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Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
 
The accounting standards related to employers’ accounting for defined benefit pension and other postretirement plans requires the Company to recognize the funded status of its defined benefit postretirement plans as assets or liabilities in the accompanying consolidated balance sheets and to recognize changes in the funded status of the plans in comprehensive income.

The Company has various defined contribution plans, the largest of which is its Retirement Savings Plan. Most U.S. salaried and non-union hourly employees are eligible to participate in this plan. See Note 17 for further discussion of the Retirement Savings Plan. The Company also maintains various other defined contribution plans which cover certain other employees. Company contributions under certain of these plans are based on the performance of the business units and employee compensation. Contribution expense under these other defined contribution plans was $4,870, $5,475 and $5,301 in 2022, 2021 and 2020, respectively.

Defined benefit pension plans in the U.S. cover a majority of the Company’s U.S. employees at the Engineered Components and Force & Motion Control businesses of Industrial, certain former U.S. employees, including retirees, and a portion of employees at the Company’s Corporate Office. Employees at certain international businesses within Industrial are also covered by defined benefit pension plans. Plan benefits for salaried and non-union hourly employees are based on years of service and average salary. Plans covering union hourly employees provide benefits based on years of service. The Company funds U.S. pension costs in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Non-U.S. defined benefit pension plans cover certain employees of certain international locations in Europe and Canada.
 
The Company provides other medical, dental and life insurance postretirement benefits for certain of its retired employees in the U.S. and Canada. It is the Company’s practice to fund these benefits as incurred.
 
The accompanying balance sheets reflect the funded status of the Company’s defined benefit pension plans at December 31, 2022 and 2021. Reconciliations of the obligations and funded status of the plans follow:
 
 20222021
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Benefit obligation, January 1$442,756 $89,460 $532,216 $461,296 $96,508 $557,804 
Service cost3,869 1,820 5,689 4,378 2,169 6,547 
Interest cost13,144 964 14,108 11,963 786 12,749 
Amendments121 — 121 862 — 862 
Actuarial gain(94,516)(23,739)(118,255)(10,734)(3,747)(14,481)
Benefits paid(24,882)(2,592)(27,474)(25,009)(4,499)(29,508)
Transfers in— 2,694 2,694 — 2,468 2,468 
Plan curtailments708 — 708 — (603)(603)
Plan settlements— (4,527)(4,527)— (2,464)(2,464)
Special termination benefits395 — 395 — — — 
Participant contributions— 1,034 1,034 — 1,171 1,171 
Foreign exchange rate changes— (4,403)(4,403)— (2,329)(2,329)
Benefit obligation, December 31341,595 60,711 402,306 442,756 89,460 532,216 
Fair value of plan assets, January 1422,563 87,366 509,929 413,898 88,880 502,778 
Actual return on plan assets(95,573)(10,275)(105,848)30,880 2,214 33,094 
Company contributions2,773 1,321 4,094 2,794 1,403 4,197 
Participant contributions— 1,034 1,034 — 1,171 1,171 
Benefits paid(24,882)(2,592)(27,474)(25,009)(4,499)(29,508)
Plan settlements— (4,527)(4,527)— (2,464)(2,464)
Transfers in— 2,694 2,694 — 2,468 2,468 
Foreign exchange rate changes— (4,982)(4,982)— (1,807)(1,807)
Fair value of plan assets, December 31304,881 70,039 374,920 422,563 87,366 509,929 
(Underfunded) Overfunded status, December 31$(36,714)$9,328 $(27,386)$(20,193)$(2,094)$(22,287)

Benefit obligations decreased in 2022 and 2021 primarily due to actuarial gains, resulting largely from increases in the discount rate, and the payment of benefits to plan participants, partially offset by interest costs.

