Retirement and Benefit Plans

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Retirement and Benefit Plans

Retirement and Benefit Plans

Substantially all full-time salaried and hourly domestic employees are included in the Invacare Retirement Savings Plan sponsored by the company. The company makes matching cash contributions up to 66.7% of employees' contributions up to 3% of compensation. The company also may make quarterly contributions to this Plan equal to a percentage of qualified wages. The company may make discretionary contributions to the domestic plans based on an annual resolution of the Board of Directors. Contribution expense for the Invacare Retirement Savings Plan in 2021, 2020 and 2019 was $1,022,000, $1,214,000 and $1,765,000, respectively.

The company sponsors a Deferred Compensation Plus Plan covering certain employees, which provides for elective deferrals and the company retirement deferrals so that the total retirement deferrals equal amounts that would have contributed to the company's principal retirement plans if it were not for limitations imposed by income tax regulations.

The company sponsors a non-qualified defined benefit Supplemental Executive Retirement Plan (SERP) for certain key executives. Effective December 31, 2008, the SERP was amended, in part to comply with IRS Section 409A. As a result of the amendment, the plan became a defined benefit cash balance plan for the non-retired participants and thus, payments by the company since December 31, 2008 have been based upon a cash balance formula with interest credited at a rate determined annually by the Compensation and Management Development Committee of the Board of Directors. In 2021, 2020 and 2019, respectively, interest was credited at 0% for active participants in the SERP. The plan continues to be unfunded with individual hypothetical accounts maintained for each participant.

The SERP projected benefit obligation related to this unfunded plan was $5,497,000 and $5,759,000 at December 31, 2021 and December 31, 2020, respectively, and the accumulated benefit obligation was $5,497,000 and $5,759,000 at December 31, 2021 and December 31, 2020, respectively. The projected benefit obligations for the SERP as well as the Death Benefit Only Plan discussed below were calculated using an assumed future salary increase of 3.25% at December 31, 2021 and 2020, respectively. The assumed discount rate, relevant for three participants unaffected by the plan conversion was 2.83% and 2.52% for 2021 and 2020, respectively, based upon the discount rate on high-quality fixed-income investments without adjustment. The retirement age was 67 for 2021 and 2020, respectively. The mortality assumptions used for 2021 and 2020 were based upon the Pri.A-2012 White Collar Fully Generational Mortality Table using Scale

MP-2021 and the Pri.A-2012 White Collar Fully Generational Mortality Table using Scale MP-2020, respectively.

Expense for the SERP in 2021, 2020 and 2019 was $129,000, $326,000 and $574,000, respectively. The expense was composed of interest expense in 2021, 2020 and 2019 of $4,000, $213,000 and $392,000, respectively, with the remaining non-interest expense related to service costs, prior service costs and other gains/losses. Benefit payments in 2021, 2020 and 2019 were $391,000, $391,000 and $391,000, respectively.

The company also sponsors a Death Benefit Only Plan (DBO) for certain key executives that provides a benefit equal to three times the participant's final target earnings should the participant's death occur while an employee and a benefit equal to one time the participant's final earnings upon the participant's death after normal retirement or if a participant dies after his or her employment with the company is terminated following a change in control of the company. Expense for the plan in 2021, 2020 and 2019 was $30,000, $640,000, and $561,000, respectively. The 2021 amount included service and accrual adjustment income of $68,000 compared to 2020 and 2019 amounts which included service and accrual adjustment expense of $569,000, and $488,000, respectively, with the remaining activity in each year related to interest costs. There were no benefit payments in 2021, 2020 and 2019. In conjunction with the company's DBO, the company has invested in life insurance policies related to certain employees to help satisfy the DBO obligations.

In Europe, the company maintains a defined benefit plan in Switzerland. The statutory pension plan is maintained with a private insurance company and, in accordance with Swiss law, the plan functions as a defined contribution plan whereby employee and employer contributions are defined as a percentage of individual salary depending on the age of the employee and a guaranteed interest rate, which is annually defined by the Swiss Pension Fund. Under U.S. GAAP, the plan is treated as defined benefit plan. Income for 2021 for the European plan was $823,000 compared to 2020 and 2019 expense of $1,678,000 and $34,000, respectively.