RETIREMENT PLANS

12 Months Ended

Dec. 31, 2023

RETIREMENT PLANS

RETIREMENT PLANS

12. RETIREMENT PLANS

The Company has noncontributory defined benefit pension plans as well as noncontributory postretirement benefit plans offering defined medical, dental, vision, and life benefits for certain of its employees. The Company’s pension and other postretirement benefit plans are closed to new participants and only grandfathered participants continue to accrue additional benefits. Also, in 2020 the Company began the process of winding up one of its benefit plans. The Company reviews the funded status of its pension plans and makes contributions based on that analysis. The benefits are based on the participants’ compensation during their employment and the credited service years earned by participants. The Company funds the other postretirement benefit plans as benefits are paid.

The weighted-average rates assumed in the actuarial calculations for the pension and other postretirement benefit plans are as follows as of December 31, 2023, 2022 and 2021:

	2023		2022		2021
Discount Rate – Pension Benefit Obligation	4.3	%	5.4	%	2.9	%
Discount Rate – Pension Benefit Cost	5.4	%	2.9	%	2.6	%
Discount Rate – Postretirement Benefit Obligation	5.2	%	5.4	%	2.8	%
Discount Rate – Postretirement Benefit Cost	5.2	%	2.8	%	2.5	%
Expected long-term return on plan assets	5.3	%	5.2	%	5.3	%

The expected long-term rate of return on plan assets was determined based on several factors including input from pension investment consultants, projected long-term returns of equity and bond indices, and historical returns over the life of the related obligations of the fund. The Company, in conjunction with its pension investment consultants, reviews its asset allocation periodically and rebalances its investments when appropriate in an effort to earn the expected long-term returns. The Company will continue to evaluate its long-term rate of return assumptions at least annually and will adjust them as necessary.

The annual salary increase assumption is no longer applicable as the plan participants no longer accrue additional service.

The discount rate was determined based on a review of market data including yields on high quality corporate bonds with maturities approximating the remaining life of the project benefit obligations.

The other postretirement benefit plans healthcare cost trend assumptions is based on health care trend rates. The 2023 assumed medical health care cost trend rate is 12% trending to an ultimate rate of 4% in 2074. The assumed dental care cost trend rate is 4% in 2023 and remains at this rate until 2074.

Changes during the year in the projected benefit obligations and in the fair value of plan assets are as follows for 2023 and 2022 (in thousands):

	2023				2022
	Pension Benefits		Postretirement Benefits		Pension Benefits		Postretirement Benefits
Projected benefit obligations:
Balance at beginning of year:	$	66,175	$	3,624	$	100,624	$	5,343
Service cost		90		65		151		124
Interest cost		3,323		182		2,373		139
Benefits and settlements paid		(6,899)		(309)		(18,490)		(396)
Actuarial (gain) loss		1,460		63		(16,758)		(1,586)
Settlement		-		—		(1,725)		-
Balance at end of year	$	64,149	$	3,625	$	66,175	$	3,624
Plan net assets:
Balance at beginning of year:	$	71,552	$	—	$	103,718	$	—
Actual return on plan assets		7,142		—		(13,188)		—
Company contributions		207		309		—		396
Benefits and settlements paid		(7,397)		(309)		(18,978)		(396)
Balance at end of year	$	71,504	$	—	$	71,552	$	—
Over/ (Under) funded status of plan	$	7,355	$	(3,625)	$	5,377	$	(3,624)

The Company reports an asset or liability on its balance sheet equal to the funded status of its pension and other postretirement benefit plans. Plans in an overfunded status are aggregated and recorded as a net pension benefit asset in other assets. Plans in an underfunded status are aggregated and recorded as a net postretirement benefit liability in other liabilities. The funded status of the Company’s pension and other retirement benefit plans is below (in thousands):

	2023
	Viya Pension Benefit		Alaska Pension Benefit		Viya Postretirement Benefits		Alaska Postretirement Benefits
Projected benefit obligation	$	53,075	$	11,074	$	3,341	$	284
Plan Net Assets		62,142		9,362		—		—
Over/ (Under) funded status of plan	$	9,067	$	(1,712)	$	(3,341)	$	(284)

	2022
	GTT Pension Benefit		Viya Pension Benefit		Alaska Pension Benefit		Viya Postretirement Benefits		Alaska Postretirement Benefits
Projected benefit obligation	$	2,038	$	52,832	$	11,305	$	3,337	$	287
Plan Net Assets		2,038		60,132		9,382		—		—
Over/ (Under) funded status of plan	$	—	$	7,300	$	(1,923)	$	(3,337)	$	(287)

The Company’s investment policy for its pension assets is to have a reasonably balanced investment approach, with a long-term bias toward debt investments. The Company’s strategy allocates plan assets among equity, debt and other assets to achieve long-term returns without significant risk to principal. The pension fund has limitations from investing in the equity, debt or other securities of the employer, its subsidiaries or associates of the employer or any company of which the employer is a subsidiary or an associate.

