We sponsor a noncontributory defined benefit pension plan covering a significant number of our former and current employees and other postretirement benefit plans that provide medical, dental, life insurance and other benefits for covered retired employees and their beneficiaries and covered dependents. The pension plan and postretirement benefit plans are closed to the majority of our newly hired employees. The benefits are based on years of service and final average pay or career average pay. Contributions are made in amounts sufficient to meet ERISA funding requirements while considering tax deductibility. Plan assets are invested in a diversified portfolio of equity and fixed-income securities and alternative investments.

The accounting results for pension and other postretirement benefit costs and obligations are dependent upon various actuarial assumptions applied in the determination of such amounts. These actuarial assumptions include the following: discount rates, expected long-term rate of return on plan assets, future compensation increases, employee turnover, healthcare cost trend rates, expected retirement age, optional form of benefit and mortality. We review these assumptions for changes annually with our independent actuaries. We consider our discount rate and expected long-term rate of return on plan assets to be our most critical assumptions.

The discount rate is used to value, on a present value basis, our pension and other postretirement benefit obligations as of the balance sheet date. The same rate is also used in the interest cost component of the pension and postretirement benefit cost determination for the following year. The measurement date used in the selection of our discount rate is the balance sheet date. Our discount rate assumption is determined annually with assistance from our independent actuaries based on the pattern of expected future benefit payments and the prevailing rates available on long-term, high quality corporate bonds that approximate the benefit obligation.

As of December 31, 2023, 2022 and 2021, we utilized an estimation technique that is based upon a settlement model (Bond:Link) that permits us to closely match cash flows to the expected payments to participants. This rate can change from year-to-year based on market conditions that affect corporate bond yields.

As a result of the technique described above, we are utilizing a discount rate of 5.20% as of December 31, 2023 for our qualified pension plan, compared to rates of 5.50% and 2.90% in 2022 and 2021, respectively. The discount rate for postretirement plans as of December 31, 2023 was 5.20% compared to 5.50% in 2022 and 3.00% in 2021.

The expected long-term rate of return on plan assets is applied in the determination of periodic pension and postretirement benefit cost as a reduction in the computation of the expense. In developing the expected long-term rate of return assumption, we considered published surveys of expected market returns, 10 and 20 year actual returns of various major indices, and our own historical 5 year, 10 year and 20 year investment returns. The expected long-term rate of return on plan assets is based on an asset allocation assumption of 35% in long-duration fixed income securities, and 65% in equity securities and other investments. We review our asset allocation at least annually and make changes when considered appropriate. Our pension asset investment allocation decisions are made by the Retirement Investment & Administration Committee (RIAC), a committee comprised of members of management, pursuant to a delegation of authority by the Board of Directors. Asset allocation decisions take into account expected market return assumptions of various asset classes as well as expected pension benefit payment streams. When analyzing anticipated benefit payments, management considers both the absolute amount of the payments as well as the timing of such payments. Our expected long-term rate of return on plan assets was 7.50% in 2023 and 2022. For 2024, we expect to assume a rate of return of 7.50%. Our pension plan assets are valued at fair value as of the measurement date. The measurement date used to determine pension and other postretirement benefit measures for the pension plan and the postretirement benefit plan is December 31.

During 2023, we capitalized $18 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 2022, we capitalized $21 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, and the eight months ended December 31, 2021, we capitalized $7 million and $15 million, respectively, of pension and OPEB expense.

Pension Benefits

The following tables set forth the pension plan’s projected benefit obligations, fair values of plan assets and the pension benefit liability recognized on our consolidated balance sheets at the end of each period, and the components of total pension benefit cost for each period:



	For the year ended		For the year ended
	December 31,		December 31,
($ in millions)	2023		2022

Change in projected benefit obligation (PBO)
PBO at the beginning of the period	$	2,510	$	3,477
Service cost		51		69
Interest cost		129		106
Actuarial gain		(44)		(867)
Benefits paid		(204)		(75)
Settlements		-		(200)
PBO at the end of the period	$	2,442	$	2,510

Change in plan assets
Fair value of plan assets at the beginning of the period	$	2,033	$	2,655
Actual return on plan assets		305		(523)
Employer contributions		134		176
Settlements		-		(200)
Benefits paid		(204)		(75)
Fair value of plan assets at the end of the period	$	2,268	$	2,033

Funded status	$	(174)	$	(477)

Amounts recognized in the consolidated balance sheet
Pension and other postretirement benefits - current	$	-	$	-
Pension and other postretirement benefits - noncurrent	$	(174)	$	(477)
Accumulated other comprehensive loss	$	-	$	-



	Successor						Predecessor
	For the year ended		For the year ended		For the eight months		For the four months
	December 31,		December 31,		ended December 31,		ended April 30,
($ in millions)	2023		2022		2021		2021

