Pension and Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2019

Pension and Other Postretirement Benefits Disclosure [Text Block]

Pension and Postretirement Benefit Plans

QUALIFIED DEFINED BENEFIT MULTIEMPLOYER PLAN

The Bank participates in the Pentegra Defined Benefit Plan for Financial Institutions (Pentegra DB Plan), a tax-qualified defined benefit pension plan. In August of 2016, the Bank’s Board of Directors elected to freeze the Pentegra DB Plan effective January 1, 2017. After the freeze, participants no longer accrue new benefits under the Pentegra DB Plan.

The Pentegra DB Plan is treated as a multiemployer plan for accounting purposes, but operates as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. As a result, certain multiemployer plan disclosures are not applicable to the Pentegra DB Plan. Under the Pentegra DB Plan, contributions made by a participating employer may be used to provide benefits to employees of other participating employers because assets contributed by an employer are not segregated in a separate account or restricted to provide benefits only to employees of that employer. Also, in the event a participating employer is unable to meet its contribution requirements, the required contributions for the other participating employers could increase proportionately.

The Bank has two defined benefit pension plans under the same multiemployer plan. Prior to the plan freeze, employees of the Des Moines Bank were eligible to participate in the Des Moines Pentegra Defined Benefit Pension Plan (Des Moines Bank DB Plan) if hired on or before December 31, 2010. Employees previously employed by the Seattle Bank were eligible to participate in the Seattle Pentegra Defined Benefit Pension Plan (Seattle Bank DB Plan) if they were hired before January 1, 2005.

The Pentegra DB Plan operates on a fiscal year from July 1 through June 30. The Pentegra DB Plan files one Form 5500 on behalf of all employers who participate in the plan. The Employer Identification Number is 13-5645888 and the three-digit plan number is 333. There are no collective bargaining agreements in place that require contributions to the plan.

The Pentegra DB Plan’s annual valuation process includes calculating the plan’s funded status and separately calculating the

funded status of each participating employer. The funded status is defined as the market value of assets divided by the funding target (100 percent of the present value of all benefit liabilities accrued at that date). As permitted by ERISA, the Pentegra DB Plan accepts contributions for the prior plan year up to eight and a half months after the asset valuation date. As a result, the

market value of assets at the valuation date (July 1) will increase by any subsequent contributions designated for the immediately preceding plan year ended June 30.

The most recent Form 5500 available for the Pentegra DB Plan is for the year ended June 30, 2018. The Bank’s contributions for the plan years ended June 30, 2018 and June 30, 2017 were not more than five percent of the total contributions to the Pentegra DB Plan.

The following table summarizes the net pension cost and funded status of the Pentegra DB Plan (dollars in millions):



	2019			2018			2017
Net pension cost¹	$	2		$	1		$	—
Pentegra DB Plan’s funded status as of July 1	108.59		%	109.86		%	111.30		%
Des Moines Bank DB Plan’s funded status as of July 1	102.81		%	107.53		%	106.65		%
Seattle Bank DB Plan’s funded status as of July 1	103.62		%	106.00		%	109.81		%


1	Represents the net pension cost charged to compensation and benefits expense on the Statements of Income for the years ended December 31, 2019, 2018, and 2017. The amounts recorded for the year ended December 31, 2017 were less than $1 million.

The Pentegra DB Plan’s funded status as of July 1, 2019 is preliminary and may further increase because plan participants are permitted to make contributions for the plan year ended June 30, 2019 through March 31, 2020. Contributions made on or before March 15, 2020, and designated for the plan year ended June 30, 2019, will be included in the final valuation as of July 1, 2019. The final funded status as of July 1, 2019 will not be available until the Form 5500 for the plan year July 1, 2019 through June 30, 2020 is filed (this Form 5500 is due to be filed no later than April 2021).

The Pentegra DB Plan’s funded status as of July 1, 2018 includes all contributions made by plan participants through March 15, 2019. The final funded status as of July 1, 2018 will not be available until the Form 5500 for the plan year July 1, 2018 through June 30, 2019 is filed (this Form 5500 is due to be filed no later than April 2020).