The Company has two trusteed, noncontributory defined benefit retirement plans covering eligible regular represented and non-represented employees with more than one year of service. Defined benefit plan benefits are based on years of service and average compensation during the highest 60 consecutive months of employment. The Company also provides postemployment medical and life insurance benefits to employees who meet certain eligibility requirements.

All represented employees of NJRHS hired on or after October 1, 2000, non-represented employees hired on or after October 1, 2009 and NJNG represented employees hired on or after January 1, 2012, are covered by an enhanced defined contribution plan instead of the defined benefit plan. Participation in the postemployment medical and life insurance plan was also frozen to new employees as of the same dates, with the exception of new NJRHS represented employees, for which benefits were frozen beginning April 3, 2012.

The Company maintains an unfunded nonqualified PEP that was established to provide employees with the full level of benefits as stated in the qualified plan without reductions due to various limitations imposed by the provisions of federal income tax laws and regulations. There were no plan assets in the nonqualified plan due to the nature of the plan.

In April 2018, the Company implemented a voluntary early retirement program open to certain eligible employees. As of September 30, 2018, pension and postemployment benefit costs related to the special termination benefits were $4.2 million and other severance benefits were $2.2 million. For the amounts incurred, NJNG recognized an expense of approximately $5.1 million and Home Services and other recognized an expense of approximately $1.3 million, as a component of O&M in the Consolidated Statements of Operations.

The Company’s funding policy for its pension plans is to contribute at least the minimum amount required by the Employee Retirement Income Security Act of 1974, as amended. In fiscal 2019 and 2018, the Company had no minimum funding requirements. The Company made no discretionary contributions to the pension plans in fiscal 2019 or 2018. The Company does not expect to be required to make additional contributions to fund the pension plans over the following two fiscal years based on current actuarial assumptions; however, funding requirements are uncertain and can depend significantly on changes in actuarial assumptions, returns on plan assets and changes in the demographics of eligible employees and covered dependents.

There are no federal requirements to pre-fund OPEB benefits. However, the Company is required to fund certain amounts due to regulatory agreements with the BPU. The Company contributed $7.9 million and $6.2 million, in fiscal 2019 and 2018, respectively, and estimates that it will contribute between $5 million and $10 million over each of the next five years. Additional contributions may be required based on market conditions and changes to assumptions.



	Pension ⁽¹⁾						OPEB
(Thousands)	2019			2018			2019			2018
Change in Benefit Obligation
Benefit obligation at beginning of year	$	298,575		$	297,835		$	196,785		$	175,090
Service cost	7,381			8,139			4,404			4,607
Interest cost	12,173			10,493			8,324			6,365
Plan participants’ contributions ⁽²⁾	43			45			210			161
Special termination benefits ⁽³⁾	—			3,730			—			490
Actuarial loss (gain)	52,549			(12,846		)	54,700			15,145
Benefits paid, net of retiree subsidies received	(10,244		)	(8,821		)	(4,420		)	(5,073		)
Benefit obligation at end of year	$	360,477		$	298,575		$	260,003		$	196,785
Change in plan assets
Fair value of plan assets at beginning of year	$	279,410		$	271,743		$	77,980		$	71,534
Actual return on plan assets	19,194			16,306			2,499			5,284
Employer contributions	231			137			7,926			6,222
Benefits paid, net of plan participants’ contributions ⁽²⁾	(10,201		)	(8,776		)	(4,479		)	(5,060		)
Fair value of plan assets at end of year	$	288,634		$	279,410		$	83,926		$	77,980
Funded status	$	(71,843	)	$	(19,165	)	$	(176,077	)	$	(118,805	)
Amounts recognized on Consolidated Balance Sheets
Postemployment employee (liability)
Current	$	(603	)	$	(294	)	$	(800	)	$	(669	)
Noncurrent	(71,240		)	(18,871		)	(175,277		)	(118,136		)
Total	$	(71,843	)	$	(19,165	)	$	(176,077	)	$	(118,805	)

The actuarial loss on the Company’s pension is primarily due to a decrease in the discount rate used to measure the obligation. The actuarial loss related to the OPEB plans is primarily due to a decrease in the discount rate used to measure the obligation and an increase in expected retiree healthcare claims. The Company recognizes a liability for its underfunded benefit plans as required by ASC 715, Compensation - Retirement Benefits. The Company records the offset to regulatory assets for the portion of liability relating to NJNG and to accumulated other comprehensive income for the portion of the liability related to its unregulated operations.



