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Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
 
The accounting standards related to employers’ accounting for defined benefit pension and other postretirement plans requires the Company to recognize the funded status of its defined benefit postretirement plans as assets or liabilities in the accompanying consolidated balance sheets and to recognize changes in the funded status of the plans in comprehensive income.

The Company has various defined contribution plans, the largest of which is its Retirement Savings Plan. Most U.S. salaried and non-union hourly employees are eligible to participate in this plan. See Note 18 for further discussion of the Retirement Savings Plan. The Company also maintains various other defined contribution plans which cover certain other employees. Company contributions under certain of these plans are based on the performance of the business units and employee compensation. Contribution expense under these other defined contribution plans was $5,301, $6,874 and $6,921 in 2020, 2019 and 2018, respectively.

Defined benefit pension plans in the U.S. cover a majority of the Company’s U.S. employees at the Associated Spring and Force & Motion Control businesses of Industrial, certain former U.S. employees, including retirees, and a portion of employees at the Company’s Corporate Office. Employees at certain international businesses within Industrial are also covered by defined benefit pension plans. Plan benefits for salaried and non-union hourly employees are based on years of service and average salary. Plans covering union hourly employees provide benefits based on years of service. The Company funds U.S. pension costs in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Non-U.S. defined benefit pension plans cover certain employees of certain international locations in Europe and Canada.
 
The Company provides other medical, dental and life insurance postretirement benefits for certain of its retired employees in the U.S. and Canada. It is the Company’s practice to fund these benefits as incurred.
 
The accompanying balance sheets reflect the funded status of the Company’s defined benefit pension plans at December 31, 2020 and 2019. Reconciliations of the obligations and funded status of the plans follow:
 
 20202019
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Benefit obligation, January 1$430,625 $87,031 $517,656 $388,334 $79,307 $467,641 
Service cost4,134 2,135 6,269 3,715 1,710 5,425 
Interest cost14,015 1,069 15,084 16,628 1,611 18,239 
Amendments— 1,014 1,014 240 (934)(694)
Actuarial loss37,709 2,812 40,521 46,662 11,843 58,505 
Benefits paid(25,049)(3,422)(28,471)(24,954)(4,026)(28,980)
Transfers in— 767 767 — 2,165 2,165 
Plan curtailments(138)— (138)— — — 
Plan settlements— (2,165)(2,165)— (1,582)(1,582)
Participant contributions— 1,127 1,127 — 1,131 1,131 
Foreign exchange rate changes— 6,140 6,140 — 1,975 1,975 
Reclassified to liabilities held for sale (see Note 3)— — — — (6,169)(6,169)
Benefit obligation, December 31461,296 96,508 557,804 430,625 87,031 517,656 
Fair value of plan assets, January 1380,242 82,265 462,507 322,615 73,607 396,222 
Actual return on plan assets55,813 3,849 59,662 64,681 6,992 71,673 
Company contributions2,892 1,545 4,437 17,900 1,808 19,708 
Participant contributions— 1,127 1,127 — 1,131 1,131 
Benefits paid(25,049)(3,422)(28,471)(24,954)(4,026)(28,980)
Plan settlements— (2,165)(2,165)— (1,582)(1,582)
Transfers in— 767 767 — 2,165 2,165 
Foreign exchange rate changes— 4,914 4,914 — 2,170 2,170 
Fair value of plan assets, December 31413,898 88,880 502,778 380,242 82,265 462,507 
Underfunded status, December 31$(47,398)$(7,628)$(55,026)$(50,383)$(4,766)$(55,149)

Benefit obligations increased in 2020 and 2019 primarily due to increases in actuarial losses, resulting largely from declines in discount rates, and interests costs, partially offset by the payment of benefits to plan participants.

