Pension Plan and Employee Benefits

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Pension Plan and Employee Benefits

Note 10 — Pension Plan and Employee Benefits

Pension Plan and Other Benefits Plan

Employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Benefits under the plan reflect an employee’s years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last ten years of employment with Cleco. Cleco’s policy is to base its contributions to the employee pension plan upon actuarial computations utilizing the projected unit credit method, subject to the IRS’s full funding limitation. Cleco did not make any required or discretionary contributions to the pension plan in 2022 or 2021. In December 2020, Cleco made a $15.8 million required contribution to the pension plan. Cleco has not made and does not expect to make any contributions in 2023. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. Based on the funding assumptions at December 31, 2022, management estimates that $74.5 million in pension contributions will be required through 2027. Future discretionary contributions may be made depending on changes in assumptions, the ability to utilize the contribution as a tax deduction, and requirements concerning recognizing a minimum pension liability. Adverse changes in assumptions or adverse actual events could cause additional minimum contributions. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is the plan sponsor and Support Group is the plan administrator.

The pension plan was amended on February 4, 2019, to include certain former NRG Energy employees who are now Cleco Cajun employees. The Cleco Cajun employees are eligible to participate as a cash balance participant and are credited with all service that was credited to them under the NRG Pension Plan as of February 4, 2019. Benefits under the plan amendment reflect the employee’s years of service, age at retirement, and accrued benefit at retirement. The interest crediting rate on the cash balance plan was 5.07% and 3.06% at December 31, 2022, and 2021, respectively.

Cleco’s retirees may be eligible to receive Other Benefits. Dependents of Cleco’s retirees may also be eligible to receive Other Benefits with the exception of life insurance benefits. Cleco recognizes the expected cost of Other Benefits during the periods in which the benefits are earned.

The employee pension plan and Other Benefits plan obligation, plan assets, and funded status at December 31, 2022, and 2021 are presented in the following table:

	PENSION BENEFITS				OTHER BENEFITS
	FOR THE YEAR ENDED DEC. 31,				FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021		2022		2021
Change in benefit obligation
Benefit obligation at beginning of period	$	680,417	$	686,384	$	55,257	$	56,331
Service cost	8,589		10,516		2,204		2,425
Interest cost	19,841		18,668		1,484		1,283
Plan participants’ contributions	—		—		1,904		—
Actuarial gain	(174,733)		(9,823)		(10,289)		(81)
Expenses paid	(3,744)		(3,306)		—		—
Benefits paid	(29,501)		(25,292)		(7,254)		(4,701)
Special/contractual termination benefits	—		3,270		—		—
Benefit obligation at end of period	500,869		680,417		43,306		55,257
Change in plan assets
Fair value of plan assets at beginning of period	527,427		516,120		—		—
Actual (loss) gain return on plan assets	(91,897)		39,905		—		—
Expenses paid	(3,744)		(3,306)		—		—
Benefits paid	(29,501)		(25,292)		—		—
Fair value of plan assets at end of period	402,285		527,427		—		—
Unfunded status	$	(98,584)	$	(152,990)	$	(43,306)	$	(55,257)

The employee pension plan accumulated benefit obligation at December 31, 2022, and 2021 is presented in the following table:

	PENSION BENEFITS
	AT DEC. 31,
(THOUSANDS)	2022		2021
Accumulated benefit obligation	$	481,398	$	640,490

The following table presents the net actuarial gains/losses included in other comprehensive income for Other Benefits and in regulatory assets for pension related to current year gains and losses as a result of being included in net periodic benefit costs for the employee pension plan and Other Benefits plan for the years ended December 31, 2022, and 2021:

	PENSION BENEFITS				OTHER BENEFITS
	FOR THE YEAR ENDED DEC. 31,				FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021		2022		2021
Net actuarial gain occurring during period	$	(58,124)	$	(26,925)	$	(10,289)	$	(81)
Net actuarial loss amortized during period	$	12,332	$	20,739	$	1,207	$	1,523

The pension net actuarial gain was $58.1 million for the year ended December 31, 2022, primarily due to an increase in the discount rate, partially offset by lower than expected return on assets. The pension net actuarial gain was $26.9 million for the year ended December 31, 2021, primarily due to an increase in the discount rate and higher than expected return on assets, partially offset by an update to the census data.

