RETIREMENT PLANS

12 Months Ended

Dec. 31, 2020

RETIREMENT PLANS

RETIREMENT PLANS

13. RETIREMENT PLANS

The Company has noncontributory defined benefit pension plans as well as noncontributory postretirement benefit plans offering defined medical, dental, vision, and life benefits for certain employees of its International Telecom segment. The Company’s pension and other postretirement benefit plans are closed to new participants and only grandfathered participants continue to accrue additional benefits. Also, in 2020 the Company began the process of winding up one of its benefit plans. The Company reviews the funded status of its pension plans and makes contributions based on that analysis. The benefits are based on the participants’ compensation during their employment and the credited service years earned by participants. The Company funds the other postretirement benefit plans as benefits are paid.

The weighted-average rates assumed in the actuarial calculations for the pension and other postretirement benefit plans are as follows as of December 31, 2020, 2019 and 2018:

	2020		2019		2018
Discount Rate – Pension Benefit Obligation	2.6	%	4.2	%	4.7	%
Discount Rate – Pension Benefit Cost	3.5	%	4.5	%	4.3	%
Discount Rate – Postretirement Benefit Obligation	2.5	%	3.5	%	4.5	%
Discount Rate – Postretirement Benefit Cost	3.5	%	4.5	%	3.9	%
Annual salary increase	n/a		6.5	%	6.5	%
Expected long-term return on plan assets	5.1	%	6.1	%	6.1	%

The expected long-term rate of return on plan assets was determined based on several factors including input from pension investment consultants, projected long-term returns of equity and bond indices, and historical returns over the life of the related obligations of the fund. The Company, in conjunction with its pension investment consultants, reviews its asset allocation periodically and rebalances its investments when appropriate in an effort to earn the expected long-term returns. The Company will continue to evaluate its long-term rate of return assumptions at least annually and will adjust them as necessary.

The annual salary increase assumption is no longer applicable as the plan participants no longer accrue additional service.

The discount rate was determined based on a review of market data including yields on high quality corporate bonds with maturities approximating the remaining life of the project benefit obligations.

The other postretirement benefit plans healthcare cost trend assumptions is based on health care trend rates. The 2020 assumed medical health care cost trend rate is 6% trending to an ultimate rate of 4% in 2074. The 2020 and ultimate assumed dental care cost trend rate is 4%.

Changes during the year in the projected benefit obligations and in the fair value of plan assets are as follows for 2020 and 2019 (in thousands):

	2020				2019
	Pension Benefits		Postretirement Benefits		Pension Benefits		Postretirement Benefits
Projected benefit obligations:
Balance at beginning of year:	$	81,977	$	4,899	$	76,900	$	4,012
Service cost		439		139		1,709		126
Interest cost		2,585		163		3,472		182
Benefits and settlements paid		(4,791)		(450)		(5,738)		(354)
Actuarial (gain) loss		8,651		759		5,739		933
Settlement		(89)		—		(105)		—
Balance at end of year	$	88,772	$	5,510	$	81,977	$	4,899
Plan net assets:
Balance at beginning of year:	$	83,350	$	—	$	77,530	$	—
Actual return on plan assets		10,398		—		10,678		—
Company contributions		958		450		838		354
Benefits and settlements paid		(5,354)		(450)		(5,696)		(354)
Balance at end of year	$	89,352	$	—	$	83,350	$	—
Over/ (Under) funded status of plan	$	580	$	(5,510)	$	1,373	$	(4,899)

The Company reports an asset or liability on its balance sheet equal to the funded status of its pension and other postretirement benefit plans. Plans in an overfunded status are aggregated and recorded as a net pension benefit asset in other assets. Plans in an underfunded status are aggregated and recorded as a net postretirement benefit liability in other liabilities. The funded status of the Company’s pension and other retirement benefit plans is below (in thousands):

