SJW Group maintains noncontributory defined benefit pension plans for its eligible employees. SJWC and CTWS employees hired before March 31, 2008 and January 1, 2009, respectively, are entitled to benefits under the pension plans based on the employee’s years of service and compensation. For SJWC employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee. CTWS employees hired on or after January 1, 2009 are entitled to an additional 1.5% of eligible compensation to their company sponsored savings plan. SJW Group does not have multi-employer plans.

The pension plans are administered by their respective committees where the investment strategy of the investments of the various pension and post-retirement benefit plans are reviewed and approved to achieve the goals of income generation and long-term capital preservation. SJW Group engages third-party investment managers to assist with, among other things, asset allocation strategy, investment policy advice, performance monitoring, and investment manager due diligence. Individual investment decisions have been delegated by the pension plan committees to the investment managers who are also monitored by an investment consultant. Investment managers are not permitted to invest outside of the asset class or strategy under the pension plans’ investment guidelines. The committees ensure that the plans establish a target mix that is expected to achieve its investment objectives, by assuring a broad diversification of investment assets among investment types, while minimizing volatility of the target asset mix, unless market conditions make such a change appropriate to reduce risk. The pension plans require a minimum portion of plan assets to be allocated to fixed income securities and guidelines and restrictions on equity investments for the assets.

Plan assets are marked to market at each measurement date, resulting in unrealized actuarial gains or losses. Unrealized actuarial gains and losses on pension assets are amortized over the expected future working lifetime of participants for actuarial expense calculation purposes. For the SJWC retirement plans, market gains in 2018 decreased pension expense by approximately $2,520 in 2019 and market losses in 2017 increased pension expense by approximately $1,388 in 2018.

Generally, it is expected of the investment managers that the performance of the assets held in the pension plans, computed on a total annual rate of return basis, should meet or exceed specific performance standards over a three-to-five-year period and/or full market cycle. These standards include specific absolute and risk-adjusted performance standards over a three-to-five-year period and/or full market cycle. The expected long-term rate of return on the pension plan assets is between 7.00% and 7.25%.

SJW Group calculates the market-related value of defined benefit pension plan assets, which is defined under FASB ASC Topic 715—“Compensation—Retirement Benefits” as a balance used to calculate the expected return on plan assets, using fair value. The fair value is based on quoted prices in active markets for identical assets and significant observable inputs.

Senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CTWS are eligible to receive additional retirement benefits under the supplemental executive retirement plans and retirement contracts (“SERP”). SJWC’s senior management hired on or after March 31, 2008 are eligible to receive additional retirement benefits under SJWC’s Cash Balance Executive Supplemental Retirement Plans. Both of the plans are non-qualified plans in which only senior management and other designated members of management may participate. The annual cost of the plans has been included in the determination of the net periodic benefit cost shown below. The SERP and Cash Balance Executive Supplemental Retirement Plan had a projected benefit obligation of $41,768 and $25,380 as of December 31, 2019 and 2018, respectively, and net periodic pension cost of $3,219, $2,905 and $2,186 for 2019, 2018 and 2017, respectively. SJWC’s plans are unfunded while CTWS’s SERP is funded through investments consisting primarily of life insurance contracts and assets in a Rabbi Trust. As of December 31, 2019, total investments made to fund CTWS’s SERP was $7,070 which is included in investments in SJW Group’s consolidated balance sheets. The life insurance contracts are valued at cash surrender value of the policies as reported by the insurer. As of December 31, 2019, the value of the life insurance contracts was $3,829.



			Fair Value Measurements at December 31, 2019
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Money market funds	$	20	20	—	—
Mutual funds	834		834	—	—
Fixed income	2,329		2,329	—	—
Total	$	3,183	3,183	—	—

In addition to providing pension and savings benefits, the company also provides health care and life insurance benefits for eligible retired employees under the respective employer-sponsored post-retirement benefits other than pension plans. The benefits are paid by the company and not from plan assets due to limitations imposed by Internal Revenue Service.

SJW Group sponsors flexible spending account plans for its employees for the purpose of providing eligible employees with the opportunity to choose from among the fringe benefits available under the plans. The flexible spending plan is intended to qualify as a cafeteria plan under the provisions of the Internal Revenue Code Section 125. The flexible spending plan allows employees to save pre-tax income in a Health Care Spending Account (“HCSA”) and/or a Dependent Care Spending Account (“DCSA”) to help defray the cost of out-of-pocket medical and dependent care expenses. The annual maximum limit under the HCSA and DCSA plans is $2.5 and $5, respectively.

SJW Group also sponsors salary deferral plans which are defined contribution plans that allow employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the company. For CTWS’s employees hired on or after January 1, 2009 and ineligible to participate in the defined benefit pension plan, CTWS contributes an additional 1.5% of eligible contributions. SJW Group contributions were $2,046, $1,569 and $1,683 in 2019, 2018 and 2017, respectively. All of the company’s contributions are invested at the direction of the employees in funds offered under the plans.

