XML 29 R19.htm IDEA: XBRL DOCUMENT v3.20.2
Pension and Postretirement Plans
 9 Months Ended
Sep. 30, 2020
Retirement Benefits, Description [Abstract]  
Pension and Postretirement Plans PENSION AND POSTRETIREMENT PLANS
Defined Benefit Plans. The total benefit arising from the Company’s defined benefit pension plans consists of the following components:
  Three Months Ended 
 September 30		Nine Months Ended 
 September 30
(in thousands)2020201920202019
Service cost$5,457 $5,142 $17,044 $15,326 
Interest cost8,139 11,743 24,448 35,078 
Expected return on assets(28,347)(30,832)(85,081)(91,955)
Amortization of prior service cost708 824 2,123 2,058 
Net Periodic Benefit(14,043)(13,123)(41,466)(39,493)
Special separation benefit expense
7,783 (175)13,797 6,432 
Total Benefit$(6,260)$(13,298)$(27,669)$(33,061)
In the third quarter of 2020, the Company recorded $7.8 million in expenses related to a Separation Incentive Program (SIP) for certain Kaplan employees, which is being funded from the assets of the Company’s pension plan.
In the second quarter of 2020, the Company recorded $6.0 million in expenses related to a SIP for certain Kaplan, Code3 and Decile employees, which was funded from the assets of the Company’s pension plan.
In the second quarter of 2019, the Company offered a SIP for certain Kaplan employees, which was funded from the assets of the Company’s pension plan. The Company recorded $6.4 million in expense related to the SIP for the nine months ended September 30, 2019.
The total cost arising from the Company’s Supplemental Executive Retirement Plan (SERP) consists of the following components:
  Three Months Ended 
 September 30		Nine Months Ended 
 September 30
(in thousands)2020201920202019
Service cost$238 $214 $715 $643 
Interest cost920 1,079 2,759 3,236 
Amortization of prior service cost83 85 248 254 
Recognized actuarial loss1,316 579 3,950 1,736 
Net Periodic Cost$2,557 $1,957 $7,672 $5,869 
Defined Benefit Plan Assets. The Company’s defined benefit pension obligations are funded by a portfolio made up of a private investment fund, a U.S. stock index fund, and a relatively small number of stocks and high-quality fixed-income securities that are held by a third-party trustee. The assets of the Company’s pension plan were allocated as follows:
  As of
  September 30,
2020		December 31,
2019
  
U.S. equities61 %62 %
Private investment fund16 %7 %
U.S. stock index fund9 %14 %
U.S. fixed income7 %10 %
International equities7 %7 %
  100 %100 %
The Company manages approximately 40% of the pension assets internally, of which the majority is invested in a private investment fund with the remaining investments in Berkshire Hathaway stock, a U.S. stock index fund and short-term fixed-income securities. The remaining 60% of plan assets are managed by two investment companies. The goal of the investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both investment managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. One investment manager cannot invest more than 15% of the assets at the time of purchase in the stock of Alphabet and Berkshire Hathaway, and no more than 30% of the assets it manages in specified international exchanges at the time the investment is made. The other investment manager cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway, and no more than 15% of the assets it manages in specified international exchanges, at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. Excluding the exceptions noted above, the investment managers cannot invest more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval from the Plan administrator.
In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks.
The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of September 30, 2020. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At September 30, 2020, the pension plan held investments in one common stock and one private investment fund that exceeded 10% of total plan assets, valued at $726.6 million, or approximately 29% of total plan assets. At December 31, 2019, the pension plan held investments in one common stock and one U.S. stock index fund that exceeded 10% of total plan assets, valued at $704.8 million, or approximately 30% of total plan assets.
Other Postretirement Plans. The total cost arising from the Company’s other postretirement plans consists of the following components:
  Three Months Ended 
 September 30		Nine Months Ended 
 September 30
(in thousands)2020201920202019
Interest cost$41 $72 $125 $216 
Amortization of prior service credit(120)(1,841)(361)(5,522)
Recognized actuarial gain(1,012)(1,090)(3,036)(3,270)
Net Periodic Benefit$(1,091)$(2,859)$(3,272)$(8,576)