Pension And Other Postretirement Benefits

12 Months Ended

Dec. 31, 2024

Pension And Other Postretirement Benefits [Abstract]

Pension And Other Postretirement Benefits

13. PENSION AND OTHER POSTRETIREMENT BENEFITS

We have a noncontributory defined benefit pension plan (the "Pension Plan") covering substantially all employees first hired prior to July 1, 2015 after the completion of one year of service and 1,000 hours of service.  The Pension Plan provides retirement benefits based on an employee’s final average earnings and years of service.  A supplemental benefit plan provides nonqualified pension benefits for compensation in excess of the IRS compensation limits applicable to the Pension Plan and eligible compensation deferred by a participant.

Our funding policy is to make contributions to the Pension Plan, provided that the total annual contributions will not be less than ERISA and the Pension Protection Act of 2006 minimums or greater than the maximum tax-deductible amount, to review the contribution and funding strategy on a regular basis, and to allow discretionary contributions to be made by us from time to time.  The assets of the Pension Plan are invested primarily in fixed income investments and equity securities. We pay nonqualified pension benefits when they are due according to the terms of the supplemental benefit plan. We have an employee deferred compensation trust to meet funding obligations for nonqualified pension benefits to certain participants in the supplemental benefit plan. The assets of the employee deferred compensation trust are invested in highly liquid money market funds and U.S. Treasury securities.

We provide certain postretirement healthcare and life insurance benefits to retired employees.  Substantially all of our employees hired or rehired prior to 2014 may become eligible for postretirement medical benefits if they reach the age and service requirements of the retiree medical plan and retire on a pension (except a deferred pension) under the Pension Plan.  Postretirement life insurance benefits are insured through an insurance company. We fund postretirement benefits as incurred, and accordingly, there were no assets held in the postretirement benefits plan at December 31, 2024 and 2023.

The following table sets forth information regarding the funded status of our pension and other postretirement benefits as of December 31, 2024 and 2023:

	Pension Benefits				Postretirement Benefits
		2024		2023		2024		2023
Change in Benefit Obligation:
Benefit obligation at beginning of period	$	616.8	$	577.9	$	62.4	$	62.3
Service cost		22.6		24.3		1.4		1.4
Interest cost		31.9		31.9		3.2		3.4
Actuarial (gain) loss		(7.9)		36.8		(1.8)		—
Benefits paid from plan assets		(47.0)		(44.7)		—		—
Benefits paid from Company assets		(1.0)		(3.9)		(4.2)		(4.8)
Plan participants' contributions		—		—		—		0.1
Administrative expenses paid		(1.6)		(5.5)		—		—
Benefit Obligation at End of Period		613.8		616.8		61.0		62.4
Change in Plan Assets:
Fair value of plan assets at beginning of period		508.2		433.1		—		—
Actual return on plan assets		(17.8)		25.3		—		—
Employer contributions(A)		41.1		103.9		4.2		4.7
Plan participants' contributions		—		—		—		0.1
Benefits paid(A)		(48.1)		(48.6)		(4.2)		(4.8)
Administrative expenses paid		(1.6)		(5.5)		—		—
Fair Value of Plan Assets at End of Period		481.8		508.2		—		—
Unfunded Status	$	132.0	$	108.6	$	61.0	$	62.4

^(A) Includes $1.1 million and $3.9 million paid from our assets for unfunded nonqualified pension benefits in fiscal years 2024 and 2023, respectively.

The accumulated benefit obligation for our Pension Plan was $570.1 million and $572.2 million at December 31, 2024 and 2023, respectively.

Amounts recognized in the consolidated balance sheet for the years ended December 31 consist of the following:

	Pension Benefits				Postretirement Benefits
		2024		2023		2024		2023
Current accrued benefit cost	$	3.0	$	1.3	$	6.9	$	6.5
Non-current accrued benefit cost		129.0		107.3		54.1		55.9
Net amount recognized	$	132.0	$	108.6	$	61.0	$	62.4

 Current accrued benefit cost for both pension benefits and postretirement benefits is included in other current liabilities in the consolidated balance sheets. Non-current accrued benefit cost for pension benefits and postretirement benefits are included in pension liability and postretirement benefits liability, respectively, in the consolidated balance sheets.

