Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits Disclosure

Note 9 - Employee Benefit Plans

Defined Benefit Pension and Other Postretirement Benefit (OPEB) Plans

We sponsor several defined benefit pension and OPEB plans for our employees, including non-qualified pension plans. The U.S. qualified and non-qualified defined benefit pension plans comprise the majority of our total benefit obligation and benefit cost. We maintain a separate defined benefit plan for eligible employees in our U.K. operation. The U.S. defined benefit pension plans were closed to new entrants on December 31, 2013, the OPEB plan was closed to new entrants on December 31, 2012, and the U.K. plan was closed to new entrants on December 31, 2002.

U.S. Pension Plan Annuity Purchases

On December 26, 2019, we purchased a group annuity contract which transferred a portion of our U.S. qualified defined benefit pension plan obligation to a third party. Under the transaction, which was funded with plan assets, we transferred the responsibility for pension benefits and annuity administration for approximately 1,900 retirees or their beneficiaries receiving less than $350 in monthly benefit payments from the plan. This transfer resulted in a reduction in our U.S. qualified defined benefit pension plan obligation of $59.5 million at December 31, 2019 and is reflected in the Benefits and Expenses Paid line item within the following table regarding changes in our benefit obligation.

On January 2, 2020, in a separate transaction, we purchased a second group annuity contract which transferred an additional portion of our U.S. qualified defined benefit pension plan obligation to the same third party. Under the transaction, which was funded with plan assets, we transferred the responsibility for pension benefits and annuity administration for approximately 600 retirees or their beneficiaries receiving between $350 and $500 in monthly benefit payments from the plan. This transfer resulted in a reduction in our U.S. qualified benefit pension plan obligation of $44.0 million at December 31, 2020 and is reflected in the Benefits and Expenses Paid line item within the following table regarding changes in our benefit obligation.

Amortization Period of Actuarial Gain or Loss and Prior Service Cost or Credit

Because all participants in the U.S. and U.K. pension plans are considered inactive, we amortize the net actuarial loss and prior service credit for these plans over the average remaining life expectancy of the plans. As of December 31, 2020, the estimate of the average remaining life expectancy of the plans was approximately 25 years for the U.S. plan and 31 years for U.K. plan.

The following table provides the changes in the benefit obligation and fair value of plan assets and the funded status of the plans.

	Pension Benefits
	U.S. Plans				U.K. Plan				OPEB
	2020		2019		2020		2019		2020		2019
	(in millions of dollars)
Change in Benefit Obligation
Benefit Obligation at Beginning of Year	$	2,106.9	$	1,933.3	$	256.9	$	211.0	$	127.2	$	125.9
Service Cost	11.0		10.9		—		—		—		—
Interest Cost	73.0		83.3		4.9		6.1		4.1		5.3
Plan Participant Contributions	—		—		—		—		0.1		0.2
Actuarial (Gain) Loss (1)	212.4		225.7		33.8		34.9		(0.3)		7.0
Benefits and Expenses Paid	(126.1)		(146.3)		(5.1)		(4.8)		(10.6)		(11.2)
Curtailment Gain	—		—		(0.7)		—		—		—
Change in Foreign Exchange Rates	—		—		10.2		9.7		—		—
Benefit Obligation at End of Year	$	2,277.2	$	2,106.9	$	300.0	$	256.9	$	120.5	$	127.2
Accumulated Benefit Obligation at December 31	$	2,277.2	$	2,106.9	$	297.5	$	253.1	N/A		N/A
Change in Fair Value of Plan Assets
Fair Value of Plan Assets at Beginning of Year	$	1,600.0	$	1,454.9	$	252.8	$	217.0	$	9.9	$	10.1
Actual Return on Plan Assets	227.9		282.7		36.4		31.0		0.1		0.2
Employer Contributions	9.1		8.7		—		—		9.8		10.6
Plan Participant Contributions	—		—		—		—		0.1		0.2
Benefits and Expenses Paid	(126.1)		(146.3)		(5.1)		(4.8)		(10.6)		(11.2)
Change in Foreign Exchange Rates	—		—		10.0		9.6		—		—
Fair Value of Plan Assets at End of Year	$	1,710.9	$	1,600.0	$	294.1	$	252.8	$	9.3	$	9.9
Underfunded Status	$	566.3	$	506.9	$	5.9	$	4.1	$	111.2	$	117.3

(1) The actuarial losses recognized for the U.S. and U.K. pension plans were primarily driven by decreases in the discount rate assumption.

