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RETIREMENT PLANS
 12 Months Ended
Dec. 31, 2022
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, 2022 and 2021.
In thousands20222021
Change in benefit obligation:  
Benefit obligation at beginning of year$39,123 $39,412 
Service cost777 879 
Interest cost1,052 945 
Actuarial loss(9,141)(660)
Benefits paid(1,585)(1,453)
Projected benefit obligation at end of year30,226 39,123 
Change in plan assets:  
Fair value of plan assets at beginning of year50,218 45,337 
Actual return on plan assets(5,514)6,334 
Employer contribution— — 
Benefits paid(1,585)(1,453)
Fair value of plan assets at end of year43,119 50,218 
Funded Status, included in other assets$12,893 $11,095 
Amounts recognized in accumulated other comprehensive loss:  
Total net actuarial loss$6,887 $7,785 
Prior service cost— — 
Total included in accumulated other comprehensive loss (pretax)$6,887 $7,785 
For the years ended December 31, 2022 and 2021, the assumptions used to determine the benefit obligation are as follows:
20222021
Discount rate5.10 %2.75 %
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 thousands20222021
Components of net periodic benefit cost (income):  
Service cost$777 $879 
Interest cost1,052 945 
Expected return on plan assets(3,136)(2,814)
Recognized net actuarial loss407 1,255 
Amortization of prior service cost— — 
Net Periodic Benefit (Income) Cost(900)265 
Net loss(491)(4,181)
Amortization of net loss(407)(1,255)
Amortization of prior service cost— — 
Total recognized in other comprehensive loss (income)$(898)$(5,436)
Total recognized in net periodic benefit cost (income) and other comprehensive (income) loss$(1,798)$(5,171)
For the years ended December 31, 2022 and 2021, the assumptions used to determine the net periodic benefit cost (income) are as follows:
20222021
Discount rate2.75 %2.45 %
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, 2022 and 2021 are as follows:
In thousands20222021
Projected benefit obligation$30,226 $39,123 
Accumulated benefit obligation29,150 37,159 
Fair value of plan assets at measurement date43,119 50,218 
It has not yet been determined the amount that the Bank may contribute to the Plan in 2023. 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 343 active, vested terminated, and retired persons in the Plan.
For the year ended December 31, 2022 the mortality assumption has been updated to reflect the most recently published mortality information through October 20, 2022. The assumption changes decreased the benefit obligation by $9,714,000. 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.
Based on current data and assumptions, the following benefit payments, which reflect expected future service, as appropriate, are:
Years EndingIn thousands
2023$1,920 
20241,970 
20252,010 
20262,030 
20272,020 
2028 - 203210,440 
The Corporation’s pension plan weighted-average assets’ allocations at December 31, 2022 and 2021, are as follows:
20222021
Equity securities46 %65 %
Debt securities49 %31 %
Real property5 %4 %
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 $3,339,000, or 8% of total plan assets, and $2,543,000, or 5% of total plan assets, at December 31, 2022 and 2021, respectively.
Fair value measurements at December 31, 2022, are as follows:
In thousandsTotalLevel 1Level 2Level 3
Equity securities$19,749 $3,339 $16,410 $— 
Debt securities21,228 — 21,228 — 
Real estate2,142 — 2,142 — 
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 — 
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 $901,000 and $921,000 for 2022 and 2021, 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 $157,000 and $124,000 for 2022 and 2021, 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, 2022 and 2021, totaled $4,145,000 and $3,768,000, respectively. The annual expense included in salaries and benefits expense
totaled $628,000 and $505,000 during the years ended December 31, 2022 and 2021, 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.