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Postretirement Benefits
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Postretirement Benefits Postretirement Benefits
Pension plans
Our pension plans consist of a noncontributory defined benefit pension plan covering substantially all employees and an unfunded supplemental employee retirement plan ("SERP") for certain members of executive and senior management. The pension plans provide benefits to covered individuals satisfying certain age and service requirements. The defined benefit pension plan and SERP each provide benefits through a final average earnings formula.

Although we are the sponsor of these postretirement plans and record the funded status of these plans, the Exchange and its subsidiaries reimburse us for approximately 58% of the annual benefit expense of these plans, which represents pension benefits for employees performing administrative services and their allocated share of costs for employees in departments that support the administrative functions. For our funded pension plan, amounts are settled in cash for the portion of pension costs allocated to the Exchange and its subsidiaries. For our unfunded plans, we pay the obligations when due and amounts are settled in cash between entities when there is a payout.

Cost of pension plans
Pension plan cost includes the following components:
(in thousands)
202120202019
Service cost for benefits earned$53,041 $43,492 $33,854 
Interest cost on benefit obligation36,824 37,578 39,306 
Expected return on plan assets(50,275)(49,411)(47,484)
Prior service cost amortization1,428 1,343 1,394 
Net actuarial loss amortization16,106 12,125 5,113 
Pension plan cost (1)
$57,124 $45,127 $32,183 

(1)     Pension plan costs represent the total cost before reimbursements to Indemnity from the Exchange and its subsidiaries. The components of pension plan costs other than the service cost components are included in the line item "Other (expense) income" in the Statements of Operations after reimbursements from the Exchange and its subsidiaries.


Actuarial assumptions
The following table describes the assumptions at December 31 used to measure the year-end obligations and the net periodic benefit costs for the subsequent year:
2021202020192018
Employee pension plan:
Discount rate3.16 %2.96 %3.59 %4.47 %
Expected return on assets5.50 6.00 6.00 6.75 
Compensation increases (1)
3.21 3.21 3.21 3.32 
SERP: 
Discount rate – pre-retirement/post-retirement (2)
3.11 2.86 
3.59/3.09
4.47/3.97
Rate of compensation increase5.00 5.00 5.00 5.00 

(1)    The rate of compensation increase for the employee plan is age-graded.  An equivalent single compensation increase rate of 3.21% in 2021, 2020 and 2019 would produce similar results.
(2)    In 2020, the SERP discount rate methodology was revised to utilize SERP specific cash outflows independent of the employee pension plan discount rate, eliminating a difference between pre-retirement and post-retirement rates.


The economic assumptions that have the most impact on the postretirement benefits expense are the discount rate and the long-term rate of return on plan assets. The discount rate assumption used to determine the benefit obligation for all periods presented was based upon a yield curve developed from corporate bond yield information.

The pension plan's expected long-term rate of return represents the average rate of return to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. To determine the expected long-term rate of return assumption, we utilized models based upon historical analysis and forward-looking views of the financial markets based upon key factors such as historical returns for the asset class' applicable indices, the correlations of the asset classes under various market conditions and consensus views on future real economic growth and inflation. The expected future return for each asset
class is then combined by considering correlations between asset classes and the volatilities of each asset class to produce a reasonable range of asset return results within which our expected long-term rate of return assumption falls.

Funding policy/funded status
In 2018, we made accelerated pension contributions totaling $80 million. Following our 2018 contributions, we would not expect to make a subsequent contribution until the sum of the target normal costs for plan years beginning on and after December 31, 2017 exceeds $80 million, or earlier if a contribution is necessary to fund the plan to 100%. At that time, our funding policy will again generally be to contribute an amount equal to the greater of the target normal cost for the plan year, or the amount necessary to fund the plan to 100%. Additional contributions may be necessary or desirable due to future plan changes, our particular business or investment strategy, or pending law changes. The following table sets forth the funded status of the pension plans and the amounts recognized in the Statements of Financial Position at December 31:
(in thousands)
20212020
Funded status at end of year$(132,411)$(165,098)
Pension liabilities – due within one year (1)
$(2,028)$(752)
Pension liabilities – due after one year(130,383)(164,346)
Net amount recognized$(132,411)$(165,098)

(1)    The current portion of pension liabilities is included in accounts payable and accrued liabilities.


