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Pension Benefits
12 Months Ended
Jan. 01, 2022
Pension Benefits  
Pension Benefits

(12)

Pension Benefits

Company-Sponsored Defined Benefit Pension Plans. As of January 1, 2022, we had four company-sponsored defined benefit pension plans covering approximately 32.7% of our employees. Three of these defined benefit pension plans are for the benefit of certain of our union employees and one is for the benefit of salaried and certain hourly employees. The benefits in the salaried and hourly plan are based on years of service and compensation, as defined. Newly hired employees are no longer eligible to participate in any of our four company-sponsored defined benefit pension plans.

The following table sets forth our defined benefit pension plans’ benefit obligation, fair value of plan assets and funded status recognized in the consolidated balance sheets. We used January 1, 2022 and January 2, 2021 measurement dates for fiscal 2021 and 2020, respectively, to calculate end of year benefit obligations, fair value of plan assets and annual net periodic benefit cost (in thousands):

    

January 1,

    

January 2,

2022

2021

Change in projected benefit obligation:

Projected benefit obligation at beginning of year

$

204,242

$

175,364

Actuarial (gain) loss(1)

 

(12,527)

 

19,306

Service cost

 

10,434

 

8,622

Interest cost

 

4,847

 

5,345

Benefits paid

 

(5,134)

 

(4,395)

Projected benefit obligation at end of year

 

201,862

 

204,242

Change in plan assets:

Fair value of plan assets at beginning of year

 

169,221

 

139,289

Actual return on plan assets

 

20,985

 

23,327

Employer contributions

 

2,500

 

11,000

Benefits paid

 

(5,134)

 

(4,395)

Fair value of plan assets at end of year

 

187,572

 

169,221

Net amount recognized:

Other assets

2,071

587

Other long-term liabilities

(16,361)

(35,608)

Funded status at the end of the year

(14,290)

(35,021)

Amount recognized in accumulated other comprehensive loss consists of:

Actuarial loss

 

(16,087)

 

(40,308)

Deferred taxes

 

6,743

 

12,677

Accumulated other comprehensive loss

$

(9,344)

$

(27,631)

(1)Actuarial (gain) loss primarily reflects changes in discount rates.

The accumulated benefit obligations of these plans were $189.5 million and $190.6 million at January 1, 2022 and January 2, 2021, respectively. The following information presents a summary of pension plans with an accumulated benefit obligation and a projected benefit obligation in excess of plan assets (in thousands):

    

January 1,

    

January 2,

2022

2021

Accumulated benefit obligation

$

108,775

 

$

184,278

Fair value of plan assets

104,757

 

162,267

Projected benefit obligation

121,117

197,875

Fair value of plan assets

$

104,757

$

162,267

The assumptions used in the measurement of our benefit obligation as of January 1, 2022 and January 2, 2021 are shown in the following table:

    

January 1,

January 2,

2022

2021

Discount rate

 

2.62 - 2.78

%  

2.23 - 2.46

%

Rate of compensation increase

 

3.00

%  

3.00

%

Expected long-term rate of return

 

7.00

%  

6.50

%

The discount rate used to determine year-end fiscal 2021 and fiscal 2020 pension benefit obligations was derived by matching the plans’ expected future cash flows to the corresponding yields from the FTSE Pension Discount Curve (formerly known as the Citigroup Pension Discount Curve). This yield curve has been constructed to represent the available yields on high-quality fixed-income investments across a broad range of future maturities.

The overall expected long-term rate of return on plan assets assumption is based upon a building-block method, whereby the expected rate of return on each asset class is broken down into the following components: (1) inflation; (2) the real risk-free rate of return (i.e., the long-term estimate of future returns on default-free U.S. government securities); and (3) the risk premium for each asset class (i.e., the expected return in excess of the risk-free rate).

All three components are based primarily on historical data, with modest adjustments to take into account additional relevant information that is currently available. For the inflation and risk-free return components, the most significant additional information is that provided by the market for nominal and inflation-indexed U.S. Treasury securities. That market provides implied forecasts of both the inflation rate and risk-free rate for the period over which currently available securities mature. The historical data on risk premiums for each asset class is adjusted to reflect any systemic changes that have occurred in the relevant markets; e.g., the higher current valuations for equities, as a multiple of earnings, relative to the longer-term average for such valuations.

