Retirement Plans

9 Months Ended

Sep. 30, 2022

Retirement Plans [Abstract]

Retirement Plans

‎

(15) Retirement Plans:

Frontier recognizes actuarial gains (losses) for our pension and postretirement plans in the period they occur. The components of net periodic benefit cost other than the service cost component for our plans as well as any actuarial gains or losses are included in “Investment and other income (loss)” on the consolidated statement of income.

The following tables provide the components of total pension benefit cost:

	Pension Benefits
	For the three months ended September 30,		For the three months ended September 30,
($ in millions)	2022		2021
Components of total pension benefit cost
Service cost	$	14	$	20
Interest cost on projected benefit obligation		22		26
Expected return on plan assets		(46)		(49)
Amortization of unrecognized loss		-		-
Net periodic pension (benefit)		(10)		(3)
Pension settlement costs		50		-
Pension remeasurement gain		(91)		-
Total pension (benefit)	$	(51)	$	(3)
	Successor				Predecessor
	Pension Benefits
	For the nine months ended September 30,		For the five months ended September 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021
Components of total pension benefit cost
Service cost	$	55	$	33	$	32
Interest cost on projected benefit obligation		71		44		31
Expected return on plan assets		(145)		(80)		(61)
Amortization of unrecognized loss		-		-		24
Net periodic pension (benefit) cost	$	(19)	$	(3)	$	26
Pension settlement costs		50		-		-
Pension remeasurement gain		(91)		-		-
Total pension (benefit) cost	$	(60)	$	(3)	$	26

The components of net periodic benefit cost other than the service cost component are included in “Investment and other income” on the consolidated statement of income.

The value of our pension plan assets decreased $696 million from $2,655 million at December 31, 2021 to $1,959 million at September 30, 2022. This decrease primarily resulted from changes in the market value of investments of $635 million including plan expenses, and benefit payments to participants of $233 million, partially offset by contributions of $172 million.

The pension plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. Frontier’s accounting policy is to record these payments as a settlement only if, in the aggregate, they exceed the sum of the annual service and interest costs for the Pension Plan’s net periodic

pension benefit cost. During the nine months ended September 30, 2022, lump sum pension settlement payments to terminated or retired individuals amounted to $177 million, which exceeded the settlement threshold of $169 million, and as a result, Frontier recognized non-cash settlement charges totaling $50 million during the nine months ended September 30, 2022.

As a result of pension settlement charges incurred during the period, Frontier remeasured its pension plan obligations resulting in a remeasurement gain of $91 million for the nine months ended September 30, 2022. Upon emergence from bankruptcy, Frontier revised its accounting policy to recognize actuarial gains and losses in the period in which they occur. As such, this gain was recorded in “Investment and other income, net” on our consolidated statements of income.

In the first nine months of 2022, Frontier amended the medical coverage for certain postretirement benefit plans, which necessitated a remeasurement of its OPEB obligations. This remeasurement resulted in the recognition of a net actuarial gain of $234 million, which was driven primarily from a higher assumed discount rate relative to the previous measurement date. Upon emergence from bankruptcy, Frontier revised its accounting policy to recognize actuarial gains and losses in the period in which they occur. As such, this gain was recorded in “Investment and other income, net” on our consolidated statements of income.

The following tables provide the components of total postretirement benefit cost:

	Postretirement
	For the three months ended September 30,		For the three months ended September 30,
($ in millions)	2022		2021
Components of net periodic postretirement benefit cost
Service cost	$	3	$	4
Interest cost on projected benefit obligation		9		7
Amortization of prior service benefit		(4)		(2)
OPEB remeasurement (gain) loss		(84)		54
Total periodic postretirement (benefit) cost	$	(76)	$	63
	Successor				Predecessor
	Postretirement
	For the nine months ended September 30,		For the five months ended September 30,		For the four months ended April 30,
($ in millions)	2022		2021		2021
Components of net periodic postretirement benefit cost
Service cost	$	10	$	7	$	7
Interest cost on projected benefit obligation		23		12		9
Amortization of prior service benefit		(10)		(3)		(10)
OPEB remeasurement (gain) loss		(234)		67		-
Amortization of unrecognized loss		-		-		5
Net periodic postretirement (benefit) cost	$	(211)	$	83	$	11

During the nine months ended September 30, 2022, we capitalized $15 million of pension and OPEB expense into the cost of our capital expenditures, as the costs relate to our engineering and plant construction activities. During the four months of April 30, 2021, we capitalized $7 million of pension and OPEB expense into the cost

of our capital expenditures, as the costs relate to our engineering and plant construction activities. During the three and five months ended September 30, 2021, we capitalized $6 million and $10 million of pension and OPEB expense, respectively.