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RETIREMENT PLANS | 12 Months Ended
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Sep. 30, 2021
Retirement Benefits [Abstract] |
RETIREMENT PLANS | RETIREMENT PLANS Barnwell sponsors a noncontributory defined benefit pension plan (“Pension Plan”) covering substantially all of its U.S. employees, with benefits based on years of service and the employee’s highest consecutive 5 years average earnings. Barnwell’s funding policy is intended to provide for both benefits attributed to service to date and for those expected to be earned in the future. In addition, Barnwell sponsors a Supplemental Executive Retirement Plan (“SERP”), a noncontributory supplemental retirement benefit plan which covers certain current and former employees of Barnwell for amounts exceeding the limits allowed under the Pension Plan, and previously sponsored a post-retirement medical insurance benefits plan (“Post-retirement Medical”) covering officers of Barnwell Industries, Inc., the parent company, who have attained at least 20 years of service of which at least 10 years were at the position of Vice President or higher, their spouses and qualifying dependents. In December 2019, the Company’s Board of Directors approved a resolution to freeze all future benefit accruals for all participants under the Company’s Pension Plan and SERP effective December 31, 2019. Consequently, current participants in the Pension Plan and SERP no longer accrue new benefits under the plans and new employees of the Company are no longer eligible to enter the Pension Plan and SERP as participants after December 31, 2019. The freezing of the Pension Plan and SERP triggered a curtailment which required a remeasurement of the projected benefit obligations of the Pension Plan and SERP and resulted in a $1,726,000 reduction in unrecognized pension benefit costs that were previously included in accumulated other comprehensive loss, with a corresponding curtailment gain in other comprehensive income which was recorded during the year ended September 30, 2020. In June 2021, the Company terminated its Post-retirement Medical plan effective June 4, 2021. Pursuant to the Post-retirement Medical plan document, the Company, as the sponsor of the Post-retirement Medical plan, had the right to terminate the plan within sixty days’ notice to each participant and the plan may be terminated by the resolution of the Board of the Directors of the Company. Further, under the terms of the plan document, the participants in the Post-retirement Medical plan were not entitled to any unpaid vested benefits thereunder upon termination of the plan. The Post-retirement Medical plan was an unfunded plan and the Company funded benefits when payments were made. As a result of the plan termination, the Company recognized a non-cash gain of $2,341,000 during the year ended September 30, 2021. The following tables detail the changes in benefit obligations, fair values of plan assets and reconciliations of the funded status of the retirement plans:
| Pension |  | SERP |  | Post-retirement Medical
| September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Change in Projected Benefit Obligation: |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year | $ | 10,280,000 |  |  | $ | 10,971,000 |  |  | $ | 2,031,000 |  |  | $ | 2,385,000 |  |  | $ | 2,839,000 |  |  | $ | 2,633,000 |
Service cost | — |  |  | 50,000 |  |  | — |  |  | 3,000 |  |  | — |  |  | — |
Interest cost | 258,000 |  |  | 304,000 |  |  | 51,000 |  |  | 63,000 |  |  | 48,000 |  |  | 80,000 |
Actuarial (gain) loss | (15,000) |  |  | 504,000 |  |  | 63,000 |  |  | (90,000) |  |  | — |  |  | 134,000 |
Benefits paid | (158,000) |  |  | (153,000) |  |  | (9,000) |  |  | — |  |  | (5,000) |  |  | (8,000) |
Curtailments | — |  |  | (1,396,000) |  |  | — |  |  | (330,000) |  |  | — |  |  | — |
Termination of post-retirement medical plan | — |  |  | — |  |  | — |  |  | — |  |  | (2,882,000) |  |  | — |
Benefit obligation at end of year | 10,365,000 |  |  | 10,280,000 |  |  | 2,136,000 |  |  | 2,031,000 |  |  | — |  |  | 2,839,000 |
Change in Plan Assets: |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | 11,051,000 |  |  | 10,192,000 |  |  | — |  |  | — |  |  | — |  |  | — |
Actual return on plan assets | 1,701,000 |  |  | 1,012,000 |  |  | — |  |  | — |  |  | — |  |  | — |
Employer contributions | — |  |  | — |  |  | — |  |  | — |  |  | 5,000 |  |  | 8,000 |
Benefits paid | (158,000) |  |  | (153,000) |  |  | — |  |  | — |  |  | (5,000) |  |  | (8,000) |
Fair value of plan assets at end of year | 12,594,000 |  |  | 11,051,000 |  |  | — |  |  | — |  |  | — |  |  | — |
