Pension and Postretirement Health Care

9 Months Ended

Sep. 30, 2022

Retirement Benefits [Abstract]

Pension and Postretirement Health Care

Pension and Postretirement Health Care

The following table sets forth the net periodic pension and postretirement benefit expense for Northern Trust’s U.S. Qualified Plan, Non-U.S. Pension Plans, U.S. Non-Qualified Plan, and postretirement health care plan for the three and nine months ended September 30, 2022 and 2021.

TABLE 70: NET PERIODIC PENSION EXPENSE (BENEFIT)

U.S. QUALIFIED PLAN	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
(In Millions)	2022		2021		2022		2021
Service Cost	$	11.1	$	13.1	$	37.5	$	39.5
Interest Cost	12.5		10.4		33.1		30.0
Expected Return on Plan Assets	(21.9)		(20.0)		(62.3)		(60.2)
Amortization
Net Actuarial Loss	—		7.1		11.4		25.9
Prior Service Cost (Credit)	—		(0.1)		(0.1)		(0.3)
Net Periodic Pension Expense	$	1.7	$	10.5	$	19.6	$	34.9
Settlement Expense	17.0		6.9		37.3		24.5
Total Pension Expense	$	18.7	$	17.4	$	56.9	$	59.4

NON-U.S. PENSION PLANS	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
(In Millions)	2022		2021		2022		2021
Service Cost	$	0.4	$	0.5	$	1.3	$	1.6
Interest Cost	0.6		0.5		1.9		1.6
Expected Return on Plan Assets	(0.7)		(0.6)		(2.2)		(1.9)
Amortization
Net Actuarial Loss	0.2		0.3		0.6		0.8
Prior Service Cost	—		—		—		0.1
Net Periodic Pension Expense	$	0.5	$	0.7	$	1.6	$	2.2
Settlement Expense	—		(0.2)		0.7		0.7
Total Pension Expense	$	0.5	$	0.5	$	2.3	$	2.9

U.S. NON-QUALIFIED PLAN	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
(In Millions)	2022		2021		2022		2021
Service Cost	$	1.4	$	1.3	$	4.2	$	3.9
Interest Cost	1.0		0.9		3.0		2.8
Amortization
Net Actuarial Loss	1.8		2.1		5.4		6.2
Prior Service Cost	—		0.1		—		0.1
Net Periodic Pension Expense	$	4.2	$	4.4	$	12.6	$	13.0

POSTRETIREMENT HEALTH CARE PLAN	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
(In Millions)	2022		2021		2022		2021
Service Cost	$	—	$	—	$	—	$	—
Interest Cost	0.1		—		0.3		0.2
Amortization
Net Actuarial (Gain)	(0.1)		—		(0.3)		(0.1)
Prior Service Cost (Credit)	(0.2)		(0.2)		(0.6)		(0.7)
Net Periodic Postretirement (Benefit)	$	(0.2)	$	(0.2)	$	(0.6)	$	(0.6)

Northern Trust’s U.S. Qualified Plan provides participants the option to select lump-sum benefit payments upon retirement and termination of service. During the three and nine months ended September 30, 2022, Northern Trust recognized settlement charges related to its U.S. Qualified Plan of $17.0 million and $37.3 million, respectively, as in the second quarter of 2022 it became probable that total lump-sum payments in 2022 would exceed the settlement threshold of the sum of annual service and interest cost. A settlement charge is also expected to be recorded during the fourth quarter of 2022. During the three and nine months ended September 30, 2021, Northern Trust recognized settlement charges of $6.9 million and $24.5 million, respectively. The settlement charge represents the pro rata amount of the net loss in AOCI that is charged to income based on the proportion of the Projected Benefit Obligation settled to the total Projected Benefit Obligation and is resulting from the normal operation of the plan and not as a result of any special event.

The application of settlement accounting required an interim remeasurement of the U.S. Qualified Plan as of quarter-end. Northern Trust utilized a discount rate of 5.49% based on the established discount rate methodology, and an expected rate of return of 6.50%. The remeasurement and the recognition of settlement charges decreased the Projected Benefit Obligation of the U.S Qualified Plan by $390.3 million from $1,401.3 million as of December 31, 2021 to $1,011.0 million as of September 30, 2022, and decreased the net funded status (over-funded) of the U.S. Qualified Plan by $172.4 million from $307.6 million as of December 31, 2021 to $135.2 million as of September 30, 2022.

The components of net periodic pension expense are recorded in Employee Benefits expense on the consolidated statements of income.

There were no contributions to the U.S. Qualified Plan during the nine months ended September 30, 2022 and 2021, and $20.7 million and $6.7 million of contributions to the U.S. Non-Qualified Plan during the nine months ended September 30, 2022 and 2021, respectively.