Pensions and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

Pensions and Other Postretirement Benefits

Pensions and Other Postretirement Benefits

Defined Benefit Plans

Employees of the Company participate in various defined benefit pension and other postretirement benefit plans.

U.S. Pension Plan

The Vishay Precision Group Non-Qualified Retirement Plan, like all nonqualified plans, is considered to be unfunded. The Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund benefits under this plan. Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified pension plan of $1.9 million at December 31, 2021 and $1.9 million at December 31, 2020, and the related liabilities of $2.6 million and $2.7 million at December 31, 2021 and 2020, respectively.

The Vishay Precision Group Non-Qualified Retirement Plan is frozen. Accordingly, no new employees may participate in the plan, no further participant contributions are permitted, and no further benefits accrue. Benefits accumulated prior to the freezing of the U.S. pension plan will be paid to employees upon retirement, and the Company will likely need to make additional cash contributions to the rabbi trust to fund this accumulated benefit obligation.

Non-U.S. Pension Plans

The Company provides pension and similar benefits to employees of certain non-U.S. subsidiaries consistent with local practices. Pension benefits earned are generally based on years of service and compensation during active employment.

The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to pension plans (in thousands):

	December 31, 2021				December 31, 2020
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,747	$	28,088	$	2,414	$	24,857
Service cost (adjusted for actual employee contributions)	—		379		—		402
Interest cost	57		353		70		442
Actuarial (gains) losses	(103)		(792)		338		1,863
Benefits paid	(75)		(851)		(75)		(659)
Curtailments and settlements	—		(108)		—		(95)
Plan amendments and other	—		(172)		—		—
Currency translation	—		(740)		—		1,278
Benefit obligation at end of year	$	2,626	$	26,157	$	2,747	$	28,088
Change in plan assets:
Fair value of plan assets at beginning of year	$	—	$	18,157	$	—	$	16,420
Actual return on plan assets	—		1,044		—		734
Company contributions	75		1,613		75		919
Benefits paid	(75)		(851)		(75)		(659)
Currency translation	—		(246)		—		743
Fair value of plan assets at end of year	$	—	$	19,717	$	—	$	18,157
Funded status at end of year	$	(2,626)	$	(6,440)	$	(2,747)	$	(9,931)

Actuarial gains incurred in 2021 related to our U.S. and non-U.S. plans are primarily the result of an increase in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2021 compared to December 31, 2020. Actuarial losses incurred in 2020 related to our U.S. and non-U.S. plans are primarily the result of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2020 compared to December 31, 2019.

Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands):

	December 31, 2021				December 31, 2020
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Other accrued expenses	$	(107)	$	(375)	$	(105)	$	(240)
Accrued pension and other postretirement costs	$	(2,519)	$	(6,065)	$	(2,642)	$	(9,691)
Accumulated other comprehensive loss	$	693	$	6,764	$	823	$	9,068
	$	(1,933)	$	324	$	(1,924)	$	(863)

Unrecognized actuarial gains and losses arise from several factors, including experience and assumption changes with respect to the obligations and from the difference between expected returns and actual returns on plan assets.  Actuarial items consist of the following (in thousands):

	December 31, 2021				December 31, 2020
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Unrecognized net actuarial loss	$	693	$	6,709	$	823	$	9,008
Unrecognized prior service cost	—		55		—		60
	$	693	$	6,764	$	823	$	9,068

The following table sets forth additional information regarding the projected and accumulated benefit obligations for the pension plans (in thousands):

	December 31, 2021
	U.S. Plans		Non-U.S. Plans
Accumulated benefit obligation, all plans	$	2,626	$	23,796
Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation	$	2,626	$	23,451
Accumulated benefit obligation	$	2,626	$	22,634
Fair value of plan assets	—		$	17,778

	December 31, 2020
	U.S. Plans		Non-U.S. Plans
Accumulated benefit obligation, all plans	$	2,747	$	25,148
Plans for which the accumulated benefit obligation exceeds plan assets:
Projected benefit obligation	$	2,747	$	25,107
Accumulated benefit obligation	$	2,747	$	24,099
Fair value of plan assets	—		$	16,259

Unrecognized gains and losses are amortized into future net periodic pension cost using the 10% corridor method over the expected remaining service life of the employee group.  The following table sets forth the components of net periodic cost of pension (in thousands):

	Years ended December 31,
	2021				2020				2019
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Annual service cost	$	—	$	379	$	—	$	402	$	—	$	336
Less: employee contributions	—		—		—		—		—		—
Net service cost	—		379		—		402		—		336
Interest cost	57		353		70		442		85		535
Expected return on plan assets	—		(393)		—		(442)		—		(517)
Amortization of actuarial losses	27		459		109		286		38		164
Amortization of transition obligation	—		(8)		—		5		—		1
Curtailment and settlement losses	—		(108)		—		—		—		—
Net periodic benefit cost	$	84	$	682	$	179	$	693	$	123	$	519

See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended December 31, 2021, 2020, and 2019.

