Retirement Plans and Other Post-Retirement Benefits

12 Months Ended

Dec. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Retirement Plans and Other Post-Retirement Benefits

13. RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS

Prior to May 2019, we provided non-contributory retirement benefits under both funded and unfunded plans to all U.S. employees and to certain non-U.S. employees in Germany. As discussed in more detail below, we terminated our U.S. qualified pension plan effective June 30, 2019 and replaced the benefits with an enhanced 401(k) defined contribution plan. Participation and benefits under the plans were based upon the employees’ date of hire. U.S. benefits accrued under the terminated pension plan was based on a final average pay formula or cash balance formula for salaried employees.

We froze qualified pension plan benefits as of May 31, 2019 and terminated the plan June 30, 2019. During 2019, all plan liabilities were settled by either a lump sum distribution or assumed by a third-party in exchange for a transfer of assets from the pension plan trust fund. After giving effect to these transactions, we recorded a $309.5 million reduction in both the projected benefit obligation and the plan assets. In addition, in accordance with pension plan settlement accounting, we recorded a $75.3 million settlement charge reflecting the recognition of amounts previously included in accumulated other comprehensive income.

As a result of terminating the qualified plan and settling the associated liabilities, as of December 31, 2019, $53.4 million of assets remained in the pension trust and was included in cash and cash equivalents in the accompanying consolidated balance sheet based on the nature of the underlying assets. In addition, during 2020 we received $2.3 million as post-settlement adjustment with the third party. After transferring $14.1 million to a suspense account to fund future 401(k) contributions and paying $8.3 million of excise taxes, approximately $33.3 million was available for general corporate purposes.

In December 2019, our Board of Directors approved the freezing of benefit accruals in the non-qualified pension plan for active participants effective December 31, 2019. As of January 1, 2020, each active participant’s frozen non-qualified pension benefit was transferred to a newly approved Deferred Compensation Plan non-qualified benefit plan and will earn interest credits going forward.

The Deferred Compensation Plan also provides for employer contributions and, beginning in 2021, the Plan may provide for elective employee deferrals. Under the Deferred Compensation Plan, participants are eligible to receive annual Company contributions that such participants would have received under our 401(k) Savings Plan but for certain limitations imposed by the Internal Revenue Code on 401(k) plan contributions (“Company Contributions”). Unless otherwise determined by the Compensation Committee, Company Contributions under the Deferred Compensation Plan will not exceed 7% of a participant’s annual eligible compensation that is in excess of the Internal Revenue Code compensation limit for 401(k) plans.

Non-U.S. benefits were based on average salary and years of service. We use a December 31-measurement date for all of our defined benefit plans.

As of December 31, 2020 and 2019, the remaining non-contributory pension plans are unfunded non-qualified plans.

We also provide certain health care benefits to eligible U.S.-based retired employees. Participation in the plan is closed to any salaried employees hired after December 31, 2006. These benefits include a comprehensive medical plan for retirees prior to age 65 and a fixed payment to certain retirees over age 65 to help defray the costs of Medicare. Claims are paid as reported.

In connection with the sale in 2018 of the Specialty Papers business the buyer assumed $210 million of pension liabilities for all employees active as of October 31, 2018, and we agreed to transfer pension assets of approximately $274 million. In addition, the buyers assumed $38 million of retiree healthcare liabilities related to employees active as of the October 31, 2018. We retained the pension retiree healthcare liabilities for all retired and deferred vested Specialty Paper employees.

GLATFELTER 2020 FORM 10-K 49

All information presented in the following tables represents amounts attributable to continuing operations.  

	Pension Benefits						Other Benefits
In millions	2020			2019			2020			2019
Change in Benefit Obligation
Balance at beginning of year	$	45.7		$	332.2		$	6.5		$	9.2
Service cost		—			1.3			—			—
Interest cost		1.2			11.5			0.2			0.3
Benefits paid		(2.4	)		(22.3	)		(1.6	)		(3.0	)
Participant contributions		—			—			—			0.9
Plan amendments		—			(0.2	)		—			—
Actuarial (gain)/loss		1.7			29.2			0.9			(0.3	)
Special termination benefits		—			1.3			—			—
Curtailment		—			(1.9	)		—			(0.6	)
Settlement/transfer		—			(309.5	)		—			—
Transfers from Discontinued Operations		—			4.3			—			—
Effect of currency rate changes		1.1			(0.2	)		—			—
Balance at end of year	$	47.3		$	45.7		$	6.0		$	6.5
Change in Plan Assets
Fair value of plan assets at beginning of year	$	53.4		$	333.2		$	—		$	—
Reversion of excess plan assets		(53.4	)		—			—			—
Actual return on plan assets		—			44.1			—			—
Total contributions		2.4			2.2			1.6			3.0
Benefits paid		(2.4	)		(22.3	)		(1.6	)		(3.0	)
Transfers from Discontinued Operations		—			5.7			—			—
Settlement/transfer		—			(309.5	)		—			—
Fair value of plan assets at end of year		—			53.4			—			—
Funded status at end of year	$	(47.3	)	$	7.7		$	(6.0	)	$	(6.5	)

Amounts presented under the caption “transfers from discontinued operations” represent the impact of employees changing their status from what was originally assumed for purposes of accounting for discontinued operations to the final determination in accordance with the sale agreement.

The fair value of plan assets as of December 31, 2019 consist entirely of the amounts discussed above and remaining in the qualified plan trust account. As of December 31, 2020, the non-qualified plans have an unfunded projected benefit obligation of $47.3 million.

