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Qualified Employee Benefit Plans
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Qualified Employee Benefit Plans Qualified Employee Benefit Plans
We maintain a qualified profit sharing plan covering U.S. employees and certain foreign employees. Employer contributions are discretionary and generally limited to the maximum amount deductible for federal income tax purposes. Aggregate contributions were $19.0 million, $17.5 million and $16.5 million for 2023, 2022 and 2021, respectively.
We maintain several defined contribution plans for foreign employees working for our subsidiaries in the United Kingdom, Australia, Japan and other locations outside the United States. Employer contributions generally are consistent with regulatory requirements and tax limits. Defined contribution expense for foreign entities was $11.7 million, $10.2 million and $9.8 million in 2023, 2022 and 2021, respectively.
We maintain a qualified, noncontributory, defined benefit retirement plan (the “Retirement Plan”) covering current and former employees who were employed by AB in the United States prior to October 2, 2000. Benefits are based on years of credited service, average final base salary (as defined in the Retirement Plan) and primary Social Security benefits. Service and compensation after December 31, 2008 are not taken into account in determining participants’ retirement benefits.
Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by ERISA and not greater than the maximum amount we can deduct for federal income tax purposes. We did not make a contribution to the Retirement Plan during 2023. We do not currently anticipate that we will contribute to the Retirement Plan during 2024. Contribution estimates, which are subject to change, are based on regulatory requirements, future market conditions and assumptions used for actuarial computations of the Retirement Plan’s obligations and assets. Management, at the present time, has not determined the amount, if any, of additional future contributions that may be required.
The Retirement Plan’s projected benefit obligation, fair value of plan assets and funded status (amounts recognized in the consolidated statements of financial condition) were as follows:
Years Ended December 31
20232022
(in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year$100,480 $141,862 
Interest cost5,199 3,958 
Plan settlements— (4,524)
Actuarial (gain)(984)(37,839)
Benefits paid(6,269)(2,977)
Projected benefit obligation at end of year98,426 100,480 
Change in plan assets:
Plan assets at fair value at beginning of year95,990 130,939 
Actual return on plan assets11,655 (27,448)
Plan settlements— (4,524)
Benefits paid(6,269)(2,977)
Plan assets at fair value at end of year101,376 95,990 
Funded status$2,950 $(4,490)
Effective December 31, 2015, the Retirement Plan was amended to change the actuarial basis used for converting a life annuity benefit to optional forms of payment and converting benefits payable at age 65 to earlier commencement dates. This prior service cost will be amortized over future years.
The amounts recognized in other comprehensive income for the Retirement Plan for 2023, 2022 and 2021 were as follows:
202320222021
(in thousands)
Unrecognized net gain (loss) from experience different from that assumed and effects of changes and assumptions$8,815 $6,519 $15,858 
Prior service cost24 24 24 
8,839 6,543 15,882 
Income tax (expense) (9)(33)(87)
Other comprehensive income$8,830 $6,510 $15,795 
The gain of $8.8 million recognized in 2023 was primarily due to actual earnings exceeding expected earnings on plan assets of ($6.9 million), the recognized actuarial loss of ($0.9 million), changes in the discount rate and lump sum interest rates of ($0.5 million) and changes in the census data ($0.5 million).
The gain of $6.5 million recognized in 2022 was primarily due to changes in the discount rate and lump sum interest rates of ($38.7 million), settlement loss recognized of ($1.7 million) and the recognized actuarial loss of ($1.0 million), offset by actual earnings less than expected earnings on plan assets of ($34.0 million), changes in the census data ($0.5 million) and changes in adjustments for participants who received their pension as a lump sum ($0.4 million).
The gain of $15.8 million recognized in 2021 was primarily due to actual earnings exceeding expected earnings on plan assets ($8.2 million), changes in the discount rate and lump sum interest rates of ($5.6 million), settlement loss recognized of ($2.0 million) and the recognized actuarial loss of ($1.5 million), offset by changes in the census data ($1.0 million) and changes in the mortality assumption ($0.2 million).
Foreign retirement plans and an individual's retirement plan maintained by AB are not material to AB's consolidated financial statements. As such, disclosure for these plans is not necessary. The reconciliation of the 2023 amounts recognized in other comprehensive income for the Retirement Plan as compared to the consolidated statement of comprehensive income (the "OCI Statement") is as follows:
Retirement
Plan		Retired Individual PlanForeign Retirement PlansOCI
Statement
(in thousands)
Recognized actuarial gain$8,815 $(19)$339 $9,135 
Amortization of prior service cost24 — — 24 
Changes in employee benefit related items8,839 (19)339 9,159 
Income tax (expense) (9)— (70)(79)
Employee benefit related items, net of tax$8,830 $(19)$269 $9,080 
The amounts included in accumulated other comprehensive loss for the Retirement Plan as of December 31, 2023 and 2022 were as follows:
20232022
(in thousands)
Unrecognized net loss from experience different from that assumed and effects of changes and assumptions$(28,433)$(37,249)
Prior service cost (635)(659)
(29,068)(37,908)
Income tax benefit168 177 
Accumulated other comprehensive loss$(28,900)$(37,731)
The amortization period over which we are amortizing the loss for the Retirement Plan from accumulated other comprehensive income is 27.2 years. The estimated prior service cost and amortization of loss for the Retirement Plan that will be amortized from accumulated other comprehensive income over the next year are $24,000 and $0.7 million.
