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Pension, Other Postretirement Benefits (OPEB) and Savings Plans
 12 Months Ended
Dec. 31, 2024
Defined Benefit Plan Disclosure [Line Items]  
Pension, Other Postretirement Benefits (OPEB) and Savings Plans

Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans

PSEG sponsors and Services administers qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria. PSEG’s qualified pension plans consist of two qualified defined benefit pension plans, Pension Plan of Public Service Enterprise Group Incorporated (Pension Plan I) and Pension Plan of Public Service Enterprise Group Incorporated II (Pension Plan II and, together, the Plans). Each of the qualified pension plans include a Final Average Pay and two Cash Balance components. In addition, represented and non-represented employees are eligible for participation in PSEG’s two defined contribution plans.

PSEG and PSE&G are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions are required to be measured as of the date of their respective year-end Consolidated Balance Sheets. For underfunded plans, the liability is equal to the difference between the plan’s benefit obligation and the fair value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. For OPEB plans, the benefit obligation is the accumulated postretirement benefit obligation. In addition, GAAP requires that the total unrecognized costs for defined benefit pension and OPEB plans be recorded as an after-tax charge to Accumulated Other Comprehensive Income (Loss), a separate component of Stockholders’ Equity. However, for PSE&G, because the amortization of the unrecognized costs is being collected from customers, the accumulated unrecognized costs are recorded as a Regulatory Asset. The unrecognized costs represent actuarial gains or losses and prior service costs which have not been expensed. The charge to Accumulated Other Comprehensive Income (Loss) and the Regulatory Asset for PSE&G are amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations.

In July 2023, PSEG and Fiduciary Counselors Inc., as independent fiduciary of the Plans, entered into a commitment agreement (for a “lift-out”) with The Prudential Insurance Company of America (the Insurer) under which the Plans agreed to purchase a nonparticipating single premium group annuity contract that has transferred to the Insurer approximately $1 billion of the Plans’ defined benefit pension obligations and associated Plan assets related to certain pension benefits. The contract covers approximately 2,000 retirees from PSEG Power & Other, excluding Services (Participants). In August 2023, assets were transferred to the Insurer and the transaction was closed. Under the contract, the Insurer made an irrevocable commitment, and is solely responsible, to pay benefits of each Participant that are due on and after December 31, 2023. The transaction resulted in no changes to the amount of benefits payable to Participants.

Amounts for Servco are not included in any of the following pension and OPEB benefit information for PSEG and its affiliates but rather are separately disclosed later in this note.

The following table provides a roll-forward of the changes in the benefit obligation and the fair value of plan assets during each of the two years in the periods ended December 31, 2024 and 2023. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

Millions

 

 

 

Change in Benefit Obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit Obligation at Beginning of Year (A)

 

$

4,758

 

 

$

5,628

 

 

$

802

 

 

$

851

 

 

 

Service Cost

 

 

94

 

 

 

90

 

 

 

3

 

 

 

3

 

 

 

Interest Cost

 

 

225

 

 

 

259

 

 

 

37

 

 

 

41

 

 

 

Actuarial (Gain) Loss (B)

 

 

(291

)

 

 

103

 

 

 

(39

)

 

 

(30

)

 

 

Gross Benefits Paid

 

 

(309

)

 

 

(352

)

 

 

(76

)

 

 

(68

)

 

 

Settlements

 

 

—

 

 

 

(970

)

 

 

—

 

 

 

—

 

 

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

Benefit Obligation at End of Year (A)

 

$

4,477

 

 

$

4,758

 

 

$

727

 

 

$

802

 

 

 

Change in Plan Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value of Assets at Beginning of Year

 

$

4,140

 

 

$

4,911

 

 

$

440

 

 

$

429

 

 

 

Actual Return on Plan Assets

 

 

134

 

 

 

539

 

 

 

18

 

 

 

51

 

 

 

Employer Contributions

 

 

13

 

 

 

12

 

 

 

41

 

 

 

28

 

 

 

Gross Benefits Paid

 

 

(309

)

 

 

(352

)

 

 

(76

)

 

 

(68

)

 

 

Settlements

 

 

—

 

 

 

(970

)

 

 

—

 

 

 

—

 

 

 

Fair Value of Assets at End of Year

 

$

3,978

 

 

$

4,140

 

 

$

423

 

 

$

440

 

 

 

Funded Status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Status (Plan Assets less Benefit Obligation)

 

$

(499

)

 

$

(618

)

 

$

(304

)

 

$

(362

)

 

 

Additional Amounts Recognized in the Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Accrued Benefit Cost

 

$

(11

)

 

$

(12

)

 

$

(12

)

 

$

(13

)

 

 

Noncurrent Accrued Benefit Cost

 

 

(488

)

 

 

(606

)

 

 

(292

)

 

 

(349

)

 

 

Amounts Recognized

 

$

(499

)

 

$

(618

)

 

$

(304

)

 

$

(362

)

 

 

Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets, Deferred Assets and Deferred Liabilities (C)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Service Cost (Credit)

 

$

—

 

 

$

—

 

 

$

4

 

 

$

6

 

 

 

Net Actuarial Loss (Gain)

 

 

1,481

 

 

 

1,656

 

 

 

(26

)

 

 

(6

)

 

 

Total

 

$

1,481

 

 

$

1,656

 

 

$

(22

)

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits. The vested benefit obligation is the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee’s expected date of separation or retirement.
(B)
For pension benefits and OPEB, the net actuarial gains in 2024 were due primarily to an increase in the discount rate, partially offset by actuarial losses driven by a lower than expected return on assets. For pension benefits, the net actuarial loss in 2023 was due primarily to a decrease in the discount rate. For OPEB, the net actuarial gain in 2023 was primarily due to assumption updates.
(C)
Includes $107 million ($76 million, after-tax) and $143 million ($102 million, after-tax) in AOCL related to Pension and OPEB as of December 31, 2024 and 2023, respectively. Also includes Regulatory Assets of $1,227 million, Deferred Assets of $134 million and Deferred Liabilities of $9 million as of December 31, 2024 and Regulatory Assets of $1,427 million and Deferred Assets of $141 million as of December 31, 2023. The Regulatory Asset amounts do not include $103 million and $55 million as of December 31, 2024 and 2023, respectively, as a result of modifying the method for calculating pension expense for ratemaking purposes, approved by the BPU effective January 1, 2023.

The pension benefits table above provides information relating to the funded status of the qualified and nonqualified pension and OPEB plans on an aggregate basis. As of December 31, 2024, PSEG had funded approximately 89% of its projected pension benefit obligation. This percentage does not include $165 million of assets in the Rabbi Trust as of December 31, 2024, which provide funding for the nonqualified pension plans and certain deferred compensation. The nonqualified pension plans included in

the projected benefit obligation in the above table were $132 million. As of December 31, 2024, PSEG had funded approximately 92% of its projected qualified pension benefit obligation.

 

Accumulated Benefit Obligation

The accumulated benefit obligation for all PSEG’s defined benefit pension plans was $4.4 billion as of December 31, 2024 and $4.7 billion as of December 31, 2023.