Amounts recognized in accumulated other comprehensive loss for the years ended December 31, net of tax, consist of the following:

	Pension Benefits				Postretirement Benefits
		2024		2023		2024		2023
Net actuarial loss (gain)	$	192.7	$	167.2	$	(1.2)	$	—
Prior service cost		—		—		—		0.1
Accumulated other comprehensive loss (gain)	$	192.7	$	167.2	$	(1.2)	$	0.1

The actuarial gain for the Pension Plan in 2024 was primarily due to increases in the discount rate compared to 2023 and due to plan experience. The actuarial loss for the Pension Plan in 2023 was primarily due to decreases in the discount rate compared to 2022 and due to plan experience.

Weighted-average assumptions used to determine the actuarial present value of the pension and postretirement benefit obligations as of December 31 are:

	Pension Benefits					Postretirement Benefits
		2024		2023			2024		2023
Discount rate		5.70	%	5.17	%		5.62	%	5.31	%
Rate of compensation increase		4.03	%	4.14	%		—		—
Healthcare cost trend on covered charges		—		—			5.00	%	5.00	%

The net periodic benefit cost for the years ended December 31, 2024, 2023, and 2022 included the following components:

		Pension Benefits					Postretirement Benefits
Components of Net Periodic Benefit Cost	2024		2023		2022		2024		2023		2022
Selling, general and administrative expenses:
Service cost	$	22.6	$	24.3	$	26.4	$	1.4	$	1.4	$	2.0
Total selling, general and administrative expenses	$	22.6	$	24.3	$	26.4	$	1.4	$	1.4	$	2.0
Non-operating expenses, net:
Interest cost		31.9		31.9		25.5		3.2		3.4		2.0
Expected return on plan assets		(31.9)		(28.9)		(30.2)		—		—		—
Amortization of:
Net actuarial loss		7.6		1.1		17.4		—		—		0.6
Settlement charge		—		—		27.0		—		—		—
Total non-operating expenses, net	$	7.6	$	4.1	$	39.7	$	3.2	$	3.4	$	2.6
Net periodic benefit cost	$	30.2	$	28.4	$	66.1	$	4.6	$	4.8	$	4.6

During 2022, we made lump-sum pension benefit distributions exceeding the cumulative amount of service and interest cost components of the net periodic pension cost for the year, which is the settlement accounting threshold. Accordingly, we recorded a non-cash pension settlement charge of $27.0 million in non-operating expenses, net on our consolidated statements of income for the year ended December 31, 2022. The settlement charge represented the immediate recognition into expense of a portion of the unrecognized loss within accumulated other comprehensive loss in proportion to the share of the projected benefit obligation that was settled by the lump-sum pension benefit distributions. We did not have a non-cash pension settlement charge for the years ended December 31, 2024, and 2023.

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 were:

	Pension Benefits						Postretirement Benefits
	2024		2023		2022		2024		2023		2022
Discount rate	5.17	%	5.55	%	2.86% / 4.83%		5.31	%	5.70	%	2.71	%
Expected return on plan assets	5.25	%	5.25	%	5.00	%	—		—		—
Rate of compensation increase	4.14	%	4.14	%	4.21	%	—		—		—
Healthcare cost trend on covered charges	—		—		—		5.00	%	5.00	%	5.00	%

A discount rate of 5.17% was used as of January 1, 2024 to determine the net periodic benefit cost for the Pension Plan. A discount rate of 5.55% was used as of January 1, 2023 to determine the net periodic benefit cost for the Pension Plan. A discount rate of 2.86% was used as of January 1, 2022 to determine the net periodic benefit cost for the Pension Plan, which was increased to 4.83% effective September 30, 2022 for the remeasurement of the plan liability upon triggering settlement accounting. The expected return on plan assets assumption for the Pension Plan is a long-term assumption and was determined after evaluating input from both the plan’s actuary and pension fund investment advisors, consideration of macroeconomic conditions, historical rates of return on plan assets, and anticipated current and long-term rates of return on the various classes of assets in which the plan invests.

For measurement of the postretirement benefits net periodic cost, a 5.00% annual rate of increase in per capita cost of covered healthcare benefits was assumed for 2024.  The rate was assumed to remain at 5.00% in 2025 and to remain at that level thereafter.

