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EMPLOYEE DEFINED CONTRIBUTION PLANS
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
EMPLOYEE DEFINED CONTRIBUTION PLANS EMPLOYEE DEFINED CONTRIBUTION PLANS
The Company offers 401(k) savings plans to eligible employees. The Company matches 50% of each employee's contributions to the 401(k) program up to 4% of the employee's eligible earnings, for a maximum match of 2% of eligible earnings.

The Company recorded expense related to its employee defined contribution plans aggregating $3.3 million, $3.5 million and $3.4 million in the years ended December 31, 2022, 2021 and 2020, respectively.
NON-U.S. EMPLOYEE DEFINED BENEFIT PLANS
The Company has defined benefit retirement plans that cover certain employees at various international locations. The Company's policy is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations or to directly pay benefits where appropriate. Benefits under the defined benefit plans are typically based either on years of service and the employee's compensation (generally during a fixed number of years immediately before retirement) or on annual credits. The range of assumptions that are used for these non-U.S. defined benefit plans reflect the different economic environments within the various countries.

In the year ended December 31, 2020, the Company assumed ECI's defined benefit plans in connection with the ECI Acquisition. These plans exist in several international locations where severance pay is either required by law for voluntary or involuntary terminations or upon reaching a statutory retirement age. The Company adopted ECI's policy to fund notional accounts each month in the name of each employee to satisfy not only the severance amounts required by the applicable laws and regulations in certain countries, but also to satisfy severance for other types of terminations not necessarily required by law, but paid in accordance with company policy. Benefits funded and paid under these plans are based upon years of service and the employees' current compensation. At the ECI Acquisition Date, ECI accounted for these plans under the shutdown approach allowed under ASC 715, Compensation - Retirement Benefits (Topic 715) ("ASC 715"). Beginning December 31, 2020, in order to be consistent with the accounting methodology utilized for Ribbon's other defined benefit plans, the Company began to account for the ECI assumed plans using the actuarial cost approach, which is also allowed under ASC 715 for these types of plans. The range of assumptions that are utilized for these plans reflects the different economic environments within each country where such severance indemnities are required.

The Company expanded its actuarial valuation of defined benefit plans beginning with the year ended December 31, 2021 to include the severance plan for employees in India that are unaffiliated with the 2020 acquisition of ECI, thereby increasing the projected benefit obligation by $1.5 million as of December 31, 2021. In addition, the Company aligned the benefits for all employees in India in the year 2021 for consistency, including those employees assumed in the ECI Acquisition in 2020. This benefit alignment was considered a plan amendment for those former ECI employees, resulting in the establishment of a $(3.8) million prior service credit in the year ended December 31, 2021.

In 2020, regulatory changes occurred in the Netherlands that changed the Company's defined benefit pension plan there from a participating plan to a non-participating plan. This plan amendment triggered settlement accounting, resulting in a gain
of $1.6 million, which is included in Other (expense) income, net, in the Company's consolidated statement of operations for the year ended December 31, 2020. Prior to the amendment, the Company's Netherlands pension plan provided defined benefit accruals which were financed by insurance contracts that had a profit sharing feature. The pension benefits accrued were subject to future increases based on final earnings at the end of employment (the final average earnings formula). With the amendment in 2020, the final average earnings formula was frozen and the insurance contracts were converted to fully paid contracts. Following the amendment, pension accruals are now based upon a new formula that only considers current earnings (the career earnings formula) with the benefits still financed through insurance contracts. Ribbon has no further liability for pension benefits earned prior to the amendment as they are fully paid contracts. In addition, the insurance contract for the new benefit accruals has no profit sharing feature. Therefore, Ribbon has no current or future obligation to pay pension benefits promised in the Netherlands beyond the payment of premiums to the insurance company.

A reconciliation of the changes in the benefit obligations and fair value of the assets of the defined benefit plans for the years ended December 31, 2022 and 2021, the funded status of the plans, and the amounts recognized in the consolidated balance sheets as of December 31, 2022 and 2021 were as follows (in thousands):
Year ended December 31,
20222021
Changes in projected benefit obligations:
  Projected benefit obligation, beginning of year$26,938 $25,067 
  Service cost1,355 1,321 
  Interest cost563 523 
  Participant contributions— — 
  Plan amendments— (3,801)
  Net actuarial (gain) loss on obligation(5,604)4,868 
  Settlement(1,063)— 
  Benefits and expenses paid(932)(1,040)
    Projected benefit obligation, end of year$21,257 $26,938 
Changes in plan assets:
  Fair value of plan assets, beginning of year$15,303 $14,350 
  Actual return on plan assets(672)981 
  Employer contributions1,954 989 
  Participant contributions39 23 
  Benefits paid(1,995)(1,040)
    Fair value of plan assets, end of year$14,629 $15,303 
Funded status at end of year$(6,628)$(11,635)
Amounts recognized in accumulated other comprehensive income consist of:
  Prior service (credit) cost$(3,481)$(3,801)
  Net actuarial (gain) loss(1,704)4,045 
$(5,185)$244 
Amounts recognized in the consolidated balance sheets consist of:
  Other assets (non-current pension asset) $552 $— 
  Accrued expenses and other (current pension liability) (803)(461)
  Other long-term liabilities (non-current pension liability)(6,377)(11,174)
    Net amount recognized$(6,628)$(11,635)