The Other Benefits net actuarial gain was $10.3 million for the year ended December 31, 2022, primarily due to an increase in the discount rate. The Other Benefits net actuarial gain was less than $0.1 million for the year ended December 31, 2021.

The following table presents net actuarial gains/losses in accumulated other comprehensive income for Other Benefits and in regulatory assets for pension that have not been recognized as components of net periodic benefit costs for the employee pension plan and Other Benefits plans at December 31, 2022, and 2021:

	PENSION BENEFITS				OTHER BENEFITS
	AT DEC. 31,				AT DEC. 31,
(THOUSANDS)	2022		2021		2022		2021
Net actuarial loss	$	47,317	$	117,773	$	13,705	$	22,785

The non-service components of net periodic pension and Other Benefits cost are included in Other income (expense), net within Cleco’s and Cleco Power’s Consolidated Statements

of Income. The components of net periodic pension and Other Benefits costs for 2022, 2021, and 2020 are as follows:

			PENSION BENEFITS						OTHER BENEFITS
	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021		2020		2022		2021		2020
Components of periodic benefit costs
Service cost	$	8,589	$	10,516	$	9,820	$	2,204	$	2,425	$	2,153
Interest cost	19,841		18,668		20,816		1,484		1,283		1,651
Expected return on plan assets	(24,706)		(22,801)		(24,974)		—		—		—
Amortizations
Prior service credit	—		—		(60)		—		—		—
Net loss	12,332		20,738		16,292		1,210		1,523		1,389
Net periodic benefit cost	$	16,056	$	27,121	$	21,894	$	4,898	$	5,231	$	5,193
Special/contractual termination benefits	—		3,270		—		—		—		—
Total benefit cost	$	16,056	$	30,391	$	21,894	$	4,898	$	5,231	$	5,193

Effective September 30, 2021, the pension plan was amended to offer an enhanced pension benefit to certain employees participating in the plan that elected to retire during a certain retirement window. Those certain employees who elected by September 30, 2021, to receive the enhanced pension benefits received a 10% increase in calculated pension benefits. This resulted in a special termination benefit cost for Cleco Power and Support Group of $2.4 million and $0.9 million, respectively, that was included as an expense of the pension plan.

Because Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the years ended December 31, 2022, 2021, and 2020 was $3.2 million, $4.5 million, and $3.5 million, respectively.

Cleco Holdings is the plan sponsor for the other benefit plans. There are no assets set aside in a trust and the liabilities are reported on the individual subsidiaries’ financial statements. The expense related to Other Benefits reflected in Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2022, 2021, and 2020 was $4.4

million, $4.7 million, and $4.8 million, respectively. The current and non-current portions of the Other Benefits liability for Cleco and Cleco Power at December 31, 2022, and 2021 are as follows:

Cleco
	AT DEC. 31,
(THOUSANDS)	2022		2021
Current	$	5,024	$	5,181
Non-current	$	38,282	$	50,093

Cleco Power
	AT DEC. 31,
(THOUSANDS)	2022		2021
Current	$	4,310	$	4,432
Non-current	$	30,082	$	39,315

The measurement date used to determine the pension and other postretirement benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows:

	PENSION BENEFITS				OTHER BENEFITS
	AT DEC. 31,				AT DEC. 31,
	2022		2021		2022		2021
Weighted-average assumptions used to determine the benefit obligation
Discount rate	5.44	%	2.98	%	5.61	%	2.82	%
Rate of compensation increase	2.76	%	2.73	%	N/A		N/A

			PENSION BENEFITS						OTHER BENEFITS
	FOR THE YEAR ENDED DEC. 31,						FOR THE YEAR ENDED DEC. 31,
	2022		2021		2020		2022		2021		2020
Weighted-average assumptions used to determine the net benefit cost
Discount rate	2.98	%	2.74	%	3.43	%	2.82	%	2.39	%	3.25	%
Expected return on plan assets	5.25	%	5.00	%	5.91	%	N/A		N/A		N/A
Rate of compensation increase	2.73	%	2.71	%	2.75	%	N/A		N/A		N/A

The expected return on plan assets was determined by examining the risk profile of each target category as compared to the expected return on that risk, within the parameters

determined by the Retirement Committee. In assessing the risk as compared to return profile, historical returns as compared to risk were considered. The historical risk compared to returns

was adjusted for the expected future long-term relationship between risk and return. The adjustment for the future risk compared to returns was, in part, subjective and not based on any measurable or observable events. For the calculation of the 2023 periodic expense, Cleco increased the discount rate to 5.44% and increased the expected long-term return on plan assets to 6.60%. Cleco expects pension expense to decrease in 2023 by approximately $14.4 million due to an increase in the discount rate and an increase in expected return on plan assets.

