Employee Retirement Plans

12 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

Employee Retirement Plans

Note 8 — Employee Retirement Plans

Defined Benefit Pension and Other Postretirement Plans

The U.S. Pension Plans consist of (1) a defined benefit pension plan for employees hired prior to January 1, 2009, of UGI, UGI Utilities, Inc., and certain of UGI’s other domestic wholly owned subsidiaries and (2) a defined benefit pension plan for substantially all Mountaineer employees. U.S. Pension Plans’ benefits are based on years of service, age and employee compensation. In addition, certain UGI International employees in France and Belgium are covered by defined benefit pension and postretirement plans. Although the disclosures in the tables below include amounts related to the UGI International plans, such amounts are not material.

We also provide postretirement health care benefits to certain retirees and postretirement life insurance benefits to certain U.S. active and retired employees. The ABO of our other postretirement benefit plans was $31 and $24 as of September 30, 2021 and 2020, respectively. The fair value of the plan assets of our other postretirement benefit plans was $19 and $17 as of September 30, 2021 and 2020, respectively.

The following table provides a reconciliation of the PBOs of our pension plans (the U.S. Pension Plans and the UGI International pension plans), plan assets, and the related funded status of our pension plans as of September 30, 2021 and 2020. ABO is the present value of benefits earned to date with benefits based upon current compensation levels. PBO is ABO increased to reflect estimated future compensation.

	Pension Benefits
	2021		2020
Change in benefit obligations:
Benefit obligations — beginning of year	$	782	$	750
Service cost	12		11
Interest cost	22		23
Actuarial (gain) loss	(30)		27
Plan amendments	2		—
Acquisitions	114		—
Curtailments	—		(2)
Foreign currency (gain) loss	(1)		3
Benefits paid	(31)		(30)
Benefit obligations — end of year (a)	$	870	$	782
Change in plan assets:

	Pension Benefits
	2021		2020
Fair value of plan assets — beginning of year	$	585	$	547
Actual gain on plan assets	75		53
Foreign currency	—		1
Employer contributions	14		13
Acquisitions	92		—
Benefits paid	(30)		(29)
Fair value of plan assets — end of year	$	736	$	585
Funded status of the plans — end of year (b)	$	(134)	$	(197)
Amounts recorded in UGI Corporation stockholders’ equity (pre-tax):
Prior service cost	$	3	$	1
Net actuarial loss	13		24
Total	$	16	$	25
Amounts recorded in regulatory assets and liabilities (pre-tax):
Net actuarial loss	108		174
Total	$	108	$	174

(a)    The ABO for the U.S. Pension Plans was $756 and $687 as of September 30, 2021 and 2020, respectively.

(b)    Amounts are reflected in “Other noncurrent liabilities” on the Consolidated Balance Sheets.

In Fiscal 2021 and Fiscal 2020, the change in the pension plans’ PBO due to actuarial gains and losses is principally the result of changes in discount rates. In Fiscal 2022, the estimated amount that will be amortized from UGI Stockholders’ equity and regulatory assets into net periodic benefit cost is approximately $7, the majority of which represents net actuarial losses, primarily associated with the U.S. Pension Plans.

Actuarial assumptions for our U.S. Pension Plans are described below. The discount rate assumption was determined by selecting a hypothetical portfolio of high quality corporate bonds appropriate to provide for the projected benefit payments of the plans. The discount rate was then developed as the single rate that equates the market value of the bonds purchased to the discounted value of the plans’ benefit payments. The expected rate of return on assets assumption is based on current and expected asset allocations as well as historical and expected returns on various categories of plan assets (as further described below).

	Pension Plans
	2021		2020		2019
Weighted-average assumptions:
Discount rate – benefit obligations	3.13	%	2.90	%	3.30	%
Discount rate – benefit cost	2.90	%	3.30	%	4.40	%
Expected return on plan assets	7.10	%	7.20	%	7.30	%
Rate of increase in salary levels	3.25	%	3.25	%	3.25	%

The service cost component of our pension and other postretirement plans, net of amounts capitalized, are reflected in “Operating and administrative expenses” on the Consolidated Statements of Income. The non-service cost components, net of amounts capitalized by UGI Utilities as a regulatory asset, are reflected in “Other non-operating income (expense), net” on the Consolidated Statements of Income. Other postretirement benefit cost was not material for all periods presented. Net periodic pension cost includes the following components:

	Pension Benefits
	2021		2020		2019
Service cost	$	12	$	11	$	10
Interest cost	22		23		27
Expected return on assets	(40)		(38)		(36)
Curtailment gain	—		(1)		—
Amortization of:
Prior service cost	—		1		—
Actuarial loss	14		15		8
Net cost	$	8	$	11	$	9

It is our general policy to fund amounts for U.S. Pension Plans benefits equal to at least the minimum required contribution set forth in applicable employee benefit laws. From time to time, we may, at our discretion, contribute additional amounts. During Fiscal 2021, Fiscal 2020 and Fiscal 2019, we made cash contributions to the U.S. Pension Plans of $13, $13 and $12, respectively. The minimum required contributions in Fiscal 2022 are not expected to be material.

UGI Utilities, Inc. has established a VEBA trust to pay certain retiree health care and life insurance benefits by depositing into the VEBA the annual amount of postretirement benefits costs, if any. Assets associated with the VEBA are not material and we do not expect to be required to make any contributions to the VEBA during Fiscal 2022.

