Pension and Other Postretirement Benefits (Tables)

12 Months Ended

Dec. 31, 2025

The rates are presented in the table below:


	December 31,
	2025		2024


Asset return assumption	7.00	%	7.00	%

Schedule of Defined Benefit Plans Disclosures

The following table sets forth the QRP, SERP, and PBOP funded statuses and amounts recognized on the Consolidated Balance Sheets and Consolidated Statements of Income.


	Year Ended December 31,
	2025									2024
(Thousands of dollars)	QRP			SERP			PBOP			QRP			SERP			PBOP
Change in benefit obligations:
Benefit obligation for service rendered to date at beginning of year (PBO/PBO/APBO)	$	1,175,245		$	43,183		$	62,064		$	1,241,177		$	45,031		$	66,009
Service cost	24,394			231			1,168			28,252			243			1,287
Interest cost	65,588			2,383			3,426			60,387			2,167			3,178

Actuarial loss (gain)	2,877			2,464			1,418			(87,575)			(725)			(2,691)
Benefits paid	(69,232)			(3,688)			(4,897)			(66,996)			(3,533)			(5,719)
Benefit obligation at end of year (PBO/PBO/APBO)	1,198,872			44,573			63,179			1,175,245			43,183			62,064
Change in plan assets:
Market value of plan assets at beginning of year	1,120,272			—			38,122			1,166,372			—			35,920
Actual return on plan assets	148,883			—			5,337			896			—			3,027
Employer contributions	25,000			3,688			—			20,000			3,533			2,514
Benefits paid	(69,232)			(3,688)			(1,335)			(66,996)			(3,533)			(3,339)
Market value of plan assets at end of year	1,224,923			—			42,124			1,120,272			—			38,122
Funded status at year end	$	26,051		$	(44,573)		$	(21,055)		$	(54,973)		$	(43,183)		$	(23,942)
Weighted-average assumptions (benefit obligation):
Discount rate	5.75		%	5.50		%	5.50		%	5.75		%	5.75		%	5.75		%
Weighted-average rate of compensation increase	3.50		%	3.50		%	N/A			3.50		%	3.50		%	N/A

Schedule of Accumulated Benefit Obligation

The accumulated benefit obligation for the QRP and the SERP is presented below:


	December 31,
(Thousands of dollars)	2025		2024
QRP	$	1,091,081	$	1,084,462
SERP	42,382		40,753

Schedule of Expected Benefit Payments

Benefits expected to be paid for the QRP, SERP, and PBOP over the next 10 years are as follows:


(Millions of dollars)	2026		2027		2028		2029		2030		2031-2035
QRP	$	72.0	$	73.0	$	74.0	$	75.0	$	77.0	$	409.0
SERP	3.5		3.5		3.4		3.4		3.4		16.2
PBOP	5.0		5.1		5.1		5.1		5.2		25.8

Schedule of Net Benefit Cost

Components of net periodic benefit cost:


	2025									2024									2023
(Thousands of dollars)	QRP			SERP			PBOP			QRP			SERP			PBOP			QRP			SERP			PBOP
Service cost	$	24,394		$	231		$	1,168		$	28,252		$	243		$	1,287		$	25,840		$	250		$	1,269
Interest cost	65,588			2,383			3,426			60,387			2,167			3,178			59,165			2,123			3,302
Expected return on plan assets	(90,328)			—			(2,495)			(87,812)			—			(2,259)			(84,062)			—			(2,424)
Amortization of prior service cost	—			—			175			—			—			175			—			—			175
Amortization of net actuarial loss	3,007			1,082			(313)			6,308			1,333			—			336			998			—
Net periodic benefit cost	$	2,661		$	3,696		$	1,961		$	7,135		$	3,743		$	2,381		$	1,279		$	3,371		$	2,322
Weighted-average assumptions (net benefit cost)
Discount rate	5.75		%	5.75		%	5.75		%	5.00		%	5.00		%	5.00		%	5.25		%	5.25		%	5.25		%
Expected return on plan assets	7.00		%	N/A			7.00		%	6.75		%	N/A			6.75		%	6.75		%	N/A			6.75		%
Weighted-average rate of compensation increase	3.50		%	3.50		%	N/A			3.50		%	3.50		%	N/A			3.25		%	3.25		%	N/A

Schedule of Amounts Recognized in Other Comprehensive Income

Other Changes in Plan Assets and Benefit Obligations Recognized in Net Periodic Benefit Cost and Other Comprehensive Income


	Year Ended December 31,
	2025								2024								2023
(Thousands of dollars)	QRP		SERP		PBOP		Total		QRP		SERP		PBOP		Total		QRP		SERP		PBOP		Total
Net actuarial loss (gain) (a)	$	(55,680)	$	2,463	$	(1,423)	$	(54,640)	$	(659)	$	(725)	$	(3,458)	$	(4,842)	$	455	$	3,995	$	(1,262)	$	3,188
Amortization of prior service cost (b)	—		—		(175)		(175)		—		—		(175)		(175)		—		—		(175)		(175)
Amortization of net actuarial loss (b)	(3,007)		(1,081)		313		(3,775)		(6,308)		(1,333)		—		(7,641)		(335)		(998)		—		(1,333)

