Employee Benefit Plans

12 Months Ended

Sep. 30, 2020

Defined Benefit Plans And Other Postretirement Benefit Plans Disclosures [Abstract]

Employee Benefit Plans

5.    Employee Benefit Plans

Defined Benefit Plans — Oshkosh and certain of its subsidiaries sponsor multiple defined benefit pension plans for certain employees providing services to Oshkosh, Oshkosh Defense, Airport Products, Oshkosh Commercial and Pierce. The benefits provided are based primarily on average compensation, years of service and date of birth. Hourly plans are generally based on years of service and a benefit dollar multiplier. The Company periodically amends the plans, including changing the benefit dollar multipliers and other revisions. Effective December 31, 2012, salaried participants in the pension plans no longer receive credit, other than for vesting purposes, for eligible earnings. In December 2013, the Pierce pension plan was amended to close participation in the plan for new production employees. Effective October 1, 2016, the Oshkosh Defense hourly defined benefit pension plan was closed to new production employees.

Determination of defined benefit pension and postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate the benefits that employees earn while working, as well as the present value of those benefits. The Company uses the services of independent actuaries to assist with these calculations. The Company determines the discount rate used each year based on the rate of return currently available on a portfolio of high-quality fixed-income investments with a maturity that is consistent with the projected benefit payout period. The Company’s long-term rate of return on assets is based on consideration of historical and forward-looking returns and the current asset allocation strategy.

Supplemental Executive Retirement Plans (SERP) — The Company maintains defined benefit and defined contribution SERPs for certain executive officers of Oshkosh and its subsidiaries. In fiscal 2013, the Oshkosh defined benefit SERP was amended to freeze benefits under the plan and certain executive officers became eligible for the new Oshkosh defined contribution SERP. At the same time, the Company established the Trust to fund obligations under the Oshkosh SERPs. As of September 30, 2020, the Trust held assets of $21.4 million. The Trust assets are subject to claims of the Company’s creditors. The Trust assets are included in “Other current assets” and “Other long-term assets” in the Consolidated Balance Sheets. The Company recognized
$1.6 million, $1.6 million and $2.0 million of expense under the Oshkosh defined contribution SERP in fiscal 2020, 2019 and 2018, respectively.

Postretirement Medical Plans — Oshkosh and certain of its subsidiaries sponsor multiple postretirement benefit plans for Oshkosh Defense, JLG, and Kewaunee hourly employees, retirees and their spouses. The plans generally provide health benefits based on years of service and date of birth. These plans are unfunded.

Changes in benefit obligations and plan assets, as well as the funded status of the Company’s defined benefit pension plans and postretirement benefit plans as of and for the fiscal years ended September 30, 2020 and 2019, were as follows (in millions):

							Postretirement
	Pension Benefits						Health and Other
	2020			2019			2020			2019
Accumulated benefit obligation at September 30	$	601.1		$	542.8		$	53.3		$	51.4
Change in projected benefit obligation
Benefit obligation at October 1	$	546.5		$	455.8		$	51.4		$	46.6
Service cost		10.1			9.1			3.5			3.1
Interest cost		17.1			18.7			1.6			1.9
Actuarial loss (gain)		44.0			77.4			5.4			1.4
Participant contributions		—			0.1			—			—
Plan amendments		9.8			0.2			(6.5	)		—
Curtailments		—			1.2			—			—
Benefits paid		(15.8	)		(14.1	)		(2.1	)		(1.6	)
Currency translation adjustments		1.9			(1.9	)		—			—
Benefit obligation at September 30	$	613.6		$	546.5		$	53.3		$	51.4
Change in plan assets
Fair value of plan assets at October 1	$	408.9		$	384.2		$	—		$	—
Actual return on plan assets		35.4			33.9			—			—
Company contributions		11.4			8.8			2.1			1.6
Participant contributions		—			0.1			—			—
Expenses paid		(4.3	)		(2.2	)		—			—
Benefits paid		(15.8	)		(14.1	)		(2.1	)		(1.6	)
Currency translation adjustments		1.7			(1.8	)		—			—
Fair value of plan assets at September 30	$	437.3		$	408.9		$	—		$	—
Funded status of plan - underfunded at September 30	$	(176.3	)	$	(137.6	)	$	(53.3	)	$	(51.4	)
Recognized in consolidated balance sheet at September 30
Accrued benefit liability (current liability)	$	(1.9	)	$	(1.8	)	$	(2.5	)	$	(1.2	)
Accrued benefit liability (long-term liability)		(174.4	)		(135.8	)		(50.8	)		(50.2	)
	$	(176.3	)	$	(137.6	)	$	(53.3	)	$	(51.4	)

