Pensions and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2019

Pensions and Other Postretirement Benefits [Abstract]

Pensions and Other Postretirement Benefits

Note 11 – Pensions and Other Postretirement Benefits

The Company maintains various retirement benefit plans. GAAP requires employers to recognize the funded status of a benefit plan, measured as the difference between plan assets at fair value and the benefit obligation, in its balance sheet.  The recognition of the funded status on the balance sheet requires employers to recognize actuarial items (such as actuarial gains and losses, prior service costs, and transition obligations) as a component of other comprehensive income, net of tax.

The following table summarizes amounts recorded on the accompanying consolidated balance sheets associated with these various retirement benefit plans:

	December 31,
	2019			2018
Included in "Other assets":
Non-U.S. pension plans	$	303		$	356
Total included in other assets	$	303		$	356
Included in "Payroll and related expenses":
U.S. pension plans	$	(35	)	$	(35	)
Non-U.S. pension plans		(7,362	)		(7,228	)
U.S. other postretirement plans		(872	)		(703	)
Non-U.S. other postretirement plans		(616	)		(181	)
Total included in payroll and related expenses	$	(8,885	)	$	(8,147	)
Accrued pension and other postretirement costs:
U.S. pension plans	$	(42,348	)	$	(38,134	)
Non-U.S. pension plans		(202,873	)		(197,515	)
U.S. other postretirement plans		(6,817	)		(6,291	)
Non-U.S. other postretirement plans		(7,493	)		(7,772	)
Other retirement obligations		(12,871	)		(11,272	)
Total accrued pension and other postretirement costs	$	(272,402	)	$	(260,984	)
Accumulated other comprehensive loss:
U.S. pension plans	$	8,839		$	5,501
Non-U.S. pension plans		84,926			76,698
U.S. other postretirement plans		(180	)		(1,257	)
Non-U.S. other postretirement plans		2,179			2,044
Total accumulated other comprehensive loss*	$	95,764		$	82,986

* - Amounts included in accumulated other comprehensive loss are presented in this table pre-tax.

Defined Benefit Pension Plans

U.S. Pension Plans

The Company maintained several defined benefit pension plans which covered most full-time U.S. employees.  These included pension plans which are “qualified” under the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code, and “non-qualified” pension plans which provide defined benefits primarily to U.S. employees whose benefits under the qualified pension plan would be limited by ERISA and the Internal Revenue Code.  The Company’s principal qualified U.S. pension plan (the Vishay Retirement Plan) was frozen effective January 1, 2009 and terminated in 2016.

The Company’s principal non-qualified U.S. pension plan (the Vishay Non-qualified Retirement Plan) was a contributory pension plan designed to provide similar defined benefits to covered U.S. employees whose benefits under the Vishay Retirement Plan were limited by the Internal Revenue Code.  The Vishay Non-qualified Retirement Plan was similar in construction to the Vishay Retirement Plan, except that the plan is not qualified under the Internal Revenue Code.

The Vishay Non-qualified Retirement Plan, like all non-qualified plans, is considered to be unfunded.  The Company maintains a non-qualified trust, referred to as a “rabbi” trust, to fund benefit payments under this plan.  Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees.  Therefore, they are accounted for as other noncurrent assets.  Assets held in trust related to the non-qualified pension plan were $27,012 and $22,409 at December 31, 2019 and 2018, respectively.

In 2008, the Company adopted amendments to the Vishay Non-Qualified Retirement Plan such that effective January 1, 2009, the plan was frozen.  Pursuant to these amendments, no new employees may participate in the plans, no further participant contributions were required or permitted, and no further benefits shall accrue after December 31, 2008.  Benefits accumulated as of December 31, 2008 will be paid to employees upon or following retirement, and the Company will likely need to make additional cash contributions to the rabbi trust to fund this accumulated benefit obligation.

The Company also maintains other pension plans which provide supplemental defined benefits primarily to former U.S. employees whose benefits under qualified pension plans were limited by the Internal Revenue Code.  These non-qualified plans are all non-contributory plans, and are considered to be unfunded.

In 2004, the Company entered into an employment agreement with Dr. Felix Zandman, its Executive Chairman and then-Chief Executive Officer.  Pursuant to this agreement, the Company is providing an annual retirement benefit of approximately $614 to his surviving spouse.  The Company maintains a non-qualified trust, referred to as a “rabbi” trust, to fund benefit payments under this plan.  Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees.  Therefore, they are accounted for as other noncurrent assets.  Assets held in trust related to this non-qualified pension plan were $605 and $1,199 at December 31, 2019 and 2018, respectively.

Non-U.S. Pension Plans

The Company provides pension and similar benefits to employees of certain non-U.S. subsidiaries consistent with local practices.  Pension benefits earned are generally based on years of service and compensation during active employment.

