Annual report pursuant to Section 13 and 15(d)

Retirement Benefit Plans

v3.3.1.900
Retirement Benefit Plans
12 Months Ended
Jan. 30, 2016
Compensation and Retirement Disclosure [Abstract]  
Retirement Benefit Plans
Retirement Benefit Plans
 
We provide retirement pension benefits, postretirement health and welfare benefits, as well as 401(k) savings, profit-sharing and stock ownership plan benefits to various segments of our workforce. Retirement benefits are an important part of our total compensation and benefits program designed to retain and attract qualified, talented employees. Pension benefits are provided through defined benefit pension plans consisting of a non-contributory qualified pension plan (Primary Pension Plan) and, for certain management employees, non-contributory supplemental retirement plans, including a 1997 voluntary early retirement plan. Retirement and other benefits include:
Defined Benefit Pension Plans
Primary Pension Plan – funded
Supplemental retirement plans – unfunded
 
Other Benefit Plans
Postretirement benefits – medical and dental
Defined contribution plans:
401(k) savings, profit-sharing and stock ownership plan
Deferred compensation plan

 
Defined Benefit Pension Plans

Primary Pension Plan — Funded
The Primary Pension Plan is a funded non-contributory qualified pension plan, initiated in 1966 and closed to new entrants on January 1, 2007. The plan is funded by Company contributions to a trust fund, which are held for the sole benefit of participants and beneficiaries.
 
Supplemental Retirement Plans — Unfunded
We have unfunded supplemental retirement plans, which provide retirement benefits to certain management employees. We pay ongoing benefits from operating cash flow and cash investments. The plans are a Supplemental Retirement Program and a Benefit Restoration Plan. Participation in the Supplemental Retirement Program is limited to employees who were annual incentive-eligible management employees as of December 31, 1995. Benefits for these plans are based on length of service and final average compensation. The Benefit Restoration Plan is intended to make up benefits that could not be paid by the Primary Pension Plan due to governmental limits on the amount of benefits and the level of pay considered in the calculation of benefits. The Supplemental Retirement Program is a non-qualified plan that was designed to allow eligible management employees to retire at age 60 with retirement income comparable to the age 65 benefit provided under the Primary Pension Plan and Benefit Restoration Plan. In addition, the Supplemental Retirement Program offers participants who leave between ages 60 and 62 benefits equal to the estimated social security benefits payable at age 62. The Supplemental Retirement Program also continues Company-paid term life insurance at a declining rate until it is phased out at age 70. Employee-paid term life insurance through age 65 is continued under a separate plan (Supplemental Term Life Insurance Plan for Management Profit-Sharing Employees).
     
Primary Pension Plan Lump-Sum Payment Offer and Annuity Contract Purchase
In August 2015, as a result of a plan amendment, we offered approximately 31,000 retirees and beneficiaries in the Primary
Pension Plan who commenced their benefit between January 1, 2000 and August 31, 2012 the option to receive a lump-sum
settlement payment. In addition, we offered approximately 8,000 participants in the Primary Pension Plan who separated from
service and had a deferred vested benefit as of August 31, 2012 the option to receive a lump-sum settlement payment.
Approximately 12,000 retirees and beneficiaries elected to receive voluntary lump-sum payments to settle the Primary Pension
Plan's obligation to them. In addition, approximately 1,900 former employees having deferred vested benefits elected to
receive lump-sums. The lump-sum settlement payments totaling $717 million were made by the Company on November 5, 2015 using assets from the Primary Pension Plan.

On December 7, 2015, the Company completed the purchase of a group annuity contract that transferred to The Prudential Insurance Company of America the pension benefit obligation of approximately 18,000 retirees totaling $838 million.

Actuarial loss of $180 million was recognized as settlement expense as a result of the lump-sum offer payment and the purchase of the group annuity contract.