	2020						2019
	GTT Pension Benefit		Viya Pension Benefit		Postretirement Benefits		GTT Pension Benefit		Viya Pension Benefit		Postretirement Benefits
Projected benefit obligation	$	15,609	$	73,163	$	5,510	$	15,594	$	66,383	$	4,899
Plan Net Assets		15,609		73,743		—		15,054		68,296		—
Over/ (Under) funded status of plan	$	—	$	580	$	(5,510)	$	(540)	$	1,913	$	(4,899)

The Company’s investment policy for its pension assets is to have a reasonably balanced investment approach, with a long-term bias toward debt investments. The Company’s strategy allocates plan assets among equity, debt and other assets to achieve long-term returns without significant risk to principal. The pension fund has limitations from investing in the equity, debt or other securities of the employer, its subsidiaries or associates of the employer or any company of which the employer is a subsidiary or an associate.

The fair values for the pension plan’s net assets, by asset category, at December 31, 2020 are as follows (in thousands):

Asset Category	Total		Level 1		Level 2		Level 3
Cash, cash equivalents, money markets and other	$	5,037	$	5,037	$	—	$	—
Common stock		27,785		24,781		3,004		—
Mutual funds - fixed income		9,494		9,494		—		—
Mutual funds - equities		8,278		8,278		—		—
Fixed income securities		37,225		—		37,225		—
Other		1,533		1,533		—		—
Total	$	89,352	$	49,123	$	40,229	$	—

The fair values for the pension plan’s net assets, by asset category, at December 31, 2019 are as follows (in thousands):

Asset Category	Total		Level 1		Level 2		Level 3
Cash, cash equivalents, money markets and other	$	4,982	$	4,982	$	—	$	—
Common stock		26,702		22,451		4,251		—
Mutual funds - fixed income		12,970		12,970		—		—
Mutual funds - equities		10,921		10,921		—		—
Fixed income securities		26,307		1,178		25,129		—
Other		1,468		1,031		—		437
Total	$	83,350	$	53,533	$	29,380	$	437

The plan’s weighted-average asset allocations at December 31, 2020 and 2019, by asset category are as follows:

	2020		2019
Cash, cash equivalents, money markets and other	6	%	6	%
Common stock	31		32
Mutual funds - fixed income	11		16
Mutual funds - equities	9		13
Fixed income securities	41		32
Other	2		1
Total	100	%	100	%

Amounts recognized on the Company’s consolidated balance sheets consist of (in thousands):

	As of December 31,
	2020				2019
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Accrued and current liabilities	$	—	$	381	$	—	$	340
Other Liabilities		—		5,129		540		4,559
Other Assets		580		—		1,913		—
Accumulated other comprehensive income, net of tax		(158)		(411)		1,484		359

Amounts recognized in accumulated other comprehensive income consist of (in thousands):

	As of December 31,
	2020				2019
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Unrecognized net actuarial gain (loss)	$	(1,159)	$	(411)	$	540	$	359
Accumulated other comprehensive income, pre-tax		(1,159)		(411)		540		359
Accumulated other comprehensive income (loss), net of tax		(158)		(411)		1,484		359

Components of the plan’s net periodic pension cost are as follows for the years ended December 31, 2020, 2019 and 2018 (in thousands):

	2020				2019				2018
	Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits		Pension benefits		Postretirement benefits
Operating expense
Service cost	$	439	$	139	$	1,709	$	126	$	1,794	$	147
Non-operating expense
Interest cost		2,585		163		3,472		182		3,279		161
Expected return on plan assets		(3,060)		—		(4,571)		—		(4,835)		—
Amortization of actuarial (gain) loss		—		(11)		29		(58)		121		(67)
Settlement		89		—		(35)		—		—		—
Net periodic pension cost	$	53	$	291	$	604	$	250	$	359	$	241

The Company is currently evaluating whether it will make any contributions to its pension and postretirement benefit plans during the year ending December 31, 2021.

The following estimated benefits, which reflect expected future service, as appropriate, are expected to be paid over the next 10 years as indicated below (in thousands):

	Pension		Postretirement
Fiscal Year	Benefits		Benefits
2021	$	19,691	$	386
2022		3,730		359
2023		3,703		276
2024		4,048		319
2025		3,706		356
2026-2030		19,058		1,679
Total	$	53,936	$	3,375