The amounts recognized in our consolidated balance sheets for our pension and OPEB plans at December 31, 2020 and 2019 are as follows.

	Pension Benefits
	U.S. Plans				U.K. Plan				OPEB
	2020		2019		2020		2019		2020		2019
	(in millions of dollars)
Current Liability	$	8.0	$	7.7	$	—	$	—	$	1.5	$	1.5
Noncurrent Liability	558.3		499.2		5.9		4.1		109.7		115.8
Noncurrent Asset	—		—		—		—		—		—
Underfunded Status	$	566.3	$	506.9	$	5.9	$	4.1	$	111.2	$	117.3
Unrecognized Pension and Postretirement Benefit Costs
Net Actuarial Gain (Loss)	$	(767.9)	$	(695.4)	$	(70.5)	$	(63.1)	$	11.0	$	11.1
Prior Service Credit (Cost)	(0.6)		(0.7)		(0.2)		(0.3)		2.9		3.1
	(768.5)		(696.1)		(70.7)		(63.4)		13.9		14.2
Income Tax	273.9		240.7		16.0		14.5		5.4		5.3
Total Included in Accumulated Other Comprehensive Income (Loss)	$	(494.6)	$	(455.4)	$	(54.7)	$	(48.9)	$	19.3	$	19.5

The following table provides the changes recognized in other comprehensive income for the years ended December 31, 2020 and 2019.

	Pension Benefits
	U.S. Plans				U.K. Plan				OPEB
	2020		2019		2020		2019		2020		2019
	(in millions of dollars)
Accumulated Other Comprehensive Income (Loss) at Beginning of Year	$	(455.4)	$	(437.3)	$	(48.9)	$	(37.3)	$	19.5	$	27.4
Net Actuarial Gain (Loss)
Amortization	18.7		20.2		1.1		0.9		—		(2.5)
All Other Changes	(91.2)		(43.0)		(8.5)		(15.1)		(0.1)		(7.3)
Prior Service Credit (Cost)
Amortization	0.1		—		—		—		(0.2)		(0.2)
Curtailment Gain	—		—		0.1		—		—		—
Change in Income Tax	33.2		4.7		1.5		2.6		0.1		2.1
Accumulated Other Comprehensive Income (Loss) at End of Year	$	(494.6)	$	(455.4)	$	(54.7)	$	(48.9)	$	19.3	$	19.5

Plan Assets

The objective of our U.S. pension and OPEB plans is to maximize long-term return, within acceptable risk levels, in a manner that is consistent with the fiduciary standards of the Employee Retirement Income Security Act (ERISA), while maintaining sufficient liquidity to pay current benefits and expenses.

Our U.S. qualified defined benefit pension plan assets include a diversified blend of domestic, international, global, and emerging market equity securities, fixed income securities, opportunistic credit securities, real estate investments, alternative investments, and cash equivalents.  Equity securities are comprised of funds and individual securities that are benchmarked against the respective indices specified below. International and global equity funds may allocate a certain percentage of assets to forward currency contracts. Fixed income securities include U.S. government and agency asset-backed securities, corporate investment-grade bonds, private placement securities, and bonds issued by states or other municipalities. Opportunistic credits consist of investments in funds that hold varied fixed income investments purchased at depressed values with the intention to

later sell those investments for a gain. Real estate investments consist primarily of funds that hold commercial real estate investments. Alternative investments, which include private equity direct investments, private equity funds of funds, and hedge funds of funds, utilize proprietary strategies that are intended to have a low correlation to the U.S. stock market. Prohibited investments include, but are not limited to, unlisted securities, options, short sales, and investments in securities issued by Unum Group or its affiliates. The invested asset classes, asset types, and benchmark indices for our U.S. qualified defined benefit pension plan is as follows. We target approximately 36 percent to equity securities, 40 percent to fixed income securities, and 24 percent to opportunistic credits, alternative, and real estate investments.