Recognized in accumulated other comprehensive income (loss) as of September 30 (net of taxes)
Net actuarial (loss) gain	$	(89.0	)	$	(68.9	)	$	(6.1	)	$	(1.9	)
Prior service (cost) benefit		(13.4	)		(7.0	)		12.6			8.4
	$	(102.4	)	$	(75.9	)	$	6.5		$	6.5

Weighted-average assumptions as of September 30
Discount rate	2.71	%	3.17	%		2.36	%		3.10	%
Expected return on plan assets	4.89	%	5.49	%	n/a			n/a

Pension benefit plans with accumulated benefit obligations in excess of plan assets consisted of the following (in millions):

	September 30,
	2020		2019
Projected benefit obligation	$	613.6	$	546.5
Accumulated benefit obligation		601.1		542.8
Fair value of plan assets		437.3		408.9

The components of net periodic benefit cost for fiscal years ended September 30 were as follows (in millions):

										Postretirement
	Pension Benefits									Health and Other
	2020			2019			2018			2020			2019			2018
Components of net periodic benefit cost
Service cost	$	10.1		$	9.1		$	10.5		$	3.5		$	3.1		$	3.7
Interest cost		17.1			18.7			17.9			1.6			1.9			1.8
Expected return on plan assets		(20.6	)		(19.9	)		(20.1	)		—			—			—
Amortization of prior service cost (benefit)		1.6			1.7			1.8			(0.9	)		(1.5	)		(0.9	)
Curtailment/settlement		0.1			1.2			—			—			—			—
Amortization of net actuarial loss (gain)		3.3			0.2			1.9			(0.2	)		(0.2	)		0.1
Expenses paid		4.0			2.5			1.9			—			—			—
Net periodic benefit cost	$	15.6		$	13.5		$	13.9		$	4.0		$	3.3		$	4.7
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net actuarial loss (gain)	$	29.4		$	63.3		$	(35.9	)	$	5.5		$	1.4		$	(6.5	)
Prior service cost (benefit)		9.8			0.2			—			(6.5	)		—			(0.6	)
Amortization of prior service benefit (cost)		(1.6	)		(1.7	)		(1.8	)		0.9			1.5			0.9
Amortization of net actuarial (loss) gain		(3.3	)		(0.2	)		(1.9	)		0.2			0.2			(0.1	)
	$	34.3		$	61.6		$	(39.6	)	$	0.1		$	3.1		$	(6.3	)
Weighted-average assumptions
Discount rate	3.17%				4.18	%		3.85	%	3.10%				4.20	%		3.71	%
Expected return on plan assets	5.49%				5.50	%		5.93	%	n/a			n/a			n/a

Components of net periodic benefit cost other than “Service cost” and “Expenses paid” are included in “Miscellaneous, net” in the Consolidated Statements of Income. 

Amounts expected to be recognized in pension and supplemental employee retirement plan net periodic benefit costs during fiscal 2021 included in “Accumulated other comprehensive loss” in the Consolidated Balance Sheet at September 30, 2020 are prior service costs of $2.3 million ($1.7 million net of tax) and unrecognized net actuarial losses of $4.9 million ($3.7 million net of tax).

