Knight-Swift Transportation Holdings Inc

Note 17 —Defined Benefit Pension Plan

Through the ACT Acquisition, the Company assumed a defined benefit pension plan covering ACT's drivers, drivers' helpers, warehousemen, warehousemen's helpers, mechanics, and mechanics' helpers. The plan provides normal retirement benefits based on years of credited service and applicable benefit units as defined by the plan. Provision is also made for early and defined retirements. A retiree annuity purchase was completed in November 2023, totaling $18.1 million. This action relieved the plan of responsibility for providing future benefit payments for 882 participants in payment status.

The pension plan was amended such that benefit accrual and plan participation for the plan were effectively frozen as of January 1, 1997, resulting in a curtailment on that date. The net pension liability recognized is as follows:

1 The pension liability is included in "Other long-term liabilities" in the consolidated balance sheets.

"Other comprehensive loss" in the consolidated statements of comprehensive income included a $1.4 million gain and $0.5 million for partial settlement of the plan related to a retiree annuity purchase during 2023 and $2.7 million loss from pension plan adjustments during 2022. The provisions of the plan do not require compensation levels to be considered in determining the plan’s benefit obligation. As such, the accumulated benefit obligation and projected benefit obligation are the same.

Other information concerning the defined benefit pension plan is summarized below:

Assumptions

A weighted-average discount rate of 4.85% and 3.84% was used to determine benefit obligations as of December 31, 2023 and December 31, 2022, respectively.

The following weighted-average assumptions were used to determine net periodic pension cost:

ACT's assumptions for the expected long-term rate of return on pension plan assets are based on a periodic review of the plan’s asset allocation over a long-term period. Expectations of returns for each asset class are based on comprehensive reviews of historical data and economic/financial market theory. The expected long-term rate of return on pension plan assets was selected from within the reasonable range of rates determined by (1) historical real returns, net of inflation, for the asset classes covered by the investment policy and (2) projections of inflation over the long-term period during which benefits are payable to plan participants.

The defined benefit pension plan weighted-average asset allocations, by asset category, are as follows:

Pension plan assets

The target allocation by asset category, is as follows:

The investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefit payments. The investment guidelines consider a broad range of economic conditions. Central to the policy are target allocation percentages (shown above) by major asset categories. The objectives of the target allocation percentages are to maintain investment portfolios that diversify risk through prudent asset allocation parameters and achieve asset returns that meet or exceed the plan’s actuarial assumptions.

Refer to Note 23 for additional information regarding fair value measurements of the Company's investments.

Cash flows

ACT didnot contribute to the pension plan during 2023. ACT isnot expecting to recognize any net loss within "Other comprehensive loss" in the consolidated statements of comprehensive income during 2024.

The following benefit payments are expected to be paid in each of the fiscal years as follows: