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Pension Plans
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
PENSION PLANS
9.PENSION PLANS.

 

Retirement Plan - The Company sponsors a defined benefit pension plan (the “Retirement Plan”) that is noncontributory, and covers only “grandfathered” unionized employees at its Alto Pekin production facilities. Benefits are based on a prescribed formula based upon the employee’s years of service. Employees hired after November 1, 2010, are not eligible to participate in the Retirement Plan. The Company uses a December 31st measurement date for its Retirement Plan. The Company's funding policy is to make the minimum annual contribution required by applicable regulations.

 

Information related to the Retirement Plan as of and for the years ended December 31, 2021 and 2020 is presented below (dollars in thousands):

 

   2021   2020 
Changes in plan assets:        
Fair value of plan assets, beginning  $17,588   $15,654 
Actual gains   2,399    1,969 
Benefits paid   (763)   (721)
Company contributions   763    686 
Participant contributions   
—
    
—
 
Fair value of plan assets, ending  $19,987   $17,588 
Less: projected accumulated benefit obligation  $23,828   $24,629 
Funded status, (underfunded)/overfunded  $(3,841)  $(7,041)
           
Amounts recognized in the consolidated balance sheets:          
Other liabilities  $(3,841)  $(7,041)
Accumulated other comprehensive loss  $574   $3,199 
           
Assumptions used in computation of benefit obligations:          
Discount rate   2.80%   2.50%
Expected long-term return on plan assets   5.75%   6.25%
Rate of compensation increase   
—
    
—
 

 

   Years Ended December 31, 
   2021   2020   2019 
Components of net periodic benefit costs are as follows:            
Service cost  $436   $405   $374 
Interest cost   605    690    760 
Amortization of net loss   98    
—
    
—
 
Expected return on plan assets   (952)   (903)   (760)
Net periodic benefit cost  $187   $192   $374 

 

The Company expects to make contributions in the year ending December 31, 2022 of approximately $0.85 million. Net periodic benefit cost for 2022 is estimated at less than $0.1 million.

 

The following table summarizes the expected benefit payments for the Company’s Retirement Plan for each of the next five fiscal years and in the aggregate for the five fiscal years thereafter (in thousands):

 

December 31:    
2022  $850 
2023   900 
2024   940 
2025   1,000 
2026   1,020 
2027-31   5,780 
   $10,490 

 

See Note 16 for discussion of the Retirement Plan’s fair value disclosures.

 

Historical and future expected returns of multiple asset classes were analyzed to develop a risk-free real rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk-free real rate of return, and the associated risk premium. A weighted-average rate was developed based on those overall rates and the target asset allocation of the Retirement Plan.

 

The Company’s pension committee is responsible for overseeing the investment of pension plan assets. The pension committee is responsible for determining and monitoring the appropriate asset allocations and for selecting or replacing investment managers, trustees, and custodians. The Retirement Plan’s current investment target allocations are 50% equities and 50% debt. The pension committee periodically reviews the actual asset allocation in light of these targets and rebalances investments as necessary. The pension committee also evaluates the performance of investment managers as compared to the performance of specified benchmarks and peers and monitors the investment managers to ensure adherence to their stated investment style and to the Retirement Plan’s investment guidelines.

 

Postretirement Plan - The Company also sponsors a health care plan and life insurance plan (the “Postretirement Plan”) that provides postretirement medical benefits and life insurance to certain “grandfathered” unionized employees at its Alto Pekin production facilities. Employees hired after December 31, 2000, are not eligible to participate in the Postretirement Plan. The plan is contributory, with contributions required at the same rate as active employees. Benefit eligibility under the plan reduces at age 65 from a defined benefit to a defined dollar cap based upon years of service.

 

Information related to the Postretirement Plan as of December 31, 2021 and 2020 is presented below (dollars in thousands):

 

   2021   2020 
Amounts at the end of the year:        
Accumulated/projected benefit obligation  $4,313   $5,296 
Fair value of plan assets   
—
    
—
 
Funded status, (underfunded)/overfunded  $(4,313)  $(5,296)
           
Amounts recognized in the consolidated balance sheets:          
Accrued liabilities  $(210)  $(300)
Other liabilities  $(4,103)  $(4,996)
Accumulated other comprehensive (income) loss  $(290)  $679 
           
Discount rate used in computation of benefit obligations   2.50%   2.05%

 

   Years Ended December 31, 
   2021   2020   2019 
Components of net periodic benefit costs are as follows:            
Service cost  $42   $54   $67 
Interest cost   105    151    219 
Amortization of prior service cost   25    30    122 
Net periodic benefit cost  $172   $235   $408 
Amounts recognized in the plan for the year:               
Participant contributions  $32   $26   $24 
                
Benefits paid  $217   $200   $195 

 

The Company does not expect to recognize any amortization of net actuarial loss during the year ended December 31, 2021.

 

The following table summarizes the expected benefit payments for the Company’s Postretirement Plan for each of the next five fiscal years and in the aggregate for the five fiscal years thereafter (in thousands):

 

December 31:    
2022  $210 
2023   240 
2024   260 
2025   280 
2026   330 
2027-2031   1,720 
   $3,040 

 

For purposes of determining the cost and obligation for pre-Medicare postretirement medical benefits, a 7.00% annual rate of increase in the per capita cost of covered benefits (i.e., health care trend rate) was assumed for the Postretirement Plan in 2023, adjusted to a rate of 4.50% in 2032. Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans.