Pension Plans and Other Retirement Benefits

Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown:



	Funded Plan						Unfunded Plan
	Thirteen Weeks Ended						Thirteen Weeks Ended
In thousands	November 3, 2018			October 28, 2017			November 3, 2018		October 28, 2017
Service cost	$	10,781		$	11,655		$	572	$	403
Interest cost	12,837			13,866			994		820
Expected return on plan assets	(17,468		)	(17,309		)	—		—
Recognized actuarial losses	3,241			5,428			914		641
Expense related to current period	$	9,391		$	13,640		$	2,480	$	1,864
Pension settlement charge	36,122			—			—		—
Total expense	$	45,513		$	13,640		$	2,480	$	1,864



	Funded Plan						Unfunded Plan
	Thirty-Nine Weeks Ended						Thirty-Nine Weeks Ended
In thousands	November 3, 2018			October 28, 2017			November 3, 2018		October 28, 2017
Service cost	$	34,007		$	35,264		$	1,794	$	1,578
Interest cost	40,767			41,384			2,700		2,506
Expected return on plan assets	(59,392		)	(52,073		)	—		—
Recognized actuarial losses	9,469			16,582			2,556		2,305
Expense related to current period	$	24,851		$	41,157		$	7,050	$	6,389
Pension settlement charge	36,122			—			—		—
Total expense	$	60,973		$	41,157		$	7,050	$	6,389

TJX’s policy with respect to the funded plan is to fund, at a minimum, the amount required to maintain a funded status of 80% of the applicable pension liability (the Funding Target pursuant to the Internal Revenue Code section 430) or such other amount as is sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code. We do not anticipate any required funding in fiscal 2019 for the funded plan. We anticipate making contributions of $2.5 million to provide current benefits coming due under the unfunded plan in fiscal 2019.

The amounts included in recognized actuarial losses in the table above have been reclassified in their entirety from other comprehensive income to the statements of income, net of related tax effects, for the periods presented.

During the third quarter of fiscal 2019, TJX annuitized and transferred current pension obligations for certain U.S. retirees and beneficiaries under the funded plan through the purchase of a group annuity contract with an insurance company. TJX transferred $207.4 million of pension plan assets to the insurance company, thereby reducing its pension benefit obligations. The transaction had no cash impact on TJX but did result in a non-cash pre-tax pension settlement charge of $36.1 million, which is reported separately on the consolidated statements of income. As a result of the annuity purchase the Company re-measured the funded status of its pension plan as of September 30, 2018. The assumptions for pension expense presented above includes a discount rate of 4.00% through the measurement date and 4.40% thereafter. The expected rate of return on plan assets is 6.00% through the measurement date and 6.00% thereafter. The discount rate for determining the obligation at the measurement date is 4.40%.