Projected benefit obligations related to pension plans with benefit obligations in excess of plan assets follow:
 20202019
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Projected benefit obligation$352,062 $52,481 $404,543 $334,808 $46,256 $381,064 
Fair value of plan assets298,966 34,947 333,913 282,213 31,248 313,461 
 
Information related to pension plans with accumulated benefit obligations in excess of plan assets follows:
 20202019
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Accumulated benefit obligation$340,158 $52,357 $392,515 $322,999 $52,202 $375,201 
Fair value of plan assets298,966 34,947 333,913 282,213 31,248 313,461 
 
The accumulated benefit obligation for all defined benefit pension plans was $545,918 and $511,977 at December 31, 2020 and 2019, respectively.
Amounts related to pensions recognized in the accompanying balance sheets consist of:
 20202019
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Other assets$5,698 $9,906 $15,604 $2,212 $10,242 $12,454 
Accrued liabilities3,204 — 3,204 2,977 — 2,977 
Accrued retirement benefits49,892 17,534 67,426 49,618 15,008 64,626 
Accumulated other non-owner changes to equity, net(118,951)(19,132)(138,083)(122,109)(18,859)(140,968)
 
Amounts related to pensions recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2020 and 2019, respectively, consist of:
 20202019
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Net actuarial loss$(117,409)$(18,687)$(136,096)$(119,908)$(19,190)$(139,098)
Prior service costs(1,542)(445)(1,987)(2,201)331 (1,870)
$(118,951)$(19,132)$(138,083)$(122,109)$(18,859)$(140,968)
 
The accompanying balance sheets reflect the underfunded status of the Company’s other postretirement benefit plans at December 31, 2020 and 2019. Reconciliations of the obligations and underfunded status of the plans follow:
 
20202019
Benefit obligation, January 1$33,239 $33,076 
Service cost81 70 
Interest cost1,041 1,345 
Actuarial loss950 380 
Benefits paid(3,203)(2,917)
Participant contributions960 1,246 
Foreign exchange rate changes36 39 
Benefit obligation, December 3133,104 33,239 
Fair value of plan assets, January 1— — 
Company contributions2,243 1,671 
Participant contributions960 1,246 
Benefits paid(3,203)(2,917)
Fair value of plan assets, December 31— — 
Underfunded status, December 31$33,104 $33,239 

Benefit obligations remained flat in 2020 and 2019 as benefit payments offset an increase in actuarial losses, driven by declines in the discount rate, and interest cost.
 
Amounts related to other postretirement benefits recognized in the accompanying balance sheets consist of:
20202019
Accrued liabilities$3,114 $5,067 
Accrued retirement benefits29,990 28,172 
Accumulated other non-owner changes to equity, net(4,036)(3,079)
Amounts related to other postretirement benefits recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2020 and 2019 consist of:
20202019
Net actuarial loss$(3,979)$(2,981)
Prior service loss(57)(98)
$(4,036)$(3,079)
 
The sources of changes in accumulated other non-owner changes to equity, net, during 2020 were: 
PensionOther
Postretirement
Benefits
Prior service cost$(808)$— 
Net loss(7,984)(1,000)
Amortization of prior service costs628 21 
Amortization of actuarial loss10,925 27 
Divestiture (see Note 3)1,347 — 
Foreign exchange rate changes(1,223)(5)
$2,885 $(957)

Weighted-average assumptions used to determine benefit obligations as of December 31, are:
20202019
U.S. plans:
Discount rate2.65 %3.40 %
Increase in compensation2.56 %2.56 %
Non-U.S. plans:
Discount rate0.83 %1.26 %
Increase in compensation2.75 %2.72 %
Interest crediting rate1.34 %1.72 %

The investment strategy of the plans is to generate a consistent total investment return sufficient to pay present and future plan benefits to retirees, while minimizing the long-term cost to the Company. Target allocations for asset categories are used to earn a reasonable rate of return, provide required liquidity and minimize the risk of large losses. Targets may be adjusted, as necessary, to reflect trends and developments within the overall investment environment. The weighted-average target investment allocations by asset category were as follows during 2020: 65% in equity securities and 35% in fixed income securities, including cash.
The fair values of the Company’s pension plan assets at December 31, 2020 and 2019, by asset category are as follows:
  Fair Value Measurements Using
Asset CategoryTotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2020
Cash and short-term investments$3,678 $3,678 $— $— 
Equity securities:
U.S. large-cap44,693 — 44,693 — 
U.S. mid-cap20,346 20,346 — — 
U.S. small-cap19,422 19,422 — — 
International equities153,315 — 153,315 — 
Global equity55,552 55,552 — — 
Fixed income securities:
U.S. bond funds125,309 — 125,309 — 
International bonds77,221 — 77,221 — 
Other3,242 — — 3,242 
$502,778 $98,998 $400,538 $3,242 
December 31, 2019
Cash and short-term investments3,737 3,737 — — 
Equity securities:
U.S. large-cap40,538 — 40,538 — 
U.S. mid-cap17,744 17,744 — — 
U.S. small-cap16,116 16,116 — — 
International equities146,013 — 146,013 — 
Global equity51,037 51,037 — — 
Fixed income securities:
U.S. bond funds124,429 — 124,429 — 
       International bonds60,050 — 60,050 — 
Other2,843 — — 2,843 
$462,507 $88,634 $371,030 $2,843 
 
