EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

EMPLOYEE BENEFITS

NOTE 15 - EMPLOYEE BENEFITS

Pension Plans

Citizens maintains a non-contributory pension plan (the “Citizens 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 Citizens Qualified Plan are based on employees’ years of service and highest 5-year average of eligible compensation. The Citizens Qualified Plan is funded on a current basis, in compliance with the requirements of ERISA.

In connection with the Investors acquisition, effective June 30, 2022, the Company withdrew from a multi-employer plan and transferred the plan assets into a newly established defined benefit pension plan sponsored by Citizens (the “Investors Qualified Plan”). The Investors Qualified Plan was closed to new hires and re-hires effective December 1, 2015, and future benefit accruals were frozen to all participants effective December 31, 2016.

The Citizens Qualified Plan and the Investors Qualified Plan are collectively referred to as the Company’s “Qualified Plans”.

Citizens also provides an unfunded, non-qualified supplemental retirement plan which was closed and frozen effective December 31, 2012. As part of the Investors acquisition the Company also obtained other frozen, non-qualified supplemental retirement and postretirement benefit plans. These plans are collectively referred to as the Company’s “Non-Qualified Plans”.

The Company’s Qualified Plans and Non-Qualified Plans 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 Plan assets, projected benefit obligation, funded status, and accumulated benefit obligation:

	Year Ended December 31,
	Qualified Plans		Non-Qualified Plans
(in millions)	2022	2021	2022	2021
Fair value of plan assets as of January 1	$1,390	$1,343	$—	$—
Actual return on plan assets	(262)	125	—	—
Employer contributions	—	—	8	8
Benefits and administrative expenses paid	(76)	(78)	(8)	(8)
Fair value of plan assets from Investors acquisition	130	—	—	—
Fair value of plan assets as of December 31	1,182	1,390	—	—
Projected benefit obligation	868	1,083	94	99
Pension asset (obligation)	$314	$307	($94)	($99)
Accumulated benefit obligation	$868	$1,083	$94	$99

The Company’s projected benefit obligation for the Qualified Plans as of December 31, 2022 decreased compared to 2021 driven by an actuarial gain given a change in the discount rate and benefits paid exceeding the interest cost on remaining obligations, partially offset by the projected benefit obligation associated with the Investors Qualified Plan. Actuarial losses related to the Pension Plans recognized in AOCI at December 31, 2022 and 2021 were $504 million and $465 million, respectively.

In 2023, Citizens does not plan to contribute to the Qualified Plans and expects to contribute $9 million to the Non-Qualified Plans.

The following table presents the components of net periodic pension (income) cost and other changes in plan assets and benefit obligations recognized in OCI for the Company’s Pension Plans:

	Year Ended December 31,
	Qualified Plans			Non-Qualified Plans			Total
(in millions)	2022	2021	2020	2022	2021	2020	2022	2021	2020
Service cost	$3	$3	$3	$—	$—	$—	$3	$3	$3
Interest cost	34	31	37	3	3	3	37	34	40
Expected return on plan assets	(93)	(85)	(82)	—	—	—	(93)	(85)	(82)
Amortization of actuarial loss	11	14	14	3	3	3	14	17	17
Settlement	—	15	—	—	—	—	—	15	—
Net periodic pension (income) cost(1)	(45)	(22)	(28)	6	6	6	(39)	(16)	(22)
Net actuarial loss (gain)	71	(73)	29	(19)	(1)	8	52	(74)	37
Amortization of net actuarial loss	(11)	(14)	(14)	(3)	(3)	(3)	(14)	(17)	(17)
Settlement	—	(15)	—	—	—	—	—	(15)	—
Total gain (loss) recognized in other comprehensive income (loss)	60	(102)	15	(22)	(4)	5	38	(106)	20
Total (loss) gain recognized in net periodic pension (income) cost and other comprehensive income (loss)	$15	($124)	($13)	($16)	$2	$11	($1)	($122)	($2)

(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.

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 Citizens Qualified Plan triggered settlement accounting. In accordance with the applicable accounting guidance for defined benefit plans, the Company performed a remeasurement of the Citizens Qualified Plan and recognized a settlement loss.

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, 2023	$70
December 31, 2024	71
December 31, 2025	73
December 31, 2026	74
December 31, 2027	75
December 31, 2028 - 2032	369

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 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 1.5% of earnings after completion of one year of service, subject to limits set by the Internal Revenue Service. Amounts expensed by the Company were $86 million in 2022 compared to $63 million in 2021 and $78 million in 2020.