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Associate Benefit Plans
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
ASSOCIATE BENEFIT PLANS 15. ASSOCIATE BENEFIT PLANS
Associate 401(k) Savings Plan
Certain subsidiaries of ours maintain a qualified plan in which Associates may participate. Participants in the plan may elect to direct a portion of their wages into investment accounts that include professionally managed mutual and money market funds and the Company's common stock. Generally, the principal and related earnings are tax deferred until withdrawn. The Company matches a portion of the Associates’ contributions. As a result, the Company's total cash contributions to the plan on behalf of its Associates resulted in an expense of $6.6 million, $5.8 million, and $3.8 million for 2020, 2019, and 2018, respectively.
All contributions are invested in accordance with the Associates’ selection of investments. If Associates do not designate how discretionary contributions are to be invested, 100% is invested in target-date fund that corresponds with the participant’s age. Associates may generally make transfers to various other investment vehicles within the plan. The plan’s yearly activity includes net sales of 14,000, 9,000 and 51,000 shares of the Company's common stock in 2020, 2019 and 2018 respectively. There were no purchases in 2020, 2019 or 2018.
Postretirement Medical Benefits
The Company shares certain costs of providing health and life insurance benefits to eligible retired Associates (employees) and their eligible dependents. Previously, all Associates were eligible for these benefits if they reached normal retirement age while working for the Company. Effective March 31, 2014, the Company changed the eligibility of this plan to include only those Associates who have achieved ten years of service with the Company as of March 31, 2014. The Company began to use the mortality table issued by the office of the Actuary of the U.S. Bureau of Census in its calculation.
The Company accounts for its obligations under the provisions of ASC 715, Compensation - Retirement Benefits (ASC 715). ASC 715 requires that the Company recognized the costs of these benefits over an Associate's active working career. Amortization of unrecognized net gains or losses resulting from experience different from that assumed and from changes in assumptions is included as a component of net periodic benefit cost over the remaining service period of active employees to the extent that such gains and losses exceed 10% of the accumulated postretirement benefit obligation, as of the beginning of the year. The Company recognizes its service cost in Salaries, benefits and other compensation and the other components of net periodic benefit cost in Other operating expenses in the Consolidated Statements of Income.
ASC 715 requires that the Company recognizes the funded status of its defined benefit postretirement plan in the statement of financial condition, with a corresponding adjustment to accumulated other comprehensive (loss) income, net of tax. The adjustment to accumulated other comprehensive (loss) income at adoption represented the net unrecognized actuarial losses and unrecognized transition obligation remaining from the initial adoption of ASC 715, all of which were previously netted against the plan’s funded status in the statement of financial condition pursuant to the provisions of ASC 715. These amounts will be subsequently recognized as net periodic pension costs pursuant to the Company's historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods, and are not recognized as net periodic pension cost in the same periods, will be recognized as a component of other comprehensive income. Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income at adoption of ASC 715.
The following disclosures relating to postretirement medical benefits were measured at December 31:
 
(Dollars in thousands)202020192018
Change in benefit obligation:
Benefit obligation at beginning of year$2,170 $1,893 $1,990 
Service cost61 54 60 
Interest cost67 78 70 
Actuarial loss (gain)80 229 (143)
Benefits paid(90)(84)(84)
Benefit obligation at end of year$2,288 $2,170 $1,893 
Change in plan assets:
Fair value of plan assets at beginning of year$— $— $— 
Employer contributions90 84 84 
Benefits paid(90)(84)(84)
Fair value of plan assets at end of year$— $— $— 
Unfunded status$(2,288)$(2,170)$(1,893)
Amounts recognized in accumulated other comprehensive income(1):
Net prior service credit$435 $511 $587 
Net gain376 491 783 
Net amount recognized$811 $1,002 $1,370 
Components of net periodic benefit cost:
Service cost$61 $54 $60 
Interest cost67 78 70 
Amortization of prior service cost(76)(76)(76)
Net gain recognition(36)(63)(45)
Net periodic benefit cost$16 $(7)$9 
Assumption used to determine net periodic benefit cost:
Discount rate3.20 %4.20 %3.60 %
Assumption used to value the Accumulated Postretirement Benefit Obligation (APBO):
Discount rate2.40 %3.10 %4.20 %
(1)Before tax effects
Estimated future benefit payments:
The following table shows the expected future payments for the next 10 years:
(Dollars in thousands)
During 2021$55 
During 202257 
During 202360 
During 202465 
During 202571 
During 2026 through 2030425 
$733 
The Company assumes medical benefits will increase at an average rate of less than 10% per annum. The costs incurred for retirees’ health care are limited since certain current and all future retirees are restricted to an annual medical premium cap indexed (since 1995) by the lesser of 4% or the actual increase in medical premiums paid by us. For 2020, this annual premium cap amounted to $3,843 per retiree. The Company estimates that it will contribute approximately $3,997 per retiree to the plan during fiscal 2021.