Pension Expense/(Income) for Defined Benefit Pension Plans
The components of net periodic benefit expense/(income) for our Primary Pension Plan and our non-contributory supplemental pension plans are as follows:
($ in millions)
 
 
 
 
 
 
Primary Pension Plan
 
2015
 
2014
 
2013
Service cost
 
$
69

 
$
61

 
$
78

Interest cost
 
196

 
211

 
204

Expected return on plan assets
 
(357
)
 
(348
)
 
(340
)
Actuarial loss/(gain)
 
52

 

 

Amortization of prior service cost/(credit)
 
8

 
7

 
6

Settlement expense
 
180

 

 

Other
 
6

 

 

Loss/(gain) on transfer of benefits
 

 
51

 

Net periodic benefit expense/(income)
 
$
154

 
$
(18
)
 
$
(52
)
 
 
 
 
 
 
 
Supplemental Pension Plans
 
 
 
 
 
 
Service cost
 
$

 
$

 
$

Interest cost
 
7

 
9

 
12

Actuarial loss/(gain)
 
1

 
12

 
(2
)
Amortization of prior service cost/(credit)
 

 

 
1

Loss/(gain) on transfer of benefits
 

 
(51
)
 

Net periodic benefit expense/(income)
 
$
8

 
$
(30
)
 
$
11

 
 
 
 
 
 
 
Primary and Supplemental Pension Plans Total
 
 
 
 
 
 
Service cost
 
$
69

 
$
61

 
$
78

Interest cost
 
203

 
220

 
216

Expected return on plan assets
 
(357
)
 
(348
)
 
(340
)
Amortization of actuarial loss/(gain)
 
53

 
12

 
(2
)
Amortization of prior service cost/(credit)
 
8

 
7

 
7

Settlement expense
 
180

 

 

Other
 
6

 

 

Loss/(gain) on transfer of benefits
 

 

 

Net periodic benefit expense/(income)
 
$
162

 
$
(48
)
 
$
(41
)

 
The defined benefit plan pension expense shown in the above table is included as a separate line item in the Consolidated Statements of Operations.

During 2014, we transferred $56 million of supplemental pension plan benefits, as allowed under the Employee Retirement Income Security Act of 1974, out of our supplemental pension plans and into our Primary Pension Plan. The transfer did not have a significant impact on our Consolidated Financial Statements; however, it did result in a gain of $51 million for our supplemental pension plans and loss of $51 million for our Primary Pension Plan.

Assumptions 
The weighted-average actuarial assumptions used to determine expense were as follows:
 
2015
 
2014
 
2013
 
Expected return on plan assets
6.75
%
 
7.00
%
 
7.00
%
 
Discount rate
3.87
%
 
4.89
%
 
4.19
%
 
Salary increase
3.5
%
 
3.5
%
 
4.7
%
 
 
The expected return on plan assets is based on the plan’s long-term asset allocation policy, historical returns for plan assets and overall capital market returns, taking into account current and expected market conditions.
     
The discount rate used to measure pension expense each year is the rate as of the beginning of the year (i.e., the prior measurement date). The discount rate used, determined by the plan actuary, was based on a hypothetical AA yield curve represented by a series of bonds maturing over the next 30 years, designed to match the corresponding pension benefit cash payments to retirees.

The salary progression rate to measure pension expense was based on age ranges and projected forward.
   
Funded Status
As of the end of 2015, the funded status of the Primary Pension Plan was 99%. The Primary Benefit Obligation (PBO) is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases. Under the Employee Retirement Income Security Act of 1974 (ERISA), the funded status of the plan exceeded 100% as of December 31, 2015 and 2014, the qualified pension plan’s year end.
The following table provides a reconciliation of benefit obligations, plan assets and the funded status of the Primary Pension Plan and supplemental pension plans:
 
Primary Pension Plan
 
Supplemental Plans
 
($ in millions)
2015
 
2014
 
2015
 
2014
 
Change in PBO
 
 
 
 
 

 
 
 
Beginning balance
$
5,254


$
4,477


$
191


$
219

  
Service cost
69

  
61

  

  

  
Interest cost
196

  
211

  
7

  
9

  
Amendments

  
20

  

  

  
Settlements
(1,555
)
 

 

 

 
Transfer of benefits

 
56

 

 
(56
)
 
Actuarial loss/(gain)
(247
)
  
818

  
(3
)
  
39

  
Benefits (paid)
(390
)
 
(389
)
 
(19
)
 
(20
)
 
Balance at measurement date
$
3,327

  
$
5,254

  
$
176

  
$
191

  
 
 
 
 
 
 
 
 
 
Change in fair value of plan assets
 
 
 
 
 
 
 
 
Beginning balance
$
5,474

  
$
5,140

  
$

  
$

  
Company contributions

  

  
19

  
20

  
Actual return on assets(1)
(242
)
  
723

  

  

  
Settlements
(1,555
)
 

 

 