Employee pension plan assets are invested in accordance with the Pension Plan’s Investment Policy Statement. At December 31, 2022, allowable investments included U.S. Equity Portfolios, International Equity - Developed Markets Portfolios, Emerging Markets Equity Portfolios, Multi-Asset Credits, Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS), Fixed Income Portfolios - Long Credit and Intermediate Government Credit, and Real Estate Portfolios.

Real estate funds and the pooled separate accounts are stated at estimated market value based on appraisal reports prepared annually by independent real estate appraisers (members of the American Institute of Real Estate Appraisers). The estimated market value of recently acquired properties is assumed to approximate cost.

Fair Value Disclosures

Cleco classifies assets and liabilities measured at their fair value according to three different levels, depending on the inputs used in determining fair value. For more information on the fair value hierarchy, see Note 7 — “Fair Value Accounting Instruments.”

There have been no changes in the methodologies for determining fair value at December 31, 2022, and 2021. The following tables disclose the pension plan’s fair value of financial assets measured on a recurring basis:

(THOUSANDS)		AT DEC. 31, 2022		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Cash equivalents		$	7,345	$	—	$	7,345	$	—
Government securities		33,019		—		33,019		—
Mutual funds
Domestic		78,349		78,349		—		—
International		39,722		39,722		—		—
Real estate funds		39,370		—		—		39,370
Corporate debt		103,940		—		103,940		—
Total		$	301,745	$	118,071	$	144,304	$	39,370
	Investments measured at net asset value*	98,505
	Interest accrual	2,035
	Total net assets	$	402,285
	*Investments measured at net asset value consist of Common/collective trust.

(THOUSANDS)		AT DEC. 31, 2021		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Cash equivalents		$	7,433	$	—	$	7,433	$	—
Government securities		75,815		—		75,815		—
Mutual funds
Domestic		106,694		106,694		—		—
International		56,169		56,169		—		—
Real estate funds		39,091		—		—		39,091
Corporate debt		166,435		—		166,435		—
Total		$	451,637	$	162,863	$	249,683	$	39,091
	Investments measured at net asset value*	73,771
	Interest accrual	2,019
	Total net assets	$	527,427
	*Investments measured at net asset value consist of Common/collective trust.

Level 3 valuations are derived from other valuation methodologies including pricing models, discounted cash flow models, and similar techniques. Level 3 valuations incorporate subjective judgments and consider assumptions including capitalization rates, discount rates, cash flows, and other

factors that are not observable in the market. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The following is a reconciliation of the beginning and ending balances of the pension plan’s real estate funds measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2022, and 2021:

(THOUSANDS)
Balance, Dec. 31, 2020	$	35,962
Realized gains	503
Unrealized gains	3,524
Purchases	1,865
Sales	(2,763)
Balance, Dec. 31, 2021	$	39,091
Realized losses	(2,451)
Unrealized gains	4,112
Purchases	2,027
Sales	(3,409)
Balance, Dec. 31, 2022	$	39,370

The market-related value of plan assets differs from the fair value of plan assets by the amount of deferred asset gains or losses. Actual asset returns that differ from the expected return on plan assets are deferred and recognized in the market-related value of assets on a straight-line basis over a five-year period. For 2022, the return on plan assets was (19.94)% compared to an expected long-term return of 5.25%. The 2021 return on pension plan assets was 7.14% compared to an expected long-term return of 5.00%. As of December 31, 2022, none of the pension plan participants’ future annual benefits are covered by insurance contracts.