The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective years:

	2021				2020
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	2.53	%	1.66	%	2.11	%	1.29	%
Rate of compensation increase	N/A		2.97	%	N/A		2.77%
Expected return on plan assets	N/A		2.10	%	N/A		2.66	%

The following weighted-average assumptions were used to determine the net periodic pension costs for the years ended December 31, 2021 and 2020:

	2021				2020
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Discount rate	2.11	%	1.29	%	2.97	%	1.86	%
Rate of compensation increase	N/A		2.77%		N/A		1.20	%
Expected return on plan assets	N/A		2.66	%	N/A		3.56	%

The plans’ expected return on assets is based on management’s expectation of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plans are invested, advice from pension consultants and investment advisors, and current economic and capital market conditions.

The investment mix between equity securities and fixed income securities is based upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return, less volatile fixed income securities. The target allocation of plan assets approximates the actual allocation of plan assets at December 31, 2021 and 2020.

Plan assets are comprised of:

	December 31, 2021			December 31, 2020
	U.S. Plans	Non-U.S. Plans		U.S. Plans	Non-U.S. Plans
Equity securities	—	47	%	—	48	%
Fixed income securities	—	39	%	—	39	%
Cash and cash equivalents	—	14	%	—	13	%
Total	—	100	%	—	100	%

The Company maintains defined benefit retirement plans in certain of its subsidiaries. The assets of the plans are measured at fair value.

Equity securities held by the defined benefit retirement plans consist of equity securities that are valued based on quoted market prices on the last business day of the year. The fair value measurement of the equity securities is considered a Level 2 measurement within the fair value hierarchy.

Fixed income securities held by the defined benefit retirement plans consist of government bonds and corporate notes that are valued based on quoted market prices on the last business day of the year. The fair value measurement of the fixed income securities is considered a Level 2 measurement within the fair value hierarchy.

Cash held by the defined benefit retirement plans consists of deposits on account in various financial institutions. The carrying amount of the cash approximates its fair value. A summary of the Company’s pension plan assets for each fair value hierarchy level are as follows for the periods presented (see Note 16 for further description of the levels within the fair value hierarchy (in thousands)):

As of December 31, 2021			Fair value measurements at reporting date using:
	Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Defined benefit pension plan assets
Equity securities	$	9,262	$	—	$	9,262	$	—
Fixed income securities	7,646		—		7,646		—
Cash and cash equivalents	2,809		1,577		1,232		—
	$	19,717	$	1,577	$	18,140	$	—

As of December 31, 2020			Fair value measurements at reporting date using:
	Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Defined benefit pension plan assets
Equity securities	$	8,779	$	—	$	8,779	$	—
Fixed income securities	7,700		—		7,700		—
Cash and cash equivalents	1,678		1,678		—		—
	$	18,157	$	1,678	$	16,479	$	—

Estimated future benefit payments are as follows (in thousands):

	US Pension Plans		Non-US Plans
2022	$	107	$	763
2023	138		1,129
2024	137		844
2025	137		1,216
2026	138		670
2025 - 2028	794		5,455

The Company anticipates making contributions to its funded and unfunded pension of approximately $1.3 million during 2022.

Other Postretirement Benefit Plans

In the U.S., the Company maintains two unfunded non-pension other postretirement benefit plans (“OPEB”) which are funded as costs are incurred. These plans provide medical and death benefits to retirees.

