Pension and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The funded status of our U.S. qualified and nonqualified defined benefit pension plans, our Germany, France, and Belgium defined benefit pension plans, plus our U.S. other postretirement healthcare and life insurance benefit plans for continuing operations, together with the associated balances and net periodic benefit cost recognized in our consolidated financial statements as of December 31, are shown in the tables below.

We are required to recognize in our consolidated balance sheets the overfunded and underfunded status of our defined benefit postretirement plans. The overfunded or underfunded status is defined as the difference between the fair value of plan assets and the projected benefit obligation. We are also required to recognize as a component of other comprehensive income the actuarial gains and losses and the prior service costs and credits that arise during the period.

The following table summarizes the weighted-average assumptions used to determine the benefit obligations at December 31 for the U.S. Plans:

	Pensions and Other Benefits
	December 31,
	2023		2022
Discount rate qualified	4.97	%	5.16	%
Discount rate nonqualified plan	4.78	%	4.99	%
Discount rate other benefits	4.83	%	5.03	%
Rate of compensation increase	3.10	%	3.10	%

The following table summarizes the components of our defined benefit postretirement plans and reflect a measurement date of December 31:

	Pensions				Other Benefits (1)
	December 31,
(in Millions)	2023		2022		2023		2022
Change in projected benefit obligation
Projected benefit obligation at January 1	$	1,044.3	$	1,354.0	$	11.2	$	13.7
Service cost	2.6		3.6		—		—
Interest cost	50.4		29.3		0.5		0.3
Actuarial loss (gain) (2)	19.0		(256.2)		(1.4)		(1.7)
Foreign currency exchange rate changes and other	—		(0.5)		—		—
Plan participants’ contributions	—		—		0.3		0.3
Settlements	(1.0)		(2.2)		—		—
Benefits paid	(83.1)		(83.7)		(1.4)		(1.4)
Projected benefit obligation at December 31	$	1,032.2	$	1,044.3	$	9.2	$	11.2
Change in plan assets
Fair value of plan assets at January 1	$	1,044.1	$	1,372.0	$	(0.1)	$	—
Actual return on plan assets	79.2		(245.3)		—		—
Foreign currency exchange rate changes	0.3		3.1		—		—
Company contributions	1.2		3.5		1.2		1.0
Plan participants’ contributions	—		—		0.3		0.3
Settlements	(0.4)		(5.5)		—		—
Benefits paid	(83.1)		(83.7)		(1.4)		(1.4)
Fair value of plan assets at December 31	$	1,041.3	$	1,044.1	$	—	$	(0.1)
Funded Status
U.S. plans with assets	$	30.7	$	22.4	$	—	$	—
U.S. plans without assets	(14.7)		(14.6)		(9.2)		(11.3)
Non-U.S. plans with assets	(1.6)		(1.2)		—		—
All other plans	(5.3)		(6.8)		—		—
Net funded status of the plan (liability)	$	9.1	$	(0.2)	$	(9.2)	$	(11.3)
Amount recognized in the consolidated balance sheets:
Pension asset (3)	$	30.7	$	22.4	$	—	$	—
Accrued benefit liability (4)	(21.6)		(22.6)		(9.2)		(11.3)
Total	$	9.1	$	(0.2)	$	(9.2)	$	(11.3)

____________________

(1)Refer to Note 10 to the consolidated financial statements included within this Form 10-K for information on our discontinued postretirement benefit plans.

(2)The actuarial loss in 2023 and gain in 2022 were primarily driven by the change in discount rate on the U.S. qualified plan.

(3)Recorded as "Other assets including long-term receivables, net" on the consolidated balance sheets.

(4)Recorded as "Accrued pension and other postretirement benefits, current" and "Accrued pension and other postretirement benefits, long-term" on the consolidated balance sheets.