SJW Group maintains a special deferral election plan and a deferred compensation plan and agreements for senior management and a deferral election program for non-employee directors allowing for the deferral of a portion of their earnings each year and to realize an investment return on those funds during the deferral period. Senior management and non-employee directors have

to make an election on the deferral and distribution method of the deferrals before services are rendered. CTWS’s deferred compensation plan allows the company to make discretionary contributions. Senior management and non-employee directors had deferred $7,834, $4,244 and $4,528 under the plans as of December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, $3,801 of the total amount deferred is related to CTWS agreements that were assumed as part of the merger transaction on October 9, 2019.



	Pension Benefits			Other Benefits
	2019	2018	2017	2019	2018	2017
	%	%	%	%	%	%
Discount rate	3.04% - 4.16%	3.52	4.04	2.52% - 4.09%	3.45	3.93
Expected return on plan assets	7.00%, 7.25%	7.00	7.00	4.00%, 7.00%	7.00	7.00
Rate of compensation increase	4.00	4.00	4.00	N/A	N/A	N/A

The expected rate of return on plan assets was determined based on a review of historical returns, for the pension plans and for medium- to large-sized defined benefit pension funds with similar asset allocations. This review generated separate expected returns for each asset class. These expected future returns were then blended based on the pension plans’ target asset allocations.

SJW Group utilized each plan’s projected benefit stream in conjunction with the FTSE Pension Discount Curve (formerly the Citigroup Pension Discount Curve) and the FTSE Above Median Double-A Curve for SJWC and CTWS, respectively, in determining the discount rate used in calculating the pension and other postretirement benefits liabilities at the measurement date.

In 2019 and 2018, SJW Group adopted the newly then issued MP-2019 and MP-2018, respectively, Mortality Improvement Scales to determine mortality assumptions. The tables and scales reflect increasing life expectancies of participants in the United States. See also “Reconciliation of Funded Status” below.



	Pension Benefits							Other Benefits
	2019			2018		2017		2019			2018		2017
Components of net periodic benefit cost
Service cost	$	5,947		5,790		4,699		$	581		616		529
Interest cost	8,506			6,879		6,993		775			627		634
Expected return on assets	(10,118		)	(9,255	)	(7,888	)	(475		)	(450	)	(376	)
Amortization of prior service cost	48			51		94		197			197		198
Recognized actuarial loss	3,984			3,986		3,844		240			321		273
Net periodic benefit cost	$	8,367		7,451		7,742		$	1,318		1,311		1,258

For the defined benefit plans and other postretirement benefits, the benefit obligation is the projected benefit obligation and the accumulated benefit obligation, respectively. The projected benefit obligations and the funded status of the defined benefit pension and other postretirement plans as of December 31 were as follows:



	Pension Benefits					Other Benefits
	2019			2018		2019			2018
Change in benefit obligation
Benefit obligation at beginning of year	$	187,877		196,207		$	17,489		18,003
Service cost	5,947			5,790		581			616
Interest cost	8,506			6,879		775			627
Business combinations	108,162			—		12,537			—
Actuarial (gain)/loss	35,502			(14,447	)	2,027			(988	)
Implicit rate subsidy	—			—		(217		)	(207	)
Plan participants contributions	—			—		85			—
Administrative expenses paid	(10		)	—		—			—
Benefits paid	(7,744		)	(6,552	)	(731		)	(562	)
Benefit obligation at end of year	$	338,240		187,877		$	32,546		17,489
Change in plan assets
Fair value of assets at beginning of year	$	127,610		133,360		$	5,849		6,804
Actual return on plan assets	34,807			(7,700	)	1,972			(262	)
Business combinations	79,382			—		9,314			—
Employer contributions	9,476			8,502		738			629
Plan participants contributions	—			—		85			—
Administrative expenses paid	(10		)	—		(55		)	—
Benefits paid	(7,744		)	(6,552	)	(677		)	(1,322	)
Fair value of plan assets at end of year	243,521			127,610		17,226			5,849
Funded status at end of year	$	(94,719	)	(60,267	)	$	(15,320	)	(11,640	)



	Pension Benefits					Other Benefits
	2019			2018		2019			2018
Fair value of assets at end of year:
Debt securities	$	86,288		42,654		$	5,608		2,200
	36		%	33	%	33		%	38	%
Equity securities	146,210			77,053		10,840			3,416
	60		%	60	%	63		%	58	%
Cash and equivalents	11,023			7,903		778			233
	5		%	6	%	5		%	4	%
Total	$	243,521		127,610		$	17,226		5,849



			Fair Value Measurements at December 31, 2019
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	11,801	11,801	—	—
Equity securities (a)	157,050		149,265	7,785	—
Fixed Income (b)	91,896		31,686	60,210	—
Total	$	260,747	192,752	67,995	—



			Fair Value Measurements at December 31, 2018
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	8,136	8,136	—	—
Equity securities (a)	80,468		74,541	5,927	—
Fixed Income (b)	44,855		—	44,855	—
Total	$	133,459	82,677	50,782	—