Retirement Benefit Plans

12 Months Ended

Dec. 31, 2020

Retirement Benefits, Description [Abstract]

RETIREMENT BENEFIT PLANS

RETIREMENT BENEFIT PLANS

Defined Contribution Plans

The company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the plans are held separately from those of the company in funds under the control of trustees. When employees leave the plans prior to vesting fully in the contributions, the contributions payable by the company are reduced by the amount of forfeited contributions.

The total amounts charged to the Consolidated Statements of Income for the year ended December 31, 2020, of $86.4 million (December 31, 2019: $73.5 million, December 31, 2018: $69.3 million) represent contributions paid or payable to these plans by the company at rates specified in the rules of the plans. As of December 31, 2020, accrued contributions of $30.7 million (December 31, 2019: $31.3 million) for the current year will be paid to the plans.

Defined Benefit Plans

The company maintains legacy defined benefit pension plans for qualifying employees of its subsidiaries in the UK, Ireland, Germany and Taiwan. All defined benefit plans are closed to new participants.

The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were valued as of December 31, 2020. The benefit obligation, related current service cost and prior service cost were measured using the projected unit credit method.

Benefit Obligations and Funded Status

The amounts included in the Consolidated Balance Sheets arising from the company's obligations and plan assets in respect of its defined benefit retirement plans are as follows:

	Retirement Plans
$ in millions	2020	2019
Benefit obligation	(587.1)	(551.7)
Fair value of plan assets	585.0	524.5
Funded status	(2.1)	(27.2)
Amounts recognized in the Consolidated Balance Sheets:
Other assets	30.4	2.5
Accrued compensation and benefits	(32.5)	(29.7)
Funded status	(2.1)	(27.2)

Changes in the benefit obligations were as follows:

	Retirement Plans
$ in millions	2020	2019
January 1	551.7	475.6
Service cost	2.4	1.1
Interest cost	9.2	13.4
Actuarial (gains)/losses	40.6	64.0
Exchange difference	21.4	16.4
Benefits paid	(11.5)	(18.6)
Curtailment	—	0.4
Settlement	(26.7)	(0.6)
December 31	587.1	551.7

Key assumptions used in plan valuations are detailed below. Appropriate local mortality tables are also used. The weighted average assumptions used to determine defined benefit obligations at December 31, 2020, and 2019 are as follows:

	Retirement Plans
	2020		2019
Discount rate	1.83	%	1.93	%
Expected rate of salary increases	2.85	%	2.95	%
Future pension trend rate increases	2.64	%	2.74	%

Changes in the fair value of plan assets in the current period were as follows:

	Retirement Plans
$ in millions	2020	2019
January 1	524.5	430.2
Actual return on plan assets	55.2	73.7
Foreign currency changes	20.1	16.0
Contributions from the company	25.5	24.0
Benefits paid	(11.5)	(18.6)
Settlement and other	(28.8)	(0.8)
December 31	585.0	524.5

The components of the amount recognized in accumulated other comprehensive income at December 31, 2020, and 2019 are as follows:

	Retirement Plans
$ in millions	2020	2019
Prior service cost/(credit)	7.4	6.1
Net actuarial loss/(gain)	144.4	145.4
Total	151.8	151.5

The amounts in accumulated other comprehensive income expected to be amortized into the Consolidated Income Statement during the year ending December 31, 2021 are as follows:

$ in millions	Retirement Plans
Prior service cost/(credit)	0.3
Net actuarial loss/(gain)	3.1
Total	3.4

The total accumulated and projected benefit obligation and fair value of plan assets for plans with accumulated and projected benefit obligations in excess of plan assets are as follows:

	Retirement Plans
$ in millions	2020	2019
Plans with accumulated and projected benefit obligation in excess of plan assets:
Accumulated and projected benefit obligation	574.2	540.1
Fair value of plan assets	572.3	512.8

Net Periodic Benefit Cost

The components of net periodic benefit cost in respect of these defined benefit plans are as follows:

	Retirement Plans
$ in millions	2020	2019	2018
Service cost	2.4	1.1	3.8
Interest cost	9.2	13.4	12.6
Expected return on plan assets	(23.7)	(22.1)	(22.0)
Amortization of prior service cost/(credit)	0.2	0.3	0.2
Amortization of net actuarial (gain)/loss	3.6	2.9	2.1
Settlement	8.0	(0.2)	3.1
Curtailment (gain)/loss	—	0.4	—
Net periodic benefit cost/(credit)	(0.3)	(4.2)	(0.2)

The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2020, 2019, and 2018 are:

	Retirement Plans
	2020		2019		2018
Discount rate	1.93	%	2.82	%	2.47	%
Expected return on plan assets	4.69	%	5.00	%	4.73	%
Expected rate of salary increases	2.95	%	3.24	%	3.26	%
Future pension rate increases	2.74	%	3.04	%	2.97	%

In developing the expected rate of return, the company considers long-term compound annualized returns based on historical and current market data. Using this reference information, the company develops forward-looking return expectations for each asset category and an expected long-term rate of return for a targeted portfolio. Discount rate assumptions were based upon AA-rated corporate bonds of suitable terms and currencies.

Plan Assets

The analysis of the plan assets as of December 31, 2020 was as follows:

$ in millions	Retirement Plans	% of Plan Assets
Cash and cash equivalents	22.4	3.8	%
Fund investments	224.2	38.3	%
Equity securities	193.6	33.1	%
Government debt securities	15.0	2.6	%
Guaranteed investments contracts	22.2	3.8	%
Other assets	107.6	18.4	%
Total	585.0	100.0	%

The analysis of the plan assets as of December 31, 2019 was as follows:

$ in millions	Retirement Plans	% of Plan Assets
Cash and cash equivalents	27.3	5.2	%
Fund investments	207.3	39.5	%
Equity securities	181.4	34.6	%
Government debt securities	22.5	4.3	%
Guaranteed investments contracts	13.2	2.5	%
Other assets	72.8	13.9	%
Total	524.5	100.0	%

Plan assets are not held in company stock. The investment policies and strategies for plan assets held by defined benefit plans include:

•Funding - to have sufficient assets available to pay members benefits;

•Security - to maintain the minimum Funding Requirement;

•Stability - to have due regard to the employer's ability in meeting contribution payments given their size and incidence.

The following is a description of the valuation methodologies used for each major category of plan assets measured at fair value. Information about the valuation hierarchy levels used to measure fair value is detailed in Note 3, “Fair Value of Assets and Liabilities.”

Cash and cash equivalents

Cash equivalents include cash in the bank and cash investments in money market funds. Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value of the underlying funds, and are classified within level 1 of the valuation hierarchy.

Fund investments

These plan assets are primarily invested in affiliated funds and are classified within level 1 of the valuation hierarchy. They are valued at the net asset value of common shares held by the plan at year end.

Equity securities, corporate debt securities, government debt securities, and other investments

These plan assets are classified within level 1 of the valuation hierarchy and are valued at the closing price reported on the active market on which the individual securities are traded.

Guaranteed investment contracts

These plan assets are classified within level 3 of the valuation hierarchy and are valued through use of unobservable inputs by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer. Guaranteed investment contracts balance at December 31, 2020 is $22.2 million (December 31, 2019: $13.2 million).

Cash Flows

The estimated amounts of contributions expected to be paid to the plans during 2021 are $15.2 million for retirement plans. There are no future annual benefits of plan participants covered by insurance contracts issued by the employer or related parties.

The benefits expected to be paid in each of the next five fiscal years and in the five fiscal years thereafter are as follows:

$ in millions	Retirement Plans
Expected benefit payments:
2021	12.1
2022	12.4
2023	12.8
2024	13.2
2025	13.6
Thereafter in the succeeding five years	74.8