Pension Plan Investment Objectives

Cleco’s Retirement Committee has established investment performance objectives of the pension plan assets. Over a rolling three- to five-year annualized period, the objectives are for the pension plan’s annualized total return to:

•Exceed the (FAS) actuarial assumed rate of return on plan assets, and

•Exceed the annualized total return of the following customized index (based on the target allocation in the glide path) consisting of a mixture of S&P 500 Index, Russell 2500 Index, Morgan Stanley Capital International All Country World ex U.S. Index, Morgan Stanley Capital International Emerging Markets Index, Custom Index related to Multi-Asset Credit asset class, Bloomberg Barclays Capital Long Credit Index, Bloomberg Barclays 15+ Year Treasury STRIPS, Bloomberg Barclays Intermediate/Government Credit Index, and National Council of Real Estate Investment Fiduciaries Index. 

Risk characteristics of the portfolio (annualized standard deviation of returns) should be similar to or less than the custom index.

In order to meet the objectives and to control risk, the Retirement Committee has established the following guidelines that the investment managers must follow:

U.S. Equity Portfolios

•Equity holdings in any single company (including common stock and convertible securities) must not exceed 10% of the manager’s portfolio measured at market value.

•A minimum of 25 stocks should be owned in the portfolio.

•Equity holdings should represent 90% of the portfolio at all times.

•Equity holdings in any one economic sector (as defined by the Global Industry Classification Standard) should not exceed the lesser of three times the sector’s weighting in the S&P 500 Index or 35% of the portfolio.

•Marketable common stocks, preferred stocks convertible into common stocks, and fixed income securities convertible into common stocks are the only permissible equity investments.

•Securities in foreign (non-U.S.) entities denominated in U.S. dollars are limited to 10% of the manager’s portfolio measured at market value. Securities denominated in currencies other than U.S. dollars are not permissible investments.

•The purchase of securities on margin and short sales is prohibited.

International Equity - Developed Markets Portfolios 

•Equity holdings in a single company (including common stock and convertible securities) should not exceed 5% of the manager’s portfolio measured at market value.

•A minimum of 30 individual stocks should be owned in the portfolio.

•Equity holdings in any industry sector (as defined by the Global Industry Classification Standard) should not exceed 35% of the portfolio measured at market value.

•A minimum of 50% of the countries within the Morgan Stanley Capital International All Country World ex U.S. Index should be represented within the portfolio. The allocation to an individual country should not exceed the lesser of 30% or 5 times the country’s weighting within the Morgan Stanley Capital International All Country World ex U.S. Index.

•Currency hedging decisions are at the discretion of the investment manager.

Emerging Markets Portfolios

•Equity holdings in any single company (including common stock and convertible securities) should not exceed 10% of the manager’s portfolio measured at market value.

•A minimum of 30 individual stocks should be held within the portfolio.

•Equity holdings in any one industry (as defined by Global Industry Classification Standard) should not exceed 25% of the manager’s portfolio at market value.

•Equity investments must represent at least 75% of the portfolio under normal circumstances.

•A minimum of three countries should be represented within the portfolio.

•Illiquid securities which are not readily marketable may represent no more than 10% of portfolio assets.

•Currency hedging decisions are at the discretion of the investment manager.

Multi-Asset Credits

•Assets can include, but would not be limited to, high yield debt, emerging market debt, global investment grade credit and bank loans, as well as fixed income strategies.

•Currency hedging decisions are the discretion of the investment manager.

Treasury STRIPS

•The STRIPS are synthetic zero-coupon bonds that are created by separating each coupon and principal payment

of a treasury bond into a separate security. STRIPS take the form of a zero-coupon bond which is sold at a discount to face value and mature at par. They are backed by U.S. Treasury securities.

•Implementation of the portfolio is either through Treasury Futures or purchase of Treasury STRIPS through an investment manager.

•The benchmark would be Bloomberg Barclays 15+ Year Treasury STRIPS.

Fixed Income Portfolios - Long Credit and Intermediate Government Credit

•Permitted securities include all U.S. dollar denominated investment grade corporate debt, including sovereign, super-nationals, and Yankee bonds, U.S. government obligations and agency debt, all U.S. dollar denominated investment grade mortgage-backed securities, all U.S. dollar investment grade private placements or securities issued as 144A with or without registration rights.

•The portfolio can invest in surplus notes, trust preferred, E-Caps, and Hybrids. These types of securities do have risk of coupon deferral.

•The portfolio can invest in both senior and subordinated debt and money market securities: Treasury Bills, Commercial or Asset-backed paper rated A1/P1 or higher.

•The duration of the portfolio must be within +/- 1 year of benchmark.

