Postretirement Benefits

6 Months Ended

Jun. 30, 2024

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 plan provides 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, there are reimbursements between us and the Exchange and its subsidiaries for their allocated share of pension income or cost. These reimbursements represent pension benefits for employees performing administrative services and an allocated share of plan (income) cost for employees in departments that support the administrative functions. For the six months ended June 30, 2024, we reimbursed the Exchange and its subsidiaries for approximately 60% of the annual defined benefit pension income and 34% of the annual SERP income. For our funded pension plan, amounts are settled in cash for the portion of pension (income) cost allocated to the Exchange and its subsidiaries. For our unfunded SERP, we pay the obligations when due and amounts are settled in cash between entities when there is a payout.

Our defined benefit pension plan funding policy is generally 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%. Accordingly, we made a $33 million contribution in January 2024. The funded pension plan net benefit asset is presented separately from the unfunded plan as a non-current asset on our Statements of Financial Position.

Pension plan income includes the following components:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023
Service cost for benefits earned	$	8,641	$	7,191	$	17,292	$	14,382
Interest cost on benefit obligation	13,163		12,548		26,308		25,096
Expected return on plan assets	(20,198)		(17,217)		(40,396)		(34,435)
Prior service cost amortization	397		361		786		723
Net actuarial gain amortization	(1,734)		(3,832)		(3,485)		(7,665)
Settlement gain (1)	(1,030)		—		(1,279)		—
Pension plan income (2)	$	(761)	$	(949)	$	(774)	$	(1,899)

(1)Settlement accounting was required due to lump sum payments made under the SERP to three former officers in 2024.

(2)Pension plan income represents total plan income before reimbursements between Indemnity and the Exchange and its subsidiaries. The components of pension plan income other than the service cost components are included in the line item "Other income" in the Statements of Operations, net of reimbursements between Indemnity and the Exchange and its subsidiaries.