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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
Defined contribution plan. Under the Team, Inc. Salary Deferral Plan (the “Plan”), contributions are made to the Plan by qualified employees at their election and our matching contributions to the Plan are made at specified rates. We did not incur any contribution expense in 2021 as forfeitures were used for the company match. Our contribution for the plan year ended December 31, 2022 was approximately $3.3 million.
Defined benefit plans. In connection with our acquisition of Furmanite, we assumed liabilities associated with the defined benefit pension plans of two foreign subsidiaries, one plan covering certain United Kingdom employees (the “U.K. Plan”) and the other covering certain Norwegian employees (the “Norwegian Plan”). In connection with the sale of our Norwegian operations in 2018, all assets and liabilities associated with the Norwegian Plan were transferred to the buyer.
Benefits for the U.K. Plan are based on the average of the employee’s salary for the last three years of employment. The U.K. Plan has had no new participants added since the plan was frozen in 1994 and accruals for future benefits ceased in connection with a plan curtailment in 2013. Plan assets are primarily invested in unitized pension funds managed by U.K. registered fund managers. The most recent valuation of the U.K. Plan was performed as of December 31, 2022. Estimated defined benefit pension plan contributions for 2023 are expected to be approximately $3.7 million.
Pension benefit costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, expected investment return on plan assets, mortality rates and retirement rates. The discount rate assumption used to determine end of year benefit obligations was 5.0% as of December 31, 2022. These rates are reviewed annually and adjusted to reflect current conditions. These rates are determined appropriate based on reference to yields. The expected return on plan assets of 2.8% for 2022 is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations) and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. Mortality and retirement rates are based on actual and anticipated plan experience. In accordance with GAAP, actual results that differ from the assumptions are accumulated and are subject to amortization over future periods and, therefore, generally affect recognized expense in future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the pension obligation and future expense.
Net pension cost (credit) included the following components (in thousands):
Twelve Months Ended
December 31,
20222021
Interest cost$1,586 $1,282 
Settlement cost— 70 
Expected return on plan assets(2,362)(2,006)
Amortization of prior service cost31 32 
Net pension cost (credit)$(745)$(622)

