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Retirement Plans
 12 Months Ended
Dec. 31, 2022
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]  
Retirement Plans Retirement Plans
Retirement Plans
The Company sponsors pension and other post-retirement benefit plans for certain associates. Most of the Company's associates are accumulating retirement income benefits through defined contribution plans. The majority of Company's defined benefit pension plans covering the Company's domestic associates have been closed to new associates and frozen for existing associates, however certain employees represented by collective bargaining continue to earn benefits. Certain foreign associates are covered by government sponsored plans in the countries in which they are employed. The defined contribution plans provide for Company contributions based, depending on the plan, upon one or more of participant contributions, service and profits. Company contributions to domestic defined contribution plans totaled $16.2 million, $9.8 million and $7.6 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively. Company contributions to non-US defined contribution plans were $7.8 million, $5.7 million and $5.5 million in fiscal 2022, fiscal 2021 and fiscal 2020, respectively.
Benefits provided under defined benefit pension plans are based, depending on the plan, on associates' average earnings and years of credited service, or a benefit multiplier times years of service. Funding of these qualified defined benefit pension plans is in accordance with federal laws and regulations. The actuarial valuation measurement date for pension plans is the calendar year end of each year.
The Company's target allocation, target return and actual weighted-average asset allocation by asset category are as follows:

TargetActual Allocation
AllocationReturn20222021
Equity Investments47.7%
7.3 - 8.9%
41.1%35.7%
Fixed Income38.1%
2.9 - 7.0%
44.7%55.0%
Other14.2%
0.5% - 7.0%
14.2%9.3%
Total100.0%6.6%100.0%100.0%

During 2022, the Company maintained its dynamic de-risking investment strategy implemented during 2021 designed to allow the plans to attain and/or maintain fully funded status levels while reducing volatility. Accordingly, allocation targets have been established to fit this strategy in response to increased funded ratio thresholds along a glidepath. The overall fixed income portfolio will increase to meet the allocation targets in such a manner that its interest rate sensitivity correlates highly with that of the liabilities of the plans, and other assets classes are intended to provide additional return with associated higher levels of risk. The long-term rate of return assumptions consider historic returns and volatilities adjusted for changes in overall economic conditions that may affect future returns and a weighting of each investment class. During 2022, the Company transitioned legacy Rexnord PMC’s pension plan to align with the Company’s other pension plan’s derisking strategy at similar funded status levels, which is expected to result in improved funding levels and less required contributions over time.
The following table presents a reconciliation of the funded status of the defined benefit pension plans:
20222021
Change in Projected Benefit Obligation:
Obligation at Beginning of Period$587.2 $298.4 
Service Cost1.4 1.2 
Interest Cost14.0 7.5 
Actuarial Gain(123.9)(1.2)
Less: Benefits Paid32.5 19.7 
Settlements(0.2)(1.9)
Foreign Currency Translation(5.7)(3.0)
Acquisitions— 305.9 
Obligation at End of Period$440.3 $587.2 
Change in Fair Value of Plan Assets:
Fair Value of Plan Assets at Beginning of Period$478.9 $230.2 
Actual Return on Plan Assets(104.5)33.7 
Employer Contributions8.3 5.7 
Less: Benefits Paid32.5 19.7 
Settlements(0.2)(1.9)
Foreign Currency Translation(3.8)(1.3)
Acquisitions— 232.2 
Fair Value of Plan Assets at End of Period$346.2 $478.9 
Funded Status$(94.1)$(108.3)
The actuarial gains for fiscal 2022 and 2021 were primarily due to an increase in discount rates, partially offset by losses due to demographic experience.
The funded status as of December 31, 2022 included domestic plans of $(64.6) million and international plans of $(29.5) million. The funded status as of January 1, 2022 included domestic plans of $(61.6) million and international plans of $(46.7) million.
Pension Assets
The Company classifies its investments into Level 1, which refers to securities valued using quoted prices from active markets for identical assets, Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available, and Level 3, which refers to securities valued based on significant unobservable inputs. Mutual funds are valued at the unadjusted quoted market prices for the securities. Real estate interest values are determined using model-based techniques that include relative value analysis and discounted cash flow techniques. Common collective trust funds are valued based on the net asset value (“NAV”) provided by the administrator of the fund as a practical expedient to estimate fair value. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Investments in units of collective trust funds and short-term investment funds, comprised of cash and money market funds, are valued at their respective published market prices as reported by the funds daily. Certain international plans hold insurance contracts. The fair value of these contracts is calculated by projecting expected future cash flows from the contract and discounting them to present value based on current market rates. The contracts are included within Level 3 of the hierarchy as the assumptions used to project expected future cash flows are based on actuarial estimates and are unobservable.
Pension assets by type and level are as follows:
December 31, 2022
TotalLevel 1Level 2Level 3
Cash and Cash Equivalents$4.3 $4.3 $— $— 
Mutual Funds:
US Equity Funds1.5 1.5 — — 
International Equity Funds3.1 3.1 — — 
Fixed Income Funds2.3 2.3 — — 
Other1.6 1.6 — — 
Insurance Contracts20.9 — — 20.9 
$33.7 $12.8 $— $20.9 
Investments Measured at Net Asset Value312.5 
Total$346.2 
January 1, 2022
TotalLevel 1Level 2Level 3
Cash and Cash Equivalents$5.3 $5.3 $— $— 
Mutual Funds:
US Equity Funds1.9 1.9 — — 
International Equity Funds3.9 3.9 — — 
Fixed Income Funds2.9 2.9 — — 
 Other2.0 2.0 — — 
Insurance Contracts34.0 — — 34.0 
$50.0 $16.0 $— $34.0 
Investments Measured at Net Asset Value428.9 
Total$478.9 