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the Company was 6.5% in fiscal 2020, declining to 5.0% in fiscal 2025. If the health care cost trend rate was increased by 100 basis points, the accumulated postretirement benefit obligation at September 30, 2020 would increase by $9.9 million and the net periodic postretirement benefit cost for fiscal 2021 would increase by $0.8 million. A corresponding decrease of 100 basis points would decrease the accumulated postretirement benefit obligation at September 30, 2020 by $7.5 million and the net periodic postretirement benefit cost for fiscal 2021 would decrease by $0.6 million.

The Company’s Board of Directors has appointed an Investment Committee (Committee), which consists of members of management, to manage the investment of the Company’s pension plan assets. The Committee has established and operates under an Investment Policy. The Committee determines the asset allocation and target ranges based upon periodic asset/liability studies and capital market projections. The Committee retains external investment managers to invest the assets and an adviser to monitor the performance of the investment managers. The Investment Policy prohibits certain investment transactions, such as commodity contracts, margin transactions, short selling and investments in Company securities, unless the Committee gives prior approval.

The weighted-average of the Company’s pension plan asset allocations and target allocations at September 30, 2020 by asset category, were as follows:

	Target %	Actual
Asset Category
Fixed income	40% - 50%		47	%
Large-cap equity	20% - 30%		24	%
Mid-cap equity	5% - 15%		11	%
Small-cap equity	5% - 10%		7	%
Global equity	5% - 10%		7	%
Other	0% - 10%		4	%
			100	%

The Company’s pension plan investment strategy is based on an expectation that, over time, equity securities will provide higher returns than debt securities. The plans primarily minimize the risk of larger losses under this strategy through diversification of investments by asset class, by investing in different styles of investment management within the classes and using a number of different investment managers. Beginning in fiscal 2016, the Company implemented a dynamic liability driven investment strategy for those pension plans with frozen benefits. The objective of this strategy is to more closely align the pension plan assets with the pension plan liabilities in terms of how both respond to changes in interest rates. Plan assets are allocated to two investment categories, including a category containing high quality fixed income securities and another category comprised of traditional securities and alternative asset classes. Assets are managed externally according to guidelines approved by the Company. Over time, the Company intends to reduce assets allocated to the return seeking category and correspondingly increase assets allocated to the high quality fixed income category to align assets more closely with the pension plan obligations.

The plans’ expected return on assets is based on management’s and the Committee’s expectations of long-term average rates of return to be achieved by the plans’ investments. These expectations are based on the plans’ historical returns and expected returns for the asset classes in which the plans are invested.

The fair value of plan assets by major category and level within the fair value hierarchy was as follows (in millions):

	Quoted Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2020
Common stocks
U.S. companies (a)	$	77.4	$	8.1	$	—	$	85.5
International companies (b)		—		13.5		—		13.5
Mutual funds (a)		81.5		—		—		81.5
Government and agency bonds (c)		—		7.7		—		7.7
Corporate bonds and notes (d)		—		8.3		—		8.3
Money market funds (e)		12.5		—		—		12.5
Other		—		—		0.8		0.8
	$	171.4	$	37.6	$	0.8		209.8
Investments measured at net asset value (NAV) (f)								227.5
							$	437.3
September 30, 2019
Common stocks
U.S. companies (a)	$	75.9	$	6.9	$	—	$	82.8
International companies (b)		—		13.3		—		13.3
Mutual funds (a)		72.7		—		—		72.7
Government and agency bonds (c)		—		7.0		—		7.0
Corporate bonds and notes (d)		—		7.5		—		7.5
Money market funds (e)		11.7		—		—		11.7
Other		—		—		0.7		0.7
	$	160.3	$	34.7	$	0.7		195.7
Investments measured at net asset value (NAV) (f)								213.2
							$	408.9

^(a) Primarily valued using a market approach based on the quoted market prices of identical instruments that are actively traded on public exchanges.

^(b) Valuation model looks at underlying security “best” price, exchange rate for underlying security’s currency against the U.S. dollar and ratio of underlying security to American depository receipt.

