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Post Retirement Benefits | 12 Months Ended
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Dec. 31, 2020
Post Retirement Benefits |
Post Retirement Benefits | 12. Post Retirement Benefits The Company provides post retirement benefits to certain of its United States and Canadian employees, including contributions to a multi-employer defined benefit pension plan, health care and life insurance benefits , and contributions to several defined retirement contribution plans. The Company contributes to a multi-employer defined benefit pension plan for its employees represented by the International Association of Machinists and Aerospace Workers ("IAM") at the Company’s Columbus, Ohio production facility . The Company does not administer this plan and contributions are determined in accordance with provisions of the collective bargaining agreement. The risks of participating in this multi-employer plan are different from a single -employer plan in the following aspects: • Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. • If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. • If the Company chooses to stop participating in its multi-employer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The Company’s participation in the multi-employer defined benefit pension plan for the years ended December 31, 2020 and 2019 is outlined in the table below. The most recent Pension Protection Act ("PPA") zone status is for the plan ’s year -end at December 31, 2020 . The zone status is based on information the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded , plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented ” column indicates whether a financial improvement plan ("FIP") or a rehabilitation plan ("RP") is either pending or has been implemented. Expiration FIP/RP Date of Pension Protection Status Contributions of the Collective EIN/Pension Act Zone Status Pending/ Company Surcharge Bargaining Pension Fund Plan Number 2020 2019 Implemented 2020 2019 Imposed Agreement IAM National Pension Fund / National Pension Plan (A) 51-6031295 - 002 as of 12/31/19 as of 12/31/18 Implemented $ 676,000 $ 971,000 Yes 8/7/2022 Total Contributions: $ 676,000 $ 971,000 The plan re-certified its zone status after using the amortization provisions of the Code. The Company's contributions to the plan did not represent more than 5% of total contributions to the plan as indicated in the plan's most recently available annual report for the plan year ended December 31, 2019. Under the terms of the collective-bargaining agreement, the Company is required to make contributions to the plan for each hour worked up to a maximum of 40 hours per person, per week at $1.55 per hour from August 10, 2019 through August 6, 2022. The Company is paying a surcharge of $2.40. Prior to the acquisition of Columbus Plastics, certain of the Company's employees were participants, or were eligible to participate, in Navistar's post retirement health and life insurance benefit plan . This plan provides healthcare and life insurance benefits for certain employees upon their retirement, along with their spouses and certain dependents and requires cost sharing between the Company, Navistar and the participants, in the form of premiums, co-payments, and deductibles. The Company and Navistar share the cost of benefits for these employees, using a formula that allocates the cost based upon the respective portion of time that the employee was an active service participant after the acquisition of Columbus Plastics to the period of active service prior to the acquisition of Columbus Plastics. The Company also sponsors a post retirement health and life insurance benefit plan for certain union retirees of its Columbus, Ohio production facility . In August 2010, as part of a new collective-bargaining agreement, the post retirement health and life insurance benefits for all current and future represented employees who were not retired were eliminated in exchange for a one- time cash payment. Individuals who retired prior to August 2010 remain eligible for post retirement health and life insurance benefits. The elimination of post retirement health and life insurance benefits described above resulted in a reduction of the Company’s post retirement benefits liability of approximately $ 10,282,000 in 2010. This reduction in post retirement benefits liability was treated as a negative plan amendment and is being amortized as a reduction to net periodic benefit cost over approximately twenty years, the actuarial life expectancy of the remaining participants in the plan at the time of the amendment. This negative plan amendment resulted in net periodic benefit cost reductions of approximately $ 496,000 in 2020, 2019 and 2018, and will result in net periodic benefit cost reductions of approximately $ 496,000 in 2021 and each year thereafter during the amortization period. The funded status of the Company's post retirement health and life insurance benefits plan as of December 31, 2020 and 2019 and reconciliation with the amounts recognized in the consolidated balance sheets are provided below: Post Retirement Benefits 2020 2019 Change in benefit obligation: Benefit obligation at January 1 $ 9,160,000 $ 8,076,000 Interest cost 237,000 285,000 Unrecognized loss (gain) (102,000) 1,099,000 Benefits paid, net (186,000) (300,000) Benefit obligation at December 31 $ 9,109,000 $ 9,160,000 Plan Assets — — Amounts recorded in accumulated other comprehensive income: Prior service credit $ (5,114,000) $ (5,610,000) Net loss 3,351,000 3,634,000 Total $ (1,763,000) $ (1,976,000) Weighted-average assumptions as of December 31: Discount rate used to determine benefit obligation and net periodic benefit cost 2.0 % 2.9 % The components of expense for all of the Company's post retirement benefit plans for the years ended December 31: 2020 2019 2018 Pension expense: Multi-employer plan $ 676,000 $ 971,000 $ 760,000 Defined contribution plans 1,173,000 1,258,000 1,059,000 Total pension expense 1,849,000 2,229,000 1,819,000 Health and life insurance: Interest cost 235,000 285,000 277,000 Amortization of prior service costs (496,000) (496,000) (496,000) Amortization of net loss 181,000 117,000 171,000 Net periodic benefit cost (80,000) (94,000) (48,000) Total post retirement benefits expense $ 1,769,000 $ 2,135,000 $ 1,771,000 The Company accounts for post retirement benefits under FASB ASC 715, which requires the recognition of the funded status of a defined benefit pension or post retirement plan in the consolidated balance sheets. For the year ended December 31, 2020, the Company recognized a net actuarial gain of $ 102,000 which is comprised of differences between actual and expected benefit payments, expenses and balance sheet accruals resulting in a gain of $ 1,047,000 , offset by an actuarial loss of $ 945,000 . For the year ended December 31, 2019, the Company recognized a net actuarial loss of $ 1,099,000 , which is comprised of an actuarial loss of $ 1,956,000 , offset by differences between actual and expected benefit payments, expenses and balance sheet accrual resulting in a gain of $ 857,000 . The net actuarial gain and loss for the years ended December 31, 2020 and 2019, respectively, were recorded in accumulated other comprehensive income . Amounts not yet recognized as a component of net periodic benefit costs at December 31, 2020 and 2019 were a net credit of $ 1,763,000 and $ 1,976,000 , respectively. The amount in accumulated other comprehensive income expected to be recognized as components of net periodic post retirement cost during 2021 consists of a prior service credit of $ 496,000 and a net loss of $ 173,000 . In addition, 2021 interest expense related to post retirement healthcare is expected to be $ 161,000 , for a total post retirement healthcare net gain of approximately $ 162,000 in 2021. The Company expects benefits paid in 2021 to be consistent with estimated future benefit payments as shown in the table below. The weighted average rate of increase in the per capita cost of covered health care benefits is projected to be 5.1 %. The rate is projected to decrease gradually to medical pre age 65 of 5.0 %, medical post age 65 of 4.25 % and drugs – all ages of 5.0 % by the year 2027 and remain at that level thereafter. The comparable assumptions for the prior year were 6.0 % and 5.0 %, respectively. The effect of changing the health care cost trend rate by one -percentage point for each future year is as follows: 1- Percentage Point Increase 1-Percentage Point Decrease Effect on total of service and interest cost components $ 34,000 $ (29,000) Effect on post retirement benefit obligation $ 1,081,000 $ (924,000) The estimated future benefit payments of the health care plan for the next ten years are as follows: Postretirement Health Care Benefits Plan 2021 $ 1,286,000 2022 459,000 2023 500,000 2024 473,000 2025 471,000 2026 - 2030 2,265,000

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