Alliance Associate Pension Plan
During the fourth quarter of 2015, the Company completed the acquisition of Alliance. At the time of the acquisition the Company assumed the Alliance pension plan offered to current Alliance associates.
During the fourth quarter of 2018, the Company notified the Alliance pension plan participants, the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) of its intention to terminate the plan and received IRS and PBGC approval in the first quarter of 2020. The Company completed the termination and contributed $0.5 million to the plan to settle the obligation during the three months ended June 30, 2020.
The following disclosures relating to Alliance pension benefits were measured at:
 
(Dollars in thousands)June 30, 2020December 31, 2019December 31, 2018
Change in benefit obligation:
Benefit obligation at beginning of year$6,893 $6,289 $7,853 
Interest cost105 253 279 
Settlements(7,272)(282)(1,142)
Disbursements— (231)(271)
Actuarial loss (gain)274 864 (430)
Benefit obligation at end of period$— $6,893 $6,289 
Change in plan assets:
Fair value of plan assets at beginning of year$7,431 $6,533 $8,378 
Actual return on plan assets(159)1,435 (393)
Settlements(7,272)(273)(1,146)
Benefits paid— (231)(271)
Administrative expenses— (33)(35)
Fair value of plan assets at end of period$— $7,431 $6,533 
Funded status$— $538 $244 
Amounts recognized in accumulated other comprehensive income(1):
Net (loss) gain$— $(279)$(413)
Components of net periodic benefit cost:
Service cost$17 $40 $40 
Interest cost105 253 279 
Expected return on plan assets(196)(471)(596)
Settlements— 16 (24)
Plan settlement loss1,431 — — 
Net gain recognition— — 413 
Net periodic benefit cost$1,357 $(162)$112 
(1)Before tax effects
Beneficial Associate Pension and other postretirement benefit plans
On March 1, 2019, the Company closed the acquisition of Beneficial. At the time of acquisition, the Company assumed the pension plan covering certain eligible Beneficial Associates. The plan was frozen in 2008.
The following disclosures relating to Beneficial pension benefits and other postretirement benefit plans were measured at December 31, 2020:
20202019
(Dollars in thousands)Pension BenefitsOther Postretirement BenefitsPension BenefitsOther Postretirement Benefits
Change in benefit obligation:
Benefit obligation at beginning of year$102,878 $20,263 $— $— 
Acquired in business combinations— — 91,568 19,504 
Service cost— 48 — 76 
Interest cost2,910 475 2,851 588 
Plan participants' contributions— 35 — 34 
Amendments— (202)— — 
Actuarial gain (loss)11,499 (520)12,020 1,035 
Benefits paid(5,004)(797)(3,561)(974)
Benefit obligation at end of year$112,283 $19,302 $102,878 $20,263 
Change in plan assets:
Fair value of plan assets at beginning of year$100,388 $— $— $— 
Acquired in business combinations— — 90,814 — 
Actual return on Plan Assets15,985 — 13,350 — 
Employer contribution340 762 293 940 
Participants' contributions— 35 — 34 
Benefits paid(5,004)(797)(3,561)(974)
Administrative expenses(580)— (508)— 
Fair value of plan assets at end of year$111,129 $— $100,388 $— 
Unfunded status$(1,154)$(19,302)$(2,490)$(20,263)
Amounts recognized in accumulated other comprehensive income(1):
Net loss$6,635 $517 $(4,174)$(1,035)
Components of net periodic benefit cost:
Service cost$— $48 $— $76 
Interest cost2,910 475 2,851 588 
Expected return on plan assets(6,363)— (4,829)— 
Net (gain) loss recognition4 (205)— — 
Net periodic benefit cost$(3,449)$318 $(1,978)$664 
(1)Before tax effects
Significant assumptions used to calculate the net periodic benefit cost and obligation for Beneficial postretirement plans as of December 31, 2020 are as follows:
Consolidated Pension Plan20202019
Discount rate for net periodic benefit cost2.91 %4.14 %
Expected return on plan assets6.50 %6.50 %
