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Note 6 - Accrued Retirement Benefits
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Retirement Benefits [Text Block]

6.

ACCRUED RETIREMENT BENEFITS

 

Accrued retirement benefits at December 31, 2022 and 2021 consisted of the following:

 

   

2022

    

2021

  
   

(in thousands)

  
                 

Defined benefit pension plan

   $ 1,023     $ 5,932  

Non-qualified retirement plan

     1,731       2,147  

Total

     2,754       8,079  

Less current portion

     (142

)

     (142

)

Non-current portion of accrued retirement benefits

   $ 2,612     $ 7,937  

 

The Company had two defined benefit pension plans which covered substantially all former bargaining and non-bargaining full-time, part-time and intermittent employees. In 2011, pension benefits under both plans were frozen. The Company merged the two defined benefit pension plans to streamline the administration of the frozen plan in 2018. The Company also has an unfunded non-qualified retirement plan covering nine of its former employees. The non-qualified retirement plan was frozen in 2009 and future vesting of additional benefits was discontinued.

 

In November 2022, the Company signed a purchase agreement with an insurer to annuitize the scheduled pension payments of 167 participants currently receiving benefits. Approximately $14.5 million was paid to the insurer from plan assets for the group annuity contract.

 

In November 2021, the Company signed a purchase agreement with an insurer to annuitize the scheduled pension payments of 384 participants currently receiving benefits. Approximately $10.4 million was paid to the insurer from plan assets for the group annuity contract.

 

The measurement date for the Company’s benefit plan disclosures is December 31 of each year. The changes in benefit obligations and plan assets for the years ended December 31, 2022 and 2021, and the funded status of the plans and assumptions used to determine benefit information at December 31, 2022 and 2021 were as follows:

 

   

2022

    

2021

  
   

(in thousands)

  
Change in benefit obligations:                

Benefit obligations at beginning of year

   $ 40,182     $ 54,655  

Interest cost

     1,034       1,237  

Actuarial gain

     (7,772

)

     (1,160

)

Benefits paid

     (16,907

)

     (14,550

)
                 

Benefit obligations at end of year

     16,537       40,182  
                 
Change in plan assets:                

Fair value of plan assets at beginning of year

     32,103       43,587  

Actual return on plan assets

     (7,241

)

     1,384  

Employer contributions

     5,828       1,682  

Benefits paid

     (16,907

)

     (14,550

)
                 

Fair value of plan assets at end of year

     13,783       32,103  
                 

Funded status

   $ (2,754

)

   $ (8,079

)

Accumulated benefit obligations

   $ 16,537     $ 40,182  

 

Weighted average assumptions to determine benefit obligations:

  

Discount rate

     5.11 - 5.14%       2.69 - 2.74%  

Expected long-term return on plan assets

       5.00%           4.00%    

Rate of compensation increase

       n/a           n/a    

 

 

Accumulated other comprehensive loss of $8.3 million and $15.6 million at December 31, 2022 and 2021, respectively, represent the net actuarial loss which have not yet been recognized as a component of pension and other post-retirement expense.

 

Components of net periodic benefit cost and other amounts recognized in comprehensive income were as follows:

 

   

2022

    

2021

  
   

(in thousands)

  
Pension and other benefits:                

Interest cost

   $ 1,034     $ 1,237  

Expected return on plan assets

     (1,226

)

     (1,680

)

Recognized net actuarial loss

     585       933  

Settlement expense

     7,492       4,252  

Pension expense

   $ 7,885     $ 4,742  
                 
Other changes in plan assets and benefit obligations recognized in comprehensive income:                

Net loss (gain)

   $ 696    

$

 (865

)

Amortization of recognized loss

     (8,077

)

     (5,185

)

Total recognized gain in comprehensive income

   $ (7,381

)

   $ (6,050

)

 

Weighted average assumptions used to determine net periodic benefit cost:

   2022    

2021

  
                         

Discount rate

     2.69 - 2.74%       2.28 - 2.35%  

Expected long-term return on plan assets

       4.00%           4.50%    

Rate of compensation increase

       n/a           n/a    

 

The expected long-term rate of return on plan assets was based on a building-block approach. Historical markets are studied and long-term historical relationships between equities and fixed income are presumed consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term capital markets are determined. Diversification and rebalancing of plan assets are properly considered as part of establishing long-term portfolio returns.

 

At December 31, 2022 and 2021, the plan held shares of various Aon Collective Investment Trust (“ACIT”) funds. The fair value of the Company’s pension plan assets by category were as follows:

 

   

2022 Fair Value Measurements

(in thousands)

                  
   

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

    

Significant Other

Observable Inputs

(Level 2)

    

Measured at

NAV as a

practical

expedient

    

Total

  

ACIT equity funds

   $ -     $ 631     $ 828     $ 1,459  

ACIT fixed income funds

     -       10,666       261       10,927  

Cash management funds

     -       1,397       -       1,397  
                                 
    $ -     $ 12,694     $ 1,089     $ 13,783  

 

   

2021 Fair Value Measurements

(in thousands)

                  
   

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

    

Significant Other

Observable Inputs

(Level 2)

    

Measured at

NAV as a

practical

expedient

    

Total

  

ACIT equity funds

   $ -     $ 6,385     $ 1,425     $ 7,810  

ACIT fixed income funds

     -       21,114       1,746       22,860  

Cash management funds

     -       1,433       -       1,433  
                                 
    $ -     $ 28,932     $ 3,171     $ 32,103  

 

 

Level 1 assets are priced using quotes for trades occurring in active markets for the identical asset. Level 2 assets are priced using observable inputs for the asset (for example, interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs). Net asset values (“NAV”) of ACIT funds included in Level 2 are readily determinable, measured daily and based on the fair value of each fund’s underlying investments. For certain ACIT funds, NAV is used as a practical expedient to estimate fair value and is not categorized in the fair value hierarchy. These funds determine NAV based on the fair value of its underlying investments on a monthly or quarterly basis and have redemption restrictions. Redemptions may be requested at the fund’s quarter-end NAV under the notification requirements of each fund, including a 105 day notice.

 

An administrative committee consisting of certain senior management employees administers the Company’s defined benefit pension plan. The pension plan assets are allocated among approved asset types based on the plan’s current funded status and other characteristics set by the administrative committee, subject to liquidity requirements of the plan.

 

Estimated future benefit payments are as follows (in thousands):

 

Years ending December 31,  

2023

   $ 1,507  

2024

   $ 1,474  

2025

   $ 1,448  

2026

   $ 1,416  

2027

   $ 1,379  

2028-2032

   $ 6,283  

 

The Company made voluntary contributions of $5.7 million and $1.0 million to its defined benefit pension plan in August 2022 and 2021, respectively. The Company also funded a minimum required contribution of $0.6 million to its pension plan in January 2021. The CARES Act included limited funding relief provisions for single employer defined benefit plans allowing the deferral of required contributions that would have been otherwise due in 2020. No minimum contributions are required in 2023.