We expect to fund $2.6 million for nonqualified pension benefits during 2025. Qualified pension contributions are expected to be $40.0 million in 2025; however, additional contributions may be made at our discretion.

Estimated future defined benefit pension and other postretirement benefit plan payments to plan participants for the years ending December 31 are as follows:

Year	Pension ‎Benefits		Postretirement ‎Benefits
2025	$	58.2	$	7.1
2026		54.7		7.4
2027		55.3		7.5
2028		56.9		7.5
2029		56.9		7.3
2030-2034		276.9		30.4

The investment objective of our Pension Plan is to ensure that there are sufficient assets to fund regular pension benefits payable to employees over the long-term life of the plan.  Our Pension Plan seeks to allocate plan assets in a manner that is closely duration-matched with the actuarial projected cash flow liabilities, consistent with prudent standards for preservation of capital, tolerance of investment risk, and maintenance of liquidity. Assets of the qualified pension plan are held by U.S. Bank National Association (the "Trustee").

Our Pension Plan utilizes a liability-driven investment (“LDI”) approach to help meet these objectives. The LDI strategy employs a structured fixed-income portfolio designed to reduce volatility in the plan's future funding requirements and funding status. This is accomplished by using a blend of long duration government, quasi-governmental and corporate fixed-income securities, as well as appropriate levels of equity and alternative investments designed to optimize the plan's liability hedge ratio. Derivatives may also be used on fixed-income investments to manage interest rate exposure, volatility, duration, credit exposures, and asset class allocation. Derivatives are not allowed if the position creates economic portfolio leverage beyond the portfolio’s investment objectives or if used for speculative purposes. In practice, the value of an asset portfolio constructed primarily of fixed income securities is inversely correlated to changes in market interest rates, primarily offsetting changes in the value of the pension benefit obligation caused by changes in the interest rate used to discount plan liabilities.

Asset allocation information for the Pension Plan at December 31, 2024 and 2023 is as follows:

Investment	2024 Actual Allocation		2024 Target Allocation Range	2023 Actual Allocation		2023 Target Allocation Range
Equity securities - U.S.	9	%	7-15 %	6	%	3-10 %
Equity securities - International	6	%	3-10 %	5	%	2-10 %
Fixed income investments	53	%	40-80 %	52	%	40-80 %
Hedge funds	0	%	0 %	1	%	2-8 %
Real assets	5	%	0-10 %	6	%	2-10 %
Private equity	9	%	5-15 %	8	%	2-8 %
Other investments	5	%	2-8 %	4	%	0-8 %
Short-term investments	13	%	1-10 %	18	%	1-10 %
Total	100	%	100 %	100	%	100 %

Actual asset allocation may occasionally fall outside of the target allocation range until rebalancing occurs.

The following is a description of the valuation methodologies used for assets held by the Pension Plan measured at fair value:

Equity securities - U.S.

Equity securities - U.S. consist of investments in publicly traded U.S. equity mutual funds. U.S. equity mutual funds are primarily invested in large-capitalization stocks (defined as companies with market capitalization of more than $10 billion). U.S. publicly traded mutual funds are valued at the closing price reported on the active public market in which the individual securities are traded and are classified as Level 1.

Equity securities - International

Equity securities - International consist of investments in two collective investment trusts and are primarily investments within developed and emerging markets. The collective investment trusts are valued at the net asset value (“NAV”) of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund. Audited financial statements are produced on an annual basis for the collective investment trusts.

Fixed income investments

Fixed income investments consist of U.S. and international corporate bonds, government and government agency bonds, derivatives, U.S. Treasury securities, as well as a collective trust that invests in U.S. government debt securities. U.S. and international corporate bonds and government and government agency bonds are valued by independent pricing services using various market and industry inputs and may include, but are not limited to, interest rates, yield curves, and credit spreads. As the significant inputs used are observable market inputs, these investments are classified as Level 2. Derivatives could include, but are not limited to, instruments such as U.S. Treasury futures, total returns swaps, and credit default swaps. Derivatives are valued by independent pricing services using direct and observable market inputs and are thus classified as Level 2. U.S. Treasury securities are valued using quoted market prices obtained from active markets and are classified as Level 1. The collective trust is valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund.