	Regulatory Assets						Accumulated Other Comprehensive Income (Loss)
	Pension			OPEB			Pension			OPEB
Balance at September 30, 2017	$	78,605		$	60,460		$	19,415		$	4,967
Amounts arising during the period:
Net actuarial (gain) loss	(6,090		)	12,378			(3,422		)	2,834
Amounts amortized to net periodic costs:
Net actuarial (loss)	(6,177		)	(4,464		)	(1,359		)	(196		)
Prior service (cost) credit	(105		)	311			(1		)	54
Balance at September 30, 2018	$	66,233		$	68,685		$	14,633		$	7,659
Amounts arising during the period:
Net actuarial loss	38,137			48,452			14,271			9,264
Amounts amortized to net periodic costs:
Net actuarial (loss)	(4,662		)	(5,820		)	(1,103		)	(648		)
Prior service (cost) credit	(102		)	312			—			53
Balance at September 30, 2019	$	99,606		$	111,629		$	27,801		$	16,328



	Regulatory Assets										Accumulated Other Comprehensive Income (Loss)
	Pension				OPEB						Pension				OPEB
(Thousands)	2019		2018		2019			2018			2019		2018		2019			2018
Net actuarial loss	$	99,139	$	65,664	$	112,109		$	69,477		$	27,801	$	14,633	$	16,367		$	7,750
Prior service cost (credit)	467		569		(480		)	(792		)	—		—		(39		)	(91		)
Total	$	99,606	$	66,233	$	111,629		$	68,685		$	27,801	$	14,633	$	16,328		$	7,659

To the extent the unrecognized amounts in accumulated other comprehensive income or regulatory assets exceed 10 percent of the greater of the benefit obligation or the fair value of plan assets, an amortized amount over the average expected future working lifetime of the active plan participants is recognized. Amounts included in regulatory assets and accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost in fiscal 2020 are as follows:



	Pension									OPEB
(Thousands)	2019			2018			2017			2019			2018			2017
Service cost	$	7,381		$	8,139		$	8,347		$	4,404		$	4,607		$	4,380
Interest cost	12,173			10,493			9,771			8,324			6,365			5,545
Expected return on plan assets	(19,054		)	(19,639		)	(19,313		)	(5,515		)	(5,352		)	(4,767		)
Recognized actuarial loss	5,765			7,537			8,827			6,466			4,660			4,370
Prior service cost (credit) amortization	102			106			111			(365		)	(365		)	(365		)
Net periodic benefit cost	$	6,367		$	6,636		$	7,743		$	13,314		$	9,915		$	9,163
Special termination benefit	—			3,730			—			—			490			—
Net periodic benefit cost recognized as expense	$	6,367		$	10,366		$	7,743		$	13,314		$	10,405		$	9,163

Pension

OPEB

2019

2018

2017

2019

2018

2017

Benefit costs:

Discount rate

4.36/4.35%

⁽¹⁾

4.04/4.03%

⁽¹⁾

3.96/3.94%

⁽¹⁾

4.38/4.37%

⁽¹⁾

4.12/4.08%

⁽¹⁾

4.08/4.01%

⁽¹⁾

Expected asset return

7.00

7.50

7.75

7.00

7.50

7.75

Compensation increase

3.25/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

3.25/3.50

⁽¹⁾

3.25/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

Obligations:

Discount rate

3.37/3.35%

⁽¹⁾

4.36/4.35%

⁽¹⁾

4.03

3.48/3.44%

⁽¹⁾

4.38/4.37%

⁽¹⁾

4.12/4.08%

⁽¹⁾

Compensation increase

3.00/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

3.00/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

3.25/3.50%

⁽¹⁾

When measuring its projected benefit obligations, the Company uses an aggregate discount rate at which its obligation could be effectively settled. The Company determines a single weighted average discount rate based on a yield curve comprised of rates of return on a population of high quality debt issuances (AA- or better) whose cash flows (via coupons or maturities) match the timing and amount of its expected future benefit payments. The Company measures its service and interest costs using a disaggregated, or spot rate, approach. The Company applies the duration-specific spot rates from the full yield curve, as of the measurement date, to each year’s future benefit payments, which aligns the timing of the plans’ separate future cash flows to the corresponding spot rates on the yield curve.



