Pension Plans and Other Postretirement Benefits

9 Months Ended

Jun. 30, 2021

Compensation And Retirement Disclosure [Abstract]

Pension Plans and Other Postretirement Benefits

8. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Pension Plans

Spire and the Utilities maintain pension plans for their employees.

Spire Missouri has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its employees. Plan assets consist primarily of corporate and U.S. government obligations and a growth segment consisting of exposure to equity markets, commodities, real estate and inflation-indexed securities, achieved through derivative instruments.

Spire Alabama has non-contributory, defined benefit, trusteed forms of pension plans covering the majority of its employees. Qualified plan assets are comprised of mutual and commingled funds consisting of U.S. equities with varying strategies, global equities, alternative investments, and fixed income investments.

The net periodic pension cost includes components shown in the following tables.  The components other than the service costs and regulatory adjustment are presented in “Other Income (Expense), Net” in the income statement, except for Spire Alabama’s losses on lump-sum settlements. Such losses are capitalized in regulatory balances and amortized over the remaining actuarial life of individuals in the plan, and that amortization is presented in “Other Income (Expense), Net.”

	Three Months Ended June 30,						Nine Months Ended June 30,
	2021			2020			2021			2020
Spire
Service cost – benefits earned during the period	$	5.5		$	5.7		$	16.4		$	16.8
Interest cost on projected benefit obligation		5.5			5.5			15.3			17.2
Expected return on plan assets		(8.5	)		(8.5	)		(23.6	)		(26.7	)
Amortization of prior service credit		(0.9	)		(0.6	)		(2.4	)		(1.8	)
Amortization of actuarial loss		3.8			3.3			11.6			10.9
Loss on lump-sum settlements		11.2			2.3			15.0			23.3
Subtotal		16.6			7.7			32.3			39.7
Regulatory adjustment		1.3			7.4			19.9			5.7
Net pension cost	$	17.9		$	15.1		$	52.2		$	45.4
Spire Missouri
Service cost – benefits earned during the period	$	3.9		$	4.0		$	11.7		$	11.7
Interest cost on projected benefit obligation		3.5			3.8			10.5			12.0
Expected return on plan assets		(5.7	)		(5.9	)		(16.9	)		(18.8	)
Amortization of prior service (credit) cost		(0.2	)		—			(0.5	)		0.1
Amortization of actuarial loss		2.8			2.6			8.5			8.6
Loss on lump-sum settlements		9.1			2.3			9.1			23.3
Subtotal		13.4			6.8			22.4			36.9
Regulatory adjustment		(1.4	)		5.4			13.7			(0.1	)
Net pension cost	$	12.0		$	12.2		$	36.1		$	36.8
Spire Alabama
Service cost – benefits earned during the period	$	1.3		$	1.6		$	4.2		$	4.6
Interest cost on projected benefit obligation		1.1			1.2			3.5			3.7
Expected return on plan assets		(1.4	)		(1.7	)		(4.5	)		(5.2	)
Amortization of prior service credit		(0.6	)		(0.6	)		(1.8	)		(1.8	)
Amortization of actuarial loss		1.0			0.7			3.1			2.3
Loss on lump-sum settlements		2.1			—			5.9			—
Subtotal		3.5			1.2			10.4			3.6
Regulatory adjustment		2.5			1.7			5.6			5.1
Net pension cost	$	6.0		$	2.9		$	16.0		$	8.7

Pursuant to the provisions of Spire Missouri’s and Spire Alabama’s pension plans, pension obligations may be satisfied by monthly annuities, lump-sum cash payments, or special termination benefits. Lump-sum payments are recognized as settlements (which can result in gains or losses) only if the total of such payments exceeds the sum of service and interest costs in a specific year. Special termination benefits, when offered, are also recognized as settlements which can result in gains or losses. For the three months ended June 30, 2021, two Missouri plans and one Alabama plan met the criteria for settlement recognition. The lump-sum settlement resulted in losses of $9.1 for the Missouri plans and $2.1 for the Alabama plan. The lump-sum payments recognized as settlements for the remeasurement were $36.8 for the Missouri plans and $7.6 for the Alabama plan. For the remeasurement, the discount rates for the Missouri plans were updated to 3.15% from 2.85% at September 30, 2020 for the first plan, and to 3.10% from 2.75% at September 30, 2020 for the second plan. For the remeasurement, the discount rate for the Alabama plan was updated to 3.25% from 3.2% at March 31, 2021. The Alabama regulatory tariff requires that settlement losses be amortized over the remaining actuarial life of the individuals in the plan — in this case, 11.7 years. In the quarter ended March 31, 2021, one Alabama plan met the criteria for settlement recognition. The lump-sum settlement resulted in a loss of $3.8. For the remeasurement, the discount rate for the Alabama plan was updated to 3.2% from 2.95% at September 30, 2020. The Alabama regulatory tariff requires that settlement losses be amortized over the remaining actuarial life of the individuals in the plan — in this case, 11.4 years. Therefore, no lump sum settlement expenses were recorded in the periods ended June 30, 2021 and March 31, 2021. In the quarter ended March 31, 2020, two Spire Missouri plans met the criteria for settlement recognition. The lump-sum payments recognized as settlements for the remeasurement were $59.1. The lump-sum settlement resulted in a loss of $21.0. In the quarter ended June 30, 2020, two Spire Missouri plans met the criteria for settlement recognition. The lump-sum payments recognized as settlements for the remeasurement were $6.0. The lump-sum settlement resulted in a loss of $2.3. For the remeasurements, the discount rates for the Missouri plans were updated to 3.0% from 3.2% at September 30, 2019.

