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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
The Company’s defined benefit pension plans cover employees in the U.S., Canada, and Europe who meet eligibility requirements. The plan covering U.S. employees is noncontributory, and the Company implemented a hard freeze for the U.S. qualified defined benefit plan as of December 31, 2013. No further benefits were provided after this date for additional credited service or earnings, and all participants became fully vested as of December 31, 2013. The Canadian plan is contributory, and benefits are based on career average compensation. The Company’s funding policy is to contribute an amount equal to the minimum required contribution under applicable pension legislation. For the plans in the U.S. and Canada, the Company may increase its contribution above the minimum, if appropriate to its tax and cash position and the plans’ funded position. The European plans are funded in accordance with local regulations.
The Company also sponsors supplemental retirement plans covering employees in the U.S. and Canada. The Company uses a measurement date of December 31 for its pension and supplemental retirement plans.
Several assumptions are used to determine the benefit obligations, plan assets, and net periodic income. The discount rate for the U.S. pension plan is calculated using a bond matching approach to select specific bonds that would satisfy the projected benefit payments. The bond matching approach reflects the process that would be used to settle the pension obligations. The discount rate for non U.S. plans are set by using Willis Towers Watson's RATE:Link model. For each plan, this approach reflects yields available on high quality corporate bonds that would generate the cash flow necessary to pay the plan's benefits when due. The expected return on plan assets is based on a calculated market-related value of plan assets, where gains and losses on plan assets are amortized over a five year period and accumulate in other comprehensive income. Other non-investment unrecognized gains and losses are amortized in future net income based on a “corridor” approach, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year. The unrecognized gains and losses in excess of the corridor criteria are amortized over the average future lifetime or service of plan participants, depending on the plan. These assumptions are updated at each annual measurement date.
Changes in benefit obligations for the years ended December 31, 2020 and 2019 were:
20202019
Changes in benefit obligation
Benefit obligation at beginning of year$2,496,600 $2,278,043 
Service cost12,105 9,558 
Interest cost83,732 97,441 
Plan participants’ contributions1,864 2,246 
Actuarial loss218,534 246,352 
Foreign currency exchange rate changes9,394 9,073 
Gross benefits paid(144,508)(119,789)
Plan amendments— 3,327 
Curtailments(472)(6,569)
Settlements— (67,831)
Special termination costs— 42,757 
Acquired plans1,717 1,992 
Benefit obligation at end of year$2,678,966 $2,496,600 
The benefit obligations for the Company’s U.S. pension plans included in the above were $2,373,884 and $2,228,066 at December 31, 2020 and 2019, respectively. The total accumulated benefit obligation for the Company’s defined benefit pension plans in the U.S., Canada, and Europe was approximately $2,649,418 and $2,466,322 at December 31, 2020 and 2019, respectively.
For the U.S. pension plan, there was a net actuarial liability loss of $175,200 and an asset gain of $184,200. The liability loss was comprised primarily of a $173,000 loss due to discount rate changes. For the U.S. supplemental retirement plan, there was a net actuarial liability loss of $20,300 comprised primarily of a $21,400 loss due to discount rate changes.
In 2019, the Company recorded $42,757 in special termination costs related to benefits provided through the Company's defined benefit plans to employees that accepted the voluntary retirement program (“VRP”) as part of the Company's 2019 Cost Savings Plan. Refer to the restructuring footnote for more information.
The assumptions used to measure the pension benefit obligations for the plans at December 31, 2020 and 2019, were:
20202019
Weighted average discount rate2.72 %3.43 %
Rate of increase in future compensation levels3.11 %3.13 %
Changes in plan assets for the years ended December 31, 2020 and 2019 were:
20202019
Changes in plan assets
Fair value of plan assets at beginning of year$2,311,227 $2,043,379 
Actual return on plan assets347,560 427,597 
Foreign currency exchange rate changes7,451 9,826 
Employer contributions21,765 15,799 
Plan participants’ contributions1,864 2,246 
Benefits paid(144,508)(119,789)
Settlements— (67,831)
Fair value of plan assets at end of year$2,545,359 $2,311,227 
The fair values of plan assets for the Company’s U.S. pension plans included in the above were $2,258,246 and $2,051,474 at December 31, 2020 and 2019, respectively.
