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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2019
Defined Benefit Plan [Abstract]  
Employee Benefit Plans EMPLOYEE BENEFIT PLANS

Prior to the Separation, certain of our employees participated in defined benefit and non-qualified plans sponsored by Dover, which included participants of other Dover subsidiaries. For periods prior to the Separation, we accounted for such plans as multi-employer benefit plans and recorded a proportionate share of the cost in our consolidated statements of income. For the years ended December 31, 2018 and 2017, costs associated with these multi-employer plans amounted to $1.6 million, and $4.6 million, respectively.

Dover provided a defined benefit pension plan for its eligible U.S. employees and retirees (“U.S. Pension Plan”). Shortly before the Separation, Apergy participants in the U.S. Pension Plan (other than Norris USW participants) fully vested in their benefits, and all participants ceased accruing benefits. In addition, Apergy did not assume any funding requirements or obligations related to the U.S. Pension Plan upon the Separation. Norris USW participants were moved to a new pension plan and continued to accrue benefits.

Dover also provided a defined benefit pension plan for its eligible salaried non-U.S. employees and retirees in Canada (“Canada Salaried Pension Plan”). The Canada Salaried Pension Plan, including all assets and liabilities, was transferred to Apergy at the Separation. Shortly before the Separation, all non-Apergy participants in this plan ceased accruing benefits nor were permitted to make contributions, as applicable. The non-Apergy participants may elect a lump sum cash payment post Separation that will be the responsibility of Apergy and will be funded out of the plan assets.

Dover provided to certain U.S. management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law. As of January 1, 2018, Apergy participants in these non-qualified plans no longer accrued benefits nor were permitted to make contributions, as applicable. We assumed the funding requirements and related obligations attributable to Apergy employees associated with these non-qualified plans upon the Separation. The non-qualified plans are unfunded and contributions are made as benefits are paid.

At the Separation, we recognized $6.1 million of liabilities and $2.4 million of accumulated other comprehensive loss, net of tax, related to plans previously accounted for as multi-employer plans prior to the Separation.

We sponsor non-qualified plans covering certain U.S. employees and retirees. The plans provide supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law. The plans are closed to new hires and all benefits under the plans are frozen.

Obligations and Funded Status

The funded status of our benefit plans, together with the associated balances recognized in our consolidated balance sheets as of December 31, 2019 and 2018, were as follows:
 
Pensions
 
Other post-retirement benefits
(in thousands)
2019
 
2018
 
2019
 
2018
Projected benefit obligation at January 1
$
15,948

 
$
3,881

 
$
13,061

 
$
14,197

Service cost
760

 
598

 
—

 
—

Interest cost
588

 
455

 
503

 
448

Benefits paid
(328
)
 
(370
)
 
(1,751
)
 
(1,022
)
Actuarial (gain)/loss (1)
2,784

 
(530
)
 
1,398

 
(562
)
Liabilities assumed from the Separation
—

 
14,348

 
—

 
—

Amendments
250

 
—

 
—

 
—

Settlements and curtailments
(2,156
)
 
(1,763
)
 
—

 
—

Foreign currency translation and other
503

 
(671
)
 
—

 
—

Projected benefit obligation at December 31
18,349

 
15,948

 
13,211

 
13,061

 
 

 
 

 
 

 
 

Fair value of plan assets at January 1
15,130

 
3,993

 
—

 
—

Actual return on plan assets
1,888

 
(76
)
 
—

 
—

Company contributions
1,486

 
4,740

 
1,751

 
1,022

Benefits paid
(328
)
 
(370
)
 
(1,751
)
 
(1,022
)
Assets assumed from the Separation
—

 
9,227

 
—

 
—

Settlements and curtailments
(2,156
)
 
(1,763
)
 
—

 
—

Foreign currency translation and other
467

 
(621
)
 
—

 
—

Fair value of plan assets at December 31
16,487

 
15,130

 
—

 
—

Funded (unfunded) status at December 31
$
(1,862
)
 
$
(818
)
 
$
(13,211
)
 
$
(13,061
)
 
 
 
 
 
 
 
 
Other non-current assets
$
18

 
$
146

 
$
—

 
$
—

Accrued compensation and employee benefits
—

 
—

 
(1,592
)
 
(1,598
)
Other long-term liabilities
(1,880
)
 
(964
)
 
(11,619
)
 
(11,463
)
Funded (unfunded) status
$
(1,862
)
 
$
(818
)
 
$
(13,211
)
 
$
(13,061
)
 
 
 
 
 
 
 
 
Accumulated benefit obligations
$
16,235

 
$
14,076

 
$
13,211

 
$
13,061


_______________________
(1) Actuarial losses incurred for year ended December 31, 2019 primarily relate to change in discount rate assumption utilized in estimating the projected benefit obligation.