Benefit obligations
Benefit obligations are described in the following tables. Accumulated and projected benefit obligations represent the obligations of a pension plan for past service as of the measurement date. The accumulated benefit obligation is the present value of pension benefits earned as of the measurement date based on employee service and compensation prior to that date. It differs from the projected benefit obligation in that the accumulated benefit obligation includes no assumptions to reflect expected future compensation. The following table sets forth a reconciliation of beginning and ending balances of the projected benefit obligation, as well as the accumulated benefit obligation at December 31:
(in thousands)
20212020
Projected benefit obligation, beginning of year$1,246,159 $1,054,467 
Service cost for benefits earned53,041 43,492 
Interest cost on benefit obligation36,824 37,578 
Plan amendments4,059 — 
Actuarial (gain) loss(38,400)134,470 
Benefits paid(29,029)(23,848)
Projected benefit obligation, end of year$1,272,654 $1,246,159 
Accumulated benefit obligation, end of year$1,037,820 $1,006,884 


Projected benefit obligations increased $26.5 million at December 31, 2021 compared to December 31, 2020 due primarily to anticipated plan progression partially offset by actuarial gains resulting from the higher discount rate used to measure the future benefit obligations. The discount rate increased to 3.16% in 2021 from 2.96% in 2020. The plan amendments during 2021 are due to the addition of four new participants to the SERP since December 31, 2020.
Both the defined benefit plan and the SERP had projected benefit obligations in excess of plan assets at December 31:
(in thousands)Projected Benefit Obligation in Excess of Plan Assets
20212020
Projected benefit obligation$1,272,654 $1,246,159 
Plan assets1,140,243 1,081,061 


The SERP had accumulated benefit obligations in excess of plan assets at December 31:
(in thousands)Accumulated Benefit Obligation in Excess of Plan Assets
20212020
Accumulated benefit obligation$29,190 $26,462 
Plan assets— — 


Pension assets
The following table sets forth a reconciliation of beginning and ending balances of the fair value of plan assets at December 31:
(in thousands)
20212020
Fair value of plan assets, beginning of year$1,081,061 $907,625 
Actual gain on plan assets86,966 195,713 
Employer contributions1,245 1,571 
Benefits paid(29,029)(23,848)
Fair value of plan assets, end of year$1,140,243 $1,081,061 


Accumulated other comprehensive loss
Net actuarial loss and prior service cost included in accumulated other comprehensive loss that were not yet recognized as components of net benefit costs were as follows:
(in thousands)
20212020
Net actuarial loss$27,524 $118,721 
Prior service cost12,201 9,570 
Net amount not yet recognized$39,725 $128,291 


Other comprehensive income
Amounts recognized in other comprehensive income for pension plans were as follows:
(in thousands)
20212020
Net actuarial gain arising during the year$(75,091)$(11,832)
Amortization of net actuarial loss(16,106)(12,125)
Amortization of prior service cost(1,428)(1,343)
Amendments (1)
4,059 — 
Total recognized in other comprehensive income$(88,566)$(25,300)

(1)    In 2021, there were four new SERP participants.
Asset allocation
The employee pension plan utilizes a return seeking and a liability asset matching allocation strategy.  It is based upon the understanding that 1) equity investments are expected to outperform debt investments over the long-term, 2) the potential volatility of short-term returns from equities is acceptable in exchange for the larger expected long-term returns, and 3) a portfolio structured across investment styles and markets (both domestic and foreign) reduces volatility.  As a result, the employee pension plan's investment portfolio utilizes a broadly diversified asset allocation across domestic and foreign equity and debt markets.  The investment portfolio is composed of commingled pools and a separate account that are dedicated exclusively to the management of employee benefit plan assets.

