Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Employee Benefit Plans

Our pension and postretirement benefit liabilities represent the funded status of the present value of benefit obligations of our employee benefit plans. We develop pension, postretirement medical and life benefit costs from third-party actuarial valuations. We establish actuarial assumptions to anticipate future events and use those assumptions when calculating the expense and liabilities related to these plans. These factors include assumptions management makes concerning expected investment return on plan assets, discount rates, health care costs trend rates, turnover rates and rates of future compensation increases, among others. In addition, we use subjective factors such as withdrawal and mortality rates to develop actuarial valuations. Management reviews and updates these assumptions on an annual basis. The actuarial assumptions that we use may differ from actual results due to changing market rates or other factors. These differences could affect the amount of pension and postretirement medical and life benefit expense we recognize in future periods.

Defined Contribution Plan. We sponsor a defined contribution plan in which we match our employees’ qualifying contributions, resulting in additional expense to us. Expenses related to the defined contribution plan, including expenses related to discontinued operations, were $12.2 million, $10.6 million and $11.6 million in 2020, 2021 and 2022, respectively.

Defined Benefit Plans. We sponsor two pension plans, including one for non-union employees and one for union employees, and a postretirement benefit plan for certain employees. The annual measurement date of these plans is December 31.

The following table presents the changes in benefit obligations and plan assets for pension benefits and other postretirement benefits, as well as the end-of-period accumulated benefit obligation, including amounts related to discontinued operations, for the years ended December 31, 2021 and 2022 (in millions):


	Pension Benefits				Other Postretirement Benefits
	2021		2022		2021		2022
Change in benefit obligations:
Benefit obligations at beginning of year	$	443.6	$	423.4	$	17.3	$	17.8
Service cost	28.2		27.2		0.3		0.3
Interest cost	9.5		10.7		0.4		0.4
Plan participants’ contributions	—		—		0.8		0.8

Actuarial (gain) loss	(19.4)		(124.6)		0.9		(6.6)
Benefits paid	(29.2)		(2.5)		(1.9)		(2.0)

Settlement payments	(9.3)		(57.3)		—		—
Benefit obligations at end of year	423.4		276.9		17.8		10.7
Change in plan assets:
Fair value of plan assets at beginning of year	295.7		294.5		—		—
Employer contributions	27.6		39.0		1.1		1.2
Plan participants’ contributions	—		—		0.8		0.8
Actual return on plan assets	9.7		(74.7)		—		—
Benefits paid	(29.2)		(2.5)		(1.9)		(2.0)
Settlement payments	(9.3)		(57.3)		—		—
Fair value of plan assets at end of year	294.5		199.0		—		—
Funded status at end of year	$	(128.9)	$	(77.9)	$	(17.8)	$	(10.7)
Accumulated benefit obligations	$	305.0	$	211.5

At December 31, 2021, the accumulated benefit obligations of each of our plans exceeded the fair value of the related plans’ assets. At December 31, 2022, the accumulated benefit obligations of the non-union employee pension plan exceeded the fair value of the plan’s assets.

The pension plans’ actuarial gain in 2021 and 2022 of $19.4 million and $124.6 million, respectively, is primarily due to the impact of increases in the discount rates used to calculate the benefit obligations, partially offset by demographic changes.

The following table summarizes information for pension plans with obligations in excess of plan assets (in millions):


	December 31,
	2021		2022
Plans with a projected benefit obligation in excess of plan assets:
Projected benefit obligation	$	423.4	$	276.9
Fair value of plan assets	$	294.5	$	199.0

Plans with an accumulated benefit obligation in excess of plan assets:
Accumulated benefit obligation	$	305.0	$	171.9
Fair value of plan assets	$	294.5	$	159.2

Amounts recognized in the consolidated balance sheets included in these financial statements were as follows (in millions):


	Pension Benefits				Other Postretirement Benefits
	2021		2022		2021		2022
Amounts recognized in consolidated balance sheets:
Current accrued benefit cost	$	—	$	—	$	1.7	$	1.2
Long-term pension and benefits	128.9		77.9		16.1		9.5
	128.9		77.9		17.8		10.7
Accumulated other comprehensive loss:
Net actuarial loss	(95.3)		(44.6)		(10.7)		(3.7)
Prior service credit	2.5		2.3		—		—
	(92.8)		(42.3)		(10.7)		(3.7)
Net amount of liabilities and accumulated other comprehensive loss recognized in consolidated balance sheets	$	36.1	$	35.6	$	7.1	$	7.0

