Pension and Other Post Retirement Benefit Plans

12 Months Ended

Dec. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Pension and Other Post Retirement Benefit Plans

Note 10 — Pension and Other Post Retirement Benefit Plans

The Company maintains a U.S. defined benefit pension plan covering its former Chief Executive Officer (“U.S. Plan”) and a German defined benefit pension plan covering certain retired executive employees of the Company’s wholly owned subsidiary, Gentherm GmbH (“German Plan”).

The components of net periodic benefit cost for the Company’s defined benefit plans for the years ended December 31, 2020, 2019 and 2018 were as follows:

	U.S. Plan									German Plan
	Year Ended December 31,									Year Ended December 31,
	2020			2019			2018			2020			2019			2018
Net periodic benefit cost:
Service cost	$	—		$	—		$	—		$	—		$	—		$	—
Interest cost		85			127			114			88			147			147
Expected return on plan assets		—			—			—			(121	)		(126	)		(130	)
Amortization of prior service cost and actuarial loss		7			—			—			124			72			73
Net periodic benefit cost	$	92		$	127		$	114		$	91		$	93		$	90
Assumptions:
Discount rate		2.40	%		3.65	%		2.95	%		1.08	%		1.06	%		2.04	%
Long-term return on assets	N/A			N/A			N/A				2.90	%		3.10	%		3.40	%

A reconciliation of the change in benefit obligation and the change in plan assets for the years ended December 31, 2020 and 2019 is as follows:

	U.S. Plan						German Plan
	As of December 31,						As of December 31,
	2020			2019			2020			2019
Change in projected benefit obligation:
Balance at beginning of year	$	3,871		$	3,832		$	8,353		$	7,529
Interest cost		85			127			88			147
Paid pension distributions		(342	)		(342	)		(294	)		(285	)
Actuarial losses		233			254			40			1,116
Exchange rate impact		—			—			747			(154	)
Balance at end of year	$	3,847		$	3,871		$	8,934		$	8,353
Change in plan assets:
Balance at beginning of year		—		$	—			3,825			3,808
Actual return on plan assets		—			—			121			126
Contributions		—			—			294			284
Paid pension distributions		—			—			(294	)		(284	)
Actuarial losses		—			—			(25	)		(30	)
Exchange rate impact		—			—			355			(79	)
Balance at end of year	$	—		$	—		$	4,276		$	3,825
Underfunded Status	$	(3,847	)	$	(3,871	)	$	(4,658	)	$	(4,528	)
Balance sheet classification:
Other current liabilities		(342	)		(342	)		—			—
Pension benefit obligation		(3,505	)		(3,529	)		(4,658	)		(4,528	)
Accumulated other comprehensive loss (pre-tax):
Actuarial losses		701			476			3,644			3,398
Assumptions:
Discount rate		1.20	%		2.40	%		1.08	%		1.06	%

Pre-tax amounts included in AOCI that are expected to be recognized in net periodic benefit cost during the year ended December 31, 2021 are as follows:

	U.S Plan		German Plan
Actuarial losses	$	26	$	126

The accumulated benefit obligations were as follows:

	U.S. Plan				German Plan
	As of December 31,				As of December 31,
	2020		2019		2020		2019
Accumulated benefit obligation	$	3,847	$	3,871	$	8,934	$	8,529

Interest costs are recognized in Selling, general and administrative expenses in the consolidated statements of income and actuarial gains and losses are included the consolidated balance sheet as part of Accumulated other comprehensive loss within shareholders’ equity. Actuarial gains or losses are amortized to Selling, general and administrative expense in the consolidated statements of income based on the average future life of the Plan using the corridor method. Prior service cost is included in Selling, general and administrative expenses in the consolidated statements of income.

Plan assets – German Plan

Plan assets are comprised of Gentherm GmbH’s pension insurance policies and are pledged to the beneficiaries of the German Plan. A market valuation technique, based on observable underlying insurance charges, is used to determine the fair value of the pension plan assets (Level 2).

The expected return on plan assets assumption used to calculate Gentherm GmbH’s pension benefit obligation was determined using actual returns realized on plan assets in the prior year.

Other assets

Although the U.S. Plan is not funded, the Company has established a separate trust having the sole purpose of paying benefits under the U.S. Plan. The only asset of the trust is a corporate-owned life insurance policy (“COLI”). The COLI is valued at fair value using quoted prices listed in active markets (Level 1). The policy value of the COLI was $2,966 and $2,592 as of December 31, 2020 and 2019, respectively, and is included in Other non-current assets in the Company’s consolidated balance sheets.

Contributions

We do not expect contributions to be paid to the U.S. Plan or the German Plan during the next fiscal year.

The schedule of future expected pension payments is as follows:

	Projected Pension Benefit Payments
Year	U.S Plan		German Plan
2021	$	342	$	296
2022		342		291
2023		342		301
2024		342		295
2025		342		287
2026-2030		1,710		2,886
Total	$	3,420	$	4,356

Defined contribution plans

The Company also sponsors defined contribution plans for eligible employees. On a discretionary basis, the Company matches a portion of the employee contributions and or makes additional discretionary contributions. Gentherm recognized costs of $1,275, $1,384 and $1,471 related to contributions to its defined contribution plans during the years ended December 31, 2020, 2019 and 2018, respectively.