XML 31 R19.htm IDEA: XBRL DOCUMENT v3.23.3
Pension and Postretirement Benefit Costs
 9 Months Ended
Sep. 30, 2023
Retirement Benefits [Abstract]  
Pension and Postretirement Benefit Costs Pension and Postretirement Benefit Costs
The components of net periodic pension and postretirement benefit costs, excluding the service cost for benefits earned, are included in “Net periodic benefit credit, excluding service cost” in the unaudited condensed consolidated statements of operations.
Net periodic pension cost (credit) included the following components:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
 (Dollars in millions)
Service cost for benefits earned$0.1 $0.1 $0.1 $0.1 
Interest cost on projected benefit obligation3.6 5.3 18.4 16.0 
Expected return on plan assets(3.1)(6.0)(16.3)(17.9)
Net periodic pension cost (credit)$0.6 $(0.6)$2.2 $(1.8)
Annual contributions to the qualified plans are made in accordance with minimum funding standards and the Company’s agreement with the Pension Benefit Guaranty Corporation. Funding decisions also consider certain funded status thresholds defined by the Pension Protection Act of 2006 (generally 80%). As of September 30, 2023, the Company’s qualified plans were expected to be at or above the Pension Protection Act thresholds. The Company is not required to make any contributions to its qualified pension plans in 2023 based on minimum funding requirements and does not expect to make any discretionary contributions in 2023 at this time.
In March 2022, Peabody Investments Corp. (PIC), a wholly-owned subsidiary of PEC, entered into a commitment agreement relating to the Peabody Investments Corp. Retirement Plan (the Peabody Plan) with The Prudential Insurance Company of America (Prudential) and Fiduciary Counselors Inc., as independent fiduciary to the Peabody Plan. Under the commitment agreement, the Peabody Plan purchased a buy-in group annuity contract (GAC) from Prudential for approximately $500 million, which was funded directly by the Peabody Plan’s assets. The benefit obligation was not transferred to Prudential and the Peabody Plan continued to administer and pay the retirement benefits of Peabody Plan participants, but was reimbursed by Prudential for the payment of all benefits covered by the GAC. There was no impact on the monthly retirement benefits paid to Peabody Plan participants and no material impact on contributions for the Peabody Plan in 2022 or 2023 as a result of this transaction.
In May 2022, the Board of Directors of PIC approved the termination of the Peabody Plan effective July 31, 2022. In June 2022, the Peabody Plan’s participants were notified of the Peabody Plan termination and PIC filed an application with the Internal Revenue Service to request a determination as to the qualified status under §401(a) of the Internal Revenue Code of 1986 with respect to the amendment and termination of the Peabody Plan. In May 2023, PIC received a favorable determination from the Internal Revenue Service as to the Peabody Plan’s qualified status with respect to its plan termination.
In February 2023, as part of the Peabody Plan termination process, PIC announced a program to offer a voluntary lump-sum pension payout to certain active and deferred participants of the Peabody Plan which would fully settle the Peabody Plan’s obligation to them. The program provided participants with a limited-time opportunity to elect to receive a lump-sum settlement of their pension benefit or begin to receive their benefit in the form of a monthly annuity in May 2023.
On July 31, 2023, as part of the completion of the standard Employee Retirement Income Security Act plan termination process for the Peabody Plan, the GAC with Prudential was converted from a buy-in group annuity contract to a buy-out group annuity contract, irrevocably transferring the remaining benefit obligation and administration to Prudential. The Peabody Plan no longer administers or pays the retirement benefits of Peabody Plan participants. No cash contributions are expected to be required to complete the termination process for the Peabody Plan.
During the nine months ended September 30, 2023, the Company settled $442.0 million of its pension obligations for active and deferred participants in the Peabody Plan with an equal amount paid from plan assets. Any settlement gain or loss related to the termination process will be recorded during the fourth quarter, but the Company does not expect a material impact to its results.
Net periodic postretirement benefit credit included the following components:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
 (Dollars in millions)
Service cost for benefits earned$0.1 $0.2 $0.4 $0.6 
Interest cost on accumulated postretirement benefit obligation2.6 1.7 7.6 5.2 
Expected return on plan assets(0.1)(0.2)(0.4)(0.6)
Amortization of prior service credit(13.5)(13.4)(40.3)(40.3)
Net periodic postretirement benefit credit$(10.9)$(11.7)$(32.7)$(35.1)
The Company has established a Voluntary Employees’ Beneficiary Association (VEBA) trust to pre-fund a portion of benefits for non-represented retirees. The Company does not expect to make any discretionary contributions to the VEBA trust in 2023 and plans to utilize a portion of VEBA assets to make certain benefit payments.