 
Benefits (paid)
(390
)
 
(389
)
 
(19
)
 
(20
)
 
Balance at measurement date
$
3,287

  
$
5,474

  
$

  
$

  
Funded status of the plan
$
(40
)
(2) 
$
220

(2) 
$
(176
)
(3) 
$
(191
)
(3) 
 
(1)
Includes plan administrative expenses.
(2)
$40 million in 2015 is included in Other liabilities and $220 million in 2014 is presented as Prepaid pension in the Consolidated Balance Sheets.
(3)
$46 million in 2015 and $16 million in 2014 were included in Other accounts payable and accrued expenses on the Consolidated Balance Sheets, and the remaining amounts were included in Other liabilities.
 
In 2015, the funded status of the Primary Pension Plan decreased by $260 million primarily due to the performance of plan assets. The actual one-year return on pension plan assets at the measurement date was a negative 4.7% in 2015, bringing the annualized return since inception of the plan to 8.8%
 
The following pre-tax amounts were recognized in Accumulated other comprehensive income/(loss) in the Consolidated Balance Sheets as of the end of 2015 and 2014:
 
Primary Pension Plan
 
Supplemental Plans
($ in millions)
2015
 
2014
 
2015
 
2014
Net actuarial loss/(gain)
$
333

 
$
213

 
$
13

 
$
17

Prior service cost/(credit)
57

  
65

 
(4
)
  
(4
)
Total
$
390

(1) 
$
278

 
$
9

 
$
13

 
(1)
In 2016, approximately $8 million for the Primary Pension Plan is expected to be amortized from Accumulated other comprehensive income/(loss) into net periodic benefit expense/(income) included in Pension in the Consolidated Statement of Operations.

Assumptions to Determine Obligations
The weighted-average actuarial assumptions used to determine benefit obligations for each of the years below were as follows:
 
 
2015
 
2014
 
2013
Discount rate
 
4.73
%
 
3.87
%
 
4.89
%
Salary progression rate
 
3.9
%
 
3.5
%
 
3.5
%


Accumulated Benefit Obligation (ABO)
The ABO is the present value of benefits earned to date, assuming no future salary growth. The ABO for our Primary Pension Plan was $3.1 billion and $4.9 billion as of the end of 2015 and 2014, respectively. At the end of 2015, plan assets of $3.3 billion for the Primary Pension Plan were above the ABO. The ABO for our unfunded supplemental pension plans was $153 million and $166 million as of the end of 2015 and 2014, respectively. 
 
Primary Pension Plan Asset Allocation
The target allocation ranges for each asset class as of the end of 2015 and the fair value of each asset class as a percent of the total fair value of pension plan assets were as follows:
 
 
2015 Target
 
Plan Assets
Asset Class
 
Allocation Ranges
 
2015
 
2014
Equity
 
15% - 35%
 
16
%
 
29
%
Fixed income
 
50% - 60%
 
54
%
 
58
%
Real estate, cash and other investments
 
20% - 40%
 
30
%
 
13
%
Total
 
 
 
100
%
 
100
%

 
Asset Allocation Strategy
In 2009, we began implementing a liability-driven investment (LDI) strategy to lower the plan’s volatility risk and minimize the impact of interest rate changes on the plan funded status. The implementation of the LDI strategy is phased in over time by reallocating the plan’s assets more towards fixed income investments (i.e., debt securities) that are more closely matched in terms of duration to the plan liability.
The plan’s asset portfolio is actively managed and primarily invested in fixed income balanced with investments in equity securities and other asset classes to maintain an efficient risk/return diversification profile. The risk of loss in the plan’s equity portfolio is mitigated by investing in a broad range of equity types. Equity diversification includes large-capitalization and small-capitalization companies, growth-oriented and value-oriented investments and U.S. and non-U.S. securities. Investment types, including high-yield debt securities, illiquid assets such as real estate, the use of derivatives and Company securities are set forth in written guidelines established for each investment manager and monitored by the plan’s management team. The plan’s asset allocation policy is designed to meet the plan’s future pension benefit obligations. Under the policy, asset classes are periodically reviewed and rebalanced as necessary, to ensure that the mix continues to be appropriate relative to established targets and ranges. 
We have an internal Benefit Plans Investment Committee (BPIC), which consists of senior executives who have established a review process of asset allocation and investment strategies and oversee risk management practices associated with the management of the plan’s assets. Key risk management practices include having an established and broad decision-making framework in place, focused on long-term plan objectives. This framework consists of the BPIC and various third parties, including investment managers, an investment consultant, an actuary and a trustee/custodian. The funded status of the plan is monitored on a continuous basis, including quarterly reviews with updated market and liability information. Actual asset allocations are monitored monthly and rebalancing actions are executed at least quarterly, if needed. To manage the risk associated with an actively managed portfolio, the plan’s management team reviews each manager’s portfolio on a quarterly basis and has written manager guidelines in place, which are adjusted as necessary to ensure appropriate diversification levels. Also, annual audits of the investment managers are conducted by independent auditors. Finally, to minimize operational risk, we utilize a master custodian for all plan assets, and each investment manager reconciles its account with the custodian at least quarterly.
Fair Value of Primary Pension Plan Assets
The tables below provide the fair values of the Primary Pension Plan’s assets as of the end of 2015 and 2014, by major class of asset. 
 