For the years ended December 31, 2020 and 2019, the aggregate projected benefit obligation and aggregate fair value of plan assets for plans with projected benefit obligations in excess of plan assets were as follows:
20202019
Aggregate projected benefit obligation$328,517 $298,565 
Aggregate fair value of plan assets$45,728 $39,672 
For the years ended December 31, 2020 and 2019, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with accumulated benefit obligations in excess of plan assets were as follows:
20202019
Aggregate accumulated benefit obligation$290,271 $270,230 
Aggregate fair value of plan assets$34,164 $39,672 
The asset allocations for the Company’s funded pension plans at December 31, 2020 and 2019, and the target allocation for 2021, by asset category were:
 Target AllocationPercentage of Plan Assets at December 31
 202120202019
Asset Category
Equity securities68 %70 %70 %
Debt securities32 %30 %30 %
100 %100 %100 %
The Company’s benefit plan committees in the U.S. and Canada establish investment policies and strategies and regularly monitor the performance of the funds. The plans in Europe are unfunded and, therefore, there are no plan assets. The pension plan strategy implemented by the Company’s management is to achieve long-term objectives and invest the pension assets in accordance with the applicable pension legislation in the U.S. and Canada as well as fiduciary standards. The long-term primary investment objectives for the pension plans are to provide for a reasonable amount of long-term growth of capital, without undue exposure to risk, protect the assets from erosion of purchasing power, and provide investment results that meet or exceed the pension plans’ actuarially assumed long-term rates of return. The Company’s investment strategy with respect to pension plan assets is to generate a return in excess of the passive portfolio benchmark (47% S&P 500 Index, 5% Russell Midcap Index, 7% Russell 2000 Index, 5% MSCI EAFE Index, 5% DJ Global Moderate Index, 3% MSCI Emerging Market Net, and 28% Barclays U.S. Govt/Credit).
The fair values of the plan assets as of December 31, 2020 and 2019, by asset category, are shown in the tables below. Various inputs are considered when determining the value of the Company’s pension plan assets. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Level 1 represents observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2 represents other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.). Level 3 represents significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments). Certain investments are measured at fair value using the net asset value ("NAV") per share as a practical expedient and have not been classified in the fair value hierarchy.    
The valuation methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Equity securities are valued at the closing price reported on the active market on which the individual securities are traded on the last day of the calendar plan year. Debt securities including corporate bonds, U.S. Government securities, and asset-backed securities are valued using price evaluations reflecting the bid and/or ask sides of the market for an investment as of the last day of the calendar plan year.
 2020
TotalAssets Measured at NAVQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Equity Securities
Common stocks — mutual funds — equity
$586,196 $204,303 $381,893 $— $— 
Genuine Parts Company common stock202,711 — 202,711 — — 
Other stocks989,258 — 989,258 — — 
Debt Securities
Short-term investments30,746 — 30,746 — — 
Cash and equivalents18,631 — 18,631 — — 
Government bonds257,221 — 192,288 64,933 — 
Corporate bonds393,450 — — 393,450 — 
Asset-backed and mortgage-backed securities
10,161 — — 10,161 — 
Other-international39,992 — 37,041 2,951 — 
Municipal bonds14,724 — — 14,724 — 
Mutual funds—fixed income— — — — — 
Other
Cash surrender value of life insurance policies
2,269 — — — 2,269 
Total$2,545,359 $204,303 $1,852,568 $486,219 $2,269 
 2019
TotalAssets Measured at NAVQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Equity Securities
Common stocks — mutual funds — equity
$527,151 $187,500 $339,651 $— $— 
Genuine Parts Company common stock214,418 — 214,418 — — 
Other stocks865,078 — 865,070 — 8 
Debt Securities
Short-term investments34,516 — 34,516 — — 
Cash and equivalents15,833 — 15,833 — — 
Government bonds259,939 — 167,394 92,545 — 
Corporate bonds255,352 — — 255,352 — 
Asset-backed and mortgage-backed securities
9,316 — — 9,316 — 
Other-international27,903 — 27,903 — — 
Municipal bonds10,153 — — 10,153 — 
Mutual funds—fixed income89,298 89,298 — — — 
Other
Cash surrender value of life insurance policies
2,270 — — — 2,270 
Total$2,311,227 $276,798 $1,664,785 $367,366 $2,278 

Equity securities include Genuine Parts Company common stock in the amounts of $202,711 (8% of total plan assets) and $214,418 (9% of total plan assets) at December 31, 2020 and 2019, respectively. Dividend payments received by the plan on Company stock totaled approximately $6,378 and $6,156 in 2020 and 2019, respectively. Fees paid during the year for services rendered by parties in interest were based on customary and reasonable rates for such services.