Funded status | $ | 2,229,000 |  |  | $ | 771,000 |  |  | $ | (2,136,000) |  |  | $ | (2,031,000) |  |  | $ | — |  |  | $ | (2,839,000) |
| Pension |  | SERP |  | Post-retirement Medical
| September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Amounts recognized in the Consolidated Balance Sheets: |  |
Noncurrent assets | $ | 2,229,000 |  |  | $ | 771,000 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Current liabilities | — |  |  | — |  |  | (35,000) |  |  | (32,000) |  |  | — |  |  | (9,000) |
Noncurrent liabilities | — |  |  | — |  |  | (2,101,000) |  |  | (1,999,000) |  |  | — |  |  | (2,830,000) |
Net amount | $ | 2,229,000 |  |  | $ | 771,000 |  |  | $ | (2,136,000) |  |  | $ | (2,031,000) |  |  | $ | — |  |  | $ | (2,839,000) |
Amounts recognized in accumulated other comprehensive income (loss) before income taxes: |  |
Net actuarial loss | $ | 471,000 |  |  | $ | 1,681,000 |  |  | $ | 135,000 |  |  | $ | 72,000 |  |  | $ | — |  |  | $ | 721,000 |
Prior service cost (credit) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Accumulated other comprehensive loss | $ | 471,000 |  |  | $ | 1,681,000 |  |  | $ | 135,000 |  |  | $ | 72,000 |  |  | $ | — |  |  | $ | 721,000 |
Currently, no contributions will be made to the Pension Plan during fiscal 2022. The SERP plan is unfunded and Barnwell funds benefits when payments are made. Expected payments under the SERP for fiscal 2022 is not material. Fluctuations in actual market returns as well as changes in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefits costs and contributions in future periods. The Pension Plan actuarial gains in fiscal 2021 were primarily due to an increase in the discount rate and actual investment returns that were greater than the assumed rate of return. The SERP actuarial losses in fiscal 2021 were primarily due to an updated mortality projection scale and adjustments due to experience, partially offset by an increase in the discount rate. The Pension Plan actuarial losses in fiscal 2020 were primarily due to a decrease in the discount rate. The SERP actuarial gains in fiscal 2020 were primarily due to the freezing of the plan benefit accruals which decreased the net periodic cost and improved the funded position. The Post-retirement Medical plan actuarial losses in fiscal 2020 were primarily due to a decrease in the discount rate. The following table presents the weighted-average assumptions used to determine benefit obligations and net benefit (income) costs:
| Pension |  | SERP |  | Post-retirement Medical
| Year ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Assumptions used to determine fiscal year-end benefit obligations: |  |  |  |
Discount rate | 2.84% |  | 2.54% |  | 2.84% |  | 2.54% |  | N/A |  | 2.54%
Rate of compensation increase | N/A |  | N/A |  | N/A |  | N/A |  | N/A |  | N/A
Assumptions used to determine net benefit costs (years ended): |  |  |  |  |  |
Discount rate | 2.54% |  | 3.06% / 3.15%(1) |  | 2.54% |  | 3.06% / 3.15%(1) |  | 2.54% / 3.00%(2) |  | 3.06%
Expected return on plan assets | 5.00% |  | 6.50% |  | N/A |  | N/A |  | N/A |  | N/A
Rate of compensation increase | N/A |  | 4.00% |  | N/A |  | 4.00% |  | N/A |  | N/A
_______________________________________________ (1) 3.06% as of September 30, 2019 and 3.15% as of December 31, 2019 remeasurement. (2) 2.54% as of September 30, 2020 and 3.00% as of May 31, 2021 termination. We select a discount rate by reference to yields available on the FTSE High Grade Credit Index at our consolidated balance sheet date. The expected return on plan assets is primarily based on historical rates of return. The components of net periodic benefit (income) cost are as follows:
| Pension |  | SERP |  | Post-retirement Medical
| Year ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Net periodic benefit (income) cost for the year: |  |
Service cost | $ | — |  |  | $ | 50,000 |  |  | $ | — |  |  | $ | 3,000 |  |  | $ | — |  |  | $ | — |
Interest cost | 258,000 |  |  | 304,000 |  |  | 51,000 |  |  | 63,000 |  |  | 48,000 |  |  | 80,000 |
Expected return on plan assets | (546,000) |  |  | (680,000) |  |  | — |  |  | — |  |  | — |  |  | — |
Amortization of prior service cost (credit) | — |  |  | 1,000 |  |  | — |  |  | (1,000) |  |  | — |  |  | — |
Amortization of net actuarial loss | 39,000 |  |  | 35,000 |  |  | — |  |  | 5,000 |  |  | 62,000 |  |  | 80,000 |
Curtailment cost (income) | — |  |  | 53,000 |  |  | — |  |  | (53,000) |  |  | — |  |  | — |
Net periodic benefit (income) cost | $ | (249,000) |  |  | $ | (237,000) |  |  | $ | 51,000 |  |  | $ | 17,000 |  |  | $ | 110,000 |  |  | $ | 160,000 |