Components of total pension benefit cost (income)
Service cost	$	51	$	69	$	53	$	32
Interest cost on projected benefit obligation		129		106		69		31
Expected return on plan assets		(148)		(181)		(127)		(61)
(Gain) / loss recognized		(202)		(218)		6		-
Amortization of unrecognized loss		-		-		-		24
Net periodic pension benefit cost (income)		(170)		(224)		1		26
Pension settlement costs		-		55		-		-
Total pension benefit cost (income)	$	(170)	$	(169)	$	1	$	26

The pension plan contains provisions that provide certain employees with the option of receiving a lump sum payment upon retirement. These payments are recorded 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 2023, lump sum pension payments to terminated or retired individuals amounted to $129 million. As we did not exceed the settlement threshold of $180 million, we did not recognize any non-cash settlement charges for 2023.

During 2023, we had actuarial gains of $44 million, driven by favorable lump sum conversion interest rates and cash balance interest crediting rates and updated census data to January 1, 2023, offset by a decrease of 30 basis points in the discount rate. 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.

During 2022, lump sum pension settlement payments to terminated or retired individuals amounted to $200 million, which exceeded the settlement threshold of $175 million, and as a result, we recognized non-cash settlement charges totaling $55 million during the period. During 2022, we had actuarial gains of $867 million, driven by an increase of 260 basis points in the discount rate, favorable lump sum annuity conversion interest rates and cash balance interest crediting rates, and updated census data to January 1, 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.

As part of fresh start accounting, we remeasured our net pension obligation as of April 30, 2021. In revaluing the pension benefit obligation, the assumed discount rate was 3.10% and the assumed rate of return on Plan assets was 7.50%. The discount rate increased compared to the 2.60% used in the December 31, 2020 valuation. This change as well as other changes in assumptions lead to a pension obligation decrease as a result of actuarial gains of $328 million.

The largest contributors to the $30 million actuarial loss from April 30, 2021 to December 31, 2021, were the decrease in the assumed discount rate from 3.10% to 2.90%.

The plan’s weighted average asset allocations at December 31, 2023 and 2022 by asset category are as follows:



	2023		2022
Asset category:
Equity securities	49	%	58	%
Debt securities	40	%	30	%
Alternative and other investments	11	%	12	%
Total	100	%	100	%

The plan’s expected benefit payments over the next 10 years are as follows:



($ in millions)	Amount

2024	$	238
2025		237
2026		232
2027		227
2028		226
2029-2033		1,049
Total	$	2,209

We made pension plan contributions of $134 million and $176 million, in 2023 and 2022, respectively.

In 2021, we elected the provisions of American Rescue Plan Act, or ARPA retroactive to the 2019 plan year, which resulted in 1) a shortfall amortization period change from 7 to 15 years with a fresh start for the existing shortfall, commencing in the 2019 plan year and 2) interest rate stabilization, commencing in the 2020 plan year. These elections resulted in the creation of a funding balance that we used to satisfy certain required contributions in 2021. As a result of these changes, our pension plan contributions in the fiscal year 2021 were $42 million.

Assumptions used in the computation of annual pension costs and valuation of the beginning/end of period obligations were as follows:



	12/31/2023		12/31/2022		12/31/2021		4/30/2021
Discount rate - used at period end to value obligation	5.20	%	5.50	%	2.90	%	3.10	%
Discount rate - used at beginning of period to compute annual cost	5.50	%	2.90	%	3.10	%	2.60	%
Expected long-term rate of return on plan assets	7.50	%	7.50	%	7.50	%	7.50	%
Rate of increase in compensation levels	3.00	%	3.00	%	2.00	%	2.00	%

Postretirement Benefits Other Than Pensions - “OPEB”

The following tables set forth the OPEB plans’ benefit obligations, fair values of plan assets and the postretirement benefit liability recognized on our consolidated balance sheets as of December 31, 2023 and 2022 and the components of total postretirement benefit cost for the years ended December 31, 2023, 2022 and 2021.