Asset Class	Asset Type	Benchmark Indices
Equity Securities	Collective funds; Individual holdings	Standard & Poor's 500; Russell 2000 Value and Growth; Morgan Stanley Capital International (MSCI) Europe Australasia Far East Small Cap; MSCI Emerging Markets; MSCI World and World Minimum Volatility; FTSE RAFI All-World Low Volatility
Fixed Income	Individual holdings	Bloomberg Barclays Long Government/Corporate Index
Opportunistic Credits	Collective fund	Custom Index
Real Estate	Collective fund	National Council of Real Estate Investment Fund Open-end Diversified Core Equity Index
Alternative Investments (Hedge and Private Equity)	Fund of funds; Direct investments	Hedge Fund Research Institute Fund of Funds; Custom Index

Assets for our U.K. pension plan are primarily invested in a pooled diversified growth fund. This fund invests in assets such as global equities, hedge funds, commodities, below-investment-grade fixed income securities, and currencies. The objectives of the fund are to generate capital appreciation over the course of a complete economic and market cycle and to deliver equity-like returns in the medium-to-long term while maintaining approximately two thirds of the volatility of equity markets. Performance of this fund is measured against LIBOR plus four and a half percent. The remaining assets in the U.K. plan are invested in leveraged interest rate and inflation gilt funds of varying durations designed to broadly match the interest rate and inflation sensitivities of the plan's liabilities. The current target allocation for the assets is 65 percent diversified growth assets and 35 percent interest rate and inflation gilt funds. There are no categories of investments that are specifically prohibited by the U.K. plan, but there are general guidelines that ensure prudent investment action is taken. Such guidelines include the prevention of the plan from using derivatives for speculative purposes and limiting the concentration of risk in any one type of investment.

Assets for the OPEB plan are invested in life insurance contracts issued by one of our insurance subsidiaries. The assets support life insurance benefits payable to certain former retirees covered under the OPEB plan. The terms of these contracts are consistent in all material respects with those the subsidiary offers to unaffiliated parties that are similarly situated. There are no categories of investments specifically prohibited by the OPEB plan.

We believe our investment portfolios are well diversified by asset class and sector, with no undue risk concentrations in any one category.

The categorization of fair value measurements by input level for the invested assets in our U.S. pension plans is shown below. The carrying values of investment-related receivables and payables approximate fair value due to the short-term nature of the securities and are not included in the following chart. Investments valued using net asset value (NAV) as a practical expedient are not required to be categorized by input level, but these investments are included as follows to reconcile to total invested assets.

	December 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		NAV as a Practical Expedient		Total
	(in millions of dollars)
Invested Assets
Equity Securities:
U.S. Large Cap	$	—	$	—	$	—	$	112.6	$	112.6
U.S. Small Cap	25.8		—		—		33.2		59.0
Global	—		—		—		307.9		307.9
International	—		—		—		31.6		31.6
Emerging Markets	—		—		—		62.3		62.3
Fixed Income Securities:
U.S. Government and Agencies	227.8		—		—		—		227.8
Corporate	—		445.6		—		—		445.6
State and Municipal Securities	—		3.7		—		—		3.7
Opportunistic Credits	—		—		—		200.4		200.4
Real Estate	—		—		—		108.9		108.9
Alternative Investments:
Private Equity Direct Investments	—		—		—		62.1		62.1
Private Equity Funds of Funds	—		—		—		39.2		39.2
Cash Equivalents	46.3		—		—		—		46.3
Total Invested Assets	$	299.9	$	449.3	$	—	$	958.2	$	1,707.4

