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Retirement Plans

12 Months Ended

Dec. 31, 2020

15.	Retirement Plans:

Certain employees of the Standard Commercial Segment were participants in a defined cash balance plan covering all full-time employees who had completed at least 1,000 hours of service. This plan was frozen in March 2001 in anticipation of distribution of plan assets to members upon plan termination. All participants were vested when the plan was frozen.

The following tables provide detail of the changes in benefit obligations, components of benefit costs, weighted-average assumptions, and plan assets for the retirement plan as of and for the twelve months ending December 31, 2020 and 2019 (in thousands) using a measurement date of December 31.


	2020			2019
Assumptions (end of period):
Discount rate used in determining benefit obligation		2.12	%		2.98	%
Rate of compensation increase		N/A			N/A

Reconciliation of funded status (end of period):
Accumulated benefit obligation	$	(13,252)		$	(12,376)

Projected benefit obligation	$	(13,252)		$	(12,376)
Fair value of plan assets		11,393			10,988
Funded status	$	(1,859)		$	(1,388)

Net actuarial loss		(4,672)			(4,010)
Accumulated other comprehensive loss		(4,672)			(4,010)
Prepaid pension cost		2,813			2,622
Net amount recognized as of December 31	$	(1,859)		$	(1,388)

Changes in projected benefit obligation:
Benefit obligation as of beginning of period	$	12,376		$	11,687
Interest cost		355			454
Actuarial liability loss		1,352			1,083
Benefits paid		(831)			(848)
Benefit obligation as of end of period	$	13,252		$	12,376

Change in plan assets:
Fair value of plan assets as of beginning of period	$	10,988		$	9,669
Actual return on plan assets (net of expenses)		1,236			1,667
Employer contributions		—			500
Benefits paid		(831)			(848)
Fair value of plan assets as of end of period	$	11,393		$	10,988

Net periodic pension cost:
Service cost - benefits earned during the period	$	—		$	—
Interest cost on projected benefit obligation		355			454
Expected return on plan assets		(684)			(607)
Recognized actuarial loss		138			143
Net periodic pension cost	$	(191)		$	(10)

Discount rate		2.98	%		4.05	%
Expected return on plan assets		6.50	%		6.50	%
Rate of compensation increase		N/A			N/A

Estimated future benefit payments by fiscal year (in thousands):


2021	$	887
2022	$	880
2023	$	865
2024	$	857
2025	$	836
2026-2030	$	3,830

As of December 31, 2020, the fair value of the plan assets was composed of cash and cash equivalents of $0.5 million, debt securities of $2.9 million and equity securities of $8.0 million.

Our investment objectives are to preserve capital and to achieve long-term growth through a favorable rate of return equal to or greater than 5% over the long-term (60 year) average inflation rate as measured by the consumer price index. The objective of the equity portion of the portfolio is to achieve a return in excess of the Standard & Poor’s 500 index. The objective of the fixed income portion of the portfolio is to add stability, consistency, safety and total return to the total fund portfolio.

We prohibit investments in options, futures, precious metals, short sales and purchase on margin. We also restrict the investment in fixed income securities to “A” rated or better by Moody’s or Standard & Poor’s rating services and restrict investments in common stocks to only those that are listed and actively traded on one or more of the major United States stock exchanges, including NASDAQ. We manage to an asset allocation of 45% to 75% in equity securities. An investment in any single stock issue is restricted to 5% of the total portfolio value and 90% of the securities held in mutual or commingled funds must meet the criteria for common stocks.

To develop the expected long-term rate of return on assets assumption, we consider the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of the 6.5% long-term rate of return on assets assumption. The expected return on plan assets uses the fair market value as of December 31, 2020. To develop the discount rate used in determining the benefit obligation we used the Findley AA Pension Discount Curve at the measurement date to match the timing and amounts of projected future benefits. A corridor approach is used to amortize actuarial gains and losses. We are applying the 10% threshold set forth in ASC 715. In addition, since all accrued benefits under the plan are frozen, we are amortizing the unrecognized gains and losses outside of the corridor by the average life expectancy of the plan participants.

We expect that we will not be required to make a contribution to the defined benefit cash balance plan during 2021. We expect our 2021 periodic pension cost to be $(265) thousand, the components of which are interest cost of $271 thousand, expected return on plan assets of ($709) thousand and amortization of actuarial loss of $173 thousand.

The following table shows the weighted-average asset allocation for the defined benefit cash balance plan held as of December 31, 2020 and 2019.


	December 31
	2020		2019
Asset Category:
Debt securities	25	%	31	%
Equity securities	70	%	64	%
Other	5	%	5	%
Total	100	%	100	%

We determine the fair value of our financial instruments based on the fair value hierarchy established in ASC 820. (See Note 3.)

The following table presents, for each of the fair value hierarchy levels, our plan assets that are measured at fair value on a recurring basis at December 31, 2020 and December 31, 2019 (in thousands).


	As of December 31, 2020
	Quoted Prices in Active		Other Observable
	Markets for Identical		Inputs		Unobservable Inputs
	Assets (Level 1)		(Level 2)		(Level 3)		Total
Debt securities	$	—	$	2,875	$	—	$	2,875
Equity securities		7,978		—		—		7,978
Total	$	7,978	$	2,875	$	—	$	10,853


	As of December 31, 2019
	Quoted Prices in Active
	Markets for Identical		Other Observable		Unobservable Inputs
	Assets (Level 1)		Inputs (Level 2)		(Level 3)		Total
Debt securities	$	—	$	3,410	$	—	$	3,410
Equity securities		6,977		—		—		6,977
Total	$	6,977	$	3,410	$	—	$	10,387

Our plan assets also include cash and cash equivalents of $0.5 million and $0.6 million at December 31, 2020 and 2019, respectively, that are carried at cost which approximates fair value.

We also sponsor a defined contribution plan. Under this plan, employees may contribute a portion of their compensation on a tax-deferred basis, and we may contribute a discretionary amount each year. We did not contribute during the year ended December 31, 2020. We contributed $0.7 million for the year ended December 31, 2019.