The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plan assets that calculate fair value based on NAV per share practical expedient as of December 31, 2022 and January 1, 2022:
20222021
Common Collective Trust Funds$312.5 $428.9 
The 2022 common collective trust funds are investments in the Mercer US Small/Midcap Equity Portfolio, the Mercer Non-US Core Equity Portfolio, the Mercer Global Low Volatility Equity Portfolio, the Mercer US Large Cap Passive Equity Portfolio, the Mercer Emerging Markets Equity Portfolio, the Mercer Active Long Corporate Fixed Income Portfolio, the Mercer Opportunistic Fixed Income Portfolio, the Mercer Long Strips Fixed Income Portfolio, and the Mercer Core Real Estate Portfolio. The Mercer US Small/Midcap Equity Portfolio seeks to provide long term total returns comprised primarily of capital appreciation by investing in equity securities issued by small to medium capitalization US companies. The Mercer Non-US Core Equity Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing in equity securities of non-US companies. The Mercer Global Low Volatility Equity Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing in equity securities of US and foreign issuers. The Mercer US Large Cap Passive Equity Portfolio seeks to approximate, as closely as possible, the performance of the S&P 500 Index over the long term by investing in the equity securities comprising the index in approximately the same proportions as they are represented in the index. The Mercer Emerging Markets Equity Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing equity securities of companies that are located in emerging markets, other investments that are tied economically to emerging markets, as well as in American, European and Global Depository Receipts. The Mercer Active Long Corporate Fixed Income Portfolio seeks to maximize long term total return by investing on high quality US corporate bonds. The Mercer Opportunistic Fixed Income Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing in high yield bonds and emerging markets debt. The Mercer Long Strips Fixed Income Portfolio seeks to extend the duration of plan assets by investing in US Treasury STRIPS with a maturity of greater than 20 years. The Mercer Core Real Estate Portfolio seeks to earn attractive risk-adjusted returns on a diversified portfolio of private real estate, by systematically favoring the market segments and opportunities believed to offer the most attractive relative value at a given point in time. The 2022 common collective trust funds are available for immediate redemption.
The 2021 common collective trust funds are investments in the Mercer US Small/Midcap Equity Portfolio, the Mercer Non-US Core Equity Portfolio, the Mercer Global Low Volatility Equity Portfolio, the Mercer US Large Cap Passive Equity Portfolio, the Mercer Long Duration Passive Fixed Income Portfolio, the Mercer Emerging Markets Equity Portfolio, the Mercer Active Long Corporate Fixed Income Portfolio, the Mercer Opportunistic Fixed Income Portfolio, the Mercer Long Strips Fixed Income Portfolio, the Mercer Active Intermediate Credit Portfolio, and the Mercer Core Real Estate Portfolio. The Mercer US Small/Midcap Equity Portfolio seeks to provide long term total returns comprised primarily of capital appreciation by investing in equity securities issued by small to medium capitalization US companies. The Mercer Non-US Core Equity Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing in equity securities of non-US companies. The Mercer Global Low Volatility Equity Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing in equity securities of US and foreign issuers. The Mercer US Large Cap Passive Equity Portfolio seeks to approximate, as closely as possible, the performance of the S&P 500 Index over the long term by investing in the equity securities comprising the index in approximately the same proportions as they are represented in the index. The Mercer Long Duration Passive Fixed Income Portfolio seeks to approximate as closely as practicable, before expenses, the performance of the Bloomberg Barclays Capital US Long Government Bond Index over the long term by investing in securities that comprise the index in the same proportions as they are represented in the index. The Mercer Emerging Markets Equity Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing equity securities of companies that are located in emerging markets, other investments that are tied economically to emerging markets, as well as in American, European and Global Depository Receipts. The Mercer Active Long Corporate Fixed Income Portfolio seeks to maximize long term total return by investing on high quality US corporate bonds. The Mercer Opportunistic Fixed Income Portfolio seeks to provide long term total return, which includes capital appreciation and income, by investing in high yield bonds and emerging markets debt. The Mercer Long Strips Fixed Income Portfolio seeks to extend the duration of plan assets by investing in US Treasury STRIPS with a maturity of greater than 20 years. The Mercer Active Intermediate Credit Portfolio seeks to maximize long-term total return. The Mercer Core Real Estate Portfolio seeks to earn attractive risk-adjusted returns on a diversified portfolio of private real estate, by systematically favoring the market segments and opportunities believed to offer the most attractive relative value at a given point in time. The 2021 common collective trust funds are available for immediate redemption.
The table below sets forth a summary of changes in the Company's Level 3 assets in its pension plan investments as of December 31, 2022 and January 1, 2022:
20222021
Insurance ContractsTotalReal Estate FundInsurance ContractsTotal
Beginning Balance$34.0 $34.0 $10.0 $— $10.0 
Acquisition— — — 33.6 33.6 
Net Sales(0.2)(0.2)(11.6)— (11.6)
Net (Losses) Gains (10.7)(10.7)1.6 1.4 3.0 
Translation(2.2)(2.2)— (1.0)(1.0)
Ending Balance$20.9 $20.9 $— $34.0 $34.0 