The accumulated benefit obligation differs from the projected benefit obligation in that it assumes future compensation levels will remain unchanged. The accumulated benefit obligation for the Pension Plan was $10,365,000 and $10,280,000 at September 30, 2021 and 2020, respectively. The accumulated benefit obligation for the SERP was $2,136,000 and $2,031,000 at September 30, 2021 and 2020, respectively. The benefits expected to be paid under the retirement plans as of September 30, 2021 are as follows:
| Pension |  | SERP
Expected Benefit Payments: |  |  |
Fiscal year ending September 30, 2022 | $ | 320,000 |  |  | $ | 35,000 |
Fiscal year ending September 30, 2023 | $ | 470,000 |  |  | $ | 97,000 |
Fiscal year ending September 30, 2024 | $ | 533,000 |  |  | $ | 123,000 |
Fiscal year ending September 30, 2025 | $ | 526,000 |  |  | $ | 122,000 |
Fiscal year ending September 30, 2026 | $ | 519,000 |  |  | $ | 121,000 |
Fiscal years ending September 30, 2027 through 2031 | $ | 2,840,000 |  |  | $ | 636,000 |
Plan Assets Management communicates periodically with its professional investment advisors to establish investment policies, direct investments and select investment options. The overall investment objective of the Pension Plan is to attain a diversified combination of investments that provides long-term growth in the assets of the plan to fund future benefit obligations while managing risk in order to meet current benefit obligations. Generally, interest and dividends received provide cash flows to fund current benefit obligations. Longer-term obligations are generally estimated to be provided for by growth in equity securities. The Company’s investment policy permits investments in a diversified mix of U.S. and international equities, fixed income securities and cash equivalents. Barnwell’s investments in fixed income securities include corporate bonds, preferred securities, and fixed income exchange-traded funds. The Company’s investments in equity securities primarily include domestic and international large-cap companies, as well as, domestic and international equity securities exchange-traded funds. The Company’s year-end target allocation, by asset category, and the actual asset allocations were as follows:
| Target |  | September 30,
Asset Category | Allocation |  | 2021 |  | 2020
Cash and other | 0% - 15% |  | —% |  | —%
Fixed income securities | 15% - 40% |  | 31% |  | 52%
Equity securities | 45% - 75% |  | 69% |  | 48%
Actual investment allocations may vary from our target allocations from time to time due to prevailing market conditions. We periodically review our actual investment allocations and rebalance our investments to our target allocations as dictated by current and anticipated market conditions and required cash flows. We categorize plan assets into three levels based upon the assumptions used to price the assets. Level 1 provides the most reliable measure of fair value, whereas Level 3 requires significant management judgment in determining the fair value. Equity securities and exchange-traded funds are valued by obtaining quoted prices on recognized and highly liquid exchanges. Fixed income securities are valued based upon the closing price reported in the active market in which the security is traded. All of our plan assets are categorized as Level 1 assets, and as such, the actual market value is used to determine the fair value of assets. The following tables set forth by level, within the fair value hierarchy, pension plan assets at their fair value:
|  |  | Fair Value Measurements Using:
| Carrying Amount as of September 30, 2021 |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets: |  |  |  |  |  |  |
Cash | $ | 25,000 |  |  | $ | 25,000 |  |  | $ | — |  |  | $ | — |
Corporate bonds | 1,000 |  |  | 1,000 |  |  | — |  |  | — |
Fixed income exchange-traded funds | 3,809,000 |  |  | 3,809,000 |  |  | — |  |  | — |
Preferred securities | 48,000 |  |  | 48,000 |  |  | — |  |  | — |
Equity securities exchange-traded funds | 459,000 |  |  | 459,000 |  |  | — |  |  | — |
Equities | 8,252,000 |  |  | 8,252,000 |  |  | — |  |  | — |
Total | $ | 12,594,000 |  |  | $ | 12,594,000 |  |  | $ | — |  |  | $ | — |
|  |  | Fair Value Measurements Using:
| Carrying Amount as of September 30, 2020 |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Financial Assets: |  |  |  |  |  |  |
Corporate bonds | $ | 1,000 |  |  | $ | 1,000 |  |  | $ | — |  |  | $ | — |
Fixed income exchange-traded funds | 5,762,000 |  |  | 5,762,000 |  |  | — |  |  | — |
Equity securities exchange-traded funds | 352,000 |  |  | 352,000 |  |  | — |  |  | — |
Equities | 4,936,000 |  |  | 4,936,000 |  |  | — |  |  | — |
Total | $ | 11,051,000 |  |  | $ | 11,051,000 |  |  | $ | — |  |  | $ | — |

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