The decrease in the underfunded status of the Company's defined benefit plans at December 31, 2022 compared to December 31, 2021 was primarily the result of the increase in the discount rates in the various countries, partially offset by continued benefit accruals. The source of the projected benefit obligation ("PBO") actuarial (gain) loss differed in each country. However, in aggregate, the effect of discount rate changes in 2022 represented the most significant contributor to the PBO actuarial (gain) loss.
Plans with underfunded or non-funded accumulated benefit obligations at December 31, 2022 and 2021 were as follows (in thousands):
December 31,
20222021
Aggregate projected benefit obligation$9,450 $26,938 
Aggregate accumulated benefit obligation$7,418 $20,695 
Aggregate fair value of plan assets$2,270 $15,303 

Plans with overfunded accumulated benefit obligations at December 31, 2022 and 2021 were as follows (in thousands):
December 31,
20222021
Aggregate projected benefit obligation$11,807 $— 
Aggregate accumulated benefit obligation$9,547 $— 
Aggregate fair value of plan assets$12,359 $— 

Net periodic benefit costs for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):
Year ended December 31,
202220212020
Service cost$1,355 $1,321 $1,459 
Interest cost563 523 46 
Expected return on plan assets(266)(314)(343)
Plan asset expenses— — — 
Settlement charge (credit)808 — (1,557)
Amortization of prior service cost(320)— — 
Amortization of net loss275 81 20 
    Net periodic benefit costs$2,415 $1,611 $(375)

Expected benefit payments for the next ten years are as follows (in thousands):
Years ending December 31,
2023$2,863 
20241,314 
20251,562 
20261,315 
20271,584 
2028 to 203211,326 
$19,964 

The changes in plan assets and benefit obligations recognized in other comprehensive income (loss) before tax for the years ended December 31, 2022, 2021 and 2020 were as follows (in thousands):
Year ended December 31,
202220212020
Net (gain) loss$(4,666)$4,201 $(503)
Prior service (credit) cost— (3,801)— 
Amortization of net gain (loss)(275)(81)(20)
Amortization of prior service credit (cost)320 — — 
Settlement (charge) credit(808)— (1,557)
Total recognized in other comprehensive income (loss)$(5,429)$319 $(2,080)

The Company defers all actuarial gains and losses resulting from variances between actual results and economic estimates or actuarial assumptions. The unrecognized actuarial gains and losses are recorded as unrealized pension actuarial gains (losses) in the Company's consolidated balance sheets as a component of Accumulated other comprehensive income (loss).
These unrecognized gains and losses are amortized as a component of net periodic benefit cost when the net gains and losses exceed 10% of the greater of the market value of plan assets or the projected benefit obligation at the beginning of the year.

The principal weighted average assumptions used to determine the benefit obligation at December 31, 2022 and 2021 were as follows:
December 31,
20222021
Discount rate4.74 %2.24 %
Rate of compensation increase4.02 %3.90 %

The principal weighted average assumptions used to determine net period benefit cost for the years ended December 31, 2022, 2021 and 2020 were as follows:
Year ended December 31,
202220212020
Discount rate2.24 %2.16 %0.68 %
Expected long-term return on plan assets1.79 %2.06 %0.21 %
Rate of compensation increase3.90 %2.41 %2.88 %

Assumed discount rates are used in the measurement of the projected and accumulated benefit obligations, as well as the service and interest cost components of net periodic pension cost. Estimated discount rates reflect the rates at which the pension benefits could be effectively settled. For each defined benefit plan, the Company chooses an estimated discount rate from a readily available market index rate, based upon high-quality fixed income investments, specific to the country or economic zone in which the benefits are paid and taking into account the duration of the plan and the number of participants.

The Company's plans in both the Netherlands and Switzerland are funded through insurance contracts, which have historically provided guaranteed interest credit. The fair value of these contracts is derived from the insurance companies' assessment of the minimum value of the benefits provided by the insurance contracts. The methodology used to value these plan assets has always assumed that the value of the plan assets equals the guaranteed insured benefits. For consistency, the same discount rate used in the valuation of the benefit obligations is used to place a value on the plan assets. The assets are assumed to grow each year in line with the discount rate, and therefore, the expected return on the assets is set equal to the discount rate. The fair value of the plan assets in Switzerland was $2.3 million at December 31, 2022 and $1.7 million at December 31, 2021. Due to the plan amendment in 2020 that changed the benefit structure of the Netherlands plan, the Company no longer has any obligation related to this plan beyond the payment of insurance premiums. Therefore, there is no projected benefit obligation and no plan assets in the Netherlands as of December 31, 2022, 2021 or 2020. The Company classifies the fair value of its plan assets as Level 2 in the fair value hierarchy as discussed in Note 6.

During the years ended December 31, 2022 and 2021, employees in Switzerland made contributions to their pension plan aggregating $39,000 and $23,000, respectively. Employee contributions to this plan are based on a fixed 5% of the relevant pensionable earnings. The Company funds this plan by contributing at least the minimum amount required by applicable regulations and as recommended by an independent actuary.

During the years ended December 31, 2022, 2021 and 2020, the Company contributed $2.0 million, $1.0 million and $0.8 million, respectively, to all of its pension plans. The Company expects to contribute $1.5 million to all of its defined benefit plans in 2023.