Regulatory adjustment	52,232		—		1,285		53,517		6,200		—		3,633		9,833		(107)		—		1,437		1,330
Recognized in other comprehensive (income) loss	(6,455)		1,382		—		(5,073)		(767)		(2,058)		—		(2,825)		13		2,997		—		3,010
Net periodic benefit costs recognized in net income	2,661		3,696		1,961		8,318		7,135		3,743		2,381		13,259		1,279		3,371		2,322		6,972
Total of amount recognized in net periodic benefit cost and other comprehensive (income) loss	$	(3,794)	$	5,078	$	1,961	$	3,245	$	6,368	$	1,685	$	2,381	$	10,434	$	1,292	$	6,368	$	2,322	$	9,982

The table above discloses the net gain or loss and prior service cost recognized in Other comprehensive income, separated into (a) amounts initially recognized in Other comprehensive income, and (b) amounts subsequently recognized as adjustments to Other comprehensive income as those amounts are amortized as components of net periodic benefit cost.

Schedule of Fair Value of Plan Assets

The following table sets forth, by level within the three-level fair value hierarchy, the fair values of the assets of the QRP and the PBOP as of December 31, 2025 and 2024. The SERP has no assets.


	December 31,
	2025						2024
(Thousands of dollars)	QRP		PBOP		Total		QRP		PBOP		Total
Assets at fair value:
Level 2 – Significant other observable inputs
Government fixed income (1)	$	6,974	$	6	$	6,980	$	5,048	$	4	$	5,052
Total Level 2 assets	6,974		6		6,980		5,048		4		5,052
Investments measured at NAV:
Mutual funds (2)	—		40,790		40,790		—		36,951		36,951
Pooled funds and mutual funds (3)	24,289		306		24,595		15,009		191		15,200
Commingled trust equity funds (4)
Global	220,661		189		220,850		237,333		211		237,544
International	99,508		85		99,593		105,977		94		106,071
U.S. equity securities	176,970		152		177,122		171,122		153		171,275
Emerging markets	61,510		54		61,564		55,327		49		55,376
Commingled trust fixed income funds (5)	632,863		542		633,405		528,238		469		528,707
Insurance company general account contracts (6)	2,148		—		2,148		2,218		—		2,218
Total Plan assets	$	1,224,923	$	42,124	$	1,267,047	$	1,120,272	$	38,122	$	1,158,394

(1) Government fixed income consists of government-related securities including cash and cash equivalent securities as well as assets invested in the Treasury futures overlay and associated cash collateral.

(2) The Mutual funds category is a balanced fund that invests in diversified portfolios of common stocks, preferred stocks, and fixed-income securities. Under normal circumstances, the fund invests between 25% and 75% of its total assets in equity securities and at least 25% in fixed-income investments. It may also invest up to 30% in non-U.S. securities. The fund seeks regular income, conservation of principal, and an opportunity for long-term growth of principal and income.

(3) These funds are collective short-term funds that invest in Treasury bills and money market funds and are used as a temporary cash repository.

(4) The commingled trust equity funds include common collective trusts that invest in diversified portfolios of securities regularly traded on securities exchanges. These funds are shown in the above table at NAV, which is the value of securities in the fund less the amount of any liabilities outstanding. Strategies employed by the funds include investment in:

▪Global equities, including domestic (U.S.) and international equities

▪International developed countries equities

▪Domestic (U.S.) equities

▪Emerging markets equities

Shares in the commingled trust equity funds may be redeemed given one business day advance notice. The global fund provides diversified exposure to global equity markets. The fund seeks to provide long-term capital growth by investing primarily in securities listed on the major developed equity markets of the U.S., Europe, and Asia, as well as within those listed on emerging country equity markets on a tactical basis.

The international fund invests in international financial markets, primarily those of developed economies in Europe and Asia. The fund invests primarily in equity securities issued by foreign corporations but may invest in other securities perceived as offering attractive investment return opportunities.

The domestic equities securities funds include a large and medium capitalization fund and a small capitalization fund. The large and medium capitalization fund is designed to track the performance of the large and medium capitalization companies contained in the index, which represents approximately 90% of the market capitalization of the U.S. stock market. The small capitalization fund is designed to provide maximum long-term appreciation through investments that are well diversified by industry.

The emerging markets fund invests in countries defined as an emerging market country. Fund investments are made directly in each country or, where direct investment is inefficient or prohibited, through appropriate financial instruments or participation in commingled funds. Major emerging markets include Brazil, India, China, and other developing countries around the world.

(5) The commingled trust fixed income funds consist primarily of fixed income debt securities issued by the U.S. Treasury, government agencies, and fixed income debt securities issued by corporations. The fixed income fund investments may include the use of high yield international fixed income securities and other instruments, including derivatives, to ensure prudent diversification over a broad spectrum of investments. The changes in the value of the fixed income funds are intended to offset the changes in the pension plan liabilities due to changes in the discount rate.

(6) The insurance company general account contracts are annuity insurance contracts used to pay the pensions of employees who retired prior to 1989. The balance of the account disclosed in the above table is the contract value, which is the result of deposits, withdrawals, and interest credits.

Southwest Gas Holdings, Inc. 10-K