	December 31, 2019
	Quoted Prices in Active  Markets for  Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		NAV as a Practical Expedient		Total
	(in millions of dollars)
Invested Assets
Equity Securities:
U.S. Large Cap	$	—	$	—	$	—	$	95.2	$	95.2
U.S. Small Cap	23.0		—		—		24.8		47.8
Global	—		—		—		299.1		299.1
International	—		—		—		28.3		28.3
Emerging Markets	—		—		—		50.4		50.4
Fixed Income Securities:
U.S. Government and Agencies	199.0		—		—		—		199.0
Corporate	—		391.1		—		—		391.1
State and Municipal Securities	—		2.5		—		—		2.5
Opportunistic Credits	—		—		—		196.5		196.5
Real Estate	—		—		—		108.4		108.4
Alternative Investments:
Private Equity Direct Investments	—		—		—		57.7		57.7
Private Equity Funds of Funds	—		—		—		38.4		38.4
Cash Equivalents	82.4		—		—		—		82.4
Total Invested Assets	$	304.4	$	393.6	$	—	$	898.8	$	1,596.8

Level 1 investments consist of individual holdings that are valued based on unadjusted quoted prices from active markets for identical securities. Level 2 investments consist of individual holdings that are valued using observable inputs through market corroborated pricing.

Certain equity, opportunistic credit, and real estate investments are valued based on the NAV of the underlying holdings. We made no adjustments to the NAV for 2020 or 2019. These investments have no unfunded commitments and no specific redemption restrictions.

Alternative investments are valued based on NAV in a period ranging from one month to one quarter in arrears. We evaluate the need for adjustments to the NAV based on market conditions and discussions with fund managers in the period subsequent to the valuation date and prior to issuance of the financial statements. We made no adjustments to the NAV for 2020 or 2019. The private equity direct investments and private equity funds of funds generally cannot be redeemed by investors. Distributions of capital from the sale of underlying fund assets may occur at any time, but are generally concentrated between five and eight years from the formation of the fund.

The categorization of fair value measurements by input level for the invested assets in our U.K. pension plan is shown below. Investments valued using NAV as a practical expedient are not required to be categorized by input level, but these investments are included as follows to reconcile to total invested assets.

	December 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		NAV as a Practical Expedient		Total
	(in millions of dollars)
Plan Assets
Diversified Growth Assets	$	—	$	—	$	—	$	176.0	$	176.0
Fixed Interest and Index-linked Securities	116.8		—		—		—		116.8
Cash Equivalents	1.3		—		—		—		1.3
Total Plan Assets	$	118.1	$	—	$	—	$	176.0	$	294.1

	December 31, 2019
	Quoted Prices in Active  Markets for  Identical Assets (Level 1)		Significant  Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		NAV as a Practical Expedient		Total
	(in millions of dollars)
Plan Assets
Diversified Growth Assets	$	—	$	—	$	—	$	163.0	$	163.0
Fixed Interest and Index-linked Securities	89.6		—		—		—		89.6
Cash Equivalents	0.2		—		—		—		0.2
Total Plan Assets	$	89.8	$	—	$	—	$	163.0	$	252.8

Level 1 fixed interest and index-linked securities consist of individual funds that are valued based on unadjusted quoted prices from active markets for identical securities. Diversified growth assets are valued based on the NAV of the underlying holdings. We made no adjustments to the NAV for 2020 or 2019. These investments have no unfunded commitments and no specific redemption restrictions.

The categorization of fair value measurements by input level for the assets in our OPEB plan is as follows:

	December 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Assets
Life Insurance Contracts	$	—	$	—	$	9.3	$	9.3

	December 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Assets
Life Insurance Contracts	$	—	$	—	$	9.9	$	9.9

The fair value is represented by the actuarial present value of future cash flows of the contracts.

