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Pension Plans and Other Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Schedule of Benefit Obligations and Change in Plan Assets
a.
Benefit Obligations and Plan Assets.

 

(In thousands)

 

Pension Benefits

 

 

Other Postretirement Benefits

 

Change in Benefit Obligations:

 

2024

 

 

 

2023

 

 

2024

 

 

2023

 

Net benefit obligation as of January 1,

 

$

346,460

 

 

 

$

335,288

 

 

$

64,973

 

 

$

63,828

 

Service cost

 

 

3,078

 

 

 

 

2,892

 

 

 

856

 

 

 

780

 

Interest cost

 

 

17,118

 

 

 

 

17,319

 

 

 

3,126

 

 

 

3,308

 

Plan participants' contributions

 

 

—

 

 

 

 

—

 

 

 

1,045

 

 

 

1,017

 

Actuarial loss (gain)(a)

 

 

(16,669

)

 

 

 

11,946

 

 

 

(3,769

)

 

 

1,951

 

Plan amendments

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

(242

)

Settlements(b)

 

 

—

 

 

 

 

—

 

 

 

(1,227

)

 

 

—

 

Gross benefits paid

 

 

(23,050

)

 

 

 

(20,985

)

 

 

(6,171

)

 

 

(5,986

)

Less: federal subsidy on benefits paid(c)

 

 

—

 

 

 

 

—

 

 

 

351

 

 

 

317

 

Benefit obligation as of December 31,

 

$

326,937

 

 

 

$

346,460

 

 

$

59,184

 

 

$

64,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Plan Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets as of January 1,

 

$

404,735

 

 

 

$

370,171

 

 

$

43,149

 

 

$

41,867

 

Actual return on plan assets

 

 

40,608

 

 

 

 

53,346

 

 

 

4,131

 

 

 

5,312

 

Employer contributions

 

 

2,175

 

 

 

 

2,203

 

 

 

682

 

 

 

939

 

Plan participants' contributions

 

 

—

 

 

 

 

—

 

 

 

1,045

 

 

 

1,017

 

Settlements(b)

 

 

—

 

 

 

 

—

 

 

 

(1,515

)

 

 

—

 

Gross benefits paid

 

 

(23,050

)

 

 

 

(20,985

)

 

 

(6,171

)

 

 

(5,986

)

Fair value of plan assets at end of year

 

 

424,468

 

 

 

 

404,735

 

 

 

41,321

 

 

 

43,149

 

Funded Status as of December 31,

 

$

97,531

 

 

 

$

58,275

 

 

$

(17,863

)

 

$

(21,824

)

 

(a)
In 2024, higher discount rates were the primary driver of the actuarial gain.
(b)
In August 2024, MGE entered into an agreement to transfer the mortality and investment risk, as well as the administration of, its employer-paid life insurance plan to a third party. MGE accounted for the settlement under the scope of ASC 715.
(c)
In 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law authorizing Medicare to provide prescription drug benefits to retirees. For both the years ended December 31, 2024 and 2023, the subsidy due to MGE was $0.3 million.
Schedule of Amounts Recognized in the Consolidated Balance Sheet

The amounts recognized in the consolidated balance sheets to reflect the funded status of the plans as of December 31 are as follows:

 

 

Pension Benefits

 

 

Other Postretirement Benefits

 

(In thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Long-term asset

 

$

131,418

 

 

$

93,896

 

 

$

846

 

 

$

—

 

Current liability

 

 

(2,441

)

 

 

(2,387

)

 

 

—

 

 

 

—

 

Long-term liability

 

 

(31,446

)

 

 

(33,234

)

 

 

(18,709

)

 

 

(21,824

)

Net asset (liability)

 

$

97,531

 

 

$

58,275

 

 

$

(17,863

)

 

$

(21,824

)
Amounts Recognized in Regulatory Asset

The following table shows the amounts that have not yet been recognized in our net periodic benefit cost as of December 31 and are recorded as regulatory asset (liability) in the consolidated balance sheets:

 

 

 

Pension Benefits

 

 

Other Postretirement Benefits

 

(In thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net actuarial loss (gain)

 

$

3,699

 

 

