Pension and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2019

Pension and Other Postretirement Benefits

The funded status of our U.S. qualified and nonqualified defined benefit pension plans, our Germany, France, and Belgium defined benefit pension plans, plus our U.S. other postretirement healthcare and life insurance benefit plans for continuing operations, together with the associated balances and net periodic benefit cost recognized in our consolidated financial statements as of December 31, are shown in the tables below.

We are required to recognize in our consolidated balance sheets the overfunded and underfunded status of our defined benefit postretirement plans. The overfunded or underfunded status is defined as the difference between the fair value of plan assets and the projected benefit obligation. We are also required to recognize as a component of other comprehensive income the actuarial gains and losses and the prior service costs and credits that arise during the period.

The following table summarizes the weighted-average assumptions used to determine the benefit obligations at December 31 for the U.S. Plans:


	Pensions and Other Benefits
	December 31,
	2019		2018
Discount rate qualified	3.22	%	4.35	%
Discount rate nonqualified plan	2.74	%	3.97	%
Discount rate other benefits	2.89	%	4.08	%
Rate of compensation increase	3.10	%	3.10	%

The following table summarizes the components of our defined benefit postretirement plans and reflect a measurement date of December 31:


	Pensions						Other Benefits ⁽¹⁾
	December 31,
(in Millions)	2019		2018		2019		2018
Change in projected benefit obligation
Projected benefit obligation at January 1	$	1,261.3	$	1,385.8	$	18.9	$	19.0
Service cost	4.2		6.3		—		—
Interest cost	47.6		44.5		0.6		0.7
Actuarial loss (gain) ⁽²⁾	153.0		(89.9)		(2.2)		0.6
Amendments	—		—		—		(0.1)

Foreign currency exchange rate changes and other	—		(0.4)		—		—
Plan participants’ contributions	—		—		0.4		0.7
Special termination benefits	—		3.9		—		—
Settlements	(3.5)		(4.4)		—		—

Curtailments	—		(0.9)		—		0.2
Benefits paid	(83.5)		(83.6)		(1.9)		(2.2)
Projected benefit obligation at December 31	$	1,379.1	$	1,261.3	$	15.8	$	18.9
Change in plan assets
Fair value of plan assets at January 1	$	1,269.7	$	1,339.9	$	—	$	—
Actual return on plan assets	196.2		(18.0)		—		—
Foreign currency exchange rate changes	(0.2)		(0.2)		—		—
Company contributions	11.9		36.0		1.5		1.5
Plan participants’ contributions	—		—		0.4		0.7

Settlements	(3.5)		(4.4)		—		—

Benefits paid	(83.5)		(83.6)		(1.9)		(2.2)
Fair value of plan assets at December 31	$	1,390.6	$	1,269.7	$	—	$	—
Funded Status
U.S. plans with assets	$	44.2	$	42.8	$	—	$	—
U.S. plans without assets	(22.4)		(24.6)		(15.8)		(18.9)
Non-U.S. plans with assets	(1.3)		(1.9)		—		—
All other plans	(9.0)		(7.9)		—		—
Net funded status of the plan (liability)	$	11.5	$	8.4	$	(15.8)	$	(18.9)
Amount recognized in the consolidated balance sheets:
Pension asset ⁽³⁾	$	44.2	$	42.8	$	—	$	—
Accrued benefit liability ⁽⁴⁾	(32.7)		(34.4)		(15.8)		(18.9)
Total	$	11.5	$	8.4	$	(15.8)	$	(18.9)

____________________

(1) Refer to Note 11 for information on our discontinued postretirement benefit plans.

(2) The actuarial loss in 2019 and actuarial gain in 2018 was primarily driven by the change in discount rate on the U.S. qualified plan. Additionally, the Society of Actuaries released an updated mortality table projection scale for measurement of retirement program obligations in both 2019 and 2018. Adoption of the most recent projection scale for each applicable year decreased the U.S. defined benefit obligations by approximately $13 million and $4 million at December 31, 2019 and 2018, respectively.

(3) Recorded as "Other assets including long-term receivables, net" on the consolidated balance sheets.

(4) Recorded as "Accrued pension and other postretirement benefits, current and long-term" on the consolidated balance sheets.

The amounts in accumulated other comprehensive income (loss) that have not yet been recognized as components of net periodic benefit cost are as follows:


	Pensions						Other Benefits ⁽¹⁾
	December 31,
(in Millions)	2019		2018		2019		2018


Prior service (cost) credit	$	(0.9)	$	(1.1)	$	—	$	(0.1)
Net actuarial (loss) gain	(367.3)		(370.6)		5.5		4.2
Accumulated other comprehensive income (loss) – pretax	$	(368.2)	$	(371.7)	$	5.5	$	4.1
Accumulated other comprehensive income (loss) – net of tax ⁽²⁾	(277.2)		(226.1)		3.7		2.6

____________________

(1) Refer to Note 11 for information on our discontinued postretirement benefit plans.