Hedge funds

Hedge funds consist of investments in various hedge funds structured as fund-of-funds (defined as a single fund that invests in multiple funds). The hedge funds use various investment strategies in an attempt to generate non-correlated returns. A fund-of-funds is designed to help diversify and reduce the risk of the overall portfolio. The hedge funds are valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund. Audited financial statements are produced on an annual basis for the hedge funds.

Real assets

Real assets consist of a diversified mutual fund, and limited partnerships (“LP”) that invest in real estate. The diversified mutual fund is valued using quoted prices in an active market, and is therefore classified as Level 1. The LP investments are valued at the NAV of units of the trust. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund. Audited financial statements are produced on an annual basis for the LP investments.

Private equity

Private equity is an asset class that is generally characterized as requiring long-term commitments and where liquidity is typically limited. Private equity investments do not have an actively traded market with readily observable prices. The investments are limited partnerships and are diversified across typical private equity strategies including: buyouts, co-investments, secondary offerings, venture capital, and special situations. Valuations are developed using a variety of proprietary model methodologies. Valuations may be derived from publicly available sources as well as information obtained from each fund's general partner based upon public market conditions and returns. All private equity investments are classified as Level 3, other than limited partnerships valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund. Audited financial statements are produced on an annual basis for the private equity investments.

Other investments

Other investments consist of investments in a private debt fund and a high-yield bond fund. The private debt fund is valued using unobservable inputs with limited trading activity, and is therefore classified as Level 3. The high-yield bond fund is valued using the NAV based on the fair value of the underlying investments held by the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. Audited financial statements are produced on an annual basis for the private debt fund and the high-yield bond fund.

Short-term investments

Short-term investments includes cash and cash equivalents in a short-term fund which is valued at the NAV of units of the fund. The NAV, as provided by the Trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund.

The methods described above may produce fair value calculations that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while we believe our Pension Plan valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

There have been no changes in the methodologies for determining fair value at December 31, 2024 or 2023.

The following tables set forth, by level within the fair value hierarchy, the Pension Plan assets measured at fair value as of December 31, 2024 and 2023:

December 31, 2024
Investment	Investments ‎Measured at ‎NAV		Level 1		Level 2		Level 3		Total
Equity securities - U.S.	$	—	$	42.0	$	—	$	—	$	42.0
Equity securities - International		27.0		—		—		—		27.0
Fixed income investments		11.1		19.7		225.8		—		256.6
Real assets		12.8		10.0		—		—		22.8
Private equity		26.3		—		—		19.7		46.0
Other investments		11.8		—		—		11.4		23.2
Short-term investments		64.2		—		—		—		64.2
Total	$	153.2	$	71.7	$	225.8	$	31.1	$	481.8

December 31, 2023
Investment	Investments ‎Measured at ‎NAV		Level 1		Level 2		Level 3		Total
Equity securities - U.S.	$	—	$	30.1	$	—	$	—	$	30.1
Equity securities - International		20.0		5.1		—		—		25.1
Fixed income investments		12.9		—		252.1		—		265.0
Hedge funds		7.5		—		—		—		7.5
Real assets		14.9		13.1		—		—		28.0
Private equity		17.6		—		—		22.2		39.8
Other investments		8.1		—		—		11.4		19.5
Short-term investments		93.2		—		—		—		93.2
Total	$	174.2	$	48.3	$	252.1	$	33.6	$	508.2

The tables below set forth a summary of changes in the fair value of the Pension Plan's Level 3 assets for the years ended December 31, 2024 and 2023:

December 31, 2024
	Private Equity		Other Investments		Total
Balance, beginning of year	$	22.2	$	11.4	$	33.6
Unrealized gains		0.3		1.2		1.5
Sales		(2.8)		(1.2)		(4.0)
Balance, end of year	$	19.7	$	11.4	$	31.1

December 31, 2023
	Private Equity		Other Investments		Total
Balance, beginning of year	$	23.6	$	11.4	$	35.0
Realized gains		0.2		—		0.2
Unrealized (losses) gains		(0.7)		1.3		0.6
Purchases		0.1		—		0.1
Sales		(1.0)		(1.3)		(2.3)
Balance, end of year	$	22.2	$	11.4	$	33.6