The following table provides the components of net periodic benefit relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis for PSEG, excluding Servco for the years ended December 31, 2024, 2023 and 2022. Amounts shown do not reflect the impacts of capitalization, co-owner allocations and the 2023 BPU accounting order. Only the service cost component is eligible for capitalization, when applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits Years Ended December 31,

 

 

Other Benefits Years Ended December 31,

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

Millions

 

 

 

Components of Net Periodic Benefit (Credits) Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Cost (included in O&M Expense)

 

$

94

 

 

$

90

 

 

$

142

 

 

$

3

 

 

$

3

 

 

$

6

 

 

 

Non-Service Components of Pension and OPEB (Credits) Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Cost

 

 

225

 

 

 

259

 

 

 

167

 

 

 

37

 

 

 

41

 

 

 

26

 

 

 

Expected Return on Plan Assets

 

 

(321

)

 

 

(361

)

 

 

(484

)

 

 

(34

)

 

 

(33

)

 

 

(42

)

 

 

Amortization of Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Service Credit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

(52

)

 

 

(129

)

 

 

Actuarial Loss

 

 

71

 

 

 

83

 

 

 

60

 

 

 

(2

)

 

 

(2

)

 

 

15

 

 

 

Settlement Charge Resulting from Pension Lift-Out

 

 

—

 

 

 

338

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

Non-Service Components of Pension and OPEB (Credits) Costs

 

 

(25

)

 

 

319

 

 

 

(257

)

 

 

3

 

 

 

(46

)

 

 

(130

)

 

 

Total Net Benefit (Credits) Costs

 

$

69

 

 

$

409

 

 

$

(115

)

 

$

6

 

 

$

(43

)

 

$

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension and OPEB (credits) costs for PSEG and PSE&G are detailed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits
Years Ended December 31,

 

 

Other Benefits
Years Ended December 31,

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

Millions

 

 

 

PSE&G

 

$

43

 

 

$

50

 

 

$

(70

)

 

$

(2

)

 

$

(42

)

 

$

(109

)

 

 

PSEG Power & Other

 

 

26

 

 

 

359

 

 

 

(45

)

 

 

8

 

 

 

(1

)

 

 

(15

)

 

 

Total Net Benefit (Credits) Costs

 

$

69

 

 

$

409

 

 

$

(115

)

 

$

6

 

 

$

(43

)

 

$

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PSEG completed the above mentioned “lift-out” transaction in August 2023. As a result of the transaction, PSEG recognized a settlement charge of $332 million ($239 million, net of tax) in the third quarter of 2023 related to the immediate recognition of unamortized net actuarial loss associated with the portion of the pension involved in the transaction. Additionally, a settlement charge of $6 million ($4 million, net of tax) related to lump sum payments to participants was recognized in the fourth quarter of 2023.

The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets, Deferred Assets and Deferred Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

Millions

 

 

 

Net Actuarial (Gain) Loss in Current Period due to Plan Experience and Assumption Changes

 

$

(104

)

 

$

(35

)

 

$

(22

)

 

$

(49

)

 

 

Net Actuarial (Gain) Loss due to Settlements/Curtailments

 

 

—

 

 

 

(39

)

 

 

—

 

 

 

—

 

 

 

Amortization of Net Actuarial Gain (Loss)

 

 

(71

)

 

 

(83

)

 

 

2

 

 

 

2

 

 

 

Recognition of Net Actuarial (Gain) Loss due to Settlements/Curtailments

 

 

—

 

 

 

(338

)

 

 

—

 

 

 

—

 

 

 

Prior Service Cost (Credit) in Current Period

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

Amortization of Prior Service Credit

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

52

 

 

 

Total

 

$

(175

)

 

$

(495

)

 

$

(22

)

 

$

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following assumptions were used to determine the benefit obligations and net periodic benefit costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31

 

 

 

 

Discount Rate

 

 

5.68

%

 

 

5.02

%

 

 

5.20

%

 

 

5.59

%

 

 

4.96

%

 

 

5.16

%

 

 

Rate of Compensation Increase

 

 

4.60

%

 

 

4.60

%

 

 

4.40

%

 

 

4.60

%

 

 

4.60

%

 

 

4.40

%

 

 

Cash Balance Interest Crediting Rate

 

 

6.00

%

 

 

6.00

%

 

 

6.00

%

 

N/A

 

 

N/A

 

 

N/A

 

 

 

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31

 

 

 

Discount Rate

 

 

5.02

%

 

 

5.20

%

 

 

2.94

%

 

 

4.96

%

 

 

5.16

%

 

 

2.82

%

 

 

Service Cost Interest Rate

 

 

5.14

%

 

 

5.31

%

 

 

3.19

%

 

 

5.03

%

 

 

5.23

%

 

 

3.06

%

 

 

Interest Cost Interest Rate

 

 

4.91

%

 

 

5.09

%

 

 

2.37

%

 

 

4.88

%

 

 

5.07

%

 

 

2.21

%

 

 

Expected Return on Plan Assets

 

 

8.10

%

 

 

8.10

%

 

 

7.20

%

 

 

8.10

%

 

 

8.10

%

 

 

7.20

%

 

 

Rate of Compensation Increase

 

 

4.60

%

 

 

4.40

%

 

 

4.40

%

 

 

4.60

%

 

 

4.40

%

 

 

4.40

%

 

 

Cash Balance Interest Crediting Rate

 

 

6.00

%

 

 

6.00

%

 

 

6.00

%

 

N/A

 

 

N/A

 

 

N/A

 

 

 

Assumed Health Care Cost Trend Rates as of December 31

 

 

 

Health Care Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Immediate Rate

 

 

 

 

 

 

 

 

 

 

 

9.08

%

 

 

8.89

%

 

 

6.98

%

 

 

Ultimate Rate

 

 

 

 

 

 

 

 

 

 

 

4.75

%

 

 

4.75

%

 

 

4.75

%

 

 

Year Ultimate Rate Reached

 

 

 

 

 

 

 

 

 

 

2034

 

 

2033

 

 

2032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan Assets

The investments of pension and OPEB plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension and OPEB plans are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. Use of the Master Trust permits the commingling of pension plan assets and OPEB plan assets for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. As of December 31, 2024, the pension plan interest and OPEB plan interest in such assets of the Master Trust were approximately 90% and 10%, respectively.

The following tables present information about the investments measured at fair value on a recurring basis as of December 31, 2024 and 2023, including the fair value measurements and the levels of inputs used in determining those fair values.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2024

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents (A)

 

$

21

 

 

$

13

 

 

$

8

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (B)

 

 

661

 

 

 

661

 

 

 

—

 

 

 

Commingled (C)

 

 

1,916

 

 

 

—

 

 

 

1,916

 

 

 

Debt Securities (D)

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

1,099

 

 

 

—

 

 

 

1,099

 

 

 

Commingled

 

 

6

 

 

 

6

 

 

 

—

 

 

 

Subtotal Fair Value

 

$

3,703

 

 

$

680

 

 

$

3,023

 

 

 

Measured at net asset value practical expedient

 

 

 

 

 

 

 

 

 

 

 

Commingled—Equities (E)

 

 

382

 

 

 

 

 

 

 

 

 

Real Estate Investment (F)

 

 

308

 

 

 

 

 

 

 

 

 

Other

 

 

1

 

 

 

 

 

 

 

 

 

Total Fair Value (G)

 

$

4,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2023

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents (A)

 

$

39

 

 

$

39

 

 

$

—

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (B)

 

 

748

 

 

 

748

 

 

 

—

 

 

 

Commingled (C)

 

 

1,376

 

 

 