The amounts in accumulated other comprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost are as follows:

	Pensions				Other Benefits (1)
	December 31,
(in Millions)	2023		2022		2023		2022
Prior service (cost) credit	$	(0.1)	$	(0.3)	$	—	$	—
Net actuarial (loss) gain	(309.9)		(337.6)		5.3		4.9
Accumulated other comprehensive income (loss) – pretax	$	(310.0)	$	(337.9)	$	5.3	$	4.9
Accumulated other comprehensive income (loss) – net of tax	(229.9)		(252.7)		3.9		3.6

____________________

(1)     Refer to Note 10 to the consolidated financial statements included within this Form 10-K for information on our discontinued postretirement benefit plans.

The accumulated benefit obligation for all pension plans was $1,027.0 million and $1,036.7 million at December 31, 2023 and 2022, respectively. The following table presents the information for pension plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets as of December 31, 2023 and 2022.

(in Millions)	December 31
	2023		2022
Projected benefit obligations	$	25.2	$	26.2
Accumulated benefit obligations	26.1		26.2
Fair value of plan assets	3.6		3.6

Other changes in plan assets and benefit obligations for continuing operations recognized in other comprehensive loss (income) are as follows:

	Pensions				Other Benefits (1)
	Year Ended December 31,
(in Millions)	2023		2022		2023		2022
Current year net actuarial loss (gain)	$	(12.2)	$	22.1	$	(1.4)	$	(1.7)
Amortization of net actuarial (loss) gain	(15.5)		(12.4)		1.0		0.8
Amortization of prior service (cost) credit	(0.1)		(0.2)		—		—
Settlement loss	(0.1)		(0.5)		—		—
Total recognized in other comprehensive (income) loss, before taxes	$	(27.9)	$	9.0	$	(0.4)	$	(0.9)
Total recognized in other comprehensive (income) loss, after taxes	(22.8)		7.2		(0.3)		(1.1)

____________________

(1)     Refer to Note 10 to the consolidated financial statements included within this Form 10-K for information on our discontinued postretirement benefit plans.

The following table summarizes the weighted-average assumptions used for and the components of net annual benefit cost (income):

	Year Ended December 31,
	Pensions									Other Benefits (1)
(in Millions, except for percentages)	2023			2022			2021			2023			2022			2021
Discount rate	5.16		%	2.84		%	2.49		%	5.03		%	2.39		%	1.91		%
Expected return on plan assets	4.75		%	2.50		%	2.25		%	—			—			—
Rate of compensation increase	3.10		%	3.10		%	3.10		%	—			—			—
Components of net annual benefit cost:
Service cost	$	2.6		$	3.6		$	4.7		$	—		$	—		$	—
Interest cost	50.4			29.3			24.5			0.5			0.3			0.3
Expected return on plan assets	(47.5)			(33.1)			(31.9)			—			—			—
Amortization of prior service cost	0.1			0.2			0.2			—			—			—
Amortization of net actuarial and other (gain) loss	15.3			12.4			12.5			(0.9)			(0.8)			(0.8)
Recognized (gain) loss due to curtailments (2)	0.4			—			—			—			—			—
Recognized (gain) loss due to settlement	—			0.5			1.0			—			—			—
Net annual benefit cost (income)	$	21.3		$	12.9		$	11.0		$	(0.4)		$	(0.5)		$	(0.5)

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(1)     Refer to Note 10 to the consolidated financial statements included within this Form 10-K for information on our discontinued postretirement benefit plans.

(2)    During the year ended December 31, 2023, as a result of restructuring activities planned in connection with Project Focus, we triggered a curtailment of our U.S. pension plans. The associated curtailment expense is recorded within "Non-operating pension and postretirement charges (income)" on the consolidated statements of income (loss).

