Employee benefit plans | Employee benefit plans Retirement plans and retiree health and life insurance plans The Company provides non-contributory defined benefit pension plans for certain of its employees in the United States, Mexico, Belgium, Germany, Greece, France, and Turkey. The Company also sponsors contributory defined benefit pension plans covering certain of its employees in the United Kingdom, Canada and the Netherlands, and provides postretirement healthcare and life insurance benefits to a limited number of its retirees and their dependents in the United States and Canada, based on certain age and/or service eligibility requirements. The Company froze participation in its U.S. qualified defined benefit pension plan for newly hired salaried and non-union hourly employees effective December 31, 2003. To replace this benefit, the Company provides non-union U.S. employees hired on or after January 1, 2004, with an annual contribution, called the Sonoco Retirement Contribution (SRC), to their participant accounts in the Sonoco Retirement and Savings Plan. Also eligible for the SRC are former participants of the U.S. qualified defined benefit pension plan who elected to transfer out of that plan under a one-time option effective January 1, 2010. On February 4, 2009, the U.S. qualified defined benefit pension plan was amended to freeze plan benefits for all active participants effective December 31, 2018. Remaining active participants in the U.S. qualified plan became eligible for SRC contributions effective January 1, 2019. The components of net periodic benefit cost include the following: 2018 2017 2016 Retirement Plans Service cost $ 18,652 $ 18,543 $ 19,508 Interest cost 54,970 55,873 59,719 Expected return on plan assets (91,021) (81,212) (85,466) Amortization of prior service cost 916 910 809 Amortization of net actuarial loss 37,391 39,209 39,009 Effect of settlement loss 730 32,761 — Effect of curtailment loss 256 — — Net periodic benefit cost $ 21,894 $ 66,084 $ 33,579 Retiree Health and Life Insurance Plans Service cost $ 297 $ 313 $ 309 Interest cost 452 463 482 Expected return on plan assets (1,135) (1,636) (1,579) Amortization of prior service credit (498) (499) (498) Amortization of net actuarial gain (1,120) (759) (667) Net periodic benefit income $ (2,004) $ (2,118) $ (1,953) The following tables set forth the Plans’ obligations and assets at December 31: Retirement Plans Retiree Health and Life Insurance Plans 2018 2017 2018 2017 Change in Benefit Obligation Benefit obligation at January 1 $ 1,837,938 $ 1,777,424 $ 15,691 $ 17,568 Service cost 18,652 18,543 297 313 Interest cost 54,970 55,873 452 463 Plan participant contributions 429 391 620 744 Plan amendments 155 639 — — Actuarial loss/(gain) (115,153) 99,402 (398) (1,249) Benefits paid (93,053) (81,547) (2,569) (2,183) Impact of foreign exchange rates (21,636) 29,753 (45) 35 Effect of settlements (2,210) (62,540) — — Effect of curtailments (253) — — — Acquisitions 4,438 — — — Benefit obligation at December 31 $ 1,684,277 $ 1,837,938 $ 14,048 $ 15,691 Retirement Plans Retiree Health and Life Insurance Plans 2018 2017 2018 2017 Change in Plan Assets Fair value of plan assets at January 1 $ 1,494,713 $ 1,325,389 $ 27,177 $ 23,848 Actual return on plan assets (78,447) 198,071 (915) 3,986 Company contributions 24,524 93,662 (13,302) 851 Plan participant contributions 429 443 620 744 Benefits paid (93,053) (81,547) (2,569) (2,183) Impact of foreign exchange rates (22,380) 29,460 — — Effect of settlements (2,210) (62,540) — — Expenses paid (6,670) (8,225) (92) (69) Acquisitions 1,926 — — — Fair value of plan assets at December 31 $ 1,318,832 $ 1,494,713 $ 10,919 $ 27,177 Funded Status of the Plans $ (365,445) $ (343,225) $ (3,129) $ 11,486 The negative contribution reported in 2018 for the Company's Retiree Health and Life Insurance Plans reflects $14,025 of cash withdrawn from a collectively bargained VEBA in 2018 pursuant to an IRS private letter ruling dated April 1, 2018, permitting the Company to amend the VEBA to provide benefits to active, non-collectively bargained employees in addition to