—

 

 

 

1,376

 

 

 

Debt Securities (D)

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

1,299

 

 

 

—

 

 

 

1,299

 

 

 

Commingled

 

 

4

 

 

 

4

 

 

 

—

 

 

 

Subtotal Fair Value

 

$

3,466

 

 

$

791

 

 

$

2,675

 

 

 

Measured at net asset value practical expedient

 

 

 

 

 

 

 

 

 

 

 

Commingled—Equities (E)

 

 

745

 

 

 

 

 

 

 

 

 

Real Estate Investment (F)

 

 

365

 

 

 

 

 

 

 

 

 

Other

 

 

2

 

 

 

 

 

 

 

 

 

Total Fair Value (G)

 

$

4,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
The Collective Investment Fund publishes a daily net asset value (NAV) which participants may use for daily redemptions without restrictions (Level 1).
(B)
Common stocks are measured using observable data in active markets and considered Level 1.
(C)
Commingled Funds that publish daily NAV but with certain near-term redemption restrictions which prevent redemption at the published daily NAV are classified as Level 2.
(D)
Debt securities include mainly U.S. Treasury obligations. These investments are valued using an evaluated pricing approach that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads or the most recent quotes for similar securities which are a Level 2 measure.
(E)
Certain commingled equity funds are not included in the fair value hierarchy as they are measured at fair value using the NAV per share (or its equivalent) practical expedient. These funds do not meet the definition of readily determinable fair value due to the frequency of publishing NAV (monthly). The objectives of these funds are mainly tracking the S&P Index or achieving long-term growth through investment in foreign equity securities and the Morgan Stanley Capital International Index.
(F)
The unlisted real estate fund invests in office, apartment, industrial and retail space. The fund is valued using the NAV per unit of funds. The investment value of the real estate properties is determined on a quarterly basis by independent market appraisers engaged by the board of directors of the fund. The ability to redeem funds is subject to the availability of cash arising from net investment income, allocations and the sale of investments in the normal course of business. The fund’s NAV is published quarterly. In addition, redemptions require one quarter advance notice prior to redemption and are fulfilled quarterly. The fund, therefore, does not meet the definition of readily determinable fair value. The purpose of the fund is to acquire, own, hold for investment and ultimately dispose of investments in real estate and real estate-related assets with the intention of achieving current income, capital appreciation or both.
(G)
Excludes net receivables of $6 million and $2 million as of December 31, 2024 and 2023, respectively, which consist of interest, dividends and receivables and payables related to pending securities sales and purchases. In addition, the table excludes cash and foreign currency of $1 million as of December 31, 2024.

The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans as of the measurement date, December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

Investments

 

2024

 

 

2023

 

 

 

Equity Securities

 

 

67

%

 

 

63

%

 

 

Debt Securities

 

 

25

%

 

 

28

%

 

 

Other Investments

 

 

8

%

 

 

9

%

 

 

Total Percentage

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

PSEG utilizes forecasted returns, risk, and correlation of all asset classes in order to develop an efficient portfolio. PSEG’s long-term target asset allocation of 54% equities, 18% real assets and 28% fixed income is consistent with the funds’ financial objectives. Certain investments in real assets (13% as of December 31, 2024) are made through investing in equity securities and tracked as equities when reporting fair value; however, they are viewed by their asset class, real assets, in our target asset allocation. Derivative financial instruments are used by the plans’ investment managers primarily to adjust the fixed income duration of the portfolio and hedge the currency risk component of foreign investments. The expected long-term rate of return on plan assets was 8.1% for 2024 and will remain at 8.1% for 2025. This expected return includes a premium for active management.

Plan Contributions

PSEG plans to contribute $5 million to its OPEB plan and may choose to contribute up to $100 million to its pension plans in 2025. Internal Revenue Service (IRS) minimum funding requirements for pension plans are determined based on the fund’s assets and liabilities at the end of a calendar year for the subsequent calendar year.

Estimated Future Benefit Payments

The following pension benefit and postretirement benefit payments are expected to be paid to plan participants.

 

 

 

 

 

 

 

 

 

 

 

Year

 

Pension
Benefits

 

 

Other
Benefits

 

 

 

 

 

Millions

 

 

 

2025

 

$

372

 

 

$

73

 

 

 

2026

 

 

333

 

 

 

71

 

 

 

2027

 

 

340

 

 

 

69

 

 

 

2028

 

 

346

 

 

 

67

 

 

 

2029

 

 

353

 

 

 

64

 

 

 

2030-2034

 

 

1,792

 

 

 

272

 

 

 

Total

 

$

3,536

 

 

$

616

 

 

 

 

 

 

 

 

 

 

 

 

401(k) Plans

PSEG sponsors two 401(k) plans, which are defined contribution retirement plans subject to the Employee Retirement Income Security Act (ERISA). Eligible represented employees of PSEG’s subsidiaries participate in the PSEG Employee Savings Plan (Savings Plan), while eligible non-represented employees of PSEG’s subsidiaries participate in the PSEG Thrift and Tax-Deferred Savings Plan (Thrift Plan). Eligible employees may contribute up to 50% of their annual eligible compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. PSEG matches 50% of such employee contributions up to 7% of pay for Savings Plan participants and up to 8% of pay for Thrift Plan participants. The amounts paid for employer matching contributions to the plans for PSEG and PSE&G are detailed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thrift Plan and Savings Plan

 

 

 

 

 

Years Ended December 31,

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

Millions

 

 

 

PSE&G

 

$

31

 

 

$

29

 

 

$

28

 

 

 

PSEG Power & Other

 

 

14

 

 

 

14

 

 

 

14

 

 

 

Total Employer Matching Contributions

 

$

45

 

 

$

43

 

 

$

42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 401(k) plans were amended to allow eligible employees hired on or after January 1, 2025 two options for participation in the 401(k) plans. The first option provides for pay credits in the Cash Balance components of PSEG's qualified pension plans and an employer match of employee 401(k) contributions noted above. The second option provides participants a 4% non-elective employer contribution and a 100% employer match of employee contributions up to 4% in the 401(k) plans, with no participation in the qualified pension plans.

 

Servco Pension and OPEB

Servco sponsors a qualified pension plan and OPEB plan covering its employees who meet certain eligibility criteria. Under the OSA, employee benefit costs for these plans are funded by LIPA. See Note 4. Variable Interest Entity. These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG.