The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to U.S. and non-U.S. pension plans:

	December 31, 2019						December 31, 2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in benefit obligation:
Benefit obligation at beginning of year	$	38,169		$	275,207		$	39,917		$	294,187
Service cost		-			3,382			-			3,822
Interest cost		1,696			5,116			1,484			4,793
Plan amendments		-			-			-			125
Actuarial (gains) losses		4,309			20,115			(1,431	)		(1,311	)
Benefits paid		(1,791	)		(18,985	)		(1,801	)		(14,397	)
Currency translation		-			(1,274	)		-			(12,012	)
Benefit obligation at end of year	$	42,383		$	283,561		$	38,169		$	275,207
Change in plan assets:
Fair value of plan assets at beginning of year	$	-		$	70,820		$	-			70,605
Actual return on plan assets		-			4,614			-			1,412
Company contributions		1,791			15,443			1,801			16,105
Benefits paid		(1,791	)		(18,985	)		(1,801	)		(14,397	)
Currency translation		-			1,737			-			(2,905	)
Fair value of plan assets at end of year	$	-		$	73,629		$	-		$	70,820
Funded status at end of year	$	(42,383	)	$	(209,932	)	$	(38,169	)	$	(204,387	)

The plan assets are stated at fair value. See Note 18 for further discussion of the valuation of the plan assets.

Amounts recognized in the accompanying consolidated balance sheets consist of the following:

	December 31, 2019						December 31, 2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Other assets	$	-		$	303		$	-		$	356
Accrued benefit liability - current		(35	)		(7,362	)		(35	)		(7,228	)
Accrued benefit liability - non-current		(42,348	)		(202,873	)		(38,134	)		(197,515	)
Accumulated other comprehensive loss		8,839			84,926			5,501			76,698
	$	(33,544	)	$	(125,006	)	$	(32,668	)	$	(127,689	)

Actuarial items consist of the following:

	December 31, 2019				December 31, 2018
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Unrecognized net actuarial loss	$	8,199	$	84,523	$	4,717	$	76,254
Unamortized prior service cost		640		403		784		444
	$	8,839	$	84,926	$	5,501	$	76,698

The following table sets forth additional information regarding the projected and accumulated benefit obligations:

	December 31, 2019				December 31, 2018
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Accumulated benefit obligation, all plans	$	42,383	$	264,723	$	38,169	$	258,244
Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation	$	42,383	$	252,469	$	38,169	$	247,066
Accumulated benefit obligation		42,383		239,341		38,169		235,167
Fair value of plan assets		-		44,670		-		45,818

The following table sets forth the components of net periodic pension cost:

	Years ended December 31,
	2019					2018					2017
	U.S. Plans		Non-U.S. Plans			U.S. Plans		Non-U.S. Plans			U.S. Plans		Non-U.S. Plans
Service cost net of employee contributions	$	-	$	3,382		$	-	$	3,822		$	-	$	3,725
Interest cost		1,696		5,116			1,484		4,793			1,643		4,866
Expected return on plan assets		-		(1,956	)		-		(1,889	)		-		(2,072	)
Amortization of actuarial losses		827		5,374			656		6,196			587		6,179
Amortization of prior service cost (credit)		144		197			144		318			144		150
Curtailment and settlement losses		-		2,183			-		1,111			-		1,360
Net periodic pension cost	$	2,667	$	14,296		$	2,284	$	14,351		$	2,374	$	14,208

See Note 10 for the pretax, tax effect and after tax amounts included in other comprehensive income during the years ended December 31, 2019, 2018, and 2017.  The estimated actuarial items for the defined benefit pensions plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost during 2020 is $8,000.

The following weighted average assumptions were used to determine benefit obligations at December 31 of the respective years:

	2019						2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		3.25	%		1.40	%		4.50	%		1.96	%
Rate of compensation increase		0.00	%		2.24	%		0.00	%		2.17	%

The following weighted average assumptions were used to determine the net periodic pension costs:

	Years ended December 31,
	2019						2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		4.50	%		1.96	%		3.75	%		1.80	%
Rate of compensation increase		0.00	%		2.17	%		0.00	%		2.10	%
Expected return on plan assets		0.00	%		2.77	%		0.00	%		2.95	%

The plans’ expected return on assets is based on management’s expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions.

The investment mix between equity securities and fixed income securities is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile fixed income securities and is adjusted for the expected duration of the obligation and the funded status of the plan.  Investment allocations are made across a range of securities, maturities and credit quality.  The Company’s non-U.S. defined benefit plan investments are based on local laws and customs.  Most plans invest in cash and local government fixed income securities, although plans in certain countries have investments in equity securities.  The plans do not invest in securities of Vishay or its subsidiaries.  Negative investment returns could ultimately affect the funded status of the plans, requiring additional cash contributions.  See Note 18 for further information on the fair value of the plan assets by asset category.

Estimated future benefit payments are as follows:

	U.S. Plans		Non-U.S. Plans
2020	$	1,872	$	15,485
2021		1,870		15,064
2022		8,311		18,071
2023		3,185		16,306
2024		3,183		16,154
2025-2029		17,460		81,415

The Company’s anticipated 2020 contributions for defined benefit pension plans will approximate the expected benefit payments disclosed above.