retired collectively bargained employees. Retirement Plans Retiree Health and Life Insurance Plans 2018 2017 2018 2017 Total Recognized Amounts in the Consolidated Balance Sheets Noncurrent assets $ 18,520 $ 24,380 $ — $ 12,851 Current liabilities (12,935) (13,220) (983) (820) Noncurrent liabilities (371,030) (354,385) (2,146) (545) Net (liability)/asset $ (365,445) $ (343,225) $ (3,129) $ 11,486 Items not yet recognized as a component of net periodic pension cost that are included in Accumulated Other Comprehensive Loss (Income) as of December 31, 2018 and 2017, are as follows: Retirement Plans Retiree Health and Life Insurance Plans 2018 2017 2018 2017 Net actuarial loss/(gain) $ 646,254 $ 625,831 $ (6,964) $ (9,822) Prior service cost/(credit) 5,514 3,780 (777) (1,275) $ 651,768 $ 629,611 $ (7,741) $ (11,097) The amounts recognized in Other Comprehensive Loss/(Income) include the following: Retirement Plans Retiree Health and Life Insurance Plans 2018 2017 2016 2018 2017 2016 Adjustments arising during the period: Net actuarial loss/(gain) $ 58,544 $ (10,732) $ 56,060 $ 1,738 $ (3,525) $ (1,449) Prior service cost/(credit) 2,906 639 1,069 — — — Net settlements/curtailments (986) (32761) — — — — Reversal of amortization: Net actuarial (loss)/gain (37,391) (39,209) (39,009) 1,120 759 667 Prior service (cost)/credit (916) (910) (809) 498 499 498 Total recognized in other comprehensive loss/(income) $ 22,157 $ (82,973) $ 17,311 $ 3,356 $ (2,267) $ (284) Total recognized in net periodic benefit cost and other comprehensive loss/(income) $ 44,051 $ (16,889) $ 50,890 $ 1,352 $ (4,385) $ (2,237) Of the amounts included in Accumulated Other Comprehensive Loss/(Income) as of December 31, 2018, the portions the Company expects to recognize as components of net periodic benefit cost in 2019 are as follows: Retirement Plans Retiree Health and Life Insurance Plans Net actuarial loss/(gain) $ 36,192 $ (780) Prior service cost/(credit) 879 (498) $ 37,071 $ (1,278) The accumulated benefit obligation for all defined benefit plans was $1,668,396 and $1,810,462 at December 31, 2018 and 2017, respectively. The projected benefit obligation (PBO), accumulated benefit obligation (ABO) and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were, $1,397,040, $1,391,129 and $1,013,173, respectively, as of December 31, 2018, and $1,554,395, $1,538,350 and $1,186,789, respectively, as of December 31, 2017. The following table sets forth the Company’s projected benefit payments for the next ten years: Year Retirement Plans Retiree Health and Life Insurance Plans 2019 $ 93,875 $ 1,491 2020 $ 95,990 $ 1,383 2021 $ 94,006 $ 1,360 2022 $ 95,628 $ 1,299 2023 $ 97,657 $ 1,239 2022-2026 $ 509,790 $ 5,480 Assumptions The following tables set forth the major actuarial assumptions used in determining the PBO, ABO and net periodic cost: Weighted-average assumptions used to determine benefit obligations at December 31 U.S. Retirement Plans U.S. Retiree Health and Life Insurance Plans Foreign Plans Discount Rate 2018 4.24 % 4.02 % 3.11 % 2017 3.59 % 3.36 % 2.78 % Rate of Compensation Increase 2018 — % 3.06 % 3.65 % 2017 3.40 % 3.28 % 3.62 % Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31 U.S. Retirement Plans U.S. Retiree Health and Life Insurance Plans Foreign Plans Discount Rate 2018 3.59 % 3.36 % 2.78 % 2017 4.12 % 3.70 % 2.95 % 2016 4.36 % 3.78 % 3.71 % Expected Long-term Rate of Return 2018 6.87 % 6.95 % 4.84 % 2017 6.86 % 6.98 % 4.52 % 2016 7.47 % 7.31 % 4.75 % Rate of Compensation Increase 2018 3.40 % 3.28 % 3.62 % 2017 3.60 % 3.32 % 3.65 % 2016 3.69 % 3.36 % 3.52 % The Company adjusts its discount rates at the end of each fiscal year based on yield curves of high-quality debt instruments over durations that match the expected benefit payouts of each plan. The expected long-term rate of return assumption is based on the Company’s current and expected future portfolio mix by asset class, and expected nominal returns of these asset classes using an economic “building block” approach. Expectations for inflation and real interest rates are developed and various risk premiums are assigned to each