XML 22 R10.htm IDEA: XBRL DOCUMENT v3.22.0.1
Retirement Benefits (Notes)
 12 Months Ended
Dec. 31, 2021
Postemployment Benefits [Abstract]  
Benefits RETIREMENT BENEFITS:
Postretirement Benefit Plans
Affiliates of the Company previously offered postretirement health care and life insurance benefit plans (other postretirement plans) that covered substantially all employees. Participation in the plan was previously frozen and medical benefits were no longer offered, except for coverage that has been extended to a closed group of former employees based on certain criteria.
Obligations and Funded Status
Other postretirement benefit liabilities are accrued on an actuarial basis during the years an employee provides services. The following tables contain information at the dates indicated about the obligations and funded status of the Company’s other postretirement plans.
December 31,
20212020
Change in benefit obligation:
Benefit obligation at beginning of period
$98 $91 
Service cost
1 1 
Interest cost
2 3 
Actuarial loss1 7 
Benefits paid, net
(4)(4)
Benefit obligation at end of period
$98 $98 
Change in plan assets:
Fair value of plan assets at beginning of period
$191 $169 
Return on plan assets and other
23 18 
Employer contributions
8 8 
Benefits paid, net
(4)(4)
Fair value of plan assets at end of period
$218 $191 
Amount overfunded at end of period (1)
$120 $93 
Amounts recognized in accumulated other comprehensive income (pre-tax basis) consist of:
Net actuarial gain
$(21)$(8)
Prior service cost
18 19 
$(3)$11 
(1)Recorded as a non-current asset in the consolidated balance sheets with a non-current pension liability for overfunded amounts owed to the Company’s shippers.
Components of Net Periodic Benefit Cost
The following tables set forth the components of net periodic benefit cost of the Company’s postretirement benefit plan for the periods presented:
Years Ended December 31,
202120202019
Service cost
$1 $1 $1 
Interest cost
2 3 3 
Expected return on plan assets
(10)(9)(7)
Prior service credit amortization
1 18 24 
Net periodic benefit cost$(6)$13 $21 
Services cost is recorded within general and administrative expense while non-service cost components are recorded within other, net in our consolidated statements of operations.
The estimated prior service cost for other postretirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2022 is $1 million.
Assumptions. The weighted-average discount rate used in determining benefit obligations was 2.50% and 2.16% at December 31, 2021 and 2020, respectively.
The weighted-average assumptions used in determining net periodic benefit cost for the periods presented are shown in the table below:
Years Ended December 31,
202120202019
Discount rate
2.18 %3.00 %4.05 %
Expected return on assets:
Tax exempt accounts
7.00 %7.00 %7.00 %
Taxable accounts
4.75 %4.75 %4.75 %
The Company employs a building block approach in determining the expected long-term rate of return on the plans’ assets with proper consideration for diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-term market assumptions are determined. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
The assumed health care cost trend weighted-average rates used to measure the expected cost of benefits covered by the plans are shown in the table below:
December 31,
20212020
Health care cost trend rate
8.10 %8.05 %
Rate to which the cost trend is assumed to decline (the ultimate trend rate)
4.90 %4.65 %
Year that the rate reaches the ultimate trend rate
20292028
Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have no material effect on accumulated postretirement benefit obligation or on total of annual service and interest cost components.
Plan Assets. The Company’s overall investment strategy is to maintain an appropriate balance of actively managed investments while maintaining a high standard of portfolio quality and achieving proper diversification. To achieve diversity within its other postretirement plan asset portfolio, the Company has targeted the following asset allocations: equity of 25% to 30% and fixed income of 65% to 70%. These target allocations are monitored by the Investment Committee of Energy Transfer’s Board of Directors in conjunction with an external investment advisor. On occasion, the asset allocations may fluctuate as compared to these guidelines as a result of Investment Committee actions.
The fair value of the Company’s other postretirement plan assets at the dates indicated by asset category is as follows:
December 31,
20212020
Cash and cash equivalents
$14 $11 
Total Market Index Fund (1)
111 87 
Total International Index Fund(2)
19 18 
U.S. Bond Index Fund (3)
74 75 
Total
$218 $191 
(1)The fund invests primarily in common stocks included in the Dow Jones U.S. Total Stock Market Index. As of December 31, 2021, this fund was invested 100% in domestic equities.
(2)The fund invests primarily in both the securities and in depository receipts representing securities included in the MSCI All Country World Index. As of December 31, 2021, this fund was invested 97% in foreign equities and 3% in domestic equities.
(3)The fund invests primarily in bonds included in the Bloomberg Barclays U.S. Aggregate Bond Index. As of December 31, 2021, this fund was invested 40% in U.S. Treasury, 27% in mortgage-backed securities, 25% in corporations and 8% in other.
The Total Market Index Fund and Total International Index Fund assets are classified as Level 1 assets within the fair value hierarchy. The U.S. Bond Index Fund is classified as Level 2 assets within the fair value hierarchy.
Contributions. The Company expects to make contributions of $8 million to its other postretirement plans in 2022 and annually thereafter until modified by rate case proceedings.
Benefit Payments. The Company’s estimate of expected benefit payments, which reflect expected future service, as appropriate, in each of the next five years and in the aggregate for the five years thereafter are shown in the table below.
YearsExpected Benefit Payments
2022$6 
20236 
20246 
20256 
20266 
2027-203126 
The Medicare Prescription Drug Act provides for a prescription drug benefit under Medicare (“Medicare Part D”) as well as a federal subsidy to sponsors of retiree health plans that provide a prescription drug benefit that is at least actuarially equivalent to Medicare Part D. The Company does not expect to receive any Medicare Part D subsidies in any future periods.
Defined Contribution Plan
The Company participates in Energy Transfer’s defined contribution savings plan (“Savings Plan”) that is available to virtually all employees. The Company provided matching contributions of 100% of the first 5% of the participant’s compensation paid into the Savings Plan. The Company contributed $2 million, $1 million and $2 million to the Savings Plan during the years ended December 31, 2021, 2020, and 2019, respectively.
In addition, the Company provides a 3% discretionary profit sharing contribution to eligible employees with annual base compensation below a specific threshold. Company contributions are 100% vested after five years of continuous service. The Company made discretionary profit sharing contributions of $1 million, $0.5 million and $1 million for the years ended December 31, 2021, 2020, and 2019, respectively.
As a result of the economic conditions in 2020, effective June 8, 2020, the Company ceased employer matching and profit sharing contributions through December 31, 2020. The Company resumed all such contributions in 2021.