(2) Accumulated other comprehensive income (loss) - net of tax as of December 31, 2019 includes the reclassification of stranded income tax effects. See Note 2 for more information.

The accumulated benefit obligation for all pension plans was $1,364.2 million and $1,248.8 million at December 31, 2019 and 2018, respectively.


(in Millions)	December 31
Information for pension plans with projected benefit obligation in excess of plan assets	2019		2018
Projected benefit obligations	$	37.2	$	39.1
Accumulated benefit obligations	37.5		39.2
Fair value of plan assets	4.5		4.7


(in Millions)	December 31
Information for pension plans with accumulated benefit obligation in excess of plan assets	2019		2018
Projected benefit obligations	$	37.2	$	39.1
Accumulated benefit obligations	37.5		39.2
Fair value of plan assets	4.5		4.7

Other changes in plan assets and benefit obligations for continuing operations recognized in other comprehensive loss (income) are as follows:


	Pensions						Other Benefits ⁽¹⁾
	Year Ended December 31,
(in Millions)	2019		2018		2019		2018
Current year net actuarial loss (gain)	$	11.0	$	(8.7)	$	(2.3)	$	0.8
Current year prior service cost (credit)	—		—		—		(0.1)
Amortization of net actuarial (loss) gain	(12.9)		(16.0)		1.0		0.5
Amortization of prior service (cost) credit	(0.2)		(0.4)		(0.1)		0.1


Recognition of prior service cost due to curtailment	—		(0.3)		—		—
Transfer of actuarial (loss) gain from continuing to discontinued operations	—		—		—		(0.1)
Curtailment loss ⁽²⁾	—		(0.9)		—		—
Settlement loss	(1.4)		(1.8)		—		—
Foreign currency exchange rate changes on the above line items	—		(0.4)		—		—
Total recognized in other comprehensive (income) loss, before taxes	$	(3.5)	$	(28.5)	$	(1.4)	$	1.2
Total recognized in other comprehensive (income) loss, after taxes	(3.0)		(22.3)		(1.1)		0.9

____________________

(1) Refer to Note 11 for information on our discontinued postretirement benefit plans.

(2) During the year ended December 31, 2018, due to the announced plans to separate FMC Lithium, we triggered a curtailment of our U.S. pension plans. As a result, we revalued our pension plans as of October 31, 2018 in addition to the normal December 31st remeasurement, which resulted in adjustments to comprehensive income. The $0.9 million in 2018 reflects the adjustment to the continuing operations liability and other comprehensive income based on the revaluation of the plan. The associated curtailment expense is recorded within "Non-operating pension and postretirement charges (income)" on the consolidated statements of income (loss).

The estimated net actuarial loss and prior service cost for our pension plans that will be amortized from accumulated other comprehensive income (loss) into our net annual benefit cost (income) during 2020 are $9.8 million and $0.2 million, respectively. The estimated net actuarial gain and prior service cost for our other benefits that will be amortized from accumulated other comprehensive income (loss) into net annual benefit cost (income) during 2020 will be $(0.9) million and zero, respectively.

The following table summarizes the weighted-average assumptions used for and the components of net annual benefit cost (income):


	Year Ended December 31,
	Pensions															Other Benefits ⁽¹⁾
(in Millions, except for percentages)	2019			2018			2017			2019			2018			2017
Discount rate	4.36		%	3.68		%	4.22		%	4.08		%	3.41		%	3.77		%
Expected return on plan assets	4.25		%	5.00		%	6.50		%	—			—			—
Rate of compensation increase	3.10		%	3.10		%	3.60		%	—			—			—
Components of net annual benefit cost:
Service cost	$	4.2		$	6.3		$	7.4		$	—		$	—		$	—
Interest cost	47.6			44.5			44.3			0.6			0.7			0.7
Expected return on plan assets	(53.4)			(63.0)			(79.1)			—			—			—

Amortization of prior service cost	0.2			0.4			0.6			0.1			(0.1)			(0.1)
Amortization of net actuarial and other (gain) loss	12.9			16.0			15.5			(1.0)			(0.5)			(0.9)


Recognized (gain) loss due to settlement	1.4			1.8			3.2			—			—			—
Net annual benefit cost (income)	$	12.9		$	6.0		$	(8.1)		$	(0.3)		$	0.1		$	(0.3)

___________________

(1) Refer to Note 11 for information on our discontinued postretirement benefit plans.

For the years ended December 31, 2018 and 2017, we recognized a $4.3 million loss due to curtailment and special termination benefits associated with the planned separation of FMC Lithium and a combined curtailment and termination benefits loss of $3.9 million associated with the disposal of our FMC Health and Nutrition Business, respectively, which were recorded within "Discontinued operations, net of income taxes" within the consolidated statements of income (loss).