The following table provides a roll-forward of the changes in Servco’s benefit obligation and the fair value of its plan assets during the years ended December 31, 2024 and 2023. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

Millions

 

 

 

Change in Benefit Obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit Obligation at Beginning of Year (A)

 

$

535

 

 

$

452

 

 

$

514

 

 

$

455

 

 

 

Service Cost

 

 

28

 

 

 

24

 

 

 

14

 

 

 

12

 

 

 

Interest Cost

 

 

26

 

 

 

23

 

 

 

25

 

 

 

24

 

 

 

Actuarial (Gain) Loss (B)

 

 

(54

)

 

 

31

 

 

 

(29

)

 

 

35

 

 

 

Plan Amendment

 

 

—

 

 

 

16

 

 

 

—

 

 

 

—

 

 

 

Gross Benefits Paid

 

 

(14

)

 

 

(11

)

 

 

(14

)

 

 

(12

)

 

 

Benefit Obligation at End of Year (A)

 

$

521

 

 

$

535

 

 

$

510

 

 

$

514

 

 

 

Change in Plan Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value of Assets at Beginning of Year

 

$

433

 

 

$

370

 

 

$

—

 

 

$

—

 

 

 

Actual Return on Plan Assets

 

 

46

 

 

 

56

 

 

 

—

 

 

 

—

 

 

 

Employer Contributions

 

 

25

 

 

 

18

 

 

 

14

 

 

 

12

 

 

 

Gross Benefits Paid

 

 

(14

)

 

 

(11

)

 

 

(14

)

 

 

(12

)

 

 

Fair Value of Assets at End of Year

 

$

490

 

 

$

433

 

 

$

—

 

 

$

—

 

 

 

Funded Status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Status (Plan Assets less Benefit Obligation)

 

$

(31

)

 

$

(102

)

 

$

(510

)

 

$

(514

)

 

 

Additional Amounts Recognized in the Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued Pension Costs of Servco

 

$

(31

)

 

$

(102

)

 

N/A

 

 

N/A

 

 

 

OPEB Costs of Servco

 

N/A

 

 

N/A

 

 

 

(510

)

 

 

(514

)

 

 

Amounts Recognized (C)

 

$

(31

)

 

$

(102

)

 

$

(510

)

 

$

(514

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits. The vested benefit obligation is the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee’s expected date of separation or retirement.
(B)
For pension benefits, the net actuarial gain in 2024 was due primarily to an increase in the discount rate. For OPEB, the net actuarial gain in 2024 was due primarily to an increase in the discount rate partially offset by other assumption updates. For pension benefits and OPEB, the net actuarial losses in 2023 were due primarily to a decrease in the discount rate and other assumption updates.
(C)
Amounts equal to the accrued pension and OPEB costs of Servco are offset in Long-Term Receivable of VIE on PSEG’s Consolidated Balance Sheets.

Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. The pension-related revenues and costs for 2024, 2023 and 2022 were $25 million, $18 million and $30 million, respectively. Servco has contributed its entire planned contribution amount to its pension plan trusts during 2024. The OPEB-related revenues earned and costs incurred were $14 million, $12 million and $10 million in 2024, 2023 and 2022, respectively.

The following assumptions were used to determine the benefit obligations of Servco:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31

 

 

 

Discount Rate

 

 

5.84

%

 

 

5.13

%

 

 

5.30

%

 

 

5.87

%

 

 

5.16

%

 

 

5.34

%

 

 

Rate of Compensation Increase

 

 

5.50

%

 

 

5.54

%

 

 

3.95

%

 

 

5.50

%

 

 

5.54

%

 

 

3.95

%

 

 

Cash Balance Interest Crediting Rate

 

 

4.84

%

 

 

4.13

%

 

 

4.30

%

 

N/A

 

 

N/A

 

 

N/A

 

 

 

Assumed Health Care Cost Trend Rates as of December 31

 

 

 

Health Care Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Immediate Rate

 

 

 

 

 

 

 

 

 

 

 

7.46

%

 

 

6.84

%

 

 

6.71

%

 

 

Ultimate Rate

 

 

 

 

 

 

 

 

 

 

 

4.75

%

 

 

4.75

%

 

 

4.75

%

 

 

Year Ultimate Rate Reached

 

 

 

 

 

 

 

 

 

 

2036

 

 

2033

 

 

2032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan Assets

All the investments of Servco’s pension plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Servco Master Trust. The investments in the pension are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance.

The following tables present information about Servco’s investments measured at fair value on a recurring basis as of December 31, 2024 and 2023, including the fair value measurements and the levels of inputs used in determining those fair values.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2024

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents

 

$

2

 

 

$

2

 

 

$

—

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (A)

 

 

35

 

 

 

35

 

 

 

—

 

 

 

Commingled (B)

 

 

334

 

 

 

—

 

 

 

334

 

 

 

Commingled Bonds (B)

 

 

119

 

 

 

—

 

 

 

119

 

 

 

Total Fair Value

 

$

490

 

 

$

37

 

 

$

453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2023

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents

 

$

2

 

 

$

2

 

 

$

—

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (A)

 

 

32

 

 

 

32

 

 

 

—

 

 

 

Commingled (B)

 

 

294

 

 

 

—

 

 

 

294

 

 

 

Commingled Bonds (B)

 

 

105

 

 

 

—

 

 

 

105

 

 

 

Total Fair Value

 

$

433

 

 

$

34

 

 

$

399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
Common stocks are measured using observable data in active markets and considered Level 1.
(B)
Investments in commingled equity and bond funds have a readily determinable fair value as they publish a daily NAV available to investors which is the basis for current transactions and contain certain redemption restrictions requiring advance notice of one to two days for withdrawals (Level 2).

The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans of Servco as of the measurement date, December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

Investments

 

2024

 

 

2023

 

 

 

Equity Securities

 

 

76

%

 

 

76

%

 

 

Debt Securities

 

 

24

%

 

 

24

%

 

 

Total Percentage

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

Servco utilizes forecasted returns, risk, and correlation of all asset classes in order to develop an efficient portfolio. Servco’s long-term target asset allocation of 60% equities, 15% real assets and 25% fixed income is consistent with the funds’ financial objectives. Certain investments in real assets (15% at December 31, 2024) are made through investing in equity securities and tracked as equities when reporting fair value; however, they are viewed by their asset class, real assets, in our target asset allocation. The expected long-term rate of return on plan assets was 8.0% for 2024 and will be 8.0% for 2025. This expected return includes a premium for active management.

Plan Contributions

Servco plans to contribute $23 million into its pension plan during 2025.

Estimated Future Benefit Payments

The following pension benefit and postretirement benefit payments are expected to be paid to Servco’s plan participants:

 

 

 

 

 

 

 

 

 

 

 

Year

 

Pension
Benefits

 

 

Other
Benefits

 

 

 

 

 

Millions

 

 

 

2025

 

$

17

 

 

$

14

 

 

 

2026

 

 

20

 

 

 

16

 

 

 

2027

 

 

23

 

 

 

18

 

 

 

2028

 

 

25

 

 

 

20

 

 

 

2029

 

 

28

 

 

 

22

 

 

 

2030-2034

 

 

181

 

 

 

140

 

 

 

Total

 

$

294

 

 

$

230

 

 

 

 

 

 

 

 

 

 

 

 

Servco 401(k) Plans

Servco sponsors two 401(k) plans, which are defined contribution retirement plans subject to ERISA. Eligible non-represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan I (Thrift Plan I), and eligible represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan II (Thrift Plan II). Participants in the plans may contribute up to 50% of their eligible compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. Servco does not provide an employer match or core contribution for employees in Thrift Plan II. For employees in Thrift Plan I, Servco matches 50% of such employee contributions up to 8% of eligible compensation and provides core contributions (based on years of service and age) to employees who do not participate in Servco’s Retirement Income Plan. The amount expensed by Servco for employer matching contributions was $13 million, $10 million and $9 million for the years ended December 31, 2024, 2023 and 2022. Pursuant to the OSA, Servco recognizes Operating Revenues for the reimbursement of these costs.
Public Service Electric and Gas Company [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Pension, Other Postretirement Benefits (OPEB) and Savings Plans

Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans

PSEG sponsors and Services administers qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria. PSEG’s qualified pension plans consist of two qualified defined benefit pension plans, Pension Plan of Public Service Enterprise Group Incorporated (Pension Plan I) and Pension Plan of Public Service Enterprise Group Incorporated II (Pension Plan II and, together, the Plans). Each of the qualified pension plans include a Final Average Pay and two Cash Balance components. In addition, represented and non-represented employees are eligible for participation in PSEG’s two defined contribution plans.