The accumulated benefit obligation for the plan was $98.4 million and $100.5 million as of December 31, 2023 and 2022, respectively.
The discount rates used to determine benefit obligations as of December 31, 2023 and 2022 (measurement dates) were 5.40% and 5.50%, respectively.
Benefit payments are expected to be paid as follows (in thousands):
2024$10,059 
20258,030 
20267,856 
20278,690 
20287,677 
2029 - 2033
37,703 
Net expense under the Retirement Plan consisted of:
Years Ended December 31
202320222021
(in thousands)
Interest cost on projected benefit obligations$5,199 $3,958 $3,794 
Expected return on plan assets(4,776)(6,591)(6,351)
Amortization of prior service cost24 24 24 
Settlement loss recognized— 1,678 2,024 
Recognized actuarial loss952 1,042 1,447 
Net pension expense$1,399 $111 $938 
Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions:
Years Ended December 31
202320222021
Discount rate on benefit obligations5.50 %2.90 %2.55 %
Expected long-term rate of return on plan assets5.25 %5.25 %5.25 %
In developing the expected long-term rate of return on plan assets of 5.25%, management considered the historical returns and future expectations for returns for each asset category, as well as the target asset allocation of the portfolio. The expected long-term rate of return on assets is based on weighted average expected returns for each asset class.
As of December 31, 2023, the mortality projection assumption used the generational MP-2021 improvement scale, which is consistent with the improvement scale used in 2022 and 2021. The base mortality assumption used is the Society of Actuaries PRI-2012 base mortality table for private sector plans, with a white-collar adjustment, using the contingent annuitant table for beneficiaries of deceased participants.
For fiscal year-end 2023, we reflected the most recently published Internal Revenue Service table for lump sums assumed to be paid in 2023. We projected future mortality for lump sums assumed to be paid after 2023 using the current base mortality tables (RP-2014 backed off to 2006) and projection scale of MP-2021.
The Retirement Plan’s asset allocation percentages consisted of:
Years Ended December 31
20232022
Equity28 %46 %
Debt securities62 42 
Other10 12 
Total100 %100 %
The guidelines regarding allocation of assets are formalized in the Investment Policy Statement adopted by the Investment Committee for the Retirement Plan. The objective of the investment program is to enhance the portfolio of the Retirement Plan through total return (capital appreciation and income), thereby promoting the ongoing ability of the Plan to meet future liabilities and obligations, while minimizing the need for additional contributions, and managing the Plan's funded status appropriately. The guidelines specify a target allocation weighting of 62.5% for liability hedging investments and 37.5% for return seeking investments.
See Note 9, Fair Value for a description of how we measure the fair value of our plan assets.
The valuation of our Retirement Plan assets by pricing observability levels as of December 31, 2023 and 2022 was as follows (in thousands):
Level 1Level 2Level 3Total
December 31, 2023
Cash$944 $— $— $944 
U.S. Treasury Strips— 15,764 — 15,764 
Fixed income mutual funds2,271 — — 2,271 
Fixed income securities— 46,443 — 46,443 
Equity mutual funds9,821 — — 9,821 
Equity securities10,231 — — 10,231 
Total assets in the fair value hierarchy23,267 62,207 — 85,474 
Investments measured at net assets value— — — 15,902 
Investments at fair value$23,267 $62,207 $— $101,376 
Level 1Level 2Level 3Total
December 31, 2022
Cash$1,441 $— $— $1,441 
U.S. Treasury Strips— 15,634 — 15,634 
Fixed income mutual funds2,149 — — 2,149 
Fixed income securities— 22,478 — 22,478 
Equity mutual funds26,074 — — 26,074 
Equity securities10,928 219 — 11,147 
Total assets in the fair value hierarchy40,592 38,331 — 78,923 
Investments measured at net assets value— — — 17,067 
Investments at fair value$40,592 $38,331 $— $95,990 
During 2023 and 2022, the Retirement Plan's investments include the following:
•U.S. Treasury strips, (zero coupon bonds) in 2023 and 2022;
•fixed income securities primarily invested in bonds and included as a level 2 security;
•one multi asset fund fund in 2023 and 2022, in which the fund pursued an aggressive investment strategy involving a variety of asset classes. This fund seeks inflation protection from investments around the globe, both in developed and emerging market countries;
•six equity mutual funds in 2023 and 2022, which focus on both U.S.-based and non-U.S.-based equity securities of various capitalization sizes ranging from small to large capitalization and diversified portfolios within those capitalization ranges;
•one asset allocation mutual fund in 2022 which was liquidated in 2023;
•one separately managed account in 2023, managed against the Bloomberg Long U.S. Corporate index. This portfolio invests in U.S. dollar denominated investment grade fixed income securities with at least 10 years to maturity;
•one alternative investment in 2022 which was liquidated in 2023;
•investments measured at net asset value, including one hedge fund in 2023 and two hedge funds in 2022. The hedge fund included in both 2023 and 2022 seeks to provide attractive risk-adjusted returns over full market cycles with less volatility than that of broad equity markets by allocating all or substantially all of their assets among portfolio managers through portfolio funds that employ a broad range of investment strategies. The second hedge fund included in 2022 was a long/short equity-focused multi-manager hedge fund investing across industries and geographies