•Sub-asset classes included but not limited to: cash, government, government related securities investment, grade credit, mortgage-backed securities asset-backed, securities, private placements, commercial mortgage-backed securities taxable municipal bonds

•High yield up to 5% from downgrades with no securities to be held below B- (rated by major rating agencies). Not allowed to purchase high yield securities. (120 day cure period for downgrades below B- - -)

•Securities must have a maximum position size of 5% for A rated securities and 3% for BBB rated securities.

•Treasury STRIPS managers will have the discretion to utilize U.S. treasury futures and STRIPS as needed to adjust the portfolio duration.

Real Estate Portfolios

•Real estate funds should be invested primarily in direct equity positions, with debt and other investments representing less than 25% of the fund.

•Leverage should be no more than 70% of the gross market value of the fund.

•Investments should be focused on existing income-producing properties, with land and development properties representing less than 40% of the fund.

The use of futures and options positions which leverage portfolio positions through borrowing, short sales, or other encumbrances of the Plan’s assets is prohibited. The Long Duration fixed income managers, Intermediate Government Credit and Treasury STRIPS manger(s) are exempt from the prohibition on derivatives use, due to the nature of long duration fixed income management.

The investment manager shall not purchase any securities of its organization or affiliated entities.

The following chart shows the dynamic asset allocation based on the funded ratio at December 31, 2022:

	PERCENT OF TOTAL PLAN ASSETS
			AT DEC. 31, 2022
	MINIMUM		TARGET		MAXIMUM
Return-seeking
Domestic equity			19	%
International equity			20	%
Multi-asset credit			6	%
Real estate			5	%
Total return-seeking	45	%	50	%	55	%
Liability hedging*	45	%	50	%	55	%
*Liability hedging has no target subcategories.

The assumed health care cost trend rates used to measure the expected cost of Other Benefits is 5.0% for 2023 and remains at 5.0% thereafter. The rate used for 2022 was also 5.0%. Assumed health care cost trend rates have a limited effect on the amount reported for Cleco’s health care plans.

The projected benefit payments for the employee pension plan and Other Benefits plan for each year through 2027 and the next five years thereafter are listed in the following table:

(THOUSANDS)	PENSION BENEFITS		OTHER BENEFITS, GROSS
For the year ending Dec. 31,
2023	$	30,509	$	5,163
2024	$	31,117	$	4,937
2025	$	32,015	$	4,741
2026	$	32,596	$	4,619
2027	$	33,101	$	4,526
Five years thereafter	$	172,598	$	20,325

SERP

Certain Cleco officers are covered by SERP. In 2014, SERP was closed to new participants; however, with regard to current SERP participants, including former employees or their beneficiaries, all terms of SERP will continue, other than as described below. SERP is a non-qualified, non-contributory, defined benefit pension plan. Generally, benefits under the plan reflect an employee’s years of service, age at retirement, and the sum of (a) the highest base salary paid out over the last five calendar years and (b) the average of the five highest cash bonuses paid during the 60 months prior to retirement. SERP benefits are reduced by retirement benefits received from any other defined benefit pension plan, supplemental executive retirement plan, or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed the amount the employee would have received under the terms of the original 401(k) Plan. Management reviews current market trends as it evaluates Cleco’s future compensation strategy.

Cleco does not fund the SERP liability, but instead pays for current benefits out of the cash available of the respective company of the employed officer. Because the SERP is a non-qualified plan, Cleco has purchased life insurance policies on certain SERP participants as a mechanism to provide a source of funding. These polices are held in a rabbi trust formed by Cleco Power. The rabbi trust is the named beneficiary of the life insurance policies and, therefore, receives the proceeds upon death of the insured participants. The life insurance policies may be used to reimburse Cleco for benefits paid from

general funds, pay the SERP participants’ death benefits, or pay future SERP payments. Market conditions could have a significant impact on the cash surrender value of the life insurance policies. Because SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. Cleco Power is the plan sponsor and Support Group is the plan administrator.