Funded Status and Expense

The Company recognized the funded status of its defined benefit pension plans on the Consolidated Balance Sheets as follows:
20222021
Other Noncurrent Assets$2.1 $0.8 
Accrued Compensation and Benefits(4.4)(4.9)
Pension and Other Post Retirement Benefits(91.8)(104.2)
Total$(94.1)$(108.3)
Amounts Recognized in Accumulated Other Comprehensive Loss
Net Actuarial Gain$21.2 $20.5 
Prior Service Cost0.4 0.7 
Total$21.6 $21.2 

The accumulated benefit obligation for all defined benefit pension plans was $434.8 million and $580.9 million as of December 31, 2022 and January 1, 2022, respectively.

Defined pension plans with accumulated benefit obligations in excess of plan assets as of December 31, 2022 and January 1, 2022 were as follows:

20222021
Projected Benefit Obligation$407.0 $554.9 
Accumulated Benefit Obligation405.1 548.6 
Fair Value of Plan Assets310.9 445.8 

Defined pension plans with projected benefit obligations in excess of plan assets as of December 31, 2022 and January 1, 2022 were as follows:

20222021
Projected Benefit Obligation$408.6 $554.9 
Accumulated Benefit Obligation406.4 548.6 
Fair Value of Plan Assets312.3 445.8 
The following weighted average assumptions were used to determine the projected benefit obligation as of December 31, 2022 and January 1, 2022, respectively:
20222021
Discount Rate5.2%2.7%

The objective of the discount rate assumption is to reflect the rate at which the pension benefits could be effectively settled. In making the determination, the Company takes into account the timing and amount of benefits that would be available under the plans. The methodology for selecting the discount rate was to match the plan's cash flows to that of a theoretical bond portfolio yield curve.

Certain of the Company's defined benefit pension plan obligations are based on years of service rather than on projected compensation percentage increases. For those plans that use compensation increases in the calculation of benefit obligations and net periodic pension cost, the Company used an assumed rate of compensation increase of 2.8% and 3.0% for the fiscal years ended December 31, 2022 and January 1, 2022, respectively.
Net periodic pension benefit costs and the net actuarial loss and prior service cost recognized in OCI for the defined benefit pension plans were as follows:
202220212020
Service Cost$1.4 $1.2 $2.0 
Interest Cost14.0 7.5 8.0 
Expected Return on Plan Assets(20.3)(14.5)(13.3)
Amortization of Net Actuarial Loss1.0 3.0 1.9 
Amortization of Prior Service Cost0.1 0.2 0.3 
Net Periodic Benefit Cost$(3.8)$(2.6)$(1.1)
Change in Obligations Recognized in OCI, Net of Tax
    Prior Service Cost$0.1 $0.1 $0.2 
    Net Actuarial Loss0.7 2.4 1.5 
Total Recognized in OCI$0.8 $2.5 $1.7 

The amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of associates expected to receive benefits under the plans. The amortization of the net actuarial loss is determined using a straight-line amortization of the loss over the average remaining life expectancy of the associates expected to receive benefits under the plans.

The following weighted average assumptions were used to determine net periodic pension cost for fiscal years 2022, 2021 and 2020, respectively.
202220212020
Discount Rate2.7%2.6%3.3%
Expected Long-Term Rate of Return on Assets4.6%6.2%7.0%

The Company made contributions to its defined benefit plan of $8.3 million and $5.7 million for the fiscal years ended December 31, 2022 and January 1, 2022, respectively.

The Company estimates that in fiscal 2023 it will make contributions in the amount of $6.5 million to fund its defined benefit pension plans.
The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
YearExpected Payments
2023$35.0 
202433.9 
202534.2 
202634.7 
202733.6 
2028-2032163.3 

Post-Retirement Health Care Plan
The Company's other post-retirement health care plans were not significant during fiscal 2022 and fiscal 2021.