asset class based primarily on historical performance. The expected long-term rate of return also gives consideration to the expected level of outperformance to be achieved on that portion of the Company’s investment portfolio under active management. The assumed rate of compensation increase reflects historical experience and management’s expectations regarding future salary and incentive increases. Medical trends The U.S. Retiree Health and Life Insurance Plan makes up approximately 96% of the Retiree Health liability. Therefore, the following information relates to the U.S. plan only. Healthcare Cost Trend Rate Pre-age 65 Post-age 65 2018 6.50 % 6.50 % 2017 6.75 % 6.75 % Ultimate Trend Rate Pre-age 65 Post-age 65 2018 4.50 % 4.50 % 2017 4.50 % 4.50 % Year at which the Rate Reaches the Ultimate Trend Rate Pre-age 65 Post-age 65 2018 2026 2026 2017 2026 2026 Increasing the assumed trend rate for healthcare costs by one percentage point would increase the accumulated postretirement benefit obligation (the APBO) and total service and interest cost component approximately $128 and $11, respectively. Decreasing the assumed trend rate for healthcare costs by one percentage point would decrease the APBO and total service and interest cost component approximately $119 and $10, respectively. Based on amendments to the U.S. plan approved in 1999, which became effective in 2003, cost increases borne by the Company are limited to the Urban CPI, as defined. Plan settlements, changes and amendments The Company recognized settlement charges totaling $730 in 2018 resulting primarily from payments made to certain participants of the Company's Canadian pension plan who elected a lump sum distribution option upon retirement. In February 2017, the Company initiated a program to settle a portion of the projected benefit obligation (PBO) relating to terminated vested participants in the U.S. qualified retirement plans through either a single, lump-sum payment or the purchase of an annuity. The terminated vested population comprised approximately 15% of the beginning of year PBO of these plans. The Company successfully settled approximately 47% of the PBO for the terminated vested plan participants. As a result of these and other smaller settlements, the Company recognized non-cash settlement charges of $32,761 in 2017. All settlement payments were funded from plan assets and did not require the Company to make any additional cash contributions. Retirement plan assets The following table sets forth the weighted-average asset allocations of the Company’s retirement plans at 2018 and 2017, by asset category. Asset Category U.S. U.K. Canada Equity securities 2018 48.3 % 38.9 % 55.4 % 2017 51.7 % 44.7 % 71.7 % Debt securities 2018 38.4 % 60.5 % 44.0 % 2017 37.1 % 54.7 % 27.9 % Alternative 2018 13.3 % — % — % 2017 11.2 % — % — % Cash and short-term investments 2018 — % 0.6 % 0.6 % 2017 — % 0.6 % 0.4 % Total 2018 100.0 % 100.0 % 100.0 % 2017 100.0 % 100.0 % 100.0 % The Company employs a total-return investment approach whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a desired level of risk. Alternative assets such as real estate funds, private equity funds and hedge funds are used to enhance expected long-term returns while improving portfolio diversification. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition. Investment risk is measured and monitored on an ongoing basis through periodic investment portfolio reviews and periodic asset/liability studies. At December 31, 2018, postretirement benefit plan assets totaled $1,329,751, of which $995,207 were assets of the U.S. Defined Benefit Plans. U.S. defined benefit plans The equity investments consist of direct ownership and funds and are diversified among U.S. and non-U.S. stocks of small to large capitalizations. Following the December 2010 amendment that split the U.S. qualified defined benefit pension plan into the Active Plan and the Inactive Plan effective January 1, 2011, the Company completed separate asset/liability studies for both plans during 2011 and adopted revised investment guidelines for each. The revised guidelines