 
Investments at Fair Value at January 30, 2016
($ in millions)
 
Level 1(1)
 
Level 2(1)
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Cash
 
$
86

 
$

 
$

 
$
86

Common collective trusts
 

 
427

 

 
427

Cash and cash equivalents total
 
86

 
427

 

 
513

Common collective trusts – domestic
 

 

 

 

Common collective trusts – international
 

 
166

 

 
166

Equity securities – domestic
 
192

 

 

 
192

Equity securities – international
 
89

 

 

 
89

Private equity
 

 

 
248

 
248

Equity securities total
 
281

 
166

 
248

 
695

Common collective trusts
 

 
676

 

 
676

Corporate bonds
 

 
771

 
5

 
776

Swaps
 

 
787

 

 
787

Government securities
 

 
230

 

 
230

Corporate loans
 

 

 

 

Municipal bonds
 

 

 

 

Mortgage backed securities
 

 
4

 

 
4

Other fixed income
 

 
155

 
3

 
158

Fixed income total
 

 
2,623

 
8

 
2,631

Public REITs
 
34

 

 

 
34

Private real estate
 

 
14

 
151

 
165

Real estate total
 
34

 
14

 
151

 
199

Hedge funds
 

 

 
214

 
214

Other investments total
 

 

 
214

 
214

Total investment assets at fair value
 
$
401

 
$
3,230

 
$
621

 
$
4,252

Liabilities
 
 
 
 
 
 
 
 
Swaps
 
$

 
$
(801
)
 
$

 
$
(801
)
Other fixed income
 

 
(6
)
 

 
(6
)
Fixed income total
 

 
(807
)
 

 
(807
)
Total liabilities at fair value
 
$

 
$
(807
)
 
$

 
$
(807
)
Accounts payable, net
 
 
 
 
 
 
 
(158
)
Total net assets
 
 
 
 
 
 
 
$
3,287

 
(1)
There were no significant transfers in or out of level 1 or 2 investments.
 
 
Investments at Fair Value at January 31, 2015
($ in millions)
 
Level 1(1)
 
Level 2(1)
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Cash
 
$
10

 
$
2

 
$

 
$
12

Common collective trusts
 

 
38

 

 
38

Cash and cash equivalents total
 
10

 
40

 

 
50

Common collective trusts – domestic
 

 
222

 

 
222

Common collective trusts – international
 

 
197

 

 
197

Equity securities – domestic
 
733

 

 

 
733

Equity securities – international
 
104

 

 

 
104

Private equity
 

 

 
281

 
281

Equity securities total
 
837

 
419

 
281

 
1,537

Common collective trusts
 

 
1,695

 

 
1,695

Corporate bonds
 

 
1,319

 
7

 
1,326

Swaps
 

 
415

 

 
415

Government securities
 

 
167

 

 
167

Corporate loans
 

 
69

 
5

 
74

Municipal bonds
 

 
66

 

 
66

Mortgage backed securities
 

 
5

 

 
5

Other fixed income
 

 
21

 

 
21

Fixed income total
 

 
3,757

 
12

 
3,769

Public REITs
 
100

 

 

 
100

Private real estate
 

 
20

 
153

 
173

Real estate total
 
100

 
20

 
153

 
273

Hedge funds
 

 

 
314

 
314

Other investments total
 

 

 
314

 
314

Total investment assets at fair value
 
$
947

 
$
4,236

 
$
760

 
$
5,943

Liabilities
 
 
 
 
 
 
 
 
Swaps
 
$

 
$
(428
)
 
$

 
$
(428
)
Other fixed income
 
(2
)
 
(3
)
 

 
(5
)
Fixed income total
 
(2
)
 
(431
)
 

 
(433
)
Total liabilities at fair value
 
$
(2
)
 
$
(431
)
 
$

 
$
(433
)
Accounts payable, net
 
 
 
 
 
 
 
(36
)
Total net assets
 
 
 
 
 
 
 
$
5,474


(1)
There were no significant transfers in or out of level 1 or 2 investments.
 