Changes in our OPEB plan assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2020 and 2019 are as follows:

	Year Ended December 31, 2020
	Beginning of Year		Actual Return on Plan Assets		Contributions		Net Benefits and Expenses Paid		End of Year
	(in millions of dollars)
Life Insurance Contracts	$	9.9	$	0.1	$	9.9	$	(10.6)	$	9.3

	Year Ended December 31, 2019
	Beginning of Year		Actual Return on Plan Assets		Contributions		Net Benefits and Expenses Paid		End of Year
	(in millions of dollars)
Life Insurance Contracts	$	10.1	$	0.2	$	10.8	$	(11.2)	$	9.9

For the years ended December 31, 2020 and 2019, the actual return on plan assets relates solely to investments still held at the reporting date. There were no transfers into or out of Level 3 during 2020 or 2019.

Measurement Assumptions

We use a December 31 measurement date for each of our plans. The weighted average assumptions used in the measurement of our benefit obligations as of December 31 and our net periodic benefit costs for the years ended December 31 are as follows:

	Pension Benefits
	U.S. Plans				U.K. Plan				OPEB
	2020		2019		2020		2019		2020		2019
Benefit Obligations
Discount Rate	2.90	%	3.60	%	1.40	%	2.00	%	2.60	%	3.40	%
Rate of Compensation Increase	N/A		N/A		2.80	%	2.90	%	N/A		N/A
Net Periodic Benefit Cost
Discount Rate	3.60	%	4.40	%	2.00	%	2.90	%	3.40	%	4.40	%
Expected Return on Plan Assets	7.00	%	7.00	%	4.10	%	4.30	%	5.75	%	5.75	%
Rate of Compensation Increase	N/A		N/A		2.90	%	3.70	%	N/A		N/A

We set the discount rate assumption annually for each of our retirement-related benefit plans at the measurement date to reflect the yield on a portfolio of high quality fixed income corporate debt instruments matched against the projected cash flows for future benefits.

Our long-term rate of return on plan assets assumption is selected from a range of probable return outcomes from an analysis of the asset portfolio.  Our expectations for the future investment returns of the asset categories are based on a combination of historical market performance, evaluations of investment forecasts obtained from external consultants and economists, and current market yields. The methodology underlying the return assumption includes the various elements of the expected return for each asset class such as long-term rates of return, volatility of returns, and the correlation of returns between various asset classes. The expected return for the total portfolio is calculated based on the plan's strategic asset allocation.  Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.  Risk tolerance is established through consideration of plan liabilities, plan funded status, and corporate financial condition.

Our mortality rate assumption reflects our best estimate, as of the measurement date, of the life expectancies of plan participants in order to determine the expected length of time for benefit payments. We derive our assumptions from industry mortality tables.

The expected return assumption for the life insurance reserve for our OPEB plan is based on full investment in fixed income securities with an average book yield of 4.87 percent and 4.74 percent in 2020 and 2019, respectively.

The rate of compensation increase assumption for our U.K. pension plan is generally based on periodic studies of compensation trends.

At December 31, 2020 and 2019, the annual rates of increase in the per capita cost of covered postretirement health care benefits assumed for the next calendar year are 6.50 percent for benefits payable to both retirees prior to Medicare eligibility as well as Medicare eligible retirees. The rates are assumed to change gradually to 5.00 percent by 2027 for measurement at December 31, 2020 and remain at that level thereafter. The annual rates of increase in the per capita cost of covered postretirement health benefits do not apply to retirees whose postretirement health care benefits are provided through an exchange.

Net Periodic Benefit Cost

The following table provides the components of the net periodic benefit cost (credit) for the years ended December 31.