The fair values of the Level 1 assets are based on quoted market prices from various financial exchanges. The fair values of the Level 2 assets are based primarily on quoted prices in active markets for similar assets or liabilities. The Level 2 assets are comprised primarily of commingled funds and fixed income securities. Commingled equity funds are valued at their net asset values based on quoted market prices of the underlying assets. Fixed income securities are valued using a market approach which considers observable market data for the underlying asset or securities. The Level 3 assets relate to a defined benefit plan within the Molding Solutions business. These pension assets are fully insured and have been estimated based on accrued pension rights and actuarial rates. These pension assets are limited to fulfilling the Company's pension obligations.
 
The Company expects to contribute approximately $4,692 to the pension plans in 2021. No contributions to the U.S. Qualified pension plans, specifically, are required, and the Company does not currently plan to make any discretionary contributions to such plans in 2021.
    
The following are the estimated future net benefit payments, which include future service, over the next 10 years:
PensionsOther
Postretirement
Benefits
2021$29,590 $3,114 
202229,531 2,888 
202329,650 2,681 
202429,505 2,499 
202529,167 2,342 
Years 2026-2030146,049 9,782 
Total$293,492 $23,306 
 
Pension and other postretirement benefit costs consist of the following:
 PensionsOther
Postretirement Benefits
 202020192018202020192018
Service cost$6,269 $5,425 $5,961 $81 $70 $85 
Interest cost15,084 18,239 17,383 1,041 1,345 1,358 
Expected return on plan assets(29,698)(29,425)(29,900)— — — 
Amortization of prior service cost 359 404 560 27 25 20 
Recognized losses13,626 8,889 11,628 35 13 561 
Curtailment loss484 — — — — — 
Settlement loss549 340 — — — — 
Net periodic benefit cost$6,673 $3,872 $5,632 $1,184 $1,453 $2,024 
 
The curtailment loss of $484 and a majority of the settlement loss of $549 in 2020 relate to the restructuring and workforce reduction actions that were taken during the current period. See Note 10.

The components of net periodic benefit cost other than service cost are included in Other Expense (Income) on the Consolidated Statements of Income.
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, are:
 
202020192018
U.S. plans:
Discount rate3.40 %4.40 %3.90 %
Long-term rate of return7.75 %7.75 %7.75 %
Increase in compensation2.56 %2.56 %2.56 %
Non-U.S. plans:
Discount rate1.28 %2.07 %1.90 %
Long-term rate of return3.02 %3.90 %4.09 %
Increase in compensation2.75 %2.72 %2.17 %
Interest crediting rate1.34 %1.03 %1.03 %
 
The expected long-term rate of return is based on consideration of projected rates of return and the historical rates of return of published indices that reflect the plans’ target asset allocation.

The Company’s accumulated postretirement benefit obligations, exclusive of pensions, take into account certain cost-sharing provisions. The annual rate of increase in the cost of covered benefits (i.e., health care cost trend rate) is assumed to be
5.70% and 6.24% at December 31, 2020 and 2019, respectively, decreasing gradually to a rate of 4.50% by December 31, 2038.  
The Company actively contributes to a Swedish pension plan that supplements the Swedish social insurance system. The pension plan guarantees employees a pension based on a percentage of their salary and represents a multi-employer pension plan, however the pension plan was not significant in any year presented. This pension plan is not underfunded.

Contributions related to the individually insignificant multi-employer plans, as disclosure is required pursuant to the applicable accounting standards, are as follows:
Contributions by the Company
Pension Fund:202020192018
Swedish Pension Plan 783 $754 $792 
Total Contributions$783 $754 $792