Following is a description of the valuation methodologies used for Primary Pension Plan assets measured at fair value.
 
Cash – Cash is valued at cost which approximates fair value, and is classified as level 1 of the fair value hierarchy.
 
Common Collective Trusts Common collective trusts are pools of investments within cash equivalents, equity and fixed income that are benchmarked relative to a comparable index. They are valued on the basis of the relative interest of each participating investor in the fair value of the underlying assets. The underlying assets are valued at net asset value (NAV) and are classified as level 2 of the fair value hierarchy.
 
Equity Securities Equity securities are common stocks and preferred stocks valued based on the price of the security as listed on an open active exchange and classified as level 1 of the fair value hierarchy, as well as warrants and preferred stock that are valued at a price, which is based on a broker quote in an over-the-counter market, and are classified as level 2 of the fair value hierarchy.
Private Equity Private equity is composed of interests in private equity funds valued on the basis of the relative interest of each participating investor in the fair value of the underlying assets and/or common stock of privately held companies. There are no observable market values for private equity funds. The valuations for the funds are derived using a combination of different methodologies including (1) the market approach, which consists of analyzing market transactions for comparable assets, (2) the income approach using the discounted cash flow model, or (3) cost method. Private equity funds also provide audited financial statements. Private equity investments are classified as level 3 of the fair value hierarchy.

Corporate Bonds – Corporate bonds and Corporate loans are valued at a price which is based on observable market information in primary markets or a broker quote in an over-the-counter market, and are classified as level 2 or level 3 of the fair value hierarchy.
  
Swaps – swap contracts are based on broker quotes in an over-the-counter market and are classified as level 2 of the fair value hierarchy.
 
Government, Municipal Bonds and Mortgaged Backed Securities  – Government and municipal securities are valued at a price based on a broker quote in an over-the-counter market and classified as level 2 of the fair value hierarchy. Mortgage backed securities are valued at a price based on observable market information or a broker quote in an over-the-counter market and classified as level 2 of the fair value hierarchy.
 
Other fixed income non-mortgage asset backed securities, collateral held in short-term investments for derivative contract and derivatives composed of futures contracts, option contracts and other fix income derivatives valued at a price based on observable market information or a broker quote in an over-the-counter market and classified as level 2 of the fair value hierarchy.    
 
Real Estate Real estate is comprised of public and private real estate investments. Real estate investments through registered investment companies that trade on an exchange are classified as level 1 of the fair value hierarchy. Investments through open end private real estate funds that are valued at the reported NAV are classified as level 2 of the fair value hierarchy. Private real estate investments through partnership interests that are valued based on different methodologies including discounted cash flow, direct capitalization and market comparable analysis are classified as level 3 of the fair value hierarchy.

Hedge Fund Hedge funds exposure is through fund of funds, which are made up of over 30 different hedge fund managers diversified over different hedge strategies. The fair value of the hedge fund is determined by the fund's administrator using valuation provided by the third party administrator for each of the underlying funds.
 
The following tables set forth a summary of changes in the fair value of the Primary Pension Plan’s level 3 investment assets:
 
2015
($ in millions)
Private Equity
 
Real Estate
 
Corporate Loans
 
Corporate Bonds
 
Hedge Funds
Balance, beginning of year
$
281

 
$
153

 
$
5

 
$
7

 
$
314

Transfers, net

 

 

 

 

Realized gains/(loss)
41

 
(23
)
 

 
(3
)
 
3

Unrealized (losses)/gains
(17
)
 
38

 

 
2

 
(1
)
Purchases and issuances
18

 
2

 

 
1

 
119

Sales, maturities and settlements
(75
)
 
(19
)
 
(2
)
 
(2
)
 
(221
)
Balance, end of year
$
248

 
$
151

 
$
3

 
$
5

 
$
214

 
 