	Pension Benefits
	U.S. Plans						U.K. Plan						OPEB
	2020		2019		2018		2020		2019		2018		2020		2019		2018
	(in millions of dollars)
Service Cost	$	11.0	$	10.9	$	9.1	$	—	$	—	$	—	$	—	$	—	$	—
Interest Cost	73.0		83.3		79.8		4.9		6.1		5.9		4.1		5.3		4.9
Expected Return on Plan Assets	(106.7)		(99.4)		(104.5)		(9.5)		(8.9)		(8.9)		(0.5)		(0.6)		(0.6)
Amortization of:
Net Actuarial Loss (Gain)	18.7		20.2		21.7		1.1		0.9		0.6		—		(2.5)		—
Prior Service Credit	0.1		—		—		—		—		—		(0.2)		(0.2)		(0.2)
Curtailment Gain	—		—		—		0.1		—		—		—		—		—
Total Net Periodic Benefit Cost	$	(3.9)	$	15.0	$	6.1	$	(3.4)	$	(1.9)	$	(2.4)	$	3.4	$	2.0	$	4.1

The service cost component of net periodic pension and postretirement benefit cost is included as a component of compensation expense in our consolidated statements of income. All other components of net periodic pension and postretirement benefit cost are included in other expenses.

Benefit Payments

The following table provides expected benefit payments, which reflect expected future service, as appropriate.

	Pension Benefits
	U.S. Plans		U.K. Plan		OPEB
	(in millions of dollars)
Year					Gross		Subsidy Payments		Net
2021	$	75.0	$	6.1	$	11.1	$	0.1	$	11.0
2022	78.4		6.1		10.5		0.1		10.4
2023	82.2		6.5		10.0		0.1		9.9
2024	86.1		7.0		9.5		0.1		9.4
2025	90.1		7.2		9.0		0.1		8.9
2026-2030	514.9		42.3		38.3		0.2		38.1

Funding Policy

The funding policy for our U.S. qualified defined benefit plan is to contribute annually an amount at least equal to the minimum annual contribution required under ERISA and other applicable laws, but generally not greater than the maximum amount that can be deducted for federal income tax purposes. We had no regulatory contribution requirements for our U.S. qualified defined benefit plan in 2020 and made a de minimis amount of voluntary contributions during 2020. We do not expect to make any contributions in 2021. The funding policy for our U.S. non-qualified defined benefit pension plan is to contribute the amount of the benefit payments made during the year. Our expected return on plan assets and discount rate will not affect the cash contributions we are required to make to our U.S. pension plan because such contributions are determined under the minimum funding requirements as set forth in ERISA.

We made no contributions to our U.K. plan during 2020, nor do we expect to make any contributions in 2021, either voluntary or those required to meet the minimum funding requirements under U.K. legislation.

Our OPEB plan represents a non-vested, non-guaranteed obligation, and current regulations do not require specific funding levels for these benefits, which are comprised of retiree life, medical, and dental benefits. It is our practice to use general assets to pay medical and dental claims as they come due in lieu of utilizing plan assets for the medical and dental benefit portions of our OPEB plan.

Defined Contribution Plans

We offer a 401(k) plan to all eligible U.S. employees under which a portion of employee contributions is matched. We match dollar-for-dollar up to 5.0 percent of base salary and any recognized sales and performance-based incentive compensation for employee contributions into the plan. We also make an additional non-elective contribution of 4.5 percent of earnings for all eligible employees and a separate transition contribution for eligible employees who met certain age and years of service criteria as of December 31, 2013. The separate transition contributions continued through December 31, 2020, at which point they expired. The 401(k) plan remains in compliance with ERISA guidelines and continues to qualify for a “safe harbor” from annual discrimination testing.

We also offer a defined contribution plan to all eligible U.K. employees under which a portion of employee contributions is matched. We match two pounds for every one pound on the first 1.0 percent of employee contributions into the plan and match additional employee contributions pound-for-pound up to 5.0 percent of base salary. We also make an additional non-elective contribution of 6.0 percent of base salary for all eligible employees who met certain age and years of service criteria as of March 31, 2016.

During the years ended December 31, 2020, 2019, and 2018, we recognized costs of $83.4 million, $77.3 million, and $72.7 million, respectively, for our U.S. defined contribution plan. We recognized costs of $5.0 million, $4.4 million, and $4.2 million in 2020, 2019, and 2018, respectively, for our U.K. defined contribution plan.