PSEG and PSE&G are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions are required to be measured as of the date of their respective year-end Consolidated Balance Sheets. For underfunded plans, the liability is equal to the difference between the plan’s benefit obligation and the fair value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. For OPEB plans, the benefit obligation is the accumulated postretirement benefit obligation. In addition, GAAP requires that the total unrecognized costs for defined benefit pension and OPEB plans be recorded as an after-tax charge to Accumulated Other Comprehensive Income (Loss), a separate component of Stockholders’ Equity. However, for PSE&G, because the amortization of the unrecognized costs is being collected from customers, the accumulated unrecognized costs are recorded as a Regulatory Asset. The unrecognized costs represent actuarial gains or losses and prior service costs which have not been expensed. The charge to Accumulated Other Comprehensive Income (Loss) and the Regulatory Asset for PSE&G are amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations.

In July 2023, PSEG and Fiduciary Counselors Inc., as independent fiduciary of the Plans, entered into a commitment agreement (for a “lift-out”) with The Prudential Insurance Company of America (the Insurer) under which the Plans agreed to purchase a nonparticipating single premium group annuity contract that has transferred to the Insurer approximately $1 billion of the Plans’ defined benefit pension obligations and associated Plan assets related to certain pension benefits. The contract covers approximately 2,000 retirees from PSEG Power & Other, excluding Services (Participants). In August 2023, assets were transferred to the Insurer and the transaction was closed. Under the contract, the Insurer made an irrevocable commitment, and is solely responsible, to pay benefits of each Participant that are due on and after December 31, 2023. The transaction resulted in no changes to the amount of benefits payable to Participants.

Amounts for Servco are not included in any of the following pension and OPEB benefit information for PSEG and its affiliates but rather are separately disclosed later in this note.

The following table provides a roll-forward of the changes in the benefit obligation and the fair value of plan assets during each of the two years in the periods ended December 31, 2024 and 2023. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

Millions

 

 

 

Change in Benefit Obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit Obligation at Beginning of Year (A)

 

$

4,758

 

 

$

5,628

 

 

$

802

 

 

$

851

 

 

 

Service Cost

 

 

94

 

 

 

90

 

 

 

3

 

 

 

3

 

 

 

Interest Cost

 

 

225

 

 

 

259

 

 

 

37

 

 

 

41

 

 

 

Actuarial (Gain) Loss (B)

 

 

(291

)

 

 

103

 

 

 

(39

)

 

 

(30

)

 

 

Gross Benefits Paid

 

 

(309

)

 

 

(352

)

 

 

(76

)

 

 

(68

)

 

 

Settlements

 

 

—

 

 

 

(970

)

 

 

—

 

 

 

—

 

 

 

Other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

Benefit Obligation at End of Year (A)

 

$

4,477

 

 

$

4,758

 

 

$

727

 

 

$

802

 

 

 

Change in Plan Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value of Assets at Beginning of Year

 

$

4,140

 

 

$

4,911

 

 

$

440

 

 

$

429

 

 

 

Actual Return on Plan Assets

 

 

134

 

 

 

539

 

 

 

18

 

 

 

51

 

 

 

Employer Contributions

 

 

13

 

 

 

12

 

 

 

41

 

 

 

28

 

 

 

Gross Benefits Paid

 

 

(309

)

 

 

(352

)

 

 

(76

)

 

 

(68

)

 

 

Settlements

 

 

—

 

 

 

(970

)

 

 

—

 

 

 

—

 

 

 

Fair Value of Assets at End of Year

 

$

3,978

 

 

$

4,140

 

 

$

423

 

 

$

440

 

 

 

Funded Status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Status (Plan Assets less Benefit Obligation)

 

$

(499

)

 

$

(618

)

 

$

(304

)

 

$

(362

)

 

 

Additional Amounts Recognized in the Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Accrued Benefit Cost

 

$

(11

)

 

$

(12

)

 

$

(12

)

 

$

(13

)

 

 

Noncurrent Accrued Benefit Cost

 

 

(488

)

 

 

(606

)

 

 

(292

)

 

 

(349

)

 

 

Amounts Recognized

 

$

(499

)

 

$

(618

)

 

$

(304

)

 

$

(362

)

 

 

Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets, Deferred Assets and Deferred Liabilities (C)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Service Cost (Credit)

 

$

—

 

 

$

—

 

 

$

4

 

 

$

6

 

 

 

Net Actuarial Loss (Gain)

 

 

1,481

 

 

 

1,656

 

 

 

(26

)

 

 

(6

)

 

 

Total

 

$

1,481

 

 

$

1,656

 

 

$

(22

)

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits. The vested benefit obligation is the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee’s expected date of separation or retirement.
(B)
For pension benefits and OPEB, the net actuarial gains in 2024 were due primarily to an increase in the discount rate, partially offset by actuarial losses driven by a lower than expected return on assets. For pension benefits, the net actuarial loss in 2023 was due primarily to a decrease in the discount rate. For OPEB, the net actuarial gain in 2023 was primarily due to assumption updates.
(C)
Includes $107 million ($76 million, after-tax) and $143 million ($102 million, after-tax) in AOCL related to Pension and OPEB as of December 31, 2024 and 2023, respectively. Also includes Regulatory Assets of $1,227 million, Deferred Assets of $134 million and Deferred Liabilities of $9 million as of December 31, 2024 and Regulatory Assets of $1,427 million and Deferred Assets of $141 million as of December 31, 2023. The Regulatory Asset amounts do not include $103 million and $55 million as of December 31, 2024 and 2023, respectively, as a result of modifying the method for calculating pension expense for ratemaking purposes, approved by the BPU effective January 1, 2023.

The pension benefits table above provides information relating to the funded status of the qualified and nonqualified pension and OPEB plans on an aggregate basis. As of December 31, 2024, PSEG had funded approximately 89% of its projected pension benefit obligation. This percentage does not include $165 million of assets in the Rabbi Trust as of December 31, 2024, which provide funding for the nonqualified pension plans and certain deferred compensation. The nonqualified pension plans included in

the projected benefit obligation in the above table were $132 million. As of December 31, 2024, PSEG had funded approximately 92% of its projected qualified pension benefit obligation.

 

Accumulated Benefit Obligation

The accumulated benefit obligation for all PSEG’s defined benefit pension plans was $4.4 billion as of December 31, 2024 and $4.7 billion as of December 31, 2023.