The target and actual asset allocations for the portfolio are as follows for the years ended December 31:
Target asset
allocation		Target asset
allocation		Actual asset
allocation		Actual asset
allocation
Asset allocation:2021202020212020
Equity securities:
U.S. equity securities27 %(1)27 %27 %28 %
Non-U.S. equity securities18 (2)18 18 18 
Total equity securities
45 45 45 46 
Debt securities54 (3)54 54 53 
Other1 (4)1 1 1 
Total100 %100 %100 %100 %

(1)    U.S. equity securities – 21% seek to achieve excess returns relative to the Russell 2000 Index. The remaining 79% of the allocation to U.S. equity securities are comprised of equity index funds that track the S&P 500.
(2)    Non-U.S. equity securities – 11% are allocated to international small cap investments, while another 20% are allocated to international emerging market investments.  The remaining 69% of the Non-U.S. equity securities are allocated to investments seeking to achieve excess returns relative to an international market index.
(3)    Debt securities – 34% are allocated to long U.S. Treasury Strips, 66% are allocated to U.S. corporate bonds with an emphasis on long duration bonds rated A or better.
(4)    Institutional money market fund.
The following tables present fair value measurements for the pension plan assets by major category and level of input as of:
December 31, 2021
Fair value measurements of plan assets using:
(in thousands)Total Level 1Level 2Level 3
Equity securities:
U.S. equity securities$305,440 $0 $305,440 $0 
Non-U.S. equity securities200,949 139,688 61,261 0 
Total equity securities506,389 139,688 366,701 0 
Debt securities620,337 0 620,337 0 
Other13,517 13,517 0 0 
Total$1,140,243 $153,205 $987,038 $0 


December 31, 2020
Fair value measurements of plan assets using:
(in thousands)TotalLevel 1Level 2Level 3
Equity securities:
U.S. equity securities$296,624 $0 $296,624 $0 
Non-U.S. equity securities196,971 134,841 62,130 0 
Total equity securities493,595 134,841 358,754 0 
Debt securities574,910 0 574,910 0 
Other12,556 12,556 0 0 
Total$1,081,061 $147,397 $933,664 $0 


Estimates of fair values of the pension plan assets are obtained primarily from the trustee and custodian of our pension plan.  Our Level 1 category includes a money market mutual fund and a separate account for which the fair value is determined using an exchange traded price provided by the trustee and custodian.  Our Level 2 category includes commingled pools.  Estimates of fair values for securities held by our commingled pools are obtained primarily from the trustee and custodian.  Trustee and custodian valuation methodologies for Level 2 securities include multiple verifiable, observable inputs including benchmark yields, reported trades, broker/dealer quotes, issuers spreads, two-sided markets, benchmark securities, bids, offers, and reference data.

Estimated future benefit payments
The following table sets forth amounts of benefits expected to be paid over the next 10 years from our pension plans as of:

(in thousands)
Year ending
December 31,		Expected future
benefit payments
2022$29,730 
202333,975 
202436,025 
202539,813 
202642,218 
2027 - 2031265,680 
Employee savings planAll full-time and regular part-time employees are eligible to participate in a qualified 401(k) savings plan.  We match 100% of the participant contributions up to 3% of compensation and 50% of participant contributions over 3% and up to 5% of compensation.  Matching contributions paid to the plan were $16.1 million in 2021, $15.8 million in 2020, and $14.9 million in 2019.  The Exchange and its subsidiaries reimbursed us for approximately 59% of the matching contributions. Employees are permitted to invest the employer-matching contributions in our Class A common stock.  Employees, other than executive and senior officers, may sell the shares at any time without restriction, provided they are in compliance with applicable insider trading laws; sales by executive and senior officers are subject to additional pre-clearance restrictions imposed by our insider trading policies.  The plan acquires shares in the open market necessary to meet the obligations of the plan.  Plan participants held 0.2 million shares of our Class A common stock at December 31, 2021 and 2020.