$

33,237

 

 

$

(7,191

)

 

$

(1,626

)

Prior service benefit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(242

)

Transition obligation

 

 

—

 

 

 

—

 

 

 

3

 

 

 

5

 

Total

 

$

3,699

 

 

$

33,237

 

 

$

(7,188

)

 

$

(1,863

)
Schedule of Projected Benefit Obligations in Excess of Plan Assets

The projected benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets as of December 31 are as follows:

(In thousands)

 

Pension Benefits

 

Projected Benefit Obligation in Excess of Plan Assets

 

2024

 

 

2023

 

Projected benefit obligation, end of year

 

$

33,887

 

 

$

35,621

 

Fair value of plan assets, end of year

 

 

—

 

 

 

—

 
Schedule of Accumulated Benefit Obligations in Excess of Plan Assets

The accumulated benefit obligation and fair value of plan assets with an accumulated benefit obligation in excess of plan assets as of December 31 are as follows:

(In thousands)

 

Pension Benefits

 

 

Other Postretirement Benefits

 

Accumulated Benefit Obligation in Excess of Plan Assets

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Accumulated benefit obligation, end of year

 

$

32,463

 

 

$

34,387

 

 

$

43,882

 

 

$

64,973

 

Fair value of plan assets, end of year

 

 

—

 

 

 

—

 

 

 

25,172

 

 

 

43,149

 
Net Periodic Benefit Costs

(In thousands)

 

Pension Benefits

 

 

Other Postretirement Benefits

 

Components of Net Periodic Benefit Cost:

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

Service cost

 

$

3,078

 

 

$

2,892

 

 

$

5,064

 

 

$

856

 

 

$

780

 

 

$

1,293

 

Interest cost

 

 

17,118

 

 

 

17,319

 

 

 

11,161

 

 

 

3,126

 

 

 

3,308

 

 

 

1,940

 

Expected return on assets

 

 

(28,597

)

 

 

(25,248

)

 

 

(31,391

)

 

 

(2,725

)

 

 

(2,595

)

 

 

(3,365

)

Settlement cost

 

 

—

 

 

 

—

 

 

 

—

 

 

 

288

 

 

 

—

 

 

 

—

 

Amortization of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transition obligation

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

 

 

3

 

 

 

3

 

Prior service (credit) cost

 

 

—

 

 

 

—

 

 

 

(20

)

 

 

(242

)

 

 

—

 

 

 

(297

)

Actuarial loss

 

 

859

 

 

 

1,760

 

 

 

2,416

 

 

 

380

 

 

 

(190

)

 

 

145

 

Net periodic benefit cost (credit)

 

$

(7,542

)

 

$

(3,277

)

 

$

(12,770

)

 

$

1,686

 

 

$

1,306

 

 

$

(281

)
Plan Assumptions

The weighted-average assumptions used to determine the benefit obligations were as follows for the years ended December 31:

 

 

Pension Benefits

 

Other Postretirement Benefits

 

 

2024

 

2023

 

2024

 

2023

Discount rate

 

 

5.64

 

%

 

 

5.10

 

%

 

 

5.59

 

%

 

 

5.11

 

%

Rate of compensation increase

 

 

3.81

 

%

 

 

4.30

 

%

 

N/A

 

 

 

N/A

 

 

Assumed health care cost trend rates:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Health care cost trend rate assumed for next year

 

N/A

 

 

 

N/A

 

 

 

 

7.50

 

%

 

 

6.75

 

%

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)

 

N/A

 

 

 

N/A

 

 

 

 

4.75

 

%

 

 

4.75

 

%

Year that the rate reaches the ultimate trend rate

 

N/A

 

 

 

N/A

 

 

 

2036

 

 

 

2032

 

 

The weighted-average assumptions used to determine the net periodic cost were as follows for the years ended December 31:

 

 

Pension Benefits

 

Other Postretirement Benefits

 

 

2024

 

2023

 

2022

 

2024

 

2023

 

2022

Discount rate

 

 

5.10

 

%

 

 

5.47

 

%

 

 

2.94

 

%

 

 

5.11

 

%

 

 

5.45

 

%

 

 

2.85

 

