Employee Benefit Plans

12 Months Ended

Dec. 31, 2025

11. Employee Benefit Plans

Pensions

The Company maintains a general and administrative and a union-represented defined benefit pension plan covering all of its employees hired prior to May 1, 2010. Employees hired after May 1, 2010 are eligible for an enhanced 401(k) plan rather than a defined benefit plan. The benefits under the defined benefit plans are based upon years of service and compensation near retirement. The Company amended its defined benefit pension plans in 2014, generally limiting the years of eligible service under the plans to 30 years. The Company’s funding policy is to contribute annually the amount permitted by the PPUC to be collected from customers in rates, but in no case less than the minimum Employee Retirement Income Security Act (ERISA) required contribution.

The following table sets forth the plans’ funded status as of December 31, 2025 and 2024. The measurement of assets and obligations of the plans is as of December 31, 2025 and 2024.

Obligations and Funded Status At December 31	2025			2024

Change in Benefit Obligation
Pension benefit obligation at beginning of year	$	37,556		$	40,198
Service cost		530			635
Interest cost		1,981			1,855
Actuarial (gain) loss		623			(2,997	)
Benefit payments		(2,209	)		(2,135	)
Pension benefit obligation at end of year		38,481			37,556

Change in Plan Assets
Fair value of plan assets at beginning of year		62,565			63,578
Actual return on plan assets		6,094			1,011
Employer contributions		–			111
Benefits paid		(2,209	)		(2,135	)
Fair value of plan assets at end of year		66,450			62,565

Funded Status of Plans at End of Year	$	27,969		$	25,009

The accounting standards require that the funded status of defined benefit pension plans be fully recognized on the balance sheets. They also call for the unrecognized actuarial gain or loss, the unrecognized prior service cost, and the unrecognized transition costs to be adjustments to shareholders’ equity (accumulated other comprehensive income). Due to a rate order granted by the PPUC, the Company is permitted under the accounting standards to defer the charges otherwise recorded in accumulated other comprehensive income as a regulatory asset. Management believes these costs will be recovered in future rates charged to customers. The asset for the funded status of the Company’s pension plans as of December 31, 2025 and 2024 is recorded in “Prepaid pension cost” on its balance sheets.

In 2025, the plans recognized an actuarial loss. In 2025, the Company recognized a 15 basis point decrease in the discount rate. In 2024, the plans recognized a significant actuarial gain. In 2024, the Company recognized a 70 basis point increase in the discount rate. The Company uses the corridor method to amortize actuarial gains and losses. Gains and losses over 10% of the greater of pension benefit obligation or the market value of assets are amortized over the average future service of plan participants expected to receive benefits.

Changes in plan assets and benefit obligations recognized in regulatory liabilities are as follows:

	2025			2024
Net gain arising during the year	$	(2,402	)	$	(844	)
Recognized prior service credit		11			13
Total changes in regulatory liability during the year	$	(2,391	)	$	(831	)

Amounts recognized in regulatory liabilities that have not yet been recognized as components of net periodic benefit cost consist of the following at December 31:

	2025			2024
Net loss	$	(3,772	)	$	(1,370	)
Prior service credit		–			(11	)
Regulatory liability	$	(3,772	)	$	(1,381	)

Components of net periodic benefit cost are as follows:

	2025			2024
Service cost	$	530		$	635
Interest cost		1,981			1,855
Expected return on plan assets		(3,069	)		(3,164	)
Amortization of prior service credit		(11	)		(13	)
Rate-regulated adjustment		569			798
Net periodic benefit cost	$	–		$	111

Pension service cost is recorded in operating expenses. All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

The rate-regulated adjustment set forth above is required in order to reflect pension expense for the Company in accordance with the method used in establishing water rates. The Company is permitted by rate order of the PPUC to expense pension costs to the extent of contributions and defer any remaining expense to regulatory assets or recognize the excess as a regulatory liability to be collected in rates at a later date as additional contributions are made. During 2025, the deferral decreased by $569.

No estimated costs for the defined benefit pension plans relating to the December 31, 2025 balance sheet will be amortized from regulatory liabilities into net periodic benefit cost over the next fiscal year.

The Company does not plan to contribute to the plans in 2026.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in each of the next five years and the subsequent five years in the aggregate:

2026		2027		2028		2029		2030		2031–2035
$2,290		$2,312		$2,557		$2,539		$2,591		$14,403

The following tables show the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets as of December 31:

	2025		2024
Projected benefit obligation	$	38,481	$	37,556
Fair value of plan assets		66,450		62,565

	2025		2024
Accumulated benefit obligation	$	37,093	$	36,195
Fair value of plan assets		66,450		62,565

Weighted-average assumptions used to determine benefit obligations at December 31:

	2025	2024
Discount rate	5.30%	5.45%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:

	2025	2024
Discount rate	5.45%	4.75%
Expected long-term return on plan assets	5.00%	5.00%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

The selected long-term rate of return on plan assets was primarily based on the asset allocation of each of the plan’s assets. Analysis of the historic returns of these asset classes and projections of expected future returns were considered in setting the long-term rate of return.

