Quarterly report pursuant to Section 13 or 15(d)

Retirement Benefit Plans

v3.20.2
Retirement Benefit Plans
6 Months Ended
Aug. 01, 2020
Retirement Benefit Plans [Abstract]  
Retirement Benefit Plans Retirement Benefit Plans
The components of net periodic pension expense/(income) for our non-contributory qualified defined benefit pension plan and supplemental pension plans were as follows:
  Three Months Ended Six Months Ended
($ in millions) August 1,
2020
August 3,
2019
August 1,
2020
August 3,
2019
Service cost $ 8  $ 7  $ 16  $ 14 
Other components of net periodic pension cost/(income):
Interest cost 26  33  52  66 
Expected return on plan assets (51) (48) (101) (96)
Amortization of prior service cost 2  2  3  4 
Amortization of net loss 1    1   
Curtailment loss recognized 5    5   
Special termination benefit cost recognized 94    94   
77  (13) 54  (26)
Net periodic pension expense/(income) $ 85  $ (6) $ 70  $ (12)

Service cost is included in SG&A in the unaudited Interim Consolidated Statements of Operations.

Primary Pension Plan Lump-Sum Payment Offer and VERP
In April 2020, the Company initiated a Voluntary Early Retirement Program (VERP) for approximately 4,300 eligible associates. Eligibility for the VERP included home office, stores and supply chain personnel who met certain criteria related to age and years of service as of October 23, 2019. The consideration period for eligible associates to accept the VERP ended on May 29, 2020. Based on the approximately 2,600 associates who elected to accept the VERP, we incurred a total charge of $94 million for enhanced retirement benefits. The enhanced retirement benefits increased the projected benefit obligation (PBO) of the Primary Pension Plan and the Supplemental Pension Plans by $85 million and $9 million, respectively. In addition, we incurred curtailment charges of $4 million related to our Primary Pension Plan and $1 million related to Supplemental Pension Plans as a result of the reduction in the expected years of future service related to these plans. As a result of these curtailments, the assets and the liabilities for our Primary Pension Plan and the liabilities of certain Supplemental Pension Plans were remeasured as of July 31, 2020. The discount rate used for the remeasurements was 2.64% compared to the fiscal year 2019 discount rate of 3.08%. The remeasurement and curtailment resulted in the PBO of our Primary Pension Plan increasing by $117 million and the related assets increasing by $74 million, and the PBO of our Supplemental Pension Plans decreasing by $0.4 million. As of July 31, 2020, the funded status of the Primary Pension Plan was 101% and is not impacted by the Chapter 11 Cases.

Other Unfunded Benefit Plans
The Company also sponsors other supplemental retirement plans, primarily the Supplemental Retirement Program, the Benefit Restoration Plan and the Mirror Savings Plan, that were unfunded as of the Petition Date. Liabilities for those plans total $165 million and have been classified as Liabilities subject to compromise in the unaudited interim Consolidated Balance Sheets.