Our U.S. qualified defined benefit pension plan ("U.S. Plan") holds the majority of our pension plan assets. The expected long-term rate of return on these plan assets was 4.75 percent for the year ended December 31, 2023, 2.50 percent for the year ended December 31, 2022, and 2.25 percent for the year ended December 31, 2021. The expected long-term rate of return on these plan assets increased by 2.25 percent in 2023 compared to 2022 primarily due to fluctuating yields on corporate bonds. In developing the assumption for the long-term rate of return on assets for our U.S. Plan, we take into consideration the technical analysis performed by our outside actuaries, including historical market returns, information on the assumption for long-term real returns by asset class, inflation assumptions and expectations for standard deviation related to these best estimates. Given an actively managed investment portfolio, the expected annual rates of return by asset class for our portfolio, assuming an estimated inflation rate of approximately 2.3 percent, is in line with our assumption for the rate of return on assets. The target asset allocation at December 31, 2023 by asset category continues to be 100 percent fixed income investments.

Our U.S. Plan is fully funded and, effective July 1, 2007, all newly hired and rehired salaried and nonunion hourly employees are not eligible for the U.S. Plan. As such, the primary investment strategy is a liability hedging approach with an objective of maintaining the funded status of the plan such that the volatility is minimized and the likelihood that we will be required to make significant contributions to the plan is also limited. The portfolio is comprised of 100 percent fixed income securities and cash. Investment performance and related risks are measured and monitored on an ongoing basis through monthly liability measurements, periodic asset liability studies, and quarterly investment portfolio reviews. We use the fair value approach for our liability-hedging asset class. This class of assets is comprised solely of fixed income securities and therefore, provides a natural hedge (liability-hedging assets) against the changes in the recorded amount of net periodic benefit cost.

The following tables present our fair value hierarchy for our major categories of pension plan assets by asset class. See Note 19 to the consolidated financial statements included within this Form 10-K for the definition of fair value and the descriptions of Level 1, 2 and 3 in the fair value hierarchy.

(in Millions)	December 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and short-term investments	$	3.0	$	3.0	$	—	$	—
Fixed income investments:
Investment contracts	114.9		—		114.9		—
U.S. Government Securities	204.6		204.6		—		—
Mutual funds	13.1		13.1		—		—
Corporate debt instruments	705.7		—		705.7		—
Total assets	$	1,041.3	$	220.7	$	820.6	$	—

(in Millions)	December 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and short-term investments	$	22.8	$	22.8	$	—	$	—
Fixed income investments:
Investment contracts	116.4		—		116.4		—
U.S. Government Securities	207.4		207.4		—		—
Mutual funds	29.3		29.3		—		—
Corporate debt instruments	668.2		—		668.2		—
Total assets	$	1,044.1	$	259.5	$	784.6	$	—

We made the following contributions to our pension and other postretirement benefit plans:

	Year Ended December 31,
(in Millions)	2023		2022
U.S. qualified pension plan	$	—	$	—
U.S. nonqualified pension plan	1.1		3.4
Non-U.S. plans	0.1		0.1
Other postretirement benefits	1.2		1.0
Total	$	2.4	$	4.5

The following table reflects the estimated future benefit payments for our pension and other postretirement benefit plans. These estimates take into consideration expected future service, as appropriate:

	Estimated Net Future Benefit Payments
(in Millions)	2024		2025		2026		2027		2028		2029 - 2033
Pension Benefits	$	88.5	$	85.5	$	85.3	$	83.3	$	81.9	$	382.4
Other Benefits	1.3		1.2		1.1		1.1		1.0		3.6

FMC Corporation Savings and Investment Plan. The FMC Corporation Savings and Investment Plan is a qualified salary-reduction plan under Section 401(k) of the Internal Revenue Code in which substantially all of our U.S. employees may participate by contributing a portion of their compensation. For eligible employees participating in the Plan, except for those employees covered by certain collective bargaining agreements, the Company makes matching contributions of 80 percent of the portion of those contributions up to 5 percent of the employee’s compensation. Eligible employees participating in the Plan that do not participate in the U.S. qualified pension plan are entitled to receive an employer contribution of 5 percent of the employee’s eligible compensation. Charges against income for all contributions were $19.1 million in 2023, $17.5 million in 2022, and $15.6 million in 2021.