The following table summarizes the pre-tax amounts in accumulated other comprehensive loss as of December 31, 2019 and 2018 that have not been recognized as components of net periodic benefit cost:
 
Pensions
 
Other post-retirement
benefits
(in thousands)
2019
 
2018
 
2019
 
2018
Pre-tax amounts recognized in accumulated other comprehensive loss (income):
 
 
 
 
 
 
 
Unrecognized net actuarial loss
$
4,699

 
$
3,586

 
$
6,883

 
$
5,685

Unrecognized prior service cost
274

 
25

 
—

 
—

Unrecognized net transition asset
(10
)
 
(8
)
 
—

 
—

Accumulated other comprehensive loss
$
4,963

 
$
3,603

 
$
6,883

 
$
5,685




The following table summarizes the accumulated benefit obligations and fair values of plan assets where the accumulated benefit obligation exceeds the fair value of plan assets as of December 31, 2019 and 2018:
 
Pensions
 
Other post-retirement benefits
(in thousands)
2019
 
2018
 
2019
 
2018
Aggregate accumulated benefit obligation
$
4,108

 
$
3,722

 
$
13,211

 
$
13,061

Aggregate fair value of plan assets
3,449

 
3,672

 
—

 
—



The following table summarizes the projected benefit obligations and fair values of plan assets where the projected benefit obligation exceeds the fair value of plan assets as of December 31, 2019 and 2018:
 
Pensions
 
Other post-retirement benefits
(in thousands)
2019
 
2018
 
2019
 
2018
Aggregate projected benefit obligation
$
13,834

 
$
12,334

 
$
13,211

 
$
13,061

Aggregate fair value of plan assets
11,954

 
11,370

 
—

 
—




Net Periodic Benefit Cost

Components of the net periodic benefit cost were as follows: 
 
Pensions
 
Other post-retirement benefits
(in thousands)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Service cost
$
760

 
$
598

 
$
106

 
$
—

 
$
—

 
$
—

Interest cost
588

 
455

 
137

 
503

 
448

 
621

Expected return on plan assets
(733
)
 
(593
)
 
(198
)
 
—

 
—

 
—

Amortization of prior service cost
2

 
1

 
2

 
—

 
—

 
—

Amortization of actuarial loss
162

 
127

 
68

 
200

 
202

 
330

Amortization of transition obligation
2

 
1

 
(1
)
 
—

 
—

 
—

Settlement loss
508

 
479

 
—

 
—

 
—

 
—

Other
—

 
—

 
—

 
—

 
—

 
(1
)
Net periodic benefit cost
$
1,289

 
$
1,068

 
$
114

 
$
703

 
$
650

 
$
950




Assumptions

The following weighted-average assumptions were used to determine the benefit obligations: 
 
Pensions
 
Other post-retirement benefits
 
2019
 
2018
 
2019
 
2018
Discount rate
3.11
%
 
3.90
%
 
3.00
%
 
4.10
%


The following weighted-average assumptions were used to determine the net periodic benefit cost:
 
Pensions
 
Other post-retirement benefits
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Discount rate
3.85
%
 
3.68
%
 
3.75
%
 
4.10
%
 
3.35
%
 
3.55
%
Expected return on plan assets
4.89
%
 
4.80
%
 
5.50
%
 
 
 
 
 
 


 
Plan Assets

The primary financial objective of the plans is to secure participant retirement benefits. Accordingly, the key objective in the plans’ financial management is to promote stability and, to the extent appropriate, growth in the funded status. We have retained professional investment managers to manage the plans’ assets and implement the investment process. The investment managers have the authority and responsibility to select appropriate investments in the asset classes specified by the terms of their applicable prospectus or investment manager agreements with the plans. The assets of the plans are invested to achieve an appropriate return for the plans consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds, weighted in the proportions outlined by the asset class exposures identified in the plans’ strategic allocation.

Our pension plan assets measured at fair value on a recurring basis are presented below. Refer to “Fair value measurements” in Note 1 to these consolidated financial statements for a description of the levels.
 
Pensions
 
December 31, 2019
 
December 31, 2018
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
5,170

 
$
7,868

 
$
—

 
$
13,038

 
$
4,775

 
$
6,683

 
$
—

 
$
11,458

Cash and cash equivalents
3,449

 
—

 
—

 
3,449

 
3,672

 
—

 
—

 
3,672

Total
$
8,619

 
$
7,868

 
$
—

 
$
16,487

 
$
8,447

 
$
6,683

 
$
—

 
$
15,130


 
Mutual funds are categorized as either Level 1 or 2 depending on the nature of the observable inputs. We had no Level 3 plan assets as of December 31, 2019 and 2018. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.

Expected contributions in 2020 are $1.1 million. The non-qualified plans are unfunded and contributions are made as benefits are paid.

Estimated Future Benefit Payments

Estimated future benefit payments to retirees from our various pension and other post-retirement benefit plans are outlined in the table below. Actual benefit payments may differ from these expected payments.
(in thousands)
Pensions
 
Other Post-retirement benefits
2020
$
1,139

 
$
1,592

2021
857

 
1,424

2022
941

 
1,295

2023
785

 
1,167

2024
782

 
1,040

2025-2029
5,427

 
3,557




Defined Contribution Plan

We offer a defined contribution retirement plan which covers the majority of our U.S. employees, as well as employees in certain other countries. Expense relating to defined contribution plans was $9.0 million, $9.6 million and $8.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.