EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2021

Retirement Benefits [Abstract]

EMPLOYEE BENEFITS

NOTE 15 - EMPLOYEE BENEFITS

Pension Plans

Citizens maintains a non-contributory pension plan (the “Qualified Plan”) that was closed to new hires and re-hires effective January 1, 2009, and frozen to all participants effective December 31, 2012. Benefits under the Qualified Plan are based on employees’ years of service and highest 5-year average of eligible compensation. The Qualified Plan is funded on a current basis, in compliance with the requirements of ERISA. Citizens also provides an unfunded, non-qualified supplemental retirement plan (the “Non-Qualified Plan”), which was closed and frozen effective December 31, 2012. The Company’s Qualified Plan and Non-Qualified Plan are collectively referred to as the Company’s “Pension Plans”. The Pension Plans’ investments include equity-oriented and fixed income-oriented investments including, but not limited to, government obligations, corporate bonds, and common and collective equity and fixed income funds.

The following table presents changes in the fair value of the Company’s Pension Plans’ assets, projected benefit obligation, funded status, and accumulated benefit obligation:

	Year Ended December 31,
	Qualified Plan		Non-Qualified Plan
(in millions)	2021	2020	2021	2020
Fair value of plan assets as of January 1	$1,343	$1,246	$—	$—
Actual return on plan assets	125	165	—	—
Employer contributions	—	—	8	8
Benefits and administrative expenses paid	(78)	(68)	(8)	(8)
Fair value of plan assets as of December 31	1,390	1,343	—	—
Projected benefit obligation	1,083	1,157	99	105
Pension asset (obligation)	$307	$186	($99)	($105)
Accumulated benefit obligation	$1,083	$1,157	$99	$105

The Company’s projected benefit obligation decreased for the year ending December 31, 2021 due to an actuarial gain and benefits paid exceeded the interest cost on remaining obligations. Citizens recognized actuarial gains and losses on the Pension Plans in AOCI resulting in an ending balance of $465 million and $571 million at December 31, 2021 and 2020, respectively.

Citizens does not plan to contribute to the Qualified Plan in 2022. No contributions were made to the Qualified Plan in 2021 or 2020. Citizens expects to contribute $8 million to the Non-Qualified Plan in 2022 and contributed $8 million to the Non-Qualified Plan in 2021 and 2020.

The following table presents other changes in plan assets and benefit obligations recognized in OCI for the Company’s Pension Plans:

	Year Ended December 31,
(in millions)	2021	2020	2019
Net periodic pension cost (income)	($31)	($22)	($5)
Net actuarial loss (gain)	(74)	37	(49)
Amortization of prior service credit	—	—	—
Amortization of net actuarial loss	(17)	(17)	(19)
Settlement	(15)	—	—
Total gain (loss) recognized in other comprehensive income (loss)	(106)	20	(68)
Total (loss) gain recognized in net periodic pension cost (income) and other comprehensive income (loss)	($137)	($2)	($73)

Costs under the Company’s Pension Plans are actuarially computed and include current service costs and amortization of prior service costs over the participants’ average future working lifetime. The actuarial cost method used in determining the net periodic pension cost is the projected unit method. During 2021, lump sum payments made under the Qualified Plan triggered settlement accounting. In accordance with the applicable accounting guidance for defined benefit plans, we performed a remeasurement of the Qualified Plan and recognized a settlement loss.

The following table presents the components of net periodic pension (income) cost for the Company’s Pension Plans:

	Year Ended December 31,
	Qualified Plan			Non-Qualified Plan			Total
(in millions)	2021	2020	2019	2021	2020	2019	2021	2020	2019
Service cost	$3	$3	$3	$—	$—	$—	$3	$3	$3
Interest cost	31	37	41	3	3	4	34	40	45
Expected return on plan assets	(85)	(82)	(72)	—	—	—	(85)	(82)	(72)
Amortization of actuarial loss	14	14	17	3	3	2	17	17	19
Settlement	15	—	—	—	—	—	15	—	—
Net periodic pension (income) cost(1)	($22)	($28)	($11)	$6	$6	$6	($16)	($22)	($5)

(1) In the Consolidated Statements of Operations, service cost is presented in salaries and employee benefits, and all other components of net periodic pension (income) cost are presented in other operating expense.

The following table presents the expected future benefit payments for the Company’s Pension Plans:

	(in millions)
Expected benefit payments by fiscal year ending:
December 31, 2022	$70
December 31, 2023	68
December 31, 2024	68
December 31, 2025	69
December 31, 2026	69
December 31, 2027 - 2031	339

401(k) Plan

Citizens sponsors a 401(k) Plan under which employee tax-deferred/Roth after-tax contributions to the 401(k) Plan are matched by the Company after completion of one year of service. Contributions for substantially all employees are matched at 100% up to an overall limitation of 4% on a pay period basis. In addition, substantially all employees will receive an additional 1% of earnings after completion of one year of service, subject to limits set by the Internal Revenue Service. Amounts expensed by the Company were $63 million in 2021 compared to $78 million in 2020 and $72 million in 2019.