Amounts recognized in the consolidated balance sheets consist of the following as of December 31:

	Pension Benefits						Other Benefits
In millions	2020			2019			2020			2019
Cash and cash equivalents	$	—		$	53.4		$	—		$	—
Current liabilities		(2.3	)		(2.3	)		(1.2	)		(1.4	)
Other long-term liabilities		(45.0	)		(43.4	)		(4.8	)		(5.1	)
Net amount recognized	$	(47.3	)	$	7.7		$	(6.0	)	$	(6.5	)

The components of amounts recognized as “Accumulated other comprehensive income” consist of the following on a pre-tax basis:

	Pension Benefits					Other Benefits
In millions	2020			2019		2020			2019
Prior service credit (cost)	$	(0.2	)	$	0.1	$	0.1		$	0.6
Net actuarial gain (loss)		(15.6	)		4.2		(0.4	)		1.4

The accumulated benefit obligation for all defined benefit pension plans was $47.3 million and $45.7 million at December 31, 2020 and 2019, respectively.

The weighted-average assumptions used in computing the benefit obligations above were as follows:

	Pension Benefits						Other Benefits
	2020			2019			2020			2019
Discount rate – benefit obligation		2.17	%		2.70	%		2.30	%		3.11	%
Future compensation growth rate		—			—			—			—

The discount rates set forth above were estimated based on the modeling of expected cash flows for each of our benefit plans and selecting a portfolio of high-quality debt instruments with maturities matching the respective cash flows of each

plan. The resulting discount rates as of December 31, 2020 ranged from 1.22% to 2.61% for pension plans and was 2.30% for the other benefit plans.

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:

In millions	2020		2019
Projected benefit obligation	$	47.3	$	45.7
Accumulated benefit obligation		47.3		45.7
Fair value of plan assets		—		—

Net periodic benefit (income) expense includes the following components:

	Year Ended December 31
In millions	2020			2019			2018
Pension Benefits
Service cost	$	—		$	1.3		$	2.3
Interest cost		1.2			11.5			13.3
Expected return on plan assets		—			(13.7	)		(21.1	)
Amortization of prior service cost		—			0.2			—
Amortization of actuarial loss		0.7			2.8			7.1
Termination benefits		—			1.3			—
One-time settlement charge		—			75.3			—
Total net periodic benefit expense	$	1.9		$	78.7		$	1.6
Other Benefits
Service cost	$	—		$	—		$	0.1
Interest cost		0.2			0.3			0.5
Expected return on plan assets
Amortization of prior service credit		(0.5	)		—			—
Amortization of actuarial loss		(0.8	)		(0.9	)		(0.3	)
Total net periodic benefit (income) expense	$	(1.1	)	$	(0.6	)	$	0.3

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows:

	Year Ended December 31
In millions	2020			2019
Pension Benefits
Actuarial (gain) loss	$	1.7		$	(5.2	)
Plan amendments		—			(0.2	)
Recognized prior service costs		—			(0.2	)
Recognized actuarial losses		(0.7	)		(78.1	)
Total recognized in other comprehensive (income) loss		1.0			(83.7	)
Total recognized in net periodic benefit cost and other comprehensive loss	$	2.9		$	(5.0	)
Other Benefits
Actuarial (gain) loss	$	0.9		$	(0.3	)
Amortization of actuarial gain		0.8			0.9
Total recognized in other comprehensive (income) loss		1.7			0.6
Total recognized in net periodic benefit cost and other comprehensive (income) loss	$	0.6		$	-

The weighted-average assumptions used in computing the net periodic benefit expense information above were as follows:

	Year Ended December 31
	2020			2019			2018
Pension Benefits
Discount rate – benefit expense		2.70	%		4.34	%		3.85	%
Future compensation growth rate		—			2.50			3.00
Expected long-term rate of return on plan assets	—				4.50			7.25
Other Benefits
Discount rate – benefit expense		3.11	%		4.19	%		3.68	%

For 2019 and 2018, the development of the expected long-term rate of return assumption was based on the historical returns and expected future returns for each asset class, as well as the target asset allocation of the pension portfolio.

GLATFELTER 2020 FORM 10-K 51

Assumed health care cost trend rates used to determine benefit obligations at December 31 were as follows:

	2020			2019
Health care cost trend rate assumed for next year		5.30	%		5.60	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		4.50			4.50
Year that the rate reaches the ultimate rate	2037			2037

At the end of 2019, assets held in the pension trust consisted entirely of $53.4 million of cash and cash equivalents and were primarily a Level 1 type.

Cash Flow   Benefit payments expected to be made under our non-qualified pension plans and other benefit plans are summarized below:

In thousands	Pension Benefits		Other Benefits
2021	$	2,271	$	1,167
2022		2,210		852
2023		2,147		626
2024		2,082		495
2025		2,020		460
2026 through 2030		16,972		1,399

Defined Contribution Plans   We maintain 401(k) plans for substantially all U.S. based employees. Employees may contribute up to 50% of their earnings, subject to certain restrictions. Through the end of May 2019, the Company matched a portion of the employees’ contribution in cash. Beginning June 1, 2019, the Company’s contribution approximated 7% of the employee’s eligible earnings and the amount contribution was increased to approximately 11% for 2020. The expense associated with our 401(k) plan was $2.0 million, $1.9 million and $0.4 million in 2020, 2019 and 2018, respectively.