Projected benefit obligations related to pension plans with benefit obligations in excess of plan assets follow:
 20222021
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Projected benefit obligation$268,811 $34,820 $303,631 $43,184 $49,272 $92,456 
Fair value of plan assets226,866 33,856 260,722 5,592 34,463 40,055 
 
Information related to pension plans with accumulated benefit obligations in excess of plan assets follows:
 20222021
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Accumulated benefit obligation$46,267 $34,762 $81,029 $43,108 $49,131 $92,239 
Fair value of plan assets9,813 33,856 43,669 5,592 34,463 40,055 
 
The accumulated benefit obligation for all defined benefit pension plans was $395,663 and $520,356 at December 31, 2022 and 2021, respectively.
Amounts related to pensions recognized in the accompanying balance sheets consist of:
 20222021
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Other assets$5,231 $10,292 $15,523 $17,399 $12,715 $30,114 
Accrued liabilities8,369 — 8,369 3,160 — 3,160 
Accrued retirement benefits33,576 964 34,540 34,432 14,809 49,241 
Accumulated other non-owner changes to equity, net(108,265)(2,636)(110,901)(96,425)(13,684)(110,109)
 
Amounts related to pensions recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2022 and 2021, respectively, consist of:
 20222021
 U.S.Non-U.S.TotalU.S.Non-U.S.Total
Net actuarial loss$(106,887)$(2,131)$(109,018)$(94,496)$(13,095)$(107,591)
Prior service costs(1,378)(505)(1,883)(1,929)(589)(2,518)
$(108,265)$(2,636)$(110,901)$(96,425)$(13,684)$(110,109)
 
The accompanying balance sheets reflect the underfunded status of the Company’s other postretirement benefit plans at December 31, 2022 and 2021. Reconciliations of the obligations and underfunded status of the plans follow:
 
20222021
Benefit obligation, January 1$29,839 $33,104 
Service cost77 103 
Interest cost808 819 
Actuarial gain(6,375)(2,115)
Benefits paid(2,597)(2,690)
Participant contributions141 589 
Foreign exchange rate changes71 29 
Benefit obligation, December 3121,964 29,839 
Fair value of plan assets, January 1— — 
Company contributions2,456 2,101 
Participant contributions141 589 
Benefits paid(2,597)(2,690)
Fair value of plan assets, December 31— — 
Underfunded status, December 31$21,964 $29,839 

Benefit obligations decreased in 2022 and 2021 primarily due to increases in actuarial gains, resulting largely from increases in the discount rate, and by the payment of benefits to plan participants.
 
Amounts related to other postretirement benefits recognized in the accompanying balance sheets consist of:
20222021
Accrued liabilities$2,630 $2,883 
Accrued retirement benefits19,334 26,956 
Accumulated other non-owner changes to equity, net2,261 (2,198)
Amounts related to other postretirement benefits recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2022 and 2021 consist of:
20222021
Net actuarial gain (loss)$2,269 $(2,141)
Prior service loss(8)(57)
$2,261 $(2,198)
 
The sources of changes in accumulated other non-owner changes to equity, net, during 2022 were: 
PensionOther
Postretirement
Benefits
Prior service cost$(92)$— 
Net gain (loss)(11,480)4,441 
Amortization of prior service costs636 27 
Amortization of actuarial loss9,218 (2)
Foreign exchange rate changes926 (7)
$(792)$4,459 

Weighted-average assumptions used to determine benefit obligations as of December 31, are:
20222021
U.S. plans:
Discount rate5.50 %2.95 %
Increase in compensation3.05 %3.03 %
Non-U.S. plans:
Discount rate3.60 %1.17 %
Increase in compensation2.76 %2.77 %
Interest crediting rate2.01 %1.34 %

The investment strategy of the plans is to generate a consistent total investment return sufficient to pay present and future plan benefits to retirees, while minimizing the long-term cost to the Company. Target allocations for asset categories are used to earn a reasonable rate of return, provide required liquidity and minimize the risk of large losses. Targets may be adjusted, as necessary, to reflect trends and developments within the overall investment environment. The weighted-average target investment allocations by asset category were as follows during 2022: 65% in equity securities and 35% in fixed income securities, including cash.
The fair values of the Company’s pension plan assets at December 31, 2022 and 2021 by asset category are as follows:
  Fair Value Measurements Using
Asset CategoryTotalQuoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
December 31, 2022
Cash and short-term investments$3,542 $3,542 $— $— 
Equity securities:
U.S. large-cap35,734 — 35,734 — 
U.S. mid-cap14,205 14,205 — — 
U.S. small-cap14,622 14,622 — — 
International equities104,377 — 104,377 — 
Global equity42,154 42,154 — — 
Fixed income securities:
U.S. bond funds97,170 — 97,170 — 
International bonds61,295 — 61,295 — 
Other1,821 — — 1,821 
$374,920 $74,523 $298,576 $1,821 
December 31, 2021
Cash and short-term investments4,195 4,195 — — 
Equity securities:
U.S. large-cap49,079 — 49,079 — 
U.S. mid-cap19,469 19,469 — — 
U.S. small-cap18,795 18,795 — — 
International equities136,557 — 136,557 — 
Global equity60,393 60,393 — — 
Fixed income securities:
U.S. bond funds143,035 — 143,035 — 
       International bonds75,515 — 75,515 — 
Other2,891 — — 2,891 
$509,929 $102,852 $404,186 $2,891 
 