Other Postretirement Benefits

In the U.S., the Company maintains unfunded non-pension postretirement plans, including medical benefits for certain executives and their surviving spouses, which are funded as costs are incurred.  The Company also maintains two unfunded non-pension postretirement plans at two European subsidiaries.

The following table sets forth a reconciliation of the benefit obligation, plan assets, and accrued benefit cost related to U.S. and non-U.S. non-pension defined benefit postretirement plans:

	December 31, 2019						December 31, 2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in benefit obligation:
Benefit obligation at beginning of year	$	6,994		$	7,953		$	7,633		$	7,898
Service cost		157			284			137			288
Interest cost		286			123			273			114
Actuarial (gains) losses		939			311			(344	)		327
Benefits paid		(687	)		(413	)		(705	)		(303	)
Currency translation		-			(149	)		-			(371	)
Benefit obligation at end of year	$	7,689		$	8,109		$	6,994		$	7,953
Fair value of plan assets at end of year	$	-		$	-		$	-		$	-
Funded status at end of year	$	(7,689	)	$	(8,109	)	$	(6,994	)	$	(7,953	)

Amounts recognized in the accompanying consolidated balance sheets consist of the following:

	December 31, 2019						December 31, 2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Accrued benefit liability - current	$	(872	)	$	(616	)	$	(703	)	$	(181	)
Accrued benefit liability - non-current		(6,817	)		(7,493	)		(6,291	)		(7,772	)
Accumulated other comprehensive income		(180	)		2,179			(1,257	)		2,044
	$	(7,869	)	$	(5,930	)	$	(8,251	)	$	(5,909	)

Actuarial items consist of the following:

	December 31, 2019							December 31, 2018
	U.S. Plans				Non-U.S. Plans			U.S. Plans				Non-U.S. Plans
Unrecognized net actuarial loss (gain)		$	(180	)		$	2,179		$	(1,257	)		$	2,044
		$	(180	)		$	2,179		$	(1,257	)		$	2,044

The following table sets forth the components of net periodic benefit cost:

	Years ended December 31,
	2019					2018					2017
	U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans		U.S. Plans			Non-U.S. Plans
Service cost	$	157		$	284	$	137		$	288	$	131		$	273
Interest cost		286			123		273			114		311			103
Amortization of actuarial (gains) losses		(138	)		107		(39	)		105		(93	)		76
Amortization of prior service credit		-			-		(148	)		-		(837	)		-
Net periodic benefit cost (benefit)	$	305		$	514	$	223		$	507	$	(488	)	$	452

The estimated actuarial items for the other postretirement benefit plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2020 are not material.

The following weighted average assumptions were used to determine benefit obligations at December 31 of the respective years:

	2019						2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		3.25	%		0.81	%		4.50	%		1.60	%
Rate of compensation increase		0.00	%		2.87	%		0.00	%		3.18	%

The following weighted average assumptions were used to determine the net periodic benefit costs:

	Years ended December 31,
	2019						2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Discount rate		4.50	%		1.60	%		3.75	%		1.50	%
Rate of compensation increase		0.00	%		3.18	%		0.00	%		2.88	%

The impact of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit cost and postretirement benefit obligation is not material.

Estimated future benefit payments are as follows:

	U.S. Plans		Non-U.S. Plans
2020	$	872	$	616
2021		839		251
2022		798		574
2023		721		266
2024		670		490
2025-2029		2,440		2,794

As the plans are unfunded, the Company’s anticipated contributions for 2020 are equal to its estimated benefits payments.

Other Retirement Obligations

The Company participates in various other defined contribution and government-mandated retirement plans based on local law or custom.  The Company periodically makes required contributions for certain of these plans, whereas other plans are unfunded retirement bonus plans which will be paid at the employee's retirement date.  At December 31, 2019 and 2018, the accompanying consolidated balance sheets include $12,871 and $11,272, respectively, within accrued pension and other postretirement costs related to these plans.

The Company’s U.S. employees are eligible to participate in a 401(k) savings plan, which provides for Company matching contributions.  The Company’s matching expense for the plans was $6,481, $6,353, and $5,843 for the years ended December 31, 2019, 2018, and 2017, respectively.  No material amounts are included in the accompanying consolidated balance sheets at December 31, 2019 and 2018 related to unfunded 401(k) contributions.

Certain key employees participate in a deferred compensation plan.  During the years ended December 31, 2019, 2018, and 2017, these employees could defer a portion of their compensation until retirement, or elect shorter deferral periods.  The Company maintains a liability within other noncurrent liabilities on its consolidated balance sheets related to these deferrals.  The Company maintains a non-qualified trust, referred to as a “rabbi” trust, to fund payments under this plan.  Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees.  Therefore, they are accounted for as other noncurrent assets.  Assets held in trust related to the deferred compensation plan at December 31, 2019 and 2018 were approximately $24,531 and $18,162, respectively.