The investment objective of the Company’s defined benefit pension plans is to grow the assets in such a manner that, when coupled with required contributions to the plans, the assets are sufficient to pay the benefits promised to the participants and beneficiaries as they come due.

The weighted-average target asset allocations are 70% to 90% fixed income securities, 10% to 30% equity securities, and 0% to 10% reserves (cash and cash equivalents). The Company’s investment performance is reviewed on a quarterly basis, with long-term emphasis placed on results achieved over a three to five year period.

Eligible investments for fixed income securities include: (i) U.S. Treasury securities and agency securities; (ii) agency and non-agency mortgage-backed securities backed by loans secured by residential, multi-family and commercial properties including, but not limited to passthroughs, collateralized mortgage obligations, REMICs, project loans, construction loans, and adjustable rate mortgages; (iii) U.S.-dollar denominated obligations of foreign governments and supranational organizations; (iv) U.S.-dollar denominated obligations of domestic and foreign corporations; (v) asset-backed securities; (vi) municipal bonds, both taxable and tax-exempt issues; (vii) cash equivalent investments such as commercial paper, asset-backed commercial paper, certificates of deposit (domestic and U.S.-dollar denominated foreign,) bankers’ acceptances and floating rate notes; and (viii) fixed income mutual funds and exchange traded funds consistent with the investment guidelines. At the time of purchase, securities must be rated investment grade pursuant to the inclusion rules for a reference benchmark provider. Securities that are not index eligible must be rated investment grade by a nationally recognized statistical rating organization at the time of purchase. The portfolio is allowed to hold up to 5% in aggregate market value of the portfolio in bonds downgraded below investment grade, provided that an overall investment grade rating is maintained for the total portfolio.

Direct exposure to the following strategies and types of securities is prohibited: oil and gas wells; interest only securities; warrants; principal only securities; margin trading; and inverse floating rate securities.

The fair values of the Company’s pension plan assets at December 31, 2025 and 2024 by asset category and fair value hierarchy level are as follows. The valuations are based on quoted prices on active markets (Level 1) or broker/dealer quotes, active market makers, models, and yield curves (Level 2).

	Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
Asset Category	2025		2024		2025		2024		2025		2024
Cash and Money Market Funds (a)	$	794	$	1,665	$	794	$	1,665	$	–	$	–
Equity Securities:
Equity Mutual Funds (b)		13,053		11,643		13,053		11,643		–		–
Fixed Income Securities:
U.S. Treasury Obligations		12,243		11,609		–		–		12,243		11,609
Corporate and Foreign Bonds (c)		40,360		37,648		–		–		40,360		37,648
Total Plan Assets	$	66,450	$	62,565	$	13,847	$	13,308	$	52,603	$	49,257

(a)	The portfolios are designed to keep up to one year of distributions in immediately available funds.

(b)	This category includes a majority of investments in exchange traded funds as well as domestic equity mutual funds and international mutual funds which give the portfolio exposure to mid and large cap index funds as well as international diversified index funds.

(c)	This category includes corporate bonds and notes widely distributed among consumer discretionary, consumer staples, healthcare, information technology, energy, transportation, and financial services.

Defined Contribution Plan

The Company has a savings plan pursuant to the provisions of section 401(k) of the Internal Revenue Code. For employees hired before May 1, 2010, this plan provides for elective employee contributions of up to 100% of compensation and Company matching contributions of 100% of the participant’s contribution, up to a maximum annual Company contribution of $2.8 for each employee.

Employees hired after May 1, 2010 are entitled to an enhanced feature of the plan. This feature provides for elective employee contributions of up to 100% of compensation and Company matching contributions of 100% of the participant’s contribution, up to a maximum of 4% of the employee’s compensation. In addition, the Company will make an annual contribution of $1.2 to each employee’s account whether or not they defer their own compensation. Employees eligible for this enhanced 401(k) plan feature are not eligible for the defined benefit plans. As of December 31, 2025, 97 employees were participating in the enhanced feature of the plan. The Company’s contributions to both portions of the plan amounted to $462 in 2025 and $430 in 2024.

Deferred Compensation

The Company has non-qualified deferred compensation and supplemental retirement agreements with certain members of management. The future commitments under these arrangements are offset by corporate-owned life insurance policies. At December 31, 2025 and 2024, the present value of the future obligations included in “Accrued compensation and benefits” and “Deferred employee benefits” was approximately $3,949 and $3,893, respectively. The insurance policies included in “Other assets” had a total cash value of approximately $4,851 and $4,935 at December 31, 2025 and 2024, respectively. The Company’s net (income) expenses under the plans amounted to $283 in 2025 and $(9) in 2024.

Other

The Company has a retiree life insurance program which pays the beneficiary of a retiree $2 upon the retiree’s death. At December 31, 2025 and 2024, the present value of the future obligations included in “Deferred employee benefits” was approximately $96 and $87, respectively. There is no trust or insurance covering this future liability, instead the Company will pay these benefits out of its general assets. The Company’s net (income) expenses under the plan amounted to $9 in 2025 and $(11) in 2024.

- Definition

The entire disclosure for retirement benefits.

+ References

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+ Details

YORK WATER CO 10-K