Net periodic benefit expense for the years ended December 31, 2020, 2021 and 2022 was as follows (in millions):


	Pension Benefits						Other Postretirement Benefits
	2020		2021		2022		2020		2021		2022
Components of net periodic benefit costs:
Service cost	$	27.7	$	28.2	$	27.2	$	0.3	$	0.3	$	0.3
Interest cost	11.0		9.5		10.7		0.5		0.4		0.4
Expected return on plan assets	(11.4)		(11.9)		(12.8)		—		—		—
Amortization of prior service credit	(0.2)		(0.2)		(0.2)		—		—		—
Amortization of actuarial loss	5.4		5.4		4.2		0.4		0.6		0.4
Settlement cost	1.0		2.6		9.5		—		—		—
Settlement gain on disposition of assets	(1.3)		—		—		—		—		—
Net periodic benefit cost	$	32.2	$	33.6	$	38.6	$	1.2	$	1.3	$	1.1

The service component of our net periodic benefit costs is presented in operating expense and G&A expense, and the non-service components are presented in other (income) expense in our consolidated statements of income.

Changes in plan assets and benefit obligations recognized in other comprehensive income (loss) during 2020, 2021 and 2022 were as follows (in millions):


	Pension Benefits						Other Postretirement Benefits
	2020		2021		2022		2020		2021		2022
Beginning balance	$	(104.7)	$	(117.8)	$	(92.8)	$	(8.4)	$	(10.4)	$	(10.7)
Net actuarial gain (loss)	(21.0)		17.2		37.1		(2.5)		(0.9)		6.6

Recognition of prior service credit amortization in income	(0.2)		(0.2)		(0.2)		—		—		—
Recognition of actuarial loss amortization in income	5.4		5.4		4.2		0.5		0.6		0.4
Curtailment gain	1.7		—		—		—		—		—
Settlement cost	1.0		2.6		9.5		—		—		—
Amount recognized in other comprehensive loss	(13.1)		25.0		50.6		(2.0)		(0.3)		7.0
Ending balance	$	(117.8)	$	(92.8)	$	(42.2)	$	(10.4)	$	(10.7)	$	(3.7)

Actuarial gains and losses are amortized over the average future service period of the current active plan participants expected to receive benefits. The corridor approach is used to determine when actuarial gains and losses are to be amortized and is equal to 10% of the greater of the projected benefit obligation or the market related value of plan assets. The amount of gain or loss in excess of the calculated corridor is subject to amortization.

The weighted average rate assumptions used to determine projected benefit obligations were as follows:


	Pension Benefits		Other Postretirement Benefits
	2021	2022	2021	2022
Discount rate	2.61%	4.79%	2.64%	4.98%
Rate of compensation increase	6.51%	4.42%	n/a	n/a
Cash balance interest crediting rate	1.94%	3.55%	n/a	n/a

The weighted average rate assumptions used to determine net pension and other postretirement benefit plans expense were as follows:


	Pension Benefits			Other Postretirement Benefits
	For the Year Ended December 31,			For the Year Ended December 31,
	2020	2021	2022	2020	2021	2022
Discount rate	3.01%	2.23%	2.61%	3.06%	2.30%	2.64%
Rate of compensation increase	4.58%	4.53%	6.51%	n/a	n/a	n/a
Expected rate of return on plan assets	4.50%	4.10%	4.40%	n/a	n/a	n/a
Cash balance interest crediting rate	2.16%	1.70%	1.94%	n/a	n/a	n/a

The non-pension postretirement benefit plans provide for retiree contributions and contain other cost-sharing features such as deductibles and coinsurance. The accounting for these plans anticipates future cost sharing that is consistent with management’s expressed intent to increase the retiree contribution rate generally in line with health care cost increases.

The annual assumed rate of increase in the health care cost trend rate for 2022 is 7.2% decreasing systematically to 5.08% by 2029 for pre-65 year old participants.

