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Qualified Employee Benefit Plans
 12 Months Ended
Dec. 31, 2024
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 $19.7 million, $19.0 million and $17.5 million for 2024, 2023 and 2022, 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 $9.3 million, $11.7 million and $10.2 million in 2024, 2023 and 2022, 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 accrue under the plan 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.
During 2024, the Compensation Committee of the AB Board of Directors approved the termination of the Retirement Plan, effective May 22, 2024. We began the process of settling benefits with vested participants and all lump sum disbursements elected by plan participants were distributed in December 2024 in the amount of $35.0 million. The remaining retirement plan participants who did not elect a lump sum disbursement elected to roll over their benefit to a group annuity contract from a qualified insurance company to administer all future payments. During the year ended December 31, 2024, we recognized a non-cash settlement charge of approximately $13.1 million related to Retirement Plan losses and the reclassification from accumulated other comprehensive loss to general and administrative expenses in the consolidated statements of income. The company will elect the qualified insurance company to administer all future payments during the first quarter of 2025 at which point, the remaining benefit obligation will be purchased by the insurance carrier and we will fully terminate the plan and recognize a gain or loss on the pension settlement at that time. As of December 31, 2024 the Retirement Plan was underfunded with a benefit obligation of $68.6 million and plan assets of $63.3 million.
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 2024. The Company expects to make a contribution to the Retirement Plan during the first quarter of 2025 in the amount of $5.3 million to fully fund the Retirement Plan, purchase the group annuity contract and settle the remaining termination costs associated with the Retirement Plan.
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
20242023
(in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year$98,426 $100,480 
Interest cost5,025 5,199 
Plan settlements(39,246)— 
Actuarial loss (gain)7,655 (984)
Benefits paid(3,281)(6,269)
Projected benefit obligation at end of year68,579 98,426 
Change in plan assets:
Plan assets at fair value at beginning of year101,376 95,990 
Actual return on plan assets4,476 11,655 
Plan settlements(39,246)— 
Benefits paid(3,281)(6,269)
Plan assets at fair value at end of year63,325 101,376 
Funded status$(5,254)$2,950 
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 2024, 2023 and 2022 were as follows:
202420232022
(in thousands)
Unrecognized net gain from experience different from that assumed and effects of changes and assumptions$5,534 $8,815 $6,519 
Prior service cost24 24 24 
5,558 8,839 6,543 
Income tax (expense) (20)(9)(33)
Other comprehensive income$5,538 $8,830 $6,510 
The gain of $5.5 million recognized in 2024 was primarily due to lump sum settlement activity of $13.7 million ($13.1 million of settlement related gains recognized from accumulated other comprehensive income to a realized loss on the consolidated statements of income during the year ended December 31, 2024 and $0.6 million of pension cost amortization) offset by a loss of ($8.2 million). The loss of ($8.2 million) reflects a decrease in the discount rate due to plan termination assumptions using a yield curve rather than ongoing accounting basis assumptions using a bond model increasing the benefit obligation by ($2.2 million), termination pricing increasing the obligation by ($5.7 million) and a loss on plan assets of ($0.6 million), offset by new census data of $0.3 million.
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).
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 2024 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 Plan		Foreign
Retirement
Plans		OCI
Statement
(in thousands)
Recognized actuarial gain$5,534 $573 $328 $6,435 
Amortization of prior service cost24 — — 24 
Changes in employee benefit related items5,558 573 328 6,459 
Income tax (expense) (20)(4)(65)(89)
Employee benefit related items, net of tax$5,538 $569 $263 $6,370 
The amounts included in accumulated other comprehensive loss for the Retirement Plan as of December 31, 2024 and 2023 were as follows:
20242023
(in thousands)
Unrecognized net loss from experience different from that assumed and effects of changes and assumptions$(22,899)$(28,433)
Prior service cost (611)(635)
(23,510)(29,068)
Income tax benefit147 168 
Accumulated other comprehensive loss$(23,363)$(28,900)
The loss for the Retirement Plan from accumulated other comprehensive loss will be recognized as a realized loss to the consolidated statements of income upon plan settlement in 2025.
The accumulated benefit obligation for the plan was $68.6 million and $98.4 million as of December 31, 2024 and 2023, respectively.
The discount rates used to determine benefit obligations as of December 31, 2024 and 2023 (measurement dates) were 5.15% and 5.40%, respectively. The discount rate to determine the benefit obligation as of December 31, 2024 has been adjusted by the annuity purchase premium to estimate the impending annuity purchase in 2025.
Benefit payments are expected to be paid as follows (in thousands):
2025$68,865 
Net expense under the Retirement Plan consisted of:
Years Ended December 31
202420232022
(in thousands)
Interest cost on projected benefit obligations$5,025 $5,199 $3,958 
Expected return on plan assets(5,056)(4,776)(6,591)
Amortization of prior service cost24 24 24 
Settlement loss recognized13,104 — 1,678 
Recognized actuarial loss666 952 1,042 
Net pension expense$13,763 $1,399 $111 
Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions:
Years Ended December 31
202420232022
Discount rate on benefit obligations5.40 %5.50 %2.90 %
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, 2024, the mortality projection assumption used the generational MP-2021 improvement scale, which is consistent with the improvement scale used in 2023 and 2022. 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 2024, we reflected the most recently published Internal Revenue Service table for lump sums paid in 2024.
The Retirement Plan’s asset allocation percentages consisted of:
Years Ended December 31
20242023
Equity— %28 %
Debt securities88 62 
Other12 10 
Total100 %100 %
The Investment Committee oversees investments for the benefit of the Retirement Plan. The objective of the investment program is to closely match the potential plan termination liability and to minimize funded status volatility, thereby promoting the ongoing ability of the Retirement Plan to meet future liabilities and obligations, while minimizing the need for additional contributions and managing the Retirement Plan’s funded status appropriately. The asset allocation was updated to 100% liability hedging investments (cash and cash equivalents) in light of the pending Retirement Plan termination.
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, 2024 and 2023 was as follows (in thousands):
Level 1Level 2Level 3Total
December 31, 2024
Cash$5,618 $— $— $5,618 
Fixed income securities— 55,839 — 55,839 
Investments measured at net assets value— — — 1,868 
Investments at fair value$5,618 $55,839 $— $63,325 
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 
During 2024 the Retirement Plan's investments include the following:
•fixed income securities primarily invested in bonds and included as a level 2 security;
During 2023 the Retirement Plan's investments include the following:
•one multi asset fund in 2023, 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, 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 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;
•investments measured at net asset value, including one hedge fund in 2023. The hedge fund 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.