The following table provides the components of net periodic benefit relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis for PSEG, excluding Servco for the years ended December 31, 2024, 2023 and 2022. Amounts shown do not reflect the impacts of capitalization, co-owner allocations and the 2023 BPU accounting order. Only the service cost component is eligible for capitalization, when applicable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits Years Ended December 31,

 

 

Other Benefits Years Ended December 31,

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

Millions

 

 

 

Components of Net Periodic Benefit (Credits) Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Cost (included in O&M Expense)

 

$

94

 

 

$

90

 

 

$

142

 

 

$

3

 

 

$

3

 

 

$

6

 

 

 

Non-Service Components of Pension and OPEB (Credits) Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Cost

 

 

225

 

 

 

259

 

 

 

167

 

 

 

37

 

 

 

41

 

 

 

26

 

 

 

Expected Return on Plan Assets

 

 

(321

)

 

 

(361

)

 

 

(484

)

 

 

(34

)

 

 

(33

)

 

 

(42

)

 

 

Amortization of Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Service Credit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

(52

)

 

 

(129

)

 

 

Actuarial Loss

 

 

71

 

 

 

83

 

 

 

60

 

 

 

(2

)

 

 

(2

)

 

 

15

 

 

 

Settlement Charge Resulting from Pension Lift-Out

 

 

—

 

 

 

338

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

Non-Service Components of Pension and OPEB (Credits) Costs

 

 

(25

)

 

 

319

 

 

 

(257

)

 

 

3

 

 

 

(46

)

 

 

(130

)

 

 

Total Net Benefit (Credits) Costs

 

$

69

 

 

$

409

 

 

$

(115

)

 

$

6

 

 

$

(43

)

 

$

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension and OPEB (credits) costs for PSEG and PSE&G are detailed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits
Years Ended December 31,

 

 

Other Benefits
Years Ended December 31,

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

Millions

 

 

 

PSE&G

 

$

43

 

 

$

50

 

 

$

(70

)

 

$

(2

)

 

$

(42

)

 

$

(109

)

 

 

PSEG Power & Other

 

 

26

 

 

 

359

 

 

 

(45

)

 

 

8

 

 

 

(1

)

 

 

(15

)

 

 

Total Net Benefit (Credits) Costs

 

$

69

 

 

$

409

 

 

$

(115

)

 

$

6

 

 

$

(43

)

 

$

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PSEG completed the above mentioned “lift-out” transaction in August 2023. As a result of the transaction, PSEG recognized a settlement charge of $332 million ($239 million, net of tax) in the third quarter of 2023 related to the immediate recognition of unamortized net actuarial loss associated with the portion of the pension involved in the transaction. Additionally, a settlement charge of $6 million ($4 million, net of tax) related to lump sum payments to participants was recognized in the fourth quarter of 2023.

The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets, Deferred Assets and Deferred Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

Millions

 

 

 

Net Actuarial (Gain) Loss in Current Period due to Plan Experience and Assumption Changes

 

$

(104

)

 

$

(35

)

 

$

(22

)

 

$

(49

)

 

 

Net Actuarial (Gain) Loss due to Settlements/Curtailments

 

 

—

 

 

 

(39

)

 

 

—

 

 

 

—

 

 

 

Amortization of Net Actuarial Gain (Loss)

 

 

(71

)

 

 

(83

)

 

 

2

 

 

 

2

 

 

 

Recognition of Net Actuarial (Gain) Loss due to Settlements/Curtailments

 

 

—

 

 

 

(338

)

 

 

—

 

 

 

—

 

 

 

Prior Service Cost (Credit) in Current Period

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

 

 

Amortization of Prior Service Credit

 

 

—

 

 

 

—

 

 

 

(2

)

 

 

52

 

 

 

Total

 

$

(175

)

 

$

(495

)

 

$

(22

)

 

$

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following assumptions were used to determine the benefit obligations and net periodic benefit costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31

 

 

 

 

Discount Rate

 

 

5.68

%

 

 

5.02

%

 

 

5.20

%

 

 

5.59

%

 

 

4.96

%

 

 

5.16

%

 

 

Rate of Compensation Increase

 

 

4.60

%

 

 

4.60

%

 

 

4.40

%

 

 

4.60

%

 

 

4.60

%

 

 

4.40

%

 

 

Cash Balance Interest Crediting Rate

 

 

6.00

%

 

 

6.00

%

 

 

6.00

%

 

N/A

 

 

N/A

 

 

N/A

 

 

 

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31

 

 

 

Discount Rate

 

 

5.02

%

 

 

5.20

%

 

 

2.94

%

 

 

4.96

%

 

 

5.16

%

 

 

2.82

%

 

 

Service Cost Interest Rate

 

 

5.14

%

 

 

5.31

%

 

 

3.19

%

 

 

5.03

%

 

 

5.23

%

 

 

3.06

%

 

 

Interest Cost Interest Rate

 

 

4.91

%

 

 

5.09

%

 

 

2.37

%

 

 

4.88

%

 

 

5.07

%

 

 

2.21

%

 

 

Expected Return on Plan Assets

 

 

8.10

%

 

 

8.10

%

 

 

7.20

%

 

 

8.10

%

 

 

8.10

%

 

 

7.20

%

 

 

Rate of Compensation Increase

 

 

4.60

%

 

 

4.40

%

 

 

4.40

%

 

 

4.60

%

 

 

4.40

%

 

 

4.40

%

 

 

Cash Balance Interest Crediting Rate

 

 

6.00

%

 

 

6.00

%

 

 

6.00

%

 

N/A

 

 

N/A

 

 

N/A

 

 

 

Assumed Health Care Cost Trend Rates as of December 31

 

 

 

Health Care Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Immediate Rate

 

 

 

 

 

 

 

 

 

 

 

9.08

%

 

 

8.89

%

 

 

6.98

%

 

 

Ultimate Rate

 

 

 

 

 

 

 

 

 

 

 

4.75

%

 

 

4.75

%

 

 

4.75

%

 

 

Year Ultimate Rate Reached

 

 

 

 

 

 

 

 

 

 

2034

 

 

2033

 

 

2032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan Assets

The investments of pension and OPEB plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension and OPEB plans are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. Use of the Master Trust permits the commingling of pension plan assets and OPEB plan assets for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. As of December 31, 2024, the pension plan interest and OPEB plan interest in such assets of the Master Trust were approximately 90% and 10%, respectively.

The following tables present information about the investments measured at fair value on a recurring basis as of December 31, 2024 and 2023, including the fair value measurements and the levels of inputs used in determining those fair values.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2024

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents (A)

 

$

21

 

 

$

13

 

 

$

8

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (B)

 

 

661

 

 

 

661

 

 

 

—

 

 

 

Commingled (C)

 

 

1,916

 

 

 

—

 

 

 

1,916

 

 

 

Debt Securities (D)

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

1,099

 

 

 

—

 

 

 

1,099

 

 

 

Commingled

 

 

6

 

 

 

6

 

 

 

—

 

 

 

Subtotal Fair Value

 

$

3,703

 

 

$

680

 

 

$

3,023

 

 

 

Measured at net asset value practical expedient

 

 

 

 

 

 

 

 

 

 

 

Commingled—Equities (E)

 

 

382

 

 

 

 

 

 

 

 

 

Real Estate Investment (F)

 

 

308

 

 

 

 

 

 

 

 

 

Other

 

 

1

 

 

 

 

 

 

 

 

 

Total Fair Value (G)

 

$

4,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2023

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents (A)

 

$

39

 

 

$

39

 

 

$

—

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (B)

 

 

748

 

 

 

748

 

 

 

—

 

 

 

Commingled (C)

 

 

1,376

 

 

 

—

 

 

 

1,376

 

 

 

Debt Securities (D)

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

 

1,299

 

 

 

—

 

 

 

1,299

 

 

 

Commingled

 

 

4

 

 

 

4

 

 

 

—

 

 

 

Subtotal Fair Value

 

$

3,466

 

 

$

791

 

 