The funding policy of the Utilities is to contribute an amount not less than the minimum required by government funding standards, nor more than the maximum deductible amount for federal income tax purposes. Fiscal 2021 contributions to Spire Missouri’s pension plans through June 30, 2021 were $36.9 to the qualified trusts and none to non-qualified plans. There were $7.2 of fiscal 2021 contributions to the Spire Alabama pension plans through June 30, 2021.

Contributions to the qualified trusts of Spire Missouri’s pension plans for the remainder of fiscal 2021 are anticipated to be $4.7. Contributions to Spire Alabama’s pension plans for the remainder of fiscal 2021 are anticipated to be $2.7.

Other Postretirement Benefits

Spire and the Utilities provide certain life insurance benefits at retirement. Spire Missouri plans provide for medical insurance after early retirement until age 65. For retirements prior to January 1, 2015, certain Spire Missouri plans provided medical insurance after retirement until death. The Spire Alabama plans provide medical insurance upon retirement until death for certain retirees depending on the type of employee and the date the employee was originally hired.

The net periodic postretirement benefit cost includes components shown in the following tables.  The components other than the service costs and regulatory adjustment are presented in “Other Income (Expense), Net” in the income statement, except in the event Spire Alabama incurs losses on lump-sum settlements. Any such losses are capitalized in regulatory balances and amortized over the remaining actuarial life of individuals in the plan, and that amortization is presented in “Other Income (Expense), Net.”

	Three Months Ended June 30,						Nine Months Ended June 30,
	2021			2020			2021			2020
Spire
Service cost – benefits earned during the period	$	1.7		$	1.5		$	5.4		$	4.4
Interest cost on accumulated postretirement benefit obligation		1.4			1.5			4.4			4.6
Expected return on plan assets		(4.0	)		(4.1	)		(12.1	)		(12.3	)
Amortization of prior service cost (credit)		0.3			(0.1	)		0.8			(0.4	)
Amortization of actuarial gain		(0.4	)		(0.6	)		(1.2	)		(1.6	)
Subtotal		(1.0	)		(1.8	)		(2.7	)		(5.3	)
Regulatory adjustment		3.5			4.0			10.1			12.0
Net postretirement benefit cost	$	2.5		$	2.2		$	7.4		$	6.7
Spire Missouri
Service cost – benefits earned during the period	$	1.5		$	1.4		$	4.6		$	4.0
Interest cost on accumulated postretirement benefit obligation		1.1			1.2			3.3			3.5
Expected return on plan assets		(2.6	)		(2.8	)		(8.1	)		(8.5	)
Amortization of prior service cost (credit)		0.2			(0.1	)		0.6			(0.2	)
Amortization of actuarial gain		(0.4	)		(0.6	)		(1.1	)		(1.6	)
Subtotal		(0.2	)		(0.9	)		(0.7	)		(2.8	)
Regulatory adjustment		3.8			4.4			11.3			13.3
Net postretirement benefit cost	$	3.6		$	3.5		$	10.6		$	10.5
Spire Alabama
Service cost – benefits earned during the period	$	0.2		$	0.1		$	0.7		$	0.3
Interest cost on accumulated postretirement benefit obligation		0.3			0.3			1.0			1.0
Expected return on plan assets		(1.3	)		(1.2	)		(3.8	)		(3.6	)
Amortization of prior service cost (credit)		0.1			—			0.2			(0.2	)
Subtotal		(0.7	)		(0.8	)		(1.9	)		(2.5	)
Regulatory adjustment		(0.4	)		(0.4	)		(1.3	)		(1.3	)
Net postretirement benefit income	$	(1.1	)	$	(1.2	)	$	(3.2	)	$	(3.8	)

Missouri and Alabama state laws provide for the recovery in rates of costs accrued pursuant to GAAP provided that such costs are funded through an independent, external funding mechanism. The Utilities have established Voluntary Employees’ Beneficiary Association (VEBA) and Rabbi Trusts as external funding mechanisms. The assets of the VEBA and Rabbi Trusts consist primarily of money market securities and mutual funds invested in stocks and bonds.

The Utilities’ funding policy is to contribute amounts to the trusts equal to the periodic benefit cost calculated pursuant to GAAP as recovered in rates. There have been no contributions to the postretirement plans through June 30, 2021 for Spire Missouri or Spire Alabama, and none are expected to be required for the remainder of the fiscal year.