2014
($ in millions)
Private Equity
 
Real Estate
 
Corporate Loans
 
Corporate Bonds
 
Hedge Funds
Balance, beginning of year
$
298

 
$
204

 
$
6

 
$
11

 
$
153

Realized gains/(loss)
57

 
3

 

 

 
13

Unrealized (losses)/gains
(8
)
 
17

 

 
(1
)
 
(4
)
Purchases and issuances
31

 
3

 
4

 
5

 
467

Sales, maturities and settlements
(97
)
 
(74
)
 
(5
)
 
(8
)
 
(315
)
Balance, end of year
$
281

 
$
153

 
$
5

 
$
7

 
$
314


 
Contributions
Our policy with respect to funding the Primary Pension Plan is to fund at least the minimum required by ERISA rules, as amended by the Pension Protection Act of 2006, and not more than the maximum amount deductible for tax purposes. Due to our past funding of the pension plan and overall positive growth in plan assets since plan inception, there will not be any required cash contribution for funding of plan assets in 2016 under ERISA, as amended by the Pension Protection Act of 2006.

Our contributions to the unfunded non-qualified supplemental retirement plans are equal to the amount of benefit payments made to retirees throughout the year and for 2016 are anticipated to be approximately $45 million. Benefits are paid in the form of five equal annual installments to participants and no election as to the form of benefit is provided for in the unfunded plans.  The following sets forth our estimated future benefit payments:
($ in millions)
 
Primary Plan Benefits
 
Supplemental Plan Benefits
2016
 
$
199

 
$
45

2017
 
202

 
23

2018
 
206

 
16

2019
 
212

 
15

2020
 
216

 
14

2020-2025
 
1,152

 
66


     
Other Benefit Plans
 
Postretirement Benefits — Medical and Dental
We provide medical and dental benefits to retirees through a contributory medical and dental plan based on age and years of service. We provide a defined dollar commitment toward retiree medical premiums.
 
Effective June 7, 2005, we amended the medical plan to reduce our subsidy to post-age 65 retirees and spouses by 45% beginning January 1, 2006, and then fully eliminated the subsidy after December 31, 2006. As disclosed previously, the postretirement benefit plan was amended in 2001 to reduce and cap the per capita dollar amount of the benefit costs that would be paid by the plan. Thus, changes in the assumed or actual health care cost trend rates do not materially affect the accumulated postretirement benefit obligation or our annual expense.

The net periodic postretirement benefit income of $7 million in 2015, $8 million in 2014 and $8 million in 2013 is included in SG&A expenses in the Consolidated Statements of Operations. The postretirement medical and dental plan has no assets and an accumulated postretirement benefit obligation (APBO) of $8 million at January 30, 2016 and $11 million at January 31, 2015.
 
Defined Contribution Plans 
The Savings, Profit-Sharing and Stock Ownership Plan (Savings Plan) is a qualified defined contribution plan, a 401(k) plan, available to all eligible employees. Effective January 1, 2007, all employees who are age 21 or older are immediately eligible to participate in and contribute a percentage of their pay to the Savings Plan. Eligible employees, who have completed one year and at least 1,000 hours of service within an eligibility period, are offered a fixed matching contribution each pay period equal to 50% of up to 6% of pay contributed by the employee. Matching contributions are credited to employees’ accounts in accordance with their investment elections and fully vest after three years. We may make additional discretionary matching contributions.
 
The Savings Plan includes a non-contributory retirement account. Participants who are hired or rehired on or after January 1, 2007 and who have completed at least 1,000 hours of service within an eligibility period receive a Company contribution in an amount equal to 2% of the participants’ annual pay. This Company contribution is in lieu of the primary pension benefit that was closed to employees hired or rehired on or after that date. Participating employees are fully vested after three years.
 
In addition to the Savings Plan, we sponsor the Mirror Savings Plan, which is a non-qualified contributory unfunded defined contribution plan offered to certain management employees. This plan supplements retirement savings under the Savings Plan for eligible management employees who choose to participate in it. The plan’s investment options generally mirror the traditional Savings Plan investment options. Similar to the supplemental retirement plans, the Mirror Savings Plan benefits are paid from our operating cash flow and cash investments.
 
The expense for these plans, which was predominantly included in SG&A expenses in the Consolidated Statements of Operations, was $56 million in 2015, $53 million in 2014 and $52 million in 2013.