^(c) These investments consist of debt securities issued by the U.S. Treasury, U.S. government agencies and U.S. government-sponsored enterprises and have a variety of structures, coupon rates and maturities. These investments are considered to have low default risk as they are guaranteed by the U.S. government. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.

^(d) These investments consist of debt obligations issued by a variety of private and public corporations. These are investment grade securities which historically have provided a steady stream of income. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.

^(e) These investments largely consist of short-term investment funds and are valued using a market approach based on the quoted market prices of identical instruments.

^(f) These investments consist of privately placed funds that are valued based on NAV. NAV of the funds is based on the fair value of each funds underlying investments. In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plans assets that calculate fair value based on NAV per share practical expedient as of September 30, 2020 (in millions):

	Fair Value		Unfunded Commitments		Redemption Frequency (if Currently Eligible)	Redemption Notice Period (1)
Common collective trust	$	227.5	$	—	N/A	15 days

⁽¹⁾ Represents the maximum redemption period. A portion of the investment does not have any redemption period restrictions.

The following table sets forth additional disclosures for the fair value measurement of the fair value of pension plans assets that calculate fair value based on NAV per share practical expedient as of September 30, 2019 (in millions):

	Fair Value		Unfunded Commitments		Redemption Frequency (if Currently Eligible)	Redemption Notice Period (1)
Common collective trust	$	213.2	$	—	N/A	15 days

⁽¹⁾ Represents the maximum redemption period. A portion of the investment does not have any redemption period restrictions.

The Company’s policy is to fund the pension plans in amounts that comply with contribution limits imposed by law. The Company expects to make contributions of approximately $25.0 million to its pension plans in fiscal 2021.

The Company’s estimated future benefit payments under Company sponsored plans were as follows (in millions):

Fiscal Year Ending	Pension Benefits				Postretirement Health
September 30,	Qualified		Non-Qualified		and Other
2021	$	15.7	$	1.9	$	2.5
2022		17.2		1.9		3.0
2023		18.9		2.0		3.1
2024		20.4		2.0		3.6
2025		21.9		1.9		3.4
2026-2030		128.4		10.0		20.9

Multi-Employer Pension Plans — The Company participates in the Boilermaker-Blacksmith National Pension Trust (Employer Identification Number 48-6168020), a multi-employer defined benefit pension plan related to collective bargaining employees at the Company’s Kewaunee facility. The Company’s contributions and pension benefits payable under the plan and the administration of the plan are determined by the terms of the related collective-bargaining agreement, which expires on May 1, 2022. The multi-employer plan poses different risks to the Company than single-employer plans in the following respects:

1. The Company’s contributions to the multi-employer plan may be used to provide benefits to all participating employees of the program, including employees of other employers.

2. In the event that another participating employer ceases contributions to the multi-employer plan, the Company may be responsible for any unfunded obligations along with the remaining participating employers.

3. If the Company chooses to withdraw from the multi-employer plan, the Company may be required to pay a withdrawal liability based on the underfunded status of the plan at that time.

As of December 31, 2019, the plan-certified zone status as defined by the Pension Protection Act of 2006 was Yellow and accordingly the plan has implemented a financial improvement plan. The Company’s contributions to the multi-employer plan did not exceed 5% of the total plan contributions for fiscal 2020, 2019 or 2018. The Company made contributions to the plan of $1.5 million, $1.4 million and $1.3 million in fiscal 2020, 2019 and 2018, respectively.

401(k) and Defined Contribution Pension Replacement Plans — The Company has defined contribution 401(k) plans for substantially all domestic employees. The plans allow employees to defer 2% to 100% of their income on a pre-tax basis. Each employee who elects to participate is eligible to receive Company matching contributions, which are based on employee contributions to the plans, subject to certain limitations. For pension replacement plans, the Company contributes between 2% and 6% of an employee’s base pay, depending on age. Amounts expensed for Company matching and discretionary contributions were $39.5 million, $43.3 million and $42.9 million in fiscal 2020, 2019 and 2018, respectively.