The fair values for the pension plan’s net assets, by asset category, at December 31, 2023 are as follows (in thousands):

Asset Category	Total		Level 1		Level 2
Cash, cash equivalents, money markets and other	$	2,642	$	2,642	$	—
Common stock		12,680		12,680		—
Mutual funds - fixed income		8,836		8,836		—
Mutual funds - equities		9,527		9,527		—
Fixed income securities		33,728		—		33,728
Other		4,091		4,091		—
Total	$	71,504	$	37,776	$	33,728

The fair values for the pension plan’s net assets, by asset category, at December 31, 2022 are as follows (in thousands):

Asset Category	Total		Level 1		Level 2
Cash, cash equivalents, money markets and other	$	7,572	$	7,572	$	—
Common stock		17,974		17,974		—
Mutual funds - fixed income		10,732		10,732		—
Mutual funds - equities		5,228		5,228		—
Fixed income securities		22,913		—		22,913
Other		7,133		7,133		—
Total	$	71,552	$	48,639	$	22,913

The plan’s weighted-average asset allocations at December 31, 2023 and 2022, by asset category are as follows:

	2023		2022
Cash, cash equivalents, money markets and other	4	%	11	%
Common stock	18		25
Mutual funds - fixed income	12		15
Mutual funds - equities	13		7
Fixed income securities	47		32
Other	6		10
Total	100	%	100	%

Amounts recognized on the Company’s consolidated balance sheets consist of (in thousands):

	As of December 31,
	2023				2022
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Accrued and current liabilities	$	—	$	310	$	—	$	294
Other Liabilities		1,712		3,318		1,923		3,068
Other Assets		9,070		—		7,303		—
Accumulated other comprehensive income, net of tax		8,592		1,415		6,191		1,589

Amounts recognized in accumulated other comprehensive income consist of (in thousands):

	As of December 31,
	2023				2022
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Unrecognized net actuarial gain	$	8,842	$	1,614	$	6,268	$	1,614
Accumulated other comprehensive income, pre-tax		8,842		1,614		6,268		1,614
Accumulated other comprehensive income, net of tax		8,592		1,415		6,191		1,589

Components of the plan’s net periodic pension cost are as follows for the years ended December 31, 2023, 2022 and 2021 (in thousands):

	2023				2022				2021
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Operating expense
Service cost	$	90	$	65	$	151	$	124	$	229	$	143
Non-operating expense
Interest cost		3,323		182		2,373		139		2,043		127
Expected return on plan assets		(2,936)		—		(3,814)		—		(3,366)		—
Amortization of actuarial (gain) loss		(43)		(113)		—		—		—		—
Settlement		—		—		1,725		—		34		—
Net periodic pension cost	$	434	$	134	$	435	$	263	$	(1,060)	$	270

The Company is currently evaluating whether it will make any contributions to its pension and postretirement benefit plans during the year ending December 31, 2024.

The following estimated benefits, which reflect expected future service, as appropriate, are expected to be paid over the next 10 years as indicated below (in thousands):

	Pension		Postretirement
Fiscal Year	Benefits		Benefits
2024	$	5,365	$	317
2025		4,899		333
2026		4,969		238
2027		5,026		265
2028		4,775		265
2029-2033		23,351		1,483
Total	$	48,385	$	2,901

Multi-employer Defined Benefit Plan 

Certain employees of the Company’s US Telecom participate in the Alaska Electrical Pension Plan (“AEPF”). The Company pays the AEPF a contractual hourly amount based on employee classification or base compensation. As a multi-employer defined benefit plan, the accumulated benefits and plan assets are not determined for, or allocated separately to, the individual employer.

The following table provides additional information about the AEPF multi-employer pension plan.

Plan name	Alaska Electrical Pension Plan
Number of employees covered	541
Pension Protection Act zone status at the plan's year-end:
December 31, 2022	Green
December 31, 2021	Green
Plan subject to funding improvement plan	No
Plan subject to rehabilitation plan	No
Employer subject to contribution surcharge	No
Company contributions to the plan for the year ended:
December 31, 2023	$ 6.2 million
December 31, 2022	$ 6.6 million
December 31, 2021	$ 3.1 million
Name and expiration date of collective bargaining agreements requiring contributions to the plan:
Collective Bargaining Agreement Between Alaska
Communications Systems and Local Union 1547 IBEW	June 30, 2025
Outside Agreement Alaska Electrical Construction between
Local Union 1547 IBEW and Alaska Chapter National
Electrical Contractors Association Inc.	June 30, 2026
Inside Agreement Alaska Electrical Construction between
Local Union 1547 IBEW and Alaska Chapter National
Electrical Contractors Association Inc.	April 30, 2026

The Company’s contributions to the plan in 2023 and 2022 represent greater than 5% of the total contributions to the plan. The Company cannot accurately project any change in the plan status in future years given the uncertainty of economic conditions or the effect of actuarial valuations versus actual performance in the market. Minimum required future contributions to the AEPF are subject to the number of employees in each classification and base compensation of employees in future years.