The weighted-average assumptions used to determine benefit obligations as of December 31, 2022 and 2021 are as follows:
December 31,
20222021
Discount rate5.0 %2.0 %
Rate of compensation increase1
Not applicableNot applicable
Inflation3.2 %3.3 %
______________
1    Not applicable due to plan curtailment.
The weighted-average assumptions used to determine net periodic benefit cost (credit) for the years ended December 31, 2022 and 2021 are as follows:
Twelve Months Ended
December 31,
20222021
Discount rate2.0 %1.3 %
Expected long-term return on plan assets2.8 %2.1 %
Rate of compensation increase1
Not applicableNot applicable
Inflation3.3 %2.9 %
_______________
1    Not applicable due to plan curtailment.
The plan actuary determines the expected return on plan assets based on a combination of expected yields on equity securities and corporate bonds and considering historical returns.
The expected long-term rate of return on invested assets for 2022 is determined based on the weighted average of expected returns on asset investment categories as follows: 6.4% overall, 9.5% for equities and 5.3% for debt securities.
The following table sets forth the changes in the benefit obligation and plan assets for the years ended December 31, 2022 and 2021 (in thousands):
Twelve Months Ended
December 31,
20222021
Projected benefit obligation:
Beginning of year$91,262 $100,244 
Service cost— — 
Interest cost1,586 1,282 
Actuarial (gain) loss(22,444)(4,237)
Benefits paid(5,028)(5,137)
Foreign currency translation adjustment and other(9,206)(890)
End of year$56,170 $91,262 
Fair value of plan assets:
Beginning of year94,164 94,962 
Actual gain (loss) on plan assets(26,919)1,195 
Employer contributions3,699 4,118 
Benefits paid(5,028)(5,137)
Foreign currency translation adjustment and other(9,348)(974)
End of year56,568 94,164 
Excess projected obligation under (over) fair value of plan assets at end of year$398 $2,902 
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss$(10,980)$(4,624)
Prior service cost(520)(601)
Total$(11,500)$(5,225)
The accumulated benefit obligation for the U.K. Plan was $56.2 million and $91.3 million as of December 31, 2022 and 2021, respectively. The decrease in the accumulated benefit obligation was due to the increase in discount rate driven by higher interest rate during the period.
As of December 31, 2022, expected future benefit payments are as follows for the years ended December 31, (in thousands):
2023$3,738 
20243,645 
20253,808 
20263,756 
20273,836 
2028-203219,388 
Total$38,171 
The following tables summarize the plan assets of the U.K. Plan measured at fair value on a recurring basis (at least annually) as of December 31, 2022 and 2021 (in thousands):
December 31, 2022
Asset CategoryTotalQuoted Prices in
Active Markets 
for
Identical Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash$1,861 $1,861 $— $— 
Equity securities:
Diversified growth fund (a)15,285 — 4,848 10,437 
Fixed income securities:
U.K. government fixed income securities (b)6,471 — 6,471 — 
U.K. government index-linked securities (c)7,942 — 7,942 — 
Corporate bonds (e)25,009 — 25,009 — 
Total$56,568 $1,861 $44,270 $10,437 
December 31, 2021
Asset CategoryTotalQuoted Prices in
Active Markets 
for
Identical Assets
(Level 1)		Significant
Observable
Inputs
(Level 2) (a)		Significant
Unobservable
Inputs
(Level 3)
Cash$2,411 $2,411 $— $— 
Equity securities:
Diversified growth fund (a)23,582 — 12,139 11,443 
Fixed income securities:
U.K. government fixed income securities (b)9,487 — 9,487 — 
U.K. government index-linked securities (c)16,393 — 16,393 — 
Global absolute return bond fund (d)12,111 — 12,111 — 
Corporate bonds (e)30,297 — 30,297 — 
Total$94,281 $2,411 $80,427 $11,443 
a)This category includes investments in a diversified portfolio of equity, alternatives and cash markets that aims to achieve capital growth returns.
b)This category includes investments in funds with the objective to provide a leveraged return to U.K. government fixed income securities (bonds) that have maturity periods ranging from 2030 to 2060.
c)This category includes investments in funds with the objective to provide a leveraged return to various U.K. government indexed-linked securities (gilts), with maturity periods ranging from 2027 to 2062. The funds invest in U.K. government bonds and derivatives.
d)This category includes investments in funds predominantly in a wide range of fixed and floating rate investment grade and below investment grade debt instruments traded on regulated markets worldwide with the objective to achieve a return of 3% above 1 month LIBOR over a 3-year basis.
e)This category includes investments in a diversified pool of debt and debt like assets to generate capital and income returns.
Investment objectives for the U.K. Plan, as of December 31, 2022, are to:
•optimize the long-term return on plan assets at an acceptable level of risk
•maintain a broad diversification across asset classes
•maintain careful control of the risk level within each asset class
The trustees of the U.K. Plan have established a long-term investment strategy comprising global investment weightings targeted at 27.5% (range of 25% to 30%) for equity securities/diversified growth funds and 72.5% (range of 70% to 75%) for debt securities. Diversified growth funds are actively managed absolute return funds that hold a combination of debt and equity securities. Selection of the targeted asset allocation was based upon a review of the expected return and risk characteristics of each asset class, as well as the correlation of returns among asset classes. Actual allocations to each asset class vary from target allocations due to periodic investment strategy changes, market value fluctuations and the timing of benefit payments and contributions.
The following table sets forth the weighted-average asset allocation and target asset allocations as of December 31, 2022 and 2021 by asset category:
Asset AllocationsTarget Asset Allocations
2022202120222021
Equity securities and diversified growth funds1
27.0 %24.9 %27.5 %27.5 %
Debt securities2
69.7 %72.5 %72.5 %72.5 %
Other3.3 %2.6 %— %— %
Total100 %100 %100 %100 %
______________________________
1Diversified growth funds refer to actively managed absolute return funds that hold a combination of equity and debt securities.
2Includes investments in funds with the objective to provide leveraged returns to U.K. government fixed income securities, U.K. government indexed-linked securities, global bonds, and corporate bonds.

The following table summarizes the changes in the fair value measurements of Level 3 investments for the pension plans (in thousands):
December 31, 2022December 31, 2021
Balance at beginning of year$11,443 $9,752 
Actual return on plan assets195 1,790 
Purchases/ sales/ settlements— — 
Transfer in/out of level 3— — 
Changes due to foreign exchange(1,201)(99)
Balance at end of year$10,437 $11,443 

The following is a description of the valuation methodologies used to measure plan assets at fair value.
For equity securities and fixed income securities, fair value is based on observable inputs of comparable market transactions. The valuation of certain alternative investments, such as limited partnerships, may require significant management judgment and involves a level of uncertainty. The valuation is generally based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but are not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. The use of different techniques or assumptions to estimate fair value could result in a different fair value measurement at the reporting date. Cash and cash equivalents are valued based on cost, which approximates fair value. Other than those assets that have quoted prices from an active market, investments are generally classified in Level 2 or Level 3 of the fair value hierarchy based on the lowest level input that is significant to the fair value measure in its entirety.