$

2,675

 

 

 

Measured at net asset value practical expedient

 

 

 

 

 

 

 

 

 

 

 

Commingled—Equities (E)

 

 

745

 

 

 

 

 

 

 

 

 

Real Estate Investment (F)

 

 

365

 

 

 

 

 

 

 

 

 

Other

 

 

2

 

 

 

 

 

 

 

 

 

Total Fair Value (G)

 

$

4,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
The Collective Investment Fund publishes a daily net asset value (NAV) which participants may use for daily redemptions without restrictions (Level 1).
(B)
Common stocks are measured using observable data in active markets and considered Level 1.
(C)
Commingled Funds that publish daily NAV but with certain near-term redemption restrictions which prevent redemption at the published daily NAV are classified as Level 2.
(D)
Debt securities include mainly U.S. Treasury obligations. These investments are valued using an evaluated pricing approach that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads or the most recent quotes for similar securities which are a Level 2 measure.
(E)
Certain commingled equity funds are not included in the fair value hierarchy as they are measured at fair value using the NAV per share (or its equivalent) practical expedient. These funds do not meet the definition of readily determinable fair value due to the frequency of publishing NAV (monthly). The objectives of these funds are mainly tracking the S&P Index or achieving long-term growth through investment in foreign equity securities and the Morgan Stanley Capital International Index.
(F)
The unlisted real estate fund invests in office, apartment, industrial and retail space. The fund is valued using the NAV per unit of funds. The investment value of the real estate properties is determined on a quarterly basis by independent market appraisers engaged by the board of directors of the fund. The ability to redeem funds is subject to the availability of cash arising from net investment income, allocations and the sale of investments in the normal course of business. The fund’s NAV is published quarterly. In addition, redemptions require one quarter advance notice prior to redemption and are fulfilled quarterly. The fund, therefore, does not meet the definition of readily determinable fair value. The purpose of the fund is to acquire, own, hold for investment and ultimately dispose of investments in real estate and real estate-related assets with the intention of achieving current income, capital appreciation or both.
(G)
Excludes net receivables of $6 million and $2 million as of December 31, 2024 and 2023, respectively, which consist of interest, dividends and receivables and payables related to pending securities sales and purchases. In addition, the table excludes cash and foreign currency of $1 million as of December 31, 2024.

The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans as of the measurement date, December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

Investments

 

2024

 

 

2023

 

 

 

Equity Securities

 

 

67

%

 

 

63

%

 

 

Debt Securities

 

 

25

%

 

 

28

%

 

 

Other Investments

 

 

8

%

 

 

9

%

 

 

Total Percentage

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

PSEG utilizes forecasted returns, risk, and correlation of all asset classes in order to develop an efficient portfolio. PSEG’s long-term target asset allocation of 54% equities, 18% real assets and 28% fixed income is consistent with the funds’ financial objectives. Certain investments in real assets (13% as of December 31, 2024) are made through investing in equity securities and tracked as equities when reporting fair value; however, they are viewed by their asset class, real assets, in our target asset allocation. Derivative financial instruments are used by the plans’ investment managers primarily to adjust the fixed income duration of the portfolio and hedge the currency risk component of foreign investments. The expected long-term rate of return on plan assets was 8.1% for 2024 and will remain at 8.1% for 2025. This expected return includes a premium for active management.

Plan Contributions

PSEG plans to contribute $5 million to its OPEB plan and may choose to contribute up to $100 million to its pension plans in 2025. Internal Revenue Service (IRS) minimum funding requirements for pension plans are determined based on the fund’s assets and liabilities at the end of a calendar year for the subsequent calendar year.

Estimated Future Benefit Payments

The following pension benefit and postretirement benefit payments are expected to be paid to plan participants.

 

 

 

 

 

 

 

 

 

 

 

Year

 

Pension
Benefits

 

 

Other
Benefits

 

 

 

 

 

Millions

 

 

 

2025

 

$

372

 

 

$

73

 

 

 

2026

 

 

333

 

 

 

71

 

 

 

2027

 

 

340

 

 

 

69

 

 

 

2028

 

 

346

 

 

 

67

 

 

 

2029

 

 

353

 

 

 

64

 

 

 

2030-2034

 

 

1,792

 

 

 

272

 

 

 

Total

 

$

3,536

 

 

$

616

 

 

 

 

 

 

 

 

 

 

 

 

401(k) Plans

PSEG sponsors two 401(k) plans, which are defined contribution retirement plans subject to the Employee Retirement Income Security Act (ERISA). Eligible represented employees of PSEG’s subsidiaries participate in the PSEG Employee Savings Plan (Savings Plan), while eligible non-represented employees of PSEG’s subsidiaries participate in the PSEG Thrift and Tax-Deferred Savings Plan (Thrift Plan). Eligible employees may contribute up to 50% of their annual eligible compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. PSEG matches 50% of such employee contributions up to 7% of pay for Savings Plan participants and up to 8% of pay for Thrift Plan participants. The amounts paid for employer matching contributions to the plans for PSEG and PSE&G are detailed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Thrift Plan and Savings Plan

 

 

 

 

 

Years Ended December 31,

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

Millions

 

 

 

PSE&G

 

$

31

 

 

$

29

 

 

$

28

 

 

 

PSEG Power & Other

 

 

14

 

 

 

14

 

 

 

14

 

 

 

Total Employer Matching Contributions

 

$

45

 

 

$

43

 

 

$

42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The 401(k) plans were amended to allow eligible employees hired on or after January 1, 2025 two options for participation in the 401(k) plans. The first option provides for pay credits in the Cash Balance components of PSEG's qualified pension plans and an employer match of employee 401(k) contributions noted above. The second option provides participants a 4% non-elective employer contribution and a 100% employer match of employee contributions up to 4% in the 401(k) plans, with no participation in the qualified pension plans.

 

Servco Pension and OPEB

Servco sponsors a qualified pension plan and OPEB plan covering its employees who meet certain eligibility criteria. Under the OSA, employee benefit costs for these plans are funded by LIPA. See Note 4. Variable Interest Entity. These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG.

The following table provides a roll-forward of the changes in Servco’s benefit obligation and the fair value of its plan assets during the years ended December 31, 2024 and 2023. It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

Millions

 

 

 

Change in Benefit Obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit Obligation at Beginning of Year (A)

 

$

535

 

 

$

452

 

 

$

514

 

 

$

455

 

 

 

Service Cost

 

 

28

 

 

 

24

 

 

 

14

 

 

 

12

 

 

 

Interest Cost

 

 

26

 

 

 

23

 

 

 

25

 

 

 

24

 

 

 

Actuarial (Gain) Loss (B)

 

 

(54

)

 

 

31

 

 

 

(29

)

 

 

35

 

 

 

Plan Amendment

 

 

—

 

 

 

16

 

 

 

—

 

 

 

—

 

 

 

Gross Benefits Paid

 

 

(14

)

 

 

(11

)

 

 

(14

)

 

 

(12

)

 

 

Benefit Obligation at End of Year (A)

 

$

521

 

 

$

535

 

 

$

510

 

 

$

514

 

 

 

Change in Plan Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value of Assets at Beginning of Year

 

$

433

 

 

$

370

 

 

$

—

 

 

$

—

 

 

 

Actual Return on Plan Assets

 

 

46

 

 

 

56

 

 

 

—

 

 

 

—

 

 