The changes in the fair value measurement of plan assets using significant unobservable inputs (Level 3) during 2020 and 2019 were not material.
Based on the investment policy for the pension plans, as well as an asset study that was performed based on the Company’s asset allocations and future expectations, the Company’s expected rate of return on plan assets for measuring 2021 pension income is 6.88% for the plans. The asset study forecasted expected rates of return for the approximate duration of the Company’s benefit obligations, using capital market data and historical relationships.
The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheets at December 31:
20202019
Other long-term asset$149,182 $73,520 
Other current liability(17,572)(11,692)
Pension and other post-retirement liabilities(265,216)(247,201)
$(133,606)$(185,373)
 
Amounts recognized in accumulated other comprehensive loss consist of:
20202019
Net actuarial loss$939,290 $952,133 
Prior service cost 8,648 9,343 
$947,938 $961,476 
The following table reflects the total benefits expected to be paid from the pension plans’ or the Company’s assets. Of the pension benefits expected to be paid in 2021, approximately $17,574 is expected to be paid from employer assets. Expected employer contributions below reflect amounts expected to be contributed to funded plans. Information about the expected cash flows for the pension plans follows:
Employer contribution
2021 (expected)$5,724 
Expected benefit payments:
2021$136,183 
2022$134,054 
2023$137,788 
2024$140,987 
2025$144,405 
2026 through 2030$741,572 
Net periodic benefit income included the following components:
202020192018
Service cost$12,105 $9,558 $10,410 
Interest cost83,732 97,441 88,247 
Expected return on plan assets(154,111)(154,137)(154,006)
Amortization of prior service cost (credit)692 (67)(147)
Amortization of actuarial loss39,613 31,000 39,721 
Net periodic benefit income$(17,969)$(16,205)$(15,775)
Service cost is recorded in selling, administrative and other expenses in the consolidated statements of income while all other components except for special termination costs are recorded within other non-operating expenses (income). The special termination costs incurred in connection with the 2019 Cost Savings Plan are presented on their own line within non-operating expenses (income).
Other changes in plan assets and benefit obligations recognized in other comprehensive income are as follows:
202020192018
Current year actuarial loss (gain)$24,613 $(33,677)$117,867 
Recognition of actuarial loss(39,613)(31,000)(39,721)
Current year prior service cost— 3,327 — 
Recognition of prior service (cost) credit(692)67 147 
Recognition of curtailment gain (loss)435 (155)— 
Other— (50)— 
Total recognized in other comprehensive (loss) income$(15,257)$(61,488)$78,293 
Total recognized in net periodic benefit income and other comprehensive (loss) income$(33,226)$(77,693)$62,518 
The assumptions used in measuring the net periodic benefit income for the plans follow:
202020192018
Weighted average discount rate3.43 %4.36 %3.70 %
Rate of increase in future compensation levels3.13 %3.14 %3.11 %
Expected long-term rate of return on plan assets7.11 %7.12 %7.14 %
The Company has one defined contribution plan in the U.S. that covers substantially all of its domestic employees. Employees receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense was approximately $54,885 in 2020, $64,990 in 2019, and $62,335 in 2018.
The Company has a defined contribution plan that covers full-time Canadian employees after six months of employment and part-time employees upon meeting provincial minimum standards. Employees receive a matching contribution of 100% of the first 5% of the employees’ salary. Total plan expense was approximately $4,486 in 2020 and $4,433 in 2019.