The following table sets forth a reconciliation of the benefit obligation, plan assets, and funded status related to other postretirement benefit plans (in thousands):

	OPEB Plans
	December 31,
	2021		2020
Change in benefit obligation:
Benefit obligation at beginning of year	$	3,577	$	4,633
Service cost (adjusted for actual employee contributions)	36		123
Interest cost	68		133
Contributions by participants	—		25
Actuarial gains	(591)		(1,498)
Benefits paid	(205)		(249)
Plan amendments and other	—		410
Benefit obligation at end of year	$	2,885	$	3,577
Change in plan assets:
Fair value of plan assets at beginning of year	$	—	$	—
Company contributions	205		224
Contributions by participants	—		25
Benefits paid	(205)		(249)
Fair value of plan assets at end of year	$	—	$	—
Funded status at end of year	$	(2,885)	$	(3,577)

Actuarial gains incurred in 2021 related to our post-retirement plans are primarily the result of an increase in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2021 compared to December 31, 2020. Actuarial gains incurred in 2020 related to our post-retirement plans are primarily the result of a prior year adjustment of $763, changes in medical claims and age variance assumptions, net of a decrease in the discount rate assumptions used to estimate the benefit obligations as of December 31, 2020 compared to December 31, 2019.

Amounts recognized in the consolidated balance sheets consist of the following pre-tax amounts (in thousands):

	OPEB Plans
	December 31,
	2021		2020
Other accrued expenses	$	(227)	$	(266)
Accrued pension and other postretirement costs	$	(2,658)	$	(3,311)
Accumulated other comprehensive (gain)/loss	$	(28)	$	583
	$	(2,913)	$	(2,994)

Actuarial items consist of the following (in thousands):

	OPEB Plans
	December 31,
	2021		2020
Unrecognized net actuarial (gain)/loss	$	(28)	$	583
	$	(28)	$	583

Unrecognized gains and losses are amortized into future net periodic benefit cost using the 10% corridor method over the expected remaining service life of the employee group.  The following table sets forth the components of net periodic benefit costs (in thousands):

	OPEB Plans
	Years ended December 31,
	2021		2020		2019
	OPEB Plans		OPEB Plans		OPEB Plans
Net service cost	36		123		126
Interest cost	68		133		180
Amortization of actuarial losses	20		137		156
Net periodic benefit cost	$	124	$	393	$	462

See Note 8 for the pre-tax, tax effect, and after tax amounts included in other comprehensive income during the years ended December 31, 2021, 2020, and 2019.

The following weighted-average assumptions were used to determine benefit obligations at December 31 of the respective years:

	OPEB Plans
	December 31,
	2021		2020
Discount rate	2.46	%	1.99	%

The following weighted-average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2021 and 2020:

	OPEB Plans
	December 31,
	2021		2020
Discount rate	1.99	%	2.97	%
Health care trend rate	6.00	%	5.40	%

The health care trend ultimate rate is 3.94% per the terms of the plan. The impact of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit cost and postretirement benefit obligation is not material.

Estimated future benefit payments are as follows (in thousands):

	OPEB Plans
2022	$	227
2023	$	165
2024	$	198
2025	$	176
2026	$	178
2025 - 2028	$	898

As the plans are unfunded, the Company's anticipated contributions for 2021 are equal to the estimated benefit payment.

Other Retirement Obligations

The Company participates in various other defined contribution plans based on local law or custom. The Company periodically makes contributions to these plans. At December 31, 2021 and 2020, the consolidated balance sheets include $1.0 million and $1.0 million, respectively, within accrued pension and other postretirement costs related to these plans.

Most of the Company’s U.S. employees are eligible to participate in 401(k) savings plans which provide company matching under various formulas. The Company’s matching expense for the plans was $1.0 million, $0.8 million, and $0.7 million for the years ended December 31, 2021, 2020, and 2019, respectively. No material amounts are included in the consolidated balance sheets related to unfunded 401(k) contributions.

Certain key employees participate in a nonqualified deferred compensation plan, which allows these employees to defer a portion of their compensation until retirement, or elect shorter deferral periods. The accompanying consolidated balance sheets include a liability within other noncurrent liabilities related to these deferrals. The Company maintains a nonqualified trust, referred to as a “rabbi” trust, to fund payments under this plan. Rabbi trust assets are subject to creditor claims under certain conditions and are not the property of employees. Therefore, they are accounted for as other noncurrent assets within the consolidated balance sheets. The assets held in the rabbi trust are invested in money market funds and company-owned life insurance policies. The consolidated balance sheets include assets held in trust related to the nonqualified deferred compensation plan of $4.2 million at December 31, 2021 and $3.7 million at December 31, 2020, and the related liabilities of $6.0 million and $5.4 million at December 31, 2021 and 2020, respectively.