The fair values of the Level 1 assets are based on quoted market prices from various financial exchanges. The fair values of the Level 2 assets are based primarily on quoted prices in active markets for similar assets or liabilities. The Level 2 assets are comprised primarily of commingled equity funds and fixed income securities. Commingled equity funds are valued at their net asset values based on quoted market prices of the underlying assets. Fixed income securities are valued using a market approach which considers observable market data for the underlying asset or securities. The Level 3 assets relate to a defined benefit plan within the Molding Solutions business. These pension assets are fully insured and have been estimated based on accrued pension rights and actuarial rates. These pension assets are limited to fulfilling the Company's pension obligations.
 
The Company expects to contribute approximately $9,712 to the pension plans in 2023. No contributions to the U.S. Qualified pension plans, specifically, are required, and the Company does not currently plan to make any discretionary contributions to such plans in 2023.
    
The following are the estimated future net benefit payments, which include future service, over the next 10 years:
PensionsOther
Postretirement
Benefits
2023$34,976 $2,630 
202432,411 2,400 
202532,292 2,247 
202632,165 2,079 
202728,824 1,947 
Years 2028-2032
141,030 8,196 
Total$301,698 $19,499 
 
Pension and other postretirement benefit costs consist of the following:
 PensionsOther
Postretirement Benefits
 202220212020202220212020
Service cost$5,689 $6,547 $6,269 $77 $103 $81 
Interest cost14,108 12,749 15,084 808 819 1,041 
Expected return on plan assets(28,944)(27,858)(29,698)— — — 
Amortization of prior service cost 387 332 359 36 29 27 
Recognized losses12,710 16,006 13,626 (2)258 35 
Curtailment loss/(gain)1,158 (133)484 — — — 
Settlement (gain)/loss(605)205 549 — — — 
Special termination benefits395 — — — — — 
Net periodic benefit cost$4,898 $7,848 $6,673 $919 $1,209 $1,184 
 
The curtailment loss of $1,158 and a portion of the special termination benefits of $395 in 2022 as well as the curtailment loss of $484 and a majority of the settlement loss of $549 in 2020 relate to restructuring and workforce reduction actions that were taken during the periods. See Note 9.

The components of net periodic benefit cost other than service cost are included in Other Expense (Income) on the Consolidated Statements of Income.
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 are:
 
202220212020
U.S. plans:
Discount rate2.95 %2.65 %3.40 %
Long-term rate of return7.25 %7.25 %7.75 %
Increase in compensation3.03 %2.56 %2.56 %
Non-U.S. plans:
Discount rate1.17 %0.83 %1.28 %
Long-term rate of return2.33 %1.96 %3.02 %
Increase in compensation2.77 %2.75 %2.75 %
Interest crediting rate1.34 %1.34 %1.34 %
 
The expected long-term rate of return is based on consideration of projected rates of return and the historical rates of return of published indices that reflect the plans’ target asset allocation.

The Company’s accumulated postretirement benefit obligations, exclusive of pensions, take into account certain cost-sharing provisions. The annual rate of increase in the cost of covered benefits (i.e., health care cost trend rate) is assumed to be
7.52% and 6.56% at December 31, 2022 and 2021, respectively, decreasing gradually to a rate of 4.00% by December 31, 2046.  
The Company actively contributes to a Swedish pension plan that supplements the Swedish social insurance system. The pension plan guarantees employees a pension based on a percentage of their salary and represents a multi-employer pension plan, however the pension plan was not significant in any year presented. This pension plan is not underfunded.