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Pension Benefits
 3 Months Ended
Mar. 31, 2023
Pension Benefits  
Pension Benefits

16.  Pension Benefits

The Company has a noncontributory defined benefit pension plan covering certain employees who work at least 1,000 hours per year. The participants have a vested interest in their accrued benefit after five full years of service. The benefits of the plan are based upon the employee’s years of service and average annual earnings for the highest five consecutive calendar years during the final ten-year period of employment. Plan assets are primarily debt securities (including U.S. Treasury and Agency securities, corporates and bonds), listed common stocks (including shares of AmeriServ Financial, Inc. common stock which is limited to 10% of the plan’s assets), mutual funds, and short-term cash equivalent instruments. The net periodic pension cost for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

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Three months ended

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March 31, 

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2023

    

2022

COMPONENTS OF NET PERIODIC BENEFIT COST:

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Service cost

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$

258

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$

387

Interest cost

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435

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273

Expected return on plan assets

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(1,034)

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(1,050)

Amortization of net loss

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—

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500

Net periodic pension (benefit) cost

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$

(341)

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$

110

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The service cost component of net periodic benefit cost is included in salaries and employee benefits and all other components of net periodic benefit cost are included in other expense on the Consolidated Statements of Operations. The reduced pension expense in the first quarter of 2023 reflects the retirement of many employees over the past two years who chose to take a lump sum payment instead of receiving future monthly annuity payments. These individuals are no longer included in the pension plan which therefore favorably impacts the Company’s basic pension expense.

The accrued pension liability, which had a positive (debit) balance of $21.7 million and $21.3 million, was reclassified to other assets on the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, respectively. The balance of the accrued pension liability continues to be a positive value as a result of Company contributions to the plan and the revaluation of the obligation.

The Company implemented a soft freeze of its defined benefit pension plan to provide that non-union employees hired on or after January 1, 2013 and union employees hired on or after January 1, 2014 are not eligible to participate in the pension plan. Instead, such employees are eligible to participate in a qualified 401(k) plan. This change was made to help reduce pension costs in future periods.