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Post Retirement Benefits
 12 Months Ended
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