized net actuarial loss$(23,332)$(29,019)
Unrecognized prior service credit5,650 7,071 
Tax effect1,116 2,124 
Amount recognized in accumulated other comprehensive loss, net of tax
$(16,566)$(19,824)
Unrecognized net actuarial gains and losses arise when actual experience deviates from the assumptions made, as well as from changes in those assumptions. For 2024, the net actuarial gain was primarily driven by an increase in the discount rate applied to the benefit obligation and a decrease in the number of participants. For 2023, the net actuarial gain was mainly driven by demographic and claims experience, partially offset by a reduction in the discount rate applied to the benefit obligation. The unrecognized actuarial gains and losses related to our postretirement benefit plan are amortized over the average remaining life expectancy of inactive plan participants, given that a significant potion of the plan participants are classified as inactive. Currently, this amortization period is 12 years.

The unrecognized prior service credit associated with our postretirement benefit plan stems from past plan amendments that reduced the accumulated postretirement benefit obligation. Initially, any reduction is applied to offset existing unrecognized prior service cost, followed by any remaining unrecognized transition obligation. Any surplus after these adjustments becomes the unrecognized prior service credit. The prior service credit is then 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 is included in other income, net on the consolidated statements of income and consisted of the following components for the years ended December 31:
(in thousands)202420232022
Interest cost$1,742 $1,985 $1,121 
Expected return on plan assets(8,395)(7,320)(7,462)
Amortization of prior service credit(1,421)(1,421)(1,421)
Amortization of net actuarial losses1,334 2,273 900 
Net periodic benefit income$(6,740)$(4,483)$(6,862)

Actuarial assumptions – In measuring the benefit obligations as of December 31, the following discount rate assumptions were used:
Postretirement benefit planPension plan
2024202320242023
Discount rate5.48 %4.89 %5.35 %4.80 %

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

Postretirement benefit planPension plan
202420232022202420232022
Discount rate4.89 %5.09 %2.61 %4.80 %5.00 %2.26 %
Expected return on plan assets6.50 %6.25 %5.25 %— — — 

The discount rate assumption is derived from the rates of return on high-quality, fixed-income instruments that are currently available and whose cash flows approximate the timing and amount of our expected benefit payments. When determining the expected long-term rate of return on plan assets, we start with our historical returns and then make adjustments for estimated inflation and projected market returns. Our inflation assumption is primarily based on an 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.

202420232022
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
6.0 %6.5 %6.6 %7.3 %6.6 %7.3 %
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
20242023
U.S. corporate debt securities55 %54 %
International equity securities20 %20 %
U.S. large capitalization equity securities17 %18 %
Mortgage-backed securities5 %5 %
U.S. small and mid-capitalization equity securities3 %3 %
Total100 %100 %

Our postretirement benefit plan is designed with assets intended to meet long-term obligations. To achieve this, we utilize a total return investment strategy that takes into account cash flow needs while balancing long-term projected returns against expected asset risks, which are measured using projected standard deviations. Our risk tolerance is determined by considering projected plan liabilities, the plan's funded status, projected liquidity needs, and our overall financial condition.

The target asset allocation percentages for our postretirement benefit plan are derived from our liability and asset projections. The targeted allocation of plan assets is 60% fixed income securities, 20% international equity securities, 17% 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, 2024:
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, 2024
(in thousands)(Level 1) (Level 2)(Level 3)
U.S. corporate debt securities$— $76,628 $— $— $76,628 
International equity securities— 27,356 — — 27,356 
U.S. large capitalization equity securities
— 23,754 — — 23,754 
Mortgage-backed securities— 6,939 — — 6,939 
U.S. small and mid-capitalization equity securities
— 3,457 — — 3,457 
Plan assets$— $138,134 $— $— $138,134 

    
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 

The Level 2 investments relate to investment funds that publish daily net asset value (NAV) per unit. The daily NAV is accessible to participants in the funds, and redemptions can be executed daily at the current NAV. The fair value and the number of units are determined and published, serving as the basis for current transactions. Although these investments do not qualify for the NAV practical expedient, they are measured at the published NAV because the quoted NAV per unit reflects 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 at the end of the reporting period during which the transfer occurred.

Cash flows – We made no contributions to plan assets during the past three 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 $8,007 as of December 31, 2024 and $7,713 as of December 31, 2023.

The following benefit payments are expected to be paid during the years indicated:
(in thousands)Postretirement benefit planPension plan
2025$4,084 $320 
20263,752 300 
20273,463 280 
20283,203 260 
20292,951 240 
2030 - 203411,904 860 
401(k) plan – We offer a 401(k) plan to provide retirement benefits for eligible employees. This plan covers the majority of full-time employees and some part-time employees. Employees generally become eligible to participate in the plan after completing 30 days of service.

Both employees and Deluxe contribute to the 401(k) plan. Employees can contribute up to 50% of eligible wages, subject to IRS limitations and the plan's terms and conditions. For most employees, we match 100% of the first 1% of wages contributed and 50% of the next 5% of wages contributed. The expense recognized for the 401(k) plan matching contributions was $11,282 for 2024, $12,046 for 2023, and $12,958 for 2022. All contributions from employees and Deluxe are remitted to the plan's trustee. Benefits provided by the plan are paid from the accumulated funds within the trust.

Employees have a broad range of investment options to choose from when investing their 401(k) plan funds. Investing directly in our common stock is not an option, although the funds selected by employees may occasionally hold our common stock.