Net periodic pension cost includes the following components (in thousands):

    

Fiscal 2021

    

Fiscal 2020

    

Fiscal 2019

Service cost—benefits earned during the period

$

10,434

$

8,622

$

7,140

Interest cost on projected benefit obligation

 

4,847

 

5,345

 

5,734

Expected return on plan assets

 

(10,939)

 

(9,187)

 

(7,750)

Amortization of unrecognized loss

 

1,648

 

1,288

 

861

Net periodic pension cost

$

5,990

$

6,068

$

5,985

The following table sets forth the changes in amounts recorded in accumulated other comprehensive income (loss) for fiscal 2021, 2020 and 2019, respectively (in thousands):

Changes in amounts recorded in accumulated other comprehensive income (loss):

    

Fiscal 2021

    

Fiscal 2020

    

Fiscal 2019

Net gain/(loss)

$

22,573

$

(5,167)

$

(17,504)

Amortization of unrecognized loss

 

1,648

 

1,288

 

861

Total recorded in other comprehensive income (loss)

$

24,221

$

(3,879)

$

(16,643)

Our pension plan assets are managed by outside investment managers; assets are rebalanced at the end of each quarter. Our investment strategy with respect to pension assets is to maximize return while protecting principal. The investment manager has the flexibility to adjust the asset allocation and move funds to the asset class that offers the most opportunity for investment returns.

The asset allocation for our pension plans at January 1, 2022 and January 2, 2021, and the target allocation for fiscal 2021, by asset category, follows:

Percentage of Plan

Assets at Year End

    

Target

January 1,

January 2,

Asset Category

Allocation

2022

2021

Equity securities

 

70

%  

64

%  

65

%

Fixed income securities

 

30

%  

32

%  

31

%

Other

 

%

4

%  

4

%

Total

100

%

100

%

100

%

The general investment objective of each of the pension plans is to grow the plan assets in relation to the plan liabilities while prudently managing the risk of a decrease in the plan’s assets relative to those liabilities. To meet this objective, our management has adopted the above target allocations that it reconsiders from time to time as circumstances change. The actual plan asset allocations may be within a range around these targets. The actual asset allocations are reviewed and rebalanced on a periodic basis.

The fair values of our pension plan assets at January 1, 2022 and January 2, 2021, utilizing the fair value hierarchy discussed in Note 8, “Fair Value Measurements” follow (in thousands):

January 1, 2022

January 2, 2021

    

Level 1

    

Levels 2 & 3

    

Level 1

    

Levels 2 & 3

Asset Category

Cash

$

6,692

$

$

6,847

$

Equity securities:

U.S. mutual funds

 

19,156

 

 

60,630

 

Foreign mutual funds

 

25,182

 

 

15,328

 

U.S. common stocks

 

74,981

 

 

33,349

 

Foreign common stocks

 

864

 

 

1,231

 

Fixed income securities:

U.S. mutual funds

 

60,697

 

 

51,836

 

Total fair value of pension plan assets

$

187,572

$

$

169,221

$

The investment portfolio contains a diversified blend of common stocks, bonds, cash equivalents and other investments, which may reflect varying rates of return. The investments are further diversified within each asset classification. The portfolio diversification provides protection against a single security or class of securities having a disproportionate impact on aggregate performance. Of the $75.0 million of U.S. common stocks in the investment portfolio at January 1, 2022, $12.2 million was invested in B&G Foods’ common stock. Of the $33.3 million of U.S. common stocks in the investment portfolio at January 2, 2021, $11.0 million was invested in B&G Foods’ common stock.

As of January 1, 2022, pension plan benefit payments were expected to be as follows (in thousands):

Pension Plan Benefit Payments

Fiscal year:

2022

$

5,215

2023

 

5,557

2024

 

5,972

2025

 

6,473

2026

 

7,166

2027 to 2031

$

44,306

We expect to make $2.5 million of contributions to our company-sponsored defined benefit pension plans during fiscal 2022.

We also sponsor defined contribution plans covering substantially all of our employees. Employees may contribute to these plans and these contributions are matched by us at varying amounts. Contributions for the matching component of these plans amounted to $3.8 million, $2.8 million and $1.9 million for fiscal 2021, 2020 and 2019, respectively.

Multi-Employer Defined Benefit Pension Plan. Prior to the closure of our Portland, Maine manufacturing facility during the fourth quarter of 2021, we also contributed to the Bakery and Confectionery Union and Industry International Pension Fund (EIN 52-6118572, Plan No. 001), a multi-employer defined benefit pension plan, sponsored by the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) on behalf of certain employees at the Portland, Maine facility. The plan provides multiple plan benefits with corresponding contribution rates that are collectively bargained between participating employers and their affiliated BCTGM local unions.

B&G Foods made contributions to the plan of $0.6 million, $1.0 million and $0.9 million in fiscal 2021, 2020 and 2019, respectively. In addition, we paid surcharges of approximately $0.3 million, $0.4 million and $0.3 million in each of fiscal 2021, 2020 and 2019, respectively. These contributions represented less than five percent of total contributions made to the plan.

In connection with the closure and pending sale of the Portland manufacturing facility, we withdrew from participation in the plan, which requires us to make monthly withdrawal liability payments to the plan over 20 years. These payments amount to approximately $0.9 million on an annual basis beginning March 1, 2022. Accordingly, we have reflected the present value of such payments amounting to $13.9 million as a liability on our consolidated balance sheet.

For more information about the closure and pending sale of the Portland manufacturing facility, see Note 18, “Assets Held for Sale and Related Severance and Other Expenses.”