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RETIREMENT PLANS
 12 Months Ended
Dec. 31, 2021
Postemployment Benefits [Abstract]  
RETIREMENT PLANS RETIREMENT PLANSThe Corporation’s banking subsidiary has a non-contributory, defined benefit pension plan. Retirement benefits are a function of both years of service and compensation. The funding policy is to contribute annually the amount that is sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act.
A measurement date of December 31 has been used for the fiscal years ended December 31, 2021 and 2020.
In thousands20212020
Change in benefit obligation:  
Benefit obligation at beginning of year$39,412 $34,534 
Service cost879 751 
Interest cost945 1,080 
Actuarial loss(660)4,405 
Benefits paid(1,453)(1,358)
Projected benefit obligation at end of year39,123 39,412 
Change in plan assets:  
Fair value of plan assets at beginning of year45,337 44,292 
Actual return on plan assets6,334 2,403 
Employer contribution— — 
Benefits paid(1,453)(1,358)
Fair value of plan assets at end of year50,218 45,337 
Funded Status, included in other assets$11,095 $5,925 
Amounts recognized in accumulated other comprehensive loss:  
Total net actuarial loss$7,785 $13,221 
Prior service cost— — 
Total included in accumulated other comprehensive loss (pretax)$7,785 $13,221 
For the years ended December 31, 2021 and 2020, the assumptions used to determine the benefit obligation are as follows:
20212020
Discount rate2.75 %2.45 %
Rate of compensation increase3.50 %3.50 %
The discount rate assumption used to determine the benefit obligation increased since last year. This change results in a decrease in the benefit obligation.
The components of net periodic benefit (income) cost related to the non-contributory, defined benefit pension plan for the years ended December 31 are as follows:
In thousands20212020
Components of net periodic benefit cost (income):  
Service cost$879 $751 
Interest cost945 1,080 
Expected return on plan assets(2,814)(2,746)
Recognized net actuarial loss1,255 675 
Amortization of prior service cost— — 
Net Periodic Benefit (Income) Cost265 (240)
Net loss(4,181)4,749 
Amortization of net loss(1,255)(675)
Amortization of prior service cost— — 
Total recognized in other comprehensive loss (income)$(5,436)$4,074 
Total recognized in net periodic benefit cost (income) and other comprehensive (income) loss$(5,171)$3,834 
For the years ended December 31, 2021 and 2020, the assumptions used to determine the net periodic benefit cost (income) are as follows:
20212020
Discount rate2.45 %3.20 %
Expected long-term rate of return on plan assets6.75 %6.75 %
Rate of compensation increase3.50 %3.50 %
The Corporation’s comparison of obligations to plan assets at December 31, 2021 and 2020 are as follows:
In thousands20212020
Projected benefit obligation$39,123 $39,412 
Accumulated benefit obligation37,159 37,522 
Fair value of plan assets at measurement date50,218 45,337 
It has not yet been determined the amount that the Bank may contribute to the Plan in 2022. ACNB does not anticipate any refunds from the postretirement Plan. The Corporation reduced the future benefit accruals for the defined benefit pension plan effective January 1, 2010, in order to manage total benefit expense. The new formula is the earned benefit as of December 31, 2009, plus 0.75% of a participant’s average monthly pay multiplied by years of benefit service earned on and after January 1, 2010, but not more than 25 years. The benefit formula percentage and maximum years of benefit service were both reduced. Effective April 1, 2012, no inactive or former participant in the Plan is eligible to again participate in the plan, and no employee hired after March 31, 2012, is eligible to participate in the Plan. As of the last annual census, ACNB Bank had a combined 346 active, vested terminated, and retired persons in the Plan.
For the year ended December 31, 2021 the mortality assumption has been updated to reflect the historical U.S. mortality date in the MP-2021 report. The assumption changes decreased the benefit obligation by $1,509,000. For the year ended December 31, 2020 the mortality assumption has been updated to reflect the historical U.S. mortality date in the MP-2020 report. The assumption changes increased the benefit obligation by $3,699,000.
Based on current data and assumptions, the following benefit payments, which reflect expected future service, as appropriate, are:
Years EndingIn thousands
2022$1,740 
20231,870 
20241,920 
20251,970 
20261,980 
2027 - 203110,160 
The Corporation’s pension plan weighted-average assets’ allocations at December 31, 2021 and 2020, are as follows:
20212020
Equity securities65 %54 %
Debt securities31 %32 %
Real property4 %14 %
100 %100 %
The Corporation’s overall investment strategy is to achieve a mix of investments to meet the long-term rate of return assumption and near-term pension obligations with a diversification of assets types, fund strategies and fund managers. The mix of investments is adjusted periodically by retaining an advisory firm to recommend appropriate allocations after reviewing the Corporation’s risk tolerance on contribution levels, funded status and plan expense, and any applicable regulatory requirements. The weighted-average assets’ allocation in the above table represents the Corporation’s conclusion on the appropriate mix of investments. The specific investment vehicles are institutional separate accounts from a variety of fund managers which are regularly reviewed by the Corporation for acceptable performance.
Equity securities included Corporation common stock in amounts of $2,543,000, or 5% of total plan assets, and $1,963,000, or 4% of total plan assets, at December 31, 2021 and 2020, respectively.
Fair value measurements at December 31, 2021, are as follows:
In thousandsTotalLevel 1Level 2Level 3
Equity securities$32,909 $2,543 $30,366 $— 
Debt securities15,441 — 15,441 — 
Real estate1,868 — 1,868 — 
Fair value measurements at December 31, 2020, are as follows:
In thousandsTotalLevel 1Level 2Level 3
Equity securities$24,542 $1,963 $22,579 $— 
Debt securities14,568 — 14,568 — 
Real estate6,227 — 6,227 — 
The Corporation’s banking subsidiary maintains a 401(k) plan for the benefit of eligible employees. Employees may contribute up to 100% of their compensation subject to certain limits based on federal tax laws. The Bank makes matching contributions equal to 100% of an employee’s compensation contributed to the plan up to 3% of an employee’s pay, plus 50% of an employee’s compensation contributed to the plan on the next 2% of their pay for the payroll period. Matching contributions vest immediately to the employee. Bank contributions to and expenses for the plan were $921,000 and $887,000 for 2021 and 2020, respectively.
ACNB Insurance Services, Inc. has a similar but separate 401(k) plan with the match of 6% for non-highly compensated employees and 3% match for highly compensated employees. ACNB Insurance Services, Inc.’s contributions to and expenses for the plan were $124,000 and $126,000 for 2021 and 2020, respectively.
The Corporation’s banking subsidiary maintains nonqualified compensation plans for selected senior officers. The estimated present value of future benefits is accrued over the period from the effective date of the agreements until the expected retirement dates of the individuals. The balance accrued for these plans included in other liabilities as of December 31, 2021 and 2020, totaled $3,768,000 and $3,491,000, respectively. The annual expense included in salaries and benefits expense
totaled $505,000 and $524,000 during the years ended December 31, 2021 and 2020, respectively. To fund the benefits under these plans, the Bank is the owner of single premium life insurance policies on participants in the nonqualified retirement plans.