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Retirement Plans

12 Months Ended

Sep. 28, 2019

8. Retirement Plans

The Company sponsors defined contribution 401(k) retirement plans covering substantially all employees. Contributions are based upon a fixed dollar amount for employees who participate and percentages of employee contributions at specified thresholds. Contribution expense for these plans was $26 million, $20 million, and $18 million for fiscal 2019, 2018, and 2017, respectively.

The North American defined benefit pension plans, which cover certain manufacturing facilities, are closed to future entrants. The majority of the retirement benefit obligations in the United Kingdom ("UK"), assumed through the RPC acquisition, are defined benefit pension plans, and are closed to future entrants. The assets of all the plans are held in a separate trustee administered fund to meet long-term liabilities for past and present employees.

Also acquired with the RPC acquisition, most of the Company’s German operations provide non-contributory pension plans. There is no external funding for these plans although they are secured by insolvency insurance required under German law. In general, the plans provide a fixed retirement benefit not related to salaries and are closed to new entrants. Germany represents $99 million of Mainland Europe’s total underfunded status.

The net amount of liability recognized is included in Employee Benefit Obligations on the Consolidated Balance Sheets. The Company uses fiscal year end as a measurement date for the retirement plans.

	Fiscal 2019												Fiscal 2018
Change in Projected Benefit Obligations (PBO)	North America			UK			Mainland Europe			Total			North America			UK		Mainland Europe		Total
Beginning of period	$	307		$	—		$	—		$	307		$	330		$	—	$	—	$	330
Acquisition		—			810			209			1,019			—			—		—		—
Service cost		—			—			2			2			—			—		—		—
Interest cost		12			—			—			12			11			—		—		11
Assumption change		—			4			1			5			—			—		—		—
Currency		—			(24	)		(10	)		(34	)		—			—		—		—
Actuarial loss (gain)		42			44			8			94			(17	)		—		—		(17	)
Benefits paid		(17	)		(7	)		(4	)		(28	)		(17	)		—		—		(17	)
End of period	$	344		$	827		$	206		$	1,377		$	307		$	—	$	—	$	307

	Fiscal 2019												Fiscal 2018
Change in Fair Value of Plan Assets	North America			UK			Mainland Europe			Total			North America			UK		Mainland Europe		Total
Beginning of period	$	277		$	—		$	—		$	277		$	291		$	—	$	—	$	291
Acquisition		—			702			70			772			—			—		—		—
Currency		—			(22	)		(3	)		(25	)		—			—		—		—
Return on assets		9			51			2			62			—			—		—		—
Contributions		—			5			2			7			3			—		—		3
Benefits paid		(17	)		(7	)		(4	)		(28	)		(17	)		—		—		(17	)
End of period	$	269		$	729		$	67		$	1,065		$	277		$	—	$	—	$	277

Underfunded status	$	(75	)	$	(98	)	$	(139	)	$	(312	)	$	(30	)	$	—	$	—	$	(30	)

At the end of fiscal 2019, the Company had $89 million of net unrealized losses recorded in Accumulated other comprehensive loss on the Consolidated Balance Sheets. The Company expects $5 million to be realized in fiscal 2020.

The following table presents significant weighted-average assumptions used to determine benefit obligation and benefit cost for the fiscal years ended:

	Fiscal 2019
(Percentages)	North America		UK		Mainland Europe
Weighted-average assumptions:
Discount rate for benefit obligation		2.9		1.8		0.7
Discount rate for net benefit cost		4.0		2.3		1.0
Expected return on plan assets for net benefit costs		6.1		4.3		1.7

	Fiscal 2018
(Percentages)	North America		UK		Mainland Europe
Weighted-average assumptions:
Discount rate for benefit obligation		4.0		—		—
Discount rate for net benefit cost		3.5		—		—
Expected return on plan assets for net benefit costs		6.1		—		—

In evaluating the expected return on plan assets, Berry considered its historical assumptions compared with actual results, an analysis of current market conditions, asset allocations, and the views of advisors. The return on plan assets is derived from target allocations and historical yield by asset type. A one quarter of a percentage point reduction of expected return on pension assets or discount rate applied to the pension liability would result in an immaterial change to the Company's pension expense in fiscal 2019.

In accordance with the guidance from the FASB for employers’ disclosure about postretirement benefit plan assets the table below discloses fair values of each pension plan asset category and level within the fair value hierarchy in which it falls. There were no material changes or transfers between level 3 assets and the other levels, with the exception of the addition of RPC assets through the acquisition.

Fiscal 2019 Asset Category	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	15	$	89	$	—	$	104
U.S. large cap comingled equity funds		—		124		—		124
U.S. mid cap equity mutual funds		42		—		—		42
U.S. small cap equity mutual funds		3		—		—		3
International equity mutual funds		18		94		—		112
Real estate equity investment funds		3		179		75		257
Corporate bond mutual funds		12		—		—		12
Corporate bonds		—		164		14		178
Guaranteed investment account		—		—		8		8
International fixed income funds		73		93		—		166
International insurance policies		—		—		59		59
Total	$	166	$	743	$	156	$	1,065

Fiscal 2018 Asset Category	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	6	$	—	$	—	$	6
U.S. large cap comingled equity funds		—		67		—		67
U.S. mid cap equity mutual funds		50		—		—		50
U.S. small cap equity mutual funds		3		—		—		3
International equity mutual funds		15		—		—		15
Real estate equity investment funds		3		—		—		3
Corporate bond mutual funds		11		—		—		11
Corporate bonds		—		108		—		108
Guaranteed investment account		—		—		8		8
International fixed income funds		6		—		—		6
Total	$	94	$	175	$	8	$	277

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the fiscal year end:

	Fiscal 2019
	North America		UK		Mainland Europe		Total
2020	$	19	$	28	$	7	$	54
2021		19		29		7		55
2022		19		29		7		55
2023		19		30		6		55
2024		19		31		8		58
2025-2029		96		158		39		293

Net pension expense included the following components as of fiscal years ended:

	2019			2018			2017
Service cost	$	2		$	—		$	—
Interest cost		12			11			11
Amortization of net actuarial loss		6			2			3
Expected return on plan assets		(24	)		(17	)		(17	)
Net periodic benefit expense (income)	$	(4	)	$	(4	)	$	(3	)

Our defined benefit pension plan asset allocations as of fiscal years ended are as follows:

Asset Category	2019			2018
Equity securities and equity-like instruments		50	%		50	%
Debt securities and debt-like		33			45
International insurance policies		6			—
Other		11			5
Total		100	%		100	%

The Company’s retirement plan assets are invested with the objective of providing the plans the ability to fund current and future benefit payment requirements while minimizing annual Company contributions. The retirement plans held $35 million of the Company’s stock at the end of fiscal 2019. The Company re-addresses the allocation of its investments on a regular basis.