%

Expected rate of return on plan assets

 

 

7.24

 

%

 

 

7.00

 

%

 

 

6.75

 

%

 

 

6.81

 

%

 

 

6.59

 

%

 

 

6.40

 

%

Rate of compensation increase

 

 

4.32

 

%

 

 

3.28

 

%

 

 

3.24

 

%

 

N/A

 

 

 

N/A

 

 

 

N/A

 

 
Fair Value of Plan Assets by Asset Category

The asset allocation for MGE's pension plans as of December 31, 2024 and 2023, and the target allocation for 2025, by asset category, follows:

 

 

Target

 

Percentage of Plan
Assets at Year End

 

 

Allocation(b)

 

2024

 

2023

Equity securities(a)

 

 

50

 

%

 

 

56

 

%

 

 

64

 

%

Fixed income securities

 

 

44

 

%

 

 

38

 

%

 

 

30

 

%

Real estate

 

 

6

 

%

 

 

6

 

%

 

 

6

 

%

 

(a)
Target allocations for equity securities are broken out as follows: 36% United States equity and 14% non-United States equity.
(b)
The target allocation for MGE's pension plans were approved to be rebalanced in December 2024. The trades happened in two steps, the first in December 2024 and the second in January 2025.

 

Other Postretirement Plan Assets

Other Postretirement plan assets are comprised of specific assets within certain defined benefit pension plans (401(h) assets) as well as assets held in VEBA trusts. The asset allocation for MGE's 401(h) assets as of December 31, 2024 and 2023, and the target allocation for 2025, by asset category, follows:

 

 

Target

 

Percentage of Plan
Assets at Year End

 

 

Allocation

 

2024

 

2023

Equity securities(a)

 

 

63

 

%

 

 

66

 

%

 

 

64

 

%

Fixed income securities

 

 

30

 

%

 

 

28

 

%

 

 

30

 

%

Real estate

 

 

7

 

%

 

 

6

 

%

 

 

6

 

%

 

(a)
Target allocations for equity securities are broken out as follows: 45.5% United States equity and 17.5% non-United States equity.

The fair values of MGE's plan assets by asset category as of December 31 are as follows:

 

(In thousands)

 

2024

 

 

2023

 

Cash and Cash Equivalents

 

$

772

 

 

$

2,079

 

Equity Securities:

 

 

 

 

 

 

U.S. Large Cap

 

 

128,262

 

 

 

132,047

 

U.S. Mid Cap

 

 

27,960

 

 

 

32,840

 

U.S. Small Cap

 

 

37,222

 

 

 

40,830

 

International Blend

 

 

73,444

 

 

 

78,294

 

Fixed Income Securities:

 

 

 

 

 

 

Short-Term Fund

 

 

7,231

 

 

 

7,465

 

High Yield Bond

 

 

24,231

 

 

 

22,273

 

Long Duration Bond

 

 

139,631

 

 

 

100,431

 

Real Estate

 

 

26,146

 

 

 

28,840

 

Insurance Continuance Fund

 

 

—

 

 

 

1,585

 

Fixed Rate Fund

 

 

890

 

 

 

1,200

 

Total

 

$

465,789

 

 

$

447,884

 
Benefit Payments, Fiscal Year Maturity

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:

 

 

 

Pension

 

 

Other Postretirement Benefits

 

(In thousands)

 

Pension Benefits

 

 

Gross Postretirement Benefits

 

 

Expected Medicare Part D Subsidy

 

 

Net Postretirement Benefits

 

2025

 

$

22,164

 

 

$

5,520

 

 

$

(410

)

 

$

5,110

 

2026

 

 

22,439

 

 

 

5,525

 

 

 

(464

)

 

 

5,061

 

2027

 

 

22,794

 

 

 

5,505

 

 

 

(508

)

 

 

4,997

 

2028

 

 

23,024

 

 

 

5,477

 

 

 

(545

)

 

 

4,932

 

2029

 

 

23,307

 

 

 

5,422

 

 

 

(580

)

 

 

4,842

 

2030 - 2034

 

 

117,422

 

 

 

25,868

 

 

 

(3,337

)

 

 

22,531