($ in thousands)	2019			2018			2017
HCCTR	7.6%			7.9%			8.3%
Ultimate HCCTR	4.5%			4.5%			4.5%
Year ultimate HCCTR reached	2026			2024			2025
Effect of a 1 percentage point increase in the HCCTR on:
Year-end benefit obligation	$	49,061		$	36,260		$	32,019
Total service and interest cost	$	2,923		$	2,482		$	2,468
Effect of a 1 percentage point decrease in the HCCTR on:
Year-end benefit obligation	$	(38,747	)	$	(28,743	)	$	(25,466	)
Total service and interest costs	$	(2,250	)	$	(1,937	)	$	(1,909	)

The Company’s investment objective is a long-term real rate of return on assets before permissible expenses that is approximately 5 percent greater than the assumed rate of inflation, as measured by the consumer price index. The expected long-term rate of return is based on the asset categories in which the Company invests and the current expectations and historical performance for these categories.

The Company adopted the revised mortality assumptions published by the Society of Actuaries for its pension and other postemployment benefit obligations, which reflected increased life expectancies in the United States. The adoption of the new mortality projection scale, MP-2018, did not materially impact the projected benefit obligation for the plans.

The Company’s OPEB plans provide prescription drug benefits that are actuarially equivalent to those provided by Medicare Part D. Therefore, under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the Company qualifies for federal subsidies.



(Thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Total
As of September 30, 2019:	Pension				OPEB
Assets
Money market funds	$	—	$	—	$	21	$	21
Registered Investment Companies:
Equity Funds:
Large Cap Index	89,374		89,374		25,474		25,474
Extended Market Index	16,548		16,548		5,036		5,036
International Stock	49,929		49,929		14,564		14,564
Fixed Income Funds:
Emerging Markets	15,794		15,794		4,764		4,764
Core Fixed Income	—		—		10,570		10,570
Opportunistic Income	—		—		6,365		6,365
Ultra Short Duration	—		—		6,340		6,340
High Yield Bond Fund	24,328		24,328		7,350		7,350
Long Duration Fund	80,041		80,041		—		—
Total assets at in the fair value hierarchy	$	276,014	276,014		$	80,484	80,484
Investments measured at net asset value
Common collective trusts			12,620				3,442
Total assets at fair value			$	288,634			$	83,926



(Thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Total
As of September 30, 2018:	Pension				OPEB
Assets
Money market funds	$	8,207	$	8,207	$	2,273	$	2,273
Registered Investment Companies:
Equity Funds:
Large Cap Index	97,016		97,016		27,340		27,340
Extended Market Index	17,741		17,741		5,014		5,014
International Stock	53,516		53,516		14,874		14,874
Fixed Income Funds:
Emerging Markets	11,754		11,754		3,264		3,264
Core Fixed Income	—		—		7,970		7,970
Opportunistic Income	—		—		4,798		4,798
Ultra Short Duration	—		—		4,830		4,830
High Yield Bond Fund	25,720		25,720		7,236		7,236
Long Duration Fund	64,039		64,039		—		—
Total assets at in the fair value hierarchy	$	277,993	277,993		$	77,599	77,599
Investments measured at net asset value
Common collective trusts			1,417				381
Total assets at fair value			$	279,410			$	77,980

The Plan had no Level 2 or Level 3 fair value measurements during fiscal 2019 and 2018, and there have been no changes in valuation methodologies as of September 30, 2019. The Plan held assets that are valued using net asset value as a practical expedient, which are excluded from the fair value hierarchy.

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. Furthermore, while the Plan believes its 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.

The Company offers a Savings Plan to eligible employees. The Company matches 75 percent of participants’ contributions up to 6 percent of base compensation. Represented NJRHS employees, non-represented employees hired on or after October 1, 2009, and NJNG represented employees hired on or after January 1, 2012, are eligible for an employer special contribution of between 4 and 5 percent of base compensation, depending on years of service, into the Savings Plan on their behalf. The amount expensed and contributed for the matching provision of the Savings Plan was $3.9 million in fiscal 2019, $3.9 million in fiscal 2018 and $2.9 million in fiscal 2017. The amount contributed for the employer special contribution of the Savings Plan was $1.3 million in fiscal 2019, $959,000 in fiscal 2018 and $781,000 in fiscal 2017.