XML 31 R18.htm IDEA: XBRL DOCUMENT v3.20.2
Employee Benefit Plans
 6 Months Ended
Jun. 28, 2020
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
Retirement Plans and Retiree Health and Life Insurance Plans
The Company provides non-contributory defined benefit pension plans to certain of its employees in the United States, Mexico and Belgium. The Company also sponsors contributory defined benefit pension plans covering the majority of its employees in the United Kingdom, Canada, and the Netherlands. In addition, the Company provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements.
The Company froze participation in its U.S. qualified defined benefit pension plan for newly hired salaried and non-union hourly employees effective December 31, 2003. To replace this benefit, non-union U.S. employees hired on or after January 1, 2004, are provided an annual contribution, called the Sonoco Retirement Contribution (SRC), to their participant accounts in the Sonoco Retirement and Savings Plan. The SRC is equal to 4% of the participant's eligible pay plus 4% of eligible pay in excess of the social security wage base. On February 4, 2009, the U.S. qualified defined benefit pension plan was further amended to freeze plan benefits for all active, non-union participants effective December 31, 2018. Remaining active participants in the U.S. qualified plan became eligible for SRC contributions effective January 1, 2019.
The components of net periodic benefit cost include the following:
Three Months EndedSix Months Ended
June 28, 2020June 30, 2019June 28, 2020June 30, 2019
Retirement Plans
Service cost$1,003  $962  $2,085  $1,903  
Interest cost12,549  15,100  25,230  30,043  
Expected return on plan assets(12,227) (19,232) (24,807) (38,329) 
Amortization of prior service cost247  216  497  430  
Amortization of net actuarial loss7,258  9,646  14,134  18,680  
Effect of curtailment loss31  —  31  —  
Effect of settlement loss38  225  661  1,547  
Net periodic benefit cost$8,899  $6,917  $17,831  $14,274  
Retiree Health and Life Insurance Plans
Service cost$93  $78  $176  $152  
Interest cost81  113  165  231  
Expected return on plan assets(93) (179) (183) (356) 
Amortization of prior service credit(69) (124) (137) (247) 
Amortization of net actuarial gain(215) (215) (412) (408) 
Net periodic benefit income$(203) $(327) $(391) $(628) 

The Company made aggregate contributions of $8,602 and $199,006 to its defined benefit retirement and retiree health and life insurance plans during the six months ended June 28, 2020 and June 30, 2019, respectively. The prior year included voluntary contributions to the Company's U.S. defined benefit pension plans (the "Plans") in May 2019 totaling $190,000. These voluntary contributions were followed by actions to further de-risk the Plan portfolios by increasing the allocation of pension assets to fixed-income investments. The Company expects to make additional aggregate contributions of approximately $8,500 to its defined benefit retirement and retiree health and life insurance plans over the remainder of 2020, excluding potential immaterial cash funding related to restructuring actions.
Plan Termination
As previously disclosed, the Company terminated the Sonoco Pension Plan for Inactive Participants (the "Inactive Plan"), a tax-qualified defined benefit plan, effective September 30, 2019. Upon approval from the Pension Benefit Guaranty Corporation ("PBGC"), and following completion of a limited lump sum offering, the Company is expected to settle all remaining liabilities under the Inactive Plan through the purchase of annuities. The Company intends to apply to the PBGC for an extension of the distribution deadline and expects to make additional contributions to the Inactive Plan of approximately $150,000 in 2021 in order to be fully funded on a termination basis at the time of the annuity purchase. The actual amount of the Company's long-term liability when it is transferred, and the related cash contribution requirement, will depend upon the nature and timing of participant settlements, as well as prevailing market conditions. These expected contributions are reducing tax payments in 2020 by approximately $38,000. Non-cash, pretax settlement charges totaling approximately $590,000 are expected to be recognized in 2021 as the lump sum payouts and annuity purchases are made.
Settlements and Curtailments
The Company recognized settlement charges totaling $661 and $1,547 during the six months ended June 28, 2020 and June 30, 2019, respectively. These charges resulted from payments made to certain participants of the Company's non-union Canadian pension plan who elected a lump sum distribution option upon retirement. Additional settlement charges may be recognized over the remainder of 2020 as a result of ongoing lump-sum distributions and restructuring actions. In addition, curtailment charges totaling $31 related to the closure of a paper mill in Canada were recognized during the six months ended June 28, 2020.
Sonoco Retirement Contribution (SRC)
SRC contributions, which are funded annually in the first quarter, totaled $22,503 during the six months ended June 28, 2020, and $14,573 during the six months ended June 30, 2019. No additional SRC contributions are expected during the remainder of 2020. The Company recognized expense related to the SRC of $5,716 and $5,830 for the quarters ended June 28, 2020 and June 30, 2019, respectively, and $11,694 and $12,097 for the six-month periods ended June 28, 2020 and June 30, 2019, respectively.