For the year ended December 31, 2017, we recorded a settlement charge of $35.7 million. The settlement charge includes $3.2 million related to the non-qualified plan in the U.S. and a $32.5 million settlement charge related to the termination of the U.K. pension plan. The $32.5 million settlement charge was recorded within "Discontinued operations, net of income taxes" within the consolidated statements of income (loss).

Our U.S. qualified defined benefit pension plan (“U.S. Plan”) holds the majority of our pension plan assets. The expected long-term rate of return on these plan assets was 4.25 percent for the year ended December 31, 2019, 5.0 percent for the year ended December 31, 2018 (except for the period between the November 1, 2018 remeasurement and December 31, 2018 during which it was 4.5 percent), and 6.5 percent for the year ended December 31, 2017. The expected long-term rate of return on these plan assets decreased by 0.75 percent in 2019 compared to 2018, due to the 2019 portfolio consisting of a full year of 100 percent fixed income investments, whereas the prior year portfolio transitioned to 100 percent fixed income in October 2018. In developing the assumption for the long-term rate of return on assets for our U.S. Plan, we take into consideration the technical analysis performed by our outside actuaries, including historical market returns, information on the assumption for long-term real returns by asset class, inflation assumptions and expectations for standard deviation related to these best estimates. Given an actively managed investment portfolio, the expected annual rates of return by asset class for our portfolio, assuming an

estimated inflation rate of approximately 2.1 percent, is in line with our assumption for the rate of return on assets. The target asset allocation at December 31, 2019 by asset category is 100 percent fixed income investments.

Our U.S. Plan reached fully funded status during 2018. The primary investment strategy is a liability hedging approach with an objective of maintaining the funded status of the plan such that the funded status volatility is minimized and the likelihood that we will be required to make significant contributions to the plan is limited. The portfolio is comprised of 100 percent fixed income securities and cash. Investment performance and related risks are measured and monitored on an ongoing basis through monthly liability measurements, periodic asset liability studies, and quarterly investment portfolio reviews.

The following tables present our fair value hierarchy for our major categories of pension plan assets by asset class. See Note 19 for the definition of fair value and the descriptions of Level 1, 2 and 3 in the fair value hierarchy.


(in Millions)	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and short-term investments	$	19.8	$	19.8	$	—	$	—




Fixed income investments:
Investment contracts	150.1		—		150.1		—
U.S. Government Securities	331.0		294.3		36.7		—
Mutual funds	65.2		65.2		—		—
Corporate debt instruments	824.5		—		824.5		—






Total assets	$	1,390.6	$	379.3	$	1,011.3	$	—


(in Millions)	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and short-term investments	$	92.5	$	92.5	$	—	$	—




Fixed income investments:
Investment contracts	144.9		—		144.9		—
U.S. Government Securities	469.9		465.1		4.8		—
Mutual funds	55.7		55.7		—		—
Corporate debt instruments	506.7		—		506.7		—






Total assets	$	1,269.7	$	613.3	$	656.4	$	—

We made the following contributions to our pension and other postretirement benefit plans:


	Year Ended December 31,
(in Millions)	2019		2018
U.S. qualified pension plan	$	7.0	$	30.0
U.S. nonqualified pension plan	4.9		6.0

Other postretirement benefits	1.5		1.5
Total	$	13.4	$	37.5

The following table reflects the estimated future benefit payments for our pension and other postretirement benefit plans. These estimates take into consideration expected future service, as appropriate:


	Estimated Net Future Benefit Payments
(in Millions)	2020		2021		2022		2023		2024		2025 - 2029
Pension Benefits	$	90.2	$	86.7	$	86.9	$	85.0	$	85.3	$	408.7
Other Benefits	1.7		1.6		1.5		1.5		1.4		5.4

Assumed health care cost trend rates have an effect on the other postretirement benefit obligations and net periodic other postretirement benefit costs reported for the health care portion of the other postretirement plan. A one-percentage point change in the assumed health care cost trend rates would be immaterial to our net periodic other postretirement benefit costs for the year ended December 31, 2019, and our other postretirement benefit obligation at December 31, 2019.

FMC Corporation Savings and Investment Plan. The FMC Corporation Savings and Investment Plan is a qualified salary-reduction plan under Section 401(k) of the Internal Revenue Code in which substantially all of our U.S. employees may participate by contributing a portion of their compensation. For eligible employees participating in the Plan, except for those employees covered by certain collective bargaining agreements, the Company makes matching contributions of 80 percent of the portion of those contributions up to 5 percent of the employee’s compensation. Eligible employees participating in the Plan that do not participate in the U.S. qualified pension plan are entitled to receive an employer contribution of 5 percent of the employee’s eligible compensation. Charges against income for all contributions were $15.3 million in 2019, $15.0 million in 2018, and $9.7 million in 2017.