Retirement and Other Benefit Plans

12 Months Ended

Sep. 30, 2020

Retirement and Other Benefit Plans

Retirement and Other Benefit Plans

12.      Retirement and Other Benefit Plans

Formerly, substantially all domestic employees were covered by a defined benefit pension plan (the Plan) maintained by the Company. The Plan was frozen in 2003 and no additional benefits have been accrued since that date. On November 14, 2019, the Company’s Board of Directors approved a resolution to terminate the Plan effective as of February 29, 2020. In connection with the termination, the Company contributed $25.7 million of cash to the Plan during the fourth quarter of 2020, settled approximately $32.4 million of Plan liabilities during the fourth quarter of 2020 through lump-sum payments from existing plan assets to eligible participants who elected to receive them; and recorded approximately $40.6 million of charges associated with these settlements. During 2020, the Company settled approximately $69.1 million of Plan liabilities by entering into an agreement to purchase annuities from Massachusetts Mutual Life Insurance Company (MassMutual). This agreement covered active and former employees and their beneficiaries, with MassMutual assuming the future annuity payments for these individuals.

Substantially all domestic employees are covered by a defined contribution plan maintained by the Company. In addition, the Company offers unfunded post-retirement pre-Medicare health insurance benefits to a small number of eligible retirees and employees. The Company formerly provided unfunded post-retirement life insurance to qualifying retired employees who retired before 2005, but ceased providing this coverage on July 31, 2020. The Company currently provides unfunded Medicare supplement coverage to a small number of retired employees, but will cease providing this coverage on December 31, 2020.

The Company used a measurement date of September 30 for its pension and other postretirement benefit plans. The Company had an accrued benefit liability of $0.2 million and $0.6 million at September 30, 2020 and 2019, respectively, related to its other postretirement benefit obligations. All other information related to its postretirement benefit plans is not considered material to the Company’s results of operations or financial condition.

The following tables provide a reconciliation of the changes in the pension plans and fair value of assets over the two-year period ended September 30, 2020, and a statement of the funded status as of September 30, 2020 and 2019:

(Dollars in millions)
Reconciliation of benefit obligation	2020		2019
Net benefit obligation at beginning of year	$	100.1	89.8
Interest cost		3.0	3.7
Actuarial loss		6.9	11.3
Gross benefits paid		(4.8)	(4.7)
Settlements		(102.4)	—
Net benefit obligation at end of year	$	2.8	100.1

(Dollars in millions)
Reconciliation of fair value of plan assets	2020		2019
Fair value of plan assets at beginning of year	$	77.2	73.3
Actual return on plan assets		3.6	5.9
Employer contributions		26.4	2.7
Gross benefits paid		(4.8)	(4.7)
Settlements		(102.4)	—
Fair value of plan assets at end of year	$	—	77.2

(Dollars in millions)
Funded Status	2020		2019
Funded status at end of year	$	(2.8)	(22.9)
Accrued benefit cost		(2.8)	(22.9)
Amounts recognized in the Balance Sheet consist of:
Current liability		(0.3)	(0.2)
Noncurrent liability		(2.5)	(22.7)
Accumulated other comprehensive loss (before tax effect)		0.7	49.6
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss		0.7	49.6
Accumulated other comprehensive loss (before tax effect)	$	0.7	49.6

The following table provides the components of net periodic benefit cost for the plans for 2020, 2019 and 2018:

(Dollars in millions)	2020		2019	2018
Service cost	$	—	—	—
Interest cost		3.0	3.7	3.4
Expected return on plan assets		(4.2)	(4.4)	(3.8)
Settlements		53.6	—	—
Net actuarial loss		2.8	2.1	2.3
Net periodic benefit cost		55.2	1.4	1.9
Defined contribution plans		7.4	6.8	6.6
Total	$	62.6	8.2	8.5

The discount rate used in measuring the Company’s pension obligations was developed by matching yields of actual high-quality corporate bonds to expected future pension plan cash flows (benefit payments). Over 400 Aa-rated, non-callable bonds with a wide range of maturities were used in the analysis. After using the bond yields to determine the present value of the plan cash flows, a single representative rate that resulted in the same present value was developed. The expected long-term rate of return on plan assets assumption was determined by reviewing the actual investment return of the plans since inception and evaluating those returns in relation to expectations of various investment organizations to determine whether long-term future returns are expected to differ significantly from the past.

Expected Cash Flows

Information about the expected cash flows for the other postretirement benefit plans follows:

	Other
(Dollars in millions)	Benefits
Expected Benefit Payments:
2021	$	0.2
2022		0.2
2023		0.3
2024		0.2
2025		0.2
2026‑2030	$	0.9