 

Employer Contributions

 

 

25

 

 

 

18

 

 

 

14

 

 

 

12

 

 

 

Gross Benefits Paid

 

 

(14

)

 

 

(11

)

 

 

(14

)

 

 

(12

)

 

 

Fair Value of Assets at End of Year

 

$

490

 

 

$

433

 

 

$

—

 

 

$

—

 

 

 

Funded Status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Status (Plan Assets less Benefit Obligation)

 

$

(31

)

 

$

(102

)

 

$

(510

)

 

$

(514

)

 

 

Additional Amounts Recognized in the Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued Pension Costs of Servco

 

$

(31

)

 

$

(102

)

 

N/A

 

 

N/A

 

 

 

OPEB Costs of Servco

 

N/A

 

 

N/A

 

 

 

(510

)

 

 

(514

)

 

 

Amounts Recognized (C)

 

$

(31

)

 

$

(102

)

 

$

(510

)

 

$

(514

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits. The vested benefit obligation is the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee’s expected date of separation or retirement.
(B)
For pension benefits, the net actuarial gain in 2024 was due primarily to an increase in the discount rate. For OPEB, the net actuarial gain in 2024 was due primarily to an increase in the discount rate partially offset by other assumption updates. For pension benefits and OPEB, the net actuarial losses in 2023 were due primarily to a decrease in the discount rate and other assumption updates.
(C)
Amounts equal to the accrued pension and OPEB costs of Servco are offset in Long-Term Receivable of VIE on PSEG’s Consolidated Balance Sheets.

Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. The pension-related revenues and costs for 2024, 2023 and 2022 were $25 million, $18 million and $30 million, respectively. Servco has contributed its entire planned contribution amount to its pension plan trusts during 2024. The OPEB-related revenues earned and costs incurred were $14 million, $12 million and $10 million in 2024, 2023 and 2022, respectively.

The following assumptions were used to determine the benefit obligations of Servco:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits

 

 

Other Benefits

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

2024

 

 

2023

 

 

2022

 

 

 

Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31

 

 

 

Discount Rate

 

 

5.84

%

 

 

5.13

%

 

 

5.30

%

 

 

5.87

%

 

 

5.16

%

 

 

5.34

%

 

 

Rate of Compensation Increase

 

 

5.50

%

 

 

5.54

%

 

 

3.95

%

 

 

5.50

%

 

 

5.54

%

 

 

3.95

%

 

 

Cash Balance Interest Crediting Rate

 

 

4.84

%

 

 

4.13

%

 

 

4.30

%

 

N/A

 

 

N/A

 

 

N/A

 

 

 

Assumed Health Care Cost Trend Rates as of December 31

 

 

 

Health Care Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Immediate Rate

 

 

 

 

 

 

 

 

 

 

 

7.46

%

 

 

6.84

%

 

 

6.71

%

 

 

Ultimate Rate

 

 

 

 

 

 

 

 

 

 

 

4.75

%

 

 

4.75

%

 

 

4.75

%

 

 

Year Ultimate Rate Reached

 

 

 

 

 

 

 

 

 

 

2036

 

 

2033

 

 

2032

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plan Assets

All the investments of Servco’s pension plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Servco Master Trust. The investments in the pension are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance.

The following tables present information about Servco’s investments measured at fair value on a recurring basis as of December 31, 2024 and 2023, including the fair value measurements and the levels of inputs used in determining those fair values.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2024

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents

 

$

2

 

 

$

2

 

 

$

—

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (A)

 

 

35

 

 

 

35

 

 

 

—

 

 

 

Commingled (B)

 

 

334

 

 

 

—

 

 

 

334

 

 

 

Commingled Bonds (B)

 

 

119

 

 

 

—

 

 

 

119

 

 

 

Total Fair Value

 

$

490

 

 

$

37

 

 

$

453

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recurring Fair Value Measurements as of December 31, 2023

 

 

 

 

 

 

 

 

Quoted
Market Prices
for Identical
Assets

 

 

Significant
Other
Observable
Inputs

 

 

 

Description

 

Total

 

 

(Level 1)

 

 

(Level 2)

 

 

 

 

 

Millions

 

 

 

Cash Equivalents

 

$

2

 

 

$

2

 

 

$

—

 

 

 

Equity Securities

 

 

 

 

 

 

 

 

 

 

 

Common Stock (A)

 

 

32

 

 

 

32

 

 

 

—

 

 

 

Commingled (B)

 

 

294

 

 

 

—

 

 

 

294

 

 

 

Commingled Bonds (B)

 

 

105

 

 

 

—

 

 

 

105

 

 

 

Total Fair Value

 

$

433

 

 

$

34

 

 

$

399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(A)
Common stocks are measured using observable data in active markets and considered Level 1.
(B)
Investments in commingled equity and bond funds have a readily determinable fair value as they publish a daily NAV available to investors which is the basis for current transactions and contain certain redemption restrictions requiring advance notice of one to two days for withdrawals (Level 2).

The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans of Servco as of the measurement date, December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

Investments

 

2024

 

 

2023

 

 

 

Equity Securities

 

 

76

%

 

 

76

%

 

 

Debt Securities

 

 

24

%

 

 

24

%

 

 

Total Percentage

 

 

100

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

Servco utilizes forecasted returns, risk, and correlation of all asset classes in order to develop an efficient portfolio. Servco’s long-term target asset allocation of 60% equities, 15% real assets and 25% fixed income is consistent with the funds’ financial objectives. Certain investments in real assets (15% at December 31, 2024) are made through investing in equity securities and tracked as equities when reporting fair value; however, they are viewed by their asset class, real assets, in our target asset allocation. The expected long-term rate of return on plan assets was 8.0% for 2024 and will be 8.0% for 2025. This expected return includes a premium for active management.

Plan Contributions

Servco plans to contribute $23 million into its pension plan during 2025.

Estimated Future Benefit Payments

The following pension benefit and postretirement benefit payments are expected to be paid to Servco’s plan participants:

 

 

 

 

 

 

 

 

 

 

 

Year

 

Pension
Benefits

 

 

Other
Benefits

 

 

 

 

 

Millions

 

 

 

2025

 

$

17

 

 

$

14

 

 

 

2026

 

 

20

 

 

 

16

 

 

 

2027

 

 

23

 

 

 

18

 

 

 

2028

 

 

25

 

 

 

20

 

 

 

2029

 

 

28

 

 

 

22

 

 

 

2030-2034

 

 

181

 

 

 

140

 

 

 

Total

 

$

294

 

 

$

230

 

 

 

 

 

 

 

 

 

 

 

 

Servco 401(k) Plans

Servco sponsors two 401(k) plans, which are defined contribution retirement plans subject to ERISA. Eligible non-represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan I (Thrift Plan I), and eligible represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan II (Thrift Plan II). Participants in the plans may contribute up to 50% of their eligible compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. Servco does not provide an employer match or core contribution for employees in Thrift Plan II. For employees in Thrift Plan I, Servco matches 50% of such employee contributions up to 8% of eligible compensation and provides core contributions (based on years of service and age) to employees who do not participate in Servco’s Retirement Income Plan. The amount expensed by Servco for employer matching contributions was $13 million, $10 million and $9 million for the years ended December 31, 2024, 2023 and 2022. Pursuant to the OSA, Servco recognizes Operating Revenues for the reimbursement of these costs.