	For the year ended		For the year ended
	December 31,		December 31,
($ in millions)	2023		2022

Change in benefit obligation
Benefit obligation at the beginning of the period	$	606	$	897
Service cost		8		13
Interest cost		31		31
Plan amendments		(45)		(41)
Plan participants' contributions		11		10
Actuarial (gain) loss		3		(248)
Benefits paid		(53)		(56)
Benefit obligation at the end of the period	$	561	$	606

Change in plan assets
Fair value of plan assets at the beginning of the period	$	-	$	-
Plan participants' contributions		11		10
Employer contribution		42		46
Benefits paid		(53)		(56)
Fair value of the plan assets at end of the period	$	-	$	-

Funded status	$	(561)	$	(606)

Amounts recognized in the consolidated balance sheet
Pension and other postretirement benefits - current	$	(38)	$	(39)
Pension and other postretirement benefits - noncurrent	$	(523)	$	(567)
Accumulated other comprehensive gain	$	(125)	$	(102)



	Successor						Predecessor
	For the year ended		For the year ended		For the eight months		For the four months
	December 31,		December 31,		ended December 31,		ended April 30,
($ in millions)	2023		2022		2021		2021

Components of total postretirement benefit cost / (income)
Service cost	$	8	$	13	$	11	$	7
Interest cost on projected benefit obligation		31		31		18		9
Amortization of prior service credit		(22)		(13)		(5)		(10)
(Gain) loss recognized		3		(248)		37		-
Amortization of unrecognized (gain) loss		-		-		-		5
Net periodic postretirement benefit cost / (income)		20		(217)		61		11
Gain on disposal, net		-		-		-		-
Total postretirement benefit cost / (income)	$	20	$	(217)	$	61	$	11

During 2023, we amended the medical coverage for certain postretirement benefit plans, which necessitated remeasurements of our OPEB obligations. These remeasurements along with the period end remeasurement resulted in the recognition of a net actuarial loss of $3 million, which was driven primarily from a higher assumed discount rate relative to the previous measurement dates, offset by updated census data to January 1, 2023.. Upon emergence from bankruptcy, we revised our accounting policy to recognize actuarial gains and losses in the period in which they occur. As such, this loss was recorded in “Investment and other income, net” on our consolidated statements of income. The remeasurements of our OPEB obligations during 2023 due to the amendments to the medical coverage for certain postretirement benefit plans also resulted in remeasurement of prior service credits of $45 million which were deferred in Accumulated comprehensive income as December 31, 2023.

During 2022, we amended the medical coverage for certain postretirement benefit plans, which necessitated remeasurements of our OPEB obligations. These remeasurements along with the period end remeasurement resulted in the recognition of a net actuarial gain of $248 million, which was driven primarily from a higher assumed discount rate relative to the previous measurement dates. Upon emergence from bankruptcy, we revised our 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 remeasurements of our OPEB obligations during 2022 due to the amendments to the medical coverage for certain postretirement benefit plans also resulted in remeasurement of prior service credits of $40 million which were deferred in Accumulated comprehensive income as December 31, 2022.

As part of the fresh start accounting, we remeasured our net OPEB obligation as of April 30, 2021, resulting in actuarial gains of $99 million primarily driven by an increase in the discount rates used to measure our OPEB plans reduction when compared to December 31, 2020. The decrease in the discount rate from April 30, 2021 to December 31, 2021 primarily resulted in the actuarial loss of $37 million at December 31, 2021. During the eight months ended December 31, 2021, we amended the medical coverage for certain postretirement benefit plans, which resulted in remeasurements of our other postretirement benefit obligation and prior service credits of $79 million which were deferred in Accumulated comprehensive income as December 31, 2021.

Assumptions used in the computation of annual OPEB costs and valuation of the beginning/end of period OPEB obligations were as follows:



	12/31/2023	12/31/2022	12/31/2021	4/30/2021
Discount rate - used at period end to value obligation	5.20%	5.50%	3.00%	3.30%
Discount rate - used to compute annual cost	5.00% - 6.40%	3.00% - 5.60%	2.80% - 3.30%	2.60% - 2.80%

The OPEB plan’s expected benefit payments over the next 10 years are as follows:



($ in millions)	Gross Benefit		Medicare Part D Subsidy		Total

2024	$	39	$	-	$	39
2025		40		-		40
2026		42		-		42
2027		43		-		43
2028		45		-		45
2029-2033		238		-		238
Total	$	447	$	-	$	447

For purposes of measuring year-end benefit obligations, we used, depending on medical plan coverage for different retiree groups, a 6.75% annual rate of increase in the per-capita cost of covered medical benefits, gradually decreasing to 4.75% in the year 2032 and remaining at that level thereafter.

The amounts in accumulated other comprehensive (income) loss before tax that have not yet been recognized as components of net periodic benefit cost at December 31, 2023 and 2022 are as follows:

The amounts recognized as a component of accumulated other comprehensive loss for the years ended December 31, 2023 and 2022 are as follows:



	For the year ended		For the year ended
OPEB	December 31,		December 31,
($ in millions)	2023		2022

Accumulated other comprehensive gain at
the beginning of the period	$	(102)	$	(75)

Prior service credit amortized during the period		22		13
Prior service credit occurring during the period		(45)		(40)
Net amount recognized in comprehensive
loss for the period		(23)		(27)
Accumulated other comprehensive gain at
end of the period	$	(125)	$	(102)