SERP’s funded status at December 31, 2022, and 2021 is presented in the following table:

			SERP BENEFITS
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021
Change in benefit obligation
Benefit obligation at beginning of period	$	93,179	$	97,225
Service cost	227		232
Interest cost	2,679		2,538
Actuarial gain	(22,097)		(1,932)
Benefits paid	(5,561)		(4,884)
Benefit obligation at end of period	$	68,427	$	93,179

SERP’s accumulated benefit obligation at December 31, 2022, and 2021 is presented in the following table:

	SERP BENEFITS
	AT DEC. 31,
(THOUSANDS)	2022		2021
Accumulated benefit obligation	$	68,427	$	93,179

The following table presents net actuarial gains/losses and prior service credits included in other comprehensive income

or regulatory assets related to current year gains and losses as a result of being amortized as a component of net periodic benefit costs for SERP for December 31, 2022, and 2021:

			SERP BENEFITS
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021
Net actuarial gain occurring during year	$	(22,097)	$	(1,932)
Net actuarial loss amortized during year	$	1,049	$	1,228
Prior service credit amortized during year	$	(215)	$	(215)

The SERP net actuarial gain was $22.1 million for the year ended December 31, 2022, primarily due to an increase in the discount rate. The following table presents net actuarial losses and prior service credit in accumulated other comprehensive income and regulatory assets that have not been recognized as components of net periodic benefit costs for SERP at December 31, 2022, and 2021:

	SERP BENEFITS
	AT DEC. 31
(THOUSANDS)	2022		2021
Net actuarial loss	$	8,241	$	31,526
Prior service credit	$	(1,299)	$	(1,514)

The non-service components of net periodic benefit cost related to SERP are included in Other income (expense), net within Cleco’s and Cleco Power’s Consolidated Statements of Income. The components of the net SERP costs for 2022, 2021, and 2020 are as follows:

			SERP BENEFITS
	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021		2020
Components of periodic benefit costs
Service cost	$	227	$	232	$	399
Interest cost	2,679		2,538		2,932
Amortizations
Prior service credit	(215)		(215)		(215)
Net loss	1,049		1,228		3,186
Net periodic benefit cost	$	3,740	$	3,783	$	6,302

The measurement date used to determine the SERP benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows:

	SERP BENEFITS
	AT DEC. 31,
	2022		2021
Weighted-average assumptions used to determine the benefit obligation
Discount rate	5.46	%	2.95	%
Rate of compensation increase	N/A		N/A

					SERP BENEFITS
	FOR THE YEAR ENDED DEC. 31,
	2022		2021		2020
Weighted-average assumptions used to determine the net benefit cost
Discount rate	2.95	%	2.64	%	3.37	%
Rate of compensation increase	N/A		N/A		N/A

The expense related to SERP reflected on Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2022, 2021, and 2020 was $0.6 million, $0.6 million, and $1.0 million, respectively.

Liabilities relating to SERP are reported on the individual subsidiaries’ financial statements. The current and non-current portions of the SERP liability for Cleco and Cleco Power at December 31, 2022, and 2021 are as follows:

Cleco
	AT DEC. 31,
(THOUSANDS)	2022		2021
Current	$	4,713	$	4,654
Non-current	$	63,714	$	88,523

Cleco Power
	AT DEC. 31,
(THOUSANDS)	2022		2021
Current	$	672	$	679
Non-current	$	9,087	$	12,909

The projected benefit payments for SERP for each year through 2027 and the next five years thereafter are shown in the following table:

(THOUSANDS)	2023		2024		2025		2026		2027		FIVE YEARS THEREAFTER
SERP	$	4,840	$	4,908	$	5,054	$	5,175	$	5,133	$	25,167

401(k)

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The 401(k) Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the 401(k) Plan, employer contributions are made in the form of cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Participation in the Plan is voluntary and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan expense for the years ended December 31, 2022, 2021, and 2020 was as follows:

	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021		2020
401(k) Plan expense	$	8,704	$	9,366	$	9,685

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries for the years ended December 31, 2022, 2021, and 2020 was as follows:

	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2022		2021		2020
401(k) Plan expense	$	4,079	$	4,350	$	4,424

Effective September 30, 2021, the 401(k) plan was amended to offer an enhanced 401(k) benefit to certain employees participating in the plan that elected to retire during a certain retirement window. Those certain employees who elected by September 30, 2021, to receive the enhanced 401(k) benefits received a one-time contribution up to 30% of the employee’s 2021 base salary in accordance with IRS contribution limits. This resulted in a one-time benefit cost of $0.2 million that was included as an expense of the 401(k) plan.