The fair values of the pension plan assets at December 31, 2021 were as follows (in millions):


Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Domestic equity securities:(1)
Small-cap fund	$	6.1	$	6.1	$	—	$	—
Mid-cap fund	6.0		6.0		—		—
Large-cap fund	48.0		48.0		—		—
International equity fund	30.1		30.1		—		—
Fixed income securities:(1)


Long-term investment grade bond funds	197.1		197.1		—		—
Other:
Short-term investment fund	7.0		7.0		—		—
Group annuity contract	0.2		—		—		0.2
Fair value of plan assets	$	294.5	$	294.3	$	—	$	0.2

(1) We hold equity and fixed income securities through investments in mutual funds, which are dedicated to each category as indicated.

The fair values of the pension plan assets at December 31, 2022 were as follows (in millions):


Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Domestic equity securities(1):
Small-cap fund	$	3.9	$	3.9	$	—	$	—
Mid-cap fund	3.9		3.9		—		—
Large-cap fund	31.3		31.3		—		—
International equity fund	20.2		20.2		—		—
Fixed income securities(1):


Long-term investment grade bond funds	128.3		128.3		—		—
Other:
Short-term investment fund	11.2		11.2		—		—
Group annuity contract	0.2		—		—		0.2
Fair value of plan assets	$	199.0	$	198.8	$	—	$	0.2

(1) We hold equity and fixed income securities through investments in mutual funds, which are dedicated to each category as indicated.

As reflected in the tables above, Level 3 activity was not material.

The investment strategies for the various funds held as pension plan assets by asset category are as follows:



Asset Category						Fund’s Investment Strategy
Domestic equity securities:
Small-cap fund						Seeks to track performance of the Center for Research in Security Prices (“CRSP”) US Small Cap Index
Mid-cap fund						Seeks to track performance of the CRSP US Mid Cap Index
Large-cap fund						Seeks to track performance of the Standard & Poor’s 500 Index
International equity fund						Seeks to track performance of the FTSE Global All Cap ex US Index
Fixed income securities:
Short-term bond fund						Seeks current income with limited price volatility through investment in primarily high quality bonds with short-term maturities
Intermediate-term bond fund						Seeks moderate and sustainable level of current income by investing primarily in high quality fixed income securities with maturities from five to ten years
Long-term investment grade bond funds						Seek high and sustainable current income through investment primarily in long-term investment grade debt securities
Other:
Short-term investment funds						Seeks maximum current income by investing exclusively in Short Term U.S. Government Securities and repurchase agreements secured by U.S. government securities
Group annuity contract						Earns interest quarterly equal to the effective yield of the 91-day U.S. Treasury bill

The expected long-term rate of return on plan assets was determined by combining a review of projected returns, historical returns of portfolios with assets similar to the current portfolios of the union and non-union pension plans and target weightings of each asset classification. Our investment objective for the assets within the pension plans is to earn a return that meets or exceeds the growth of obligations that result from interest and changes in the discount rate, while avoiding excessive risk. Defined diversification goals are set in order to reduce the risk of wide swings in the market value from year to year, or of incurring large losses that may result from concentrated positions. As a result, our plan assets have no significant concentrations of credit risk. Additionally, liquidity risks are minimized because the funds that the plans have invested in are publicly traded. We evaluate risks based on the potential impact to the predictability of contribution requirements, probability of under-funding, expected risk-adjusted returns and investment return volatility. Funds are invested with multiple investment managers. Our liabilities are calculated using rates defined by the Pension Protection Act of 2006. Approximately 70% of the plans’ investments are allocated to fixed-income securities and invested to match the durations of the plans’ short, intermediate and long-term pension liabilities, with the amount invested in each duration reflecting that duration’s proportion of the plans’ liabilities. The remaining approximately 30% of the plans’ investments are allocated to equity securities.

The target allocation and actual weighted average asset allocation percentages at December 31, 2021 and 2022 were as follows:


	2021		2022
	Actual	Target	Actual	Target
Equity securities	30%	30%	30%	30%
Fixed income securities	67%	70%	64%	70%
Other	3%	—%	6%	—%

As of December 31, 2022, the benefit amounts expected to be paid from plan assets through December 31, 2032 were as follows (in millions):


	Pension Benefits		Other Postretirement Benefits
2023	$	10.7	$	1.1
2024	$	11.1	$	1.0
2025	$	14.5	$	0.9
2026	$	16.7	$	0.8
2027	$	18.1	$	0.7
2028 through 2032	$	110.8	$	2.9

Contributions estimated to be paid by us into the plans in 2023 are $19.3 million and $1.1 million for the pension and other postretirement benefit plans, respectively.