Company: UIS
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000746838-25-000008
Chunk: 84

Company: UNISYS CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 84
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 certain assumptions as permitted under current regulations. Changes to the benefit obligation caused by a 25 basis point change noted below are related to the balance sheet obligation and are not necessarily indicative of the impact on the funding liability.

At the end of each year, the company determines the discount rate to be used to calculate the present value of plan liabilities. Inherent in deriving the discount rate are significant assumptions with respect to the timing and magnitude of expected benefit payment obligations. The discount rate is an estimate of the current interest rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, the company looks to rates of return on high-quality, fixed-income investments that (a) receive one of the two highest ratings given by a recognized ratings agency and (b) are currently available and expected to be available during the period to maturity of the pension benefits. At December 31, 2024, the company determined this rate to be 6.09% for its U.S. defined benefit pension plans, an increase of 39 basis points from the rate used at December 31, 2023, and 5.10% for the company’s non-U.S. defined benefit pension plans, an increase of 86 basis points from the rate used at December 31, 2023. A change of 25 basis points in the U.S. and non-U.S. discount rates causes a change in 2025 pension expense of approximately $300 thousand in the U.S. and a nominal change in the non-U.S pension expense, and a change in the U.S. and non-U.S. benefit obligation of approximately $35 million and $39 million, respectively. These estimates are intended to be illustrative based on a single 25 basis point change. The sensitivity to rate changes is not linear and additional changes in rates may result in a different impact on the pension liability. The net effect of changes in the discount rate, as well as the net effect of other changes in actuarial assumptions and experience, has been deferred, as permitted.

A significant element in determining the company’s pension income or expense is the expected long-term rate of return on plan assets. The company sets the expected long-term rate of return based on the expected long-term return of the various asset categories in which it invests. The company considers the current expectations for future returns and the actual historical returns of each asset class. Also, because the company’s investment policy is to actively manage certain asset classes where the potential exists to