Expected payments for postretirement benefits over the next 10 years are not material. Expected payments for pension benefits are as follows:

	Pension Benefits
Fiscal 2022	$	36
Fiscal 2023	$	36
Fiscal 2024	$	41
Fiscal 2025	$	41
Fiscal 2026	$	43
Fiscal 2027 - 2031	$	230

We also sponsor unfunded and non-qualified supplemental executive defined benefit retirement plans. At September 30, 2021 and 2020, the PBOs of these plans, including obligations for amounts held in grantor trusts, totaled $57 and $59, respectively. Costs associated with these plans were not material for all periods presented and are excluded from the tables above. Amounts recorded in UGI’s stockholders’ equity for these plans include pre-tax losses of $10 and $12 at September 30, 2021 and 2020, respectively, principally representing unrecognized actuarial losses. In Fiscal 2022, the estimated amount that will be amortized from such pre-tax actuarial losses into retiree benefit cost is not material. During Fiscal 2021, the Company made $12 of payments for the supplemental executive defined benefit retirement plans. During Fiscal 2020 and Fiscal 2019, the payments the Company made with respect to the supplemental executive defined benefit retirement plans were not material. The total fair value of the grantor trust investment assets associated with the supplemental executive defined benefit retirement plans, which are included in “Other assets” on the Consolidated Balance Sheets, totaled $44 and $35 at September 30, 2021 and 2020, respectively.

U.S. Pension Plans’ Assets

The assets of the U.S. Pension Plans are held in trust. The investment policies and asset allocation strategies for the assets in these trusts are determined by an investment committee comprising certain members of UGI’s senior management. The overall investment objective is to minimize projected funded status volatility by more closely aligning the duration of the U.S. Pension Plans’ fixed income portfolio to the duration of its liabilities. The proportion of plan assets allocated to fixed income investments will increase as the funded status increases. Investments are made principally in common collective trust funds that consist of equity index investments, bond index investments and short-term investments, and, to a much less extent, UGI Common Stock.

The targets and actual allocations for the U.S. Pension Plans’ trust assets at September 30 are as follows:

	Actual				Target Asset Allocation (b)
	2021		2020		2021		2020
Equity investments:
U.S. equities	22.2	%	26.5	%	25.3	%	29.0	%
Non-U.S. equities	21.7	%	25.0	%	21.4	%	24.5	%
Global equities (a)	16.0	%	12.3	%	13.1	%	11.5	%
Total	59.9	%	63.8	%	59.8	%	65.0	%
Fixed income funds & cash equivalents	36.4	%	36.2	%	34.4	%	35.0	%
Alternative investments	3.7	%	—	%	5.8	%	—	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

(a)    Comprises investment funds that consist of a mix of U.S. and Non-U.S. equity securities.

(b)    There is a permitted range for the allocation of the trust assets for the U.S. Pension Plans, excluding the defined benefit pension plan for Mountaineer employees, which is 5% less than and greater than the target allocation.

Common collective trust funds in the U.S. Pension Plans primarily include investments in U.S., Non-U.S. and global (a mix of U.S. and Non-U.S.) equities, fixed income and short-term investments. The fair values of common collective trust funds and cash equivalents are valued at the NAV of units of the collective trusts. The NAVs, as provided by the trustee, are used as a practical expedient to estimate fair value based on the fair values of the underlying investments held by the funds less their liabilities. The fair values of the U.S. Pension Plans trust assets by asset class as of September 30, 2021 and 2020 are as follows:

	2021		2020
U.S. Pension Plans:
Domestic equity investments:
UGI Corporation Common Stock	$	35	$	27
Total domestic equity investments (a)	35		27
Common collective trust funds:
U.S. equity index investments	124		123
Non-U.S. equity index investments	155		141
Global equity index investments	115		70
Bond index investments	254		200
Cash equivalents	7		5
Total common collective trust funds (b)	655		539
Alternative investments (b)	27		—
Total	$	717	$	566

(a)    Level 1 investments within the fair value hierarchy

(b)    Assets measured at NAV and therefore excluded from the fair value hierarchy.

The expected long-term rates of return on U.S. Pension Plans’ trust assets have been developed using a best estimate of expected returns, volatilities and correlations for each asset class. The estimates are based on historical capital market performance data and future expectations provided by independent consultants. Future expectations are determined by using simulations that provide a wide range of scenarios of future market performance. The market conditions in these simulations consider the long-term relationships between equities and fixed income as well as current market conditions at the start of the simulation. The expected rate begins with a risk-free rate of return with other factors being added such as inflation, duration, credit spreads and equity risk premiums. The rates of return derived from this process are applied to our target asset allocation to develop a reasonable return assumption.

Defined Contribution Plans

We sponsor 401(k) savings plans for eligible employees of UGI and certain of UGI’s domestic subsidiaries. Generally, participants in these plans may contribute a portion of their compensation on either a before-tax basis, or on both a before-tax and after-tax basis. These plans also provide for employer matching contributions at various rates. The cost of benefits under the savings plans totaled $21 in Fiscal 2021, $21 in Fiscal 2020 and $19 in Fiscal 2019. The Company also sponsors certain nonqualified supplemental defined contribution executive retirement plans. These plans generally provide supplemental benefits to certain executives that would otherwise be provided under retirement plans but are prohibited due to limitations imposed by the IRC. The Company makes payments to self-directed grantor trusts with respect to these supplemental defined contribution plans. Such payments during Fiscal 2021, Fiscal 2020 and Fiscal 2019 were not material. At September 30, 2021 and 2020, the total fair values of these grantor trust investment assets, which amounts are included in “Other assets” on the Consolidated Balance Sheets, were $9 and $7, respectively.