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DEFINED BENEFIT PENSION PLANS
 12 Months Ended
Jul. 31, 2022
Retirement Benefits [Abstract]  
DEFINED BENEFIT PENSION PLANS DEFINED BENEFIT PENSION PLANS
The Company sponsors two defined benefit pension plans covering certain of ModusLink's employees in its Netherlands facility and one unfunded defined benefit pension plan covering certain of its employees in Japan. Pension costs are actuarially determined. During the year ended July 31, 2020, the Netherlands defined benefit plan was amended so active participants no longer accrued benefits as of January 1, 2020 which resulted in a pre-tax curtailment gain of $2.4 million recognized in accumulated other comprehensive income.

The plan assets of the two defined benefit plans associated with the ModusLink's Netherlands facility consist of an insurance contract that guarantees the payment of the funded pension entitlements. Insurance contract assets are recorded at fair value, which is determined based on the cash surrender value of the insured benefits which is the present value of the guaranteed funded benefits. Insurance contracts are valued using unobservable inputs, primarily by discounting expected future cash flows relating to benefits paid from a notional investment portfolio in order to determine the cash surrender value of the policy. The following table presents the plan assets measured at fair value on a recurring basis as of July 31, 2022 and 2021, classified by fair value hierarchy:
Fair Value Measurements at Reporting Date Using
(In thousands)July 31, 2022Asset
Allocations		Level 1Level 2Level 3
Insurance contract$17,560 98 %$— $— $17,560 
Other investments416 2 %— — 416 
$17,976 100 %$— $— $17,976 
Fair Value Measurements at Reporting Date Using
(In thousands)July 31, 2021Asset
Allocations		Level 1Level 2Level 3
Insurance contract$28,554 98 %$— $— $28,554 
Other investments669 2 %— — 669 
$29,223 100 %$— $— $29,223 
The following table summarizes the changes in benefit obligation, plan assets and funded status for these plans:
July 31,
20222021
(In thousands)
Change in benefit obligation
Benefit obligation at beginning of year$33,584 $33,927 
Service cost11 16 
Interest cost462 501 
Actuarial gain(8,674)(664)
Benefits and administrative expenses paid(227)(216)
Settlements— (46)
Currency translation(4,053)66 
Benefit obligation at end of year$21,103 $33,584 
Change in plan assets
Fair value of plan assets at beginning of year$29,223 $29,050 
Actual return on plan assets(7,544)(29)
Employer contributions, net5 393 
Settlements— (46)
Benefits and administrative expenses paid(227)(216)
Currency translation(3,481)71 
Fair value of plan assets at end of year$17,976 $29,223 
Funded status
Current liabilities$(11)$(13)
Noncurrent liabilities(3,116)(4,348)
Net amounts recognized on the consolidated balance sheets$(3,127)$(4,361)

Information for pension plans with an accumulated benefit obligation in excess of plan assets was as follows:
July 31,
20222021
(In thousands)
Projected benefit obligation$21,103 $33,584 
Accumulated benefit obligation$21,103 $33,584 
Fair value of plan assets$17,976 $29,223 

The following table summarizes the components of net periodic pension cost:
Fiscal Year Ended
July 31,
20222021
(In thousands)
Service cost$11 $16 
Interest costs462 501 
Expected return on plan assets(407)(437)
Amortization of net actuarial loss4 4 
Net periodic pension costs$70 $84 

Assumptions

The table below summarizes the weighted average assumptions used to determine benefit obligations:
Fiscal Year Ended
July 31,
20222021
Discount rate2.96 %1.49 %
Rate of compensation increase— %— %

The table below summarizes weighted average assumptions used to determine net periodic pension cost:
Fiscal Year Ended
July 31,
20222021
Discount rate2.58 %1.24 %
Expected long-term rate of return on plan assets2.51 %1.20 %
Rate of compensation increase— %— %

The discount rate reflects the Company's best estimate of the interest rate at which pension benefits could be effectively settled as of the valuation date. It is based on the Mercer Yield Curve for the Eurozone as of July 31, 2022 for the appropriate duration of the plan.

To develop the expected long-term rate of return on assets assumptions, consideration is given to the current level of expected returns on risk free investments, the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for the future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

Benefit Payments

The following table summarizes expected benefit payments from the plans through fiscal year 2032. Actual benefit payments may differ from expected benefit payments. The minimum employer required contributions to the plans are expected to be approximately $0.2 million in fiscal year 2023.
Pension Benefit
Payments
(In thousands)
For the fiscal year ending July 31:
2023$265 
2024414 
2025340 
2026430 
2027413 
Thereafter2,896 

The current target allocations for plan assets are primarily insurance contracts.

Valuation Technique

Benefit obligations are computed using the projected unit credit method. Benefits are attributed to service based on the plan's benefit formula. Cumulative gains and losses in excess of 10% of the greater of the pension benefit obligation or market-related value of plan assets are amortized over the expected average remaining lifetime of all inactive participants.