Discount rate for disclosure obligations3.25 %3.25 %
Beneficial Bank Other Postretirement
Discount rate for net periodic benefit cost3.12 %4.10 %
Discount rate for disclosure obligations2.31 %3.19 %
FMS Other Postretirement
Discount rate for net periodic benefit cost2.61 %3.60 %
Discount rate for disclosure obligations1.49 %2.60 %
Split-Dollar Plan
Discount rate for net periodic benefit cost2.57 %3.54 %
Discount rate for disclosure obligations1.45 %2.55 %
Estimated future benefit payments:
The following table shows the expected future payments for the next 10 years:
(Dollars in thousands)Pension BenefitsOther Postretirement Benefits
During 2021$4,694 $1,099 
During 20224,918 1,103 
During 20235,488 1,129 
During 20246,123 1,120 
During 20255,078 1,145 
During 2026 through 203028,445 5,516 
$54,746 $11,112 

The fair values and weighted average asset allocations in plan assets of all pension and postretirement plan assets at December 31, 2020 and 2019 by asset category are as follows:
Category Used for Fair Value Measurement
December 31, 2020
(Dollars in thousands)Level 1Level 2Level 3TotalPercent
Assets:
Mutual Funds:
Large cap$5,827 $— $— $5,827 5.2 %
Mid cap69 — — 69 0.1 
Small cap61 — — 61 0.1 
International10,249 — — 10,249 9.2 
Global Managed Volatility8,970 — — 8,970 8.1 
U.S. Managed Volatility3,363 — — 3,363 3.0 
Fixed Income73,071 — — 73,071 65.8 
U.S. Government Agencies9,345 — — 9,345 8.4 
Accrued Income174 — — 174 0.1 
Total$111,129 $— $— $111,129 100.0 %
Category Used for Fair Value Measurement
December 31, 2019
(Dollars in thousands)Level 1Level 2Level 3TotalPercent
Assets:
Mutual Funds:
Large cap$4,532 $— $— $4,532 4.5 %
Mid cap67 — — 67 0.1 
Small cap63 — — 63 0.1 
International7,902 — — 7,902 7.9 
Global Managed Volatility6,955 — — 6,955 6.9 
U.S. Managed Volatility2,611 — — 2,611 2.6 
Fixed Income62,924 — — 62,924 62.7 
U.S. Government Agencies15,166 — — 15,166 15.1 
Accrued Income168 — — 168 0.1 
Total$100,388 $— $— $100,388 100.0 %

As of December 31, 2020, pension and postretirement plan assets were comprised of investments in equity and fixed income mutual funds. The Bank’s consolidated pension plan investment policy provides that assets are to be managed over a long-term investment horizon to ensure that the chances and duration of investment losses are carefully weighed against the long-term potential for asset appreciation. The primary objective of managing a plan’s assets is to improve the plan’s funded status. A secondary financial objective is, where possible, to minimize pension expense volatility. The Company’s pension plan allocates assets based on the plan’s funded status to risk management and return enhancement asset classes. The risk management class is comprised of a long duration fixed income fund while the return enhancement class consists of equity and other fixed income funds. Asset allocation ranges are generally 40% to 80% for risk management and 20% to 60% for return enhancement when the funded status is less than 110%, and 50% to 90% in risk management and 10% to 50% for return enhancement when the funded status reaches 110%, subject to the discretion of the Company. Also, a small portion is maintained in cash reserves when appropriate.
The Company has four additional plans which are no longer being provided to current Associates: (1) a Supplemental Pension Plan with a corresponding liability of $0.5 million and $0.6 million for December 31, 2020 and 2019 respectively; (2) an Early Retirement Window Plan with a corresponding liability of $0.1 million for both December 31, 2020 and 2019; (3) a Supplemental Executive Retirement Plan with a corresponding liability of $1.4 million for both December 31, 2020 and 2019, and; (4) a Post-Retirement Medical Plan with a corresponding liability of $0.1 million for both December 31, 2020 and 2019.