establish a dynamic de-risking framework that will gradually shift the allocation of assets to long-duration domestic fixed income from equity and other asset categories, as the relative funding ratio of each plan increases over time. The current target allocation (midpoint) for the Inactive Plan investment portfolio is: Equity Securities – 49%, Debt Securities – 40%, Alternative – 11% and Cash – 0%. The current target allocation (midpoint) for the Active Plan investment portfolio is: Equity Securities – 57%, Debt Securities – 30%, Alternative – 13% and Cash – 0%. United Kingdom defined benefit plan The equity investments consist of direct ownership and funds and are diversified among U.K. and international stocks of small and large capitalizations. The current target allocation (midpoint) for the investment portfolio is: Equity Securities – 48%, Debt Securities – 52%, Alternative – 0% and Cash – 0%. Canada defined benefit plan The equity investments consist of direct ownership and funds and are diversified among Canadian and international stocks of primarily large capitalizations and short to intermediate duration corporate and government bonds. The current target allocation (midpoint) for the investment portfolio is: Equity Securities – 53%, Debt Securities – 45%, Alternative – 0% and Cash – 2%. Retiree health and life insurance plan assets The following table sets forth the weighted-average asset allocations by asset category of the Company’s retiree health and life insurance plan. Asset Category 2018 2017 Equity securities 48.3% 63.6% Debt securities 38.4% 30.8% Alternative 13.3% 5.4% Cash —% 0.2% Total 100.0% 100.0% Contributions Based on current actuarial estimates, the Company anticipates that the total contributions to its retirement plans and retiree health and life insurance plans, excluding contributions to the Sonoco Savings Plan, will be approximately $31,000 in 2019. No assurances can be made, however, about funding requirements beyond 2019, as they will depend largely on actual investment returns and future actuarial assumptions. Sonoco Savings and Retirement Plan The Sonoco Savings and Retirement Plan is a defined contribution retirement plan provided for certain of the Company’s U.S. employees. The plan is comprised of both an elective and non-elective component. The elective component of the plan, which is designed to meet the requirements of section 401(k) of the Internal Revenue Code, allows participants to set aside a portion of their wages and salaries for retirement and encourages saving by matching a portion of their contributions with contributions from the Company. The plan provides for participant contributions of 1% to 100% of gross pay. Since January 1, 2010, the Company has matched 50% on the first 4% of compensation contributed by the participant as pretax contributions which are immediately fully vested. The Company’s expenses related to the plan for 2018, 2017 and 2016 were approximately $12,500, $11,200 and $11,400, respectively. The non-elective component of the plan, the Sonoco Retirement Contribution (SRC), is available to certain employees who are not currently active participants in the Company’s U.S. qualified defined benefit pension plan. The SRC provides for an annual Company contribution of 4% of all eligible pay plus 4% of eligible pay in excess of the Social Security wage base to eligible participant accounts. Participants are fully vested after three years of service or upon reaching age 55, if earlier. The Company’s expenses related to the plan for 2018, 2017 and 2016 were approximately $14,995, $14,540 and $13,655, respectively. Cash contributions to the SRC totaled $14,151, $14,066 and $13,352 in 2018, 2017 and 2016, respectively. Other plans The Company also provides retirement and postretirement benefits to certain other non-U.S. employees through various Company-sponsored and local government sponsored defined contribution arrangements. For the most part, the liabilities related to these arrangements are funded in the period they arise. The Company’s expenses for these plans were not material for all years presented. |