The Company sponsors pension plans in both the United States and Canada. Under the domestic plans, salaried, management and certain hourly employees’ pension benefits are based on a two-rate formula applied to each year of service. Participants receive the larger of the accrued benefit as of December 31, 2015 (based on service commencing at the date of hire and a 35-year service cap and an average annual salary for the five highest consecutive years during the last 10-year period) and the benefit calculated under the current plan provisions from the date of hire. Generally, under the current plan provisions, a participant receives credit for one year of service for each 365 days of employment as an eligible employee with the Company commencing after the employee’s date of participation in the plan, up to 30 years. Except for grandfathered employees and certain hourly associates in the Company’s retail divisions, final average compensation, taxable covered compensation and credit service for purposes of determining accrued pension benefits were frozen as of December 31, 2018.

The Company’s Canadian pension plans cover certain employees based on plan specifications. Under the Canadian plans, employees’ pension benefits are based on the employee’s highest consecutive five years of compensation during the 10 years before retirement. The Company’s funding policy for all plans is to make the minimum annual contributions required by applicable regulations. The Company also maintains an unfunded Supplemental Executive Retirement Plan (“SERP”). In addition to providing pension benefits, the Company sponsors unfunded postretirement life insurance plans that cover both salaried and hourly employees who became eligible for benefits by January 1, 1995. The life insurance plans provide coverage of up to $20,000 for qualifying retired employees.

The following table sets forth changes in benefit obligations, including all domestic and Canadian plans:

The accumulated benefit obligation for the United States pension plans was $280.5 million and $348.8 million as of January 28, 2023 and January 29, 2022, respectively. The accumulated benefit obligation for the Canadian pension plans was $3.3 million and $3.9 million as of January 28, 2023 and January 29, 2022, respectively.

As of January 28, 2023 and January 29, 2022, the Company used the PRI-2012 Bottom Quartile mortality table, projected using generational scale MP-2021, a base mortality table issued by the Society of Actuaries in 2021, to estimate the plan liabilities. Actuarial losses related to the change in mortality projection scales from the MP-2020 scale used in 2020 increased the projected benefit obligation by approximately $1.1 million as of January 29, 2022.

Pension assets are managed in accordance with the prudent investor standards of the Employee Retirement Income Security Act (“ERISA”). The plan’s investment objective is to earn a competitive total return on assets, while also ensuring plan assets are adequately managed to provide for future pension obligations. This results in the protection of plan surplus and is accomplished by matching the duration of the projected benefit obligation using leveraged fixed income instruments and, while maintaining an equity commitment, managing an equity overlay strategy. The overlay strategy is intended to protect the managed equity portfolios against adverse stock market environments. The Company delegates investment management of the plan assets to specialists in each asset class and regularly monitors manager performance and compliance with investment guidelines. The Company’s overall investment strategy is to achieve a mix of approximately 97% of investments for long-term growth and 3% for near-term benefit payments with a wide diversification of asset types, fund strategies and fund managers. The target allocations for plan assets for 2022 were 70% equities and 30% debt securities. Allocations may change periodically based upon changing market conditions. Corporate stocks – common did not include any Company stock at January 28, 2023 or January 29, 2022.

Assets of the Canadian pension plans, which total approximately $4.5 million on January 28, 2023, were invested 55% in equity funds, 42% in bond funds and 3% in money market funds. The Canadian pension plans did not include any Company stock as of January 28, 2023 or January 29, 2022.

A financial instrument’s level within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Refer to further discussion on the fair value hierarchy in Note 13 to the consolidated financial statements. Following is a description of the pension plan investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy.

The fair values of the Company’s pension plan assets at January 28, 2023 by asset category were as follows:


			Fair Value Measurements at January 28, 2023
($ thousands)	Total		Level 1		Level 2		Level 3
Asset
Cash and cash equivalents	$	12,962	$	12,962	$	—	$	—
U.S. government securities		80,522		45,872		34,650		—
Interest rate swap agreements		(2,793)		—		(2,793)		—
Mutual fund		29,548		29,548		—		—
Exchange-traded funds		92,338		92,338		—		—
Corporate stocks - common		132,138		132,138		—		—
Preferred securities		335		—		—		335
S&P 500 Index options		(2,634)		(2,634)		—		—
Total investments in the fair value hierarchy	$	342,416	$	310,224	$	31,857	$	335

Investments measured at net asset value:
Alternative investment fund		14,293		—		—		—
Unallocated insurance contract		36		—		—		—
Total investments measured at net asset value		14,329		—		—		—

Total investments at fair value	$	356,745	$	310,224	$	31,857	$	335

The fair values of the Company’s pension plan assets at January 29, 2022 by asset category were as follows:


			Fair Value Measurements at January 29, 2022
($ thousands)	Total		Level 1		Level 2		Level 3
Asset
Cash and cash equivalents	$	11,714	$	11,714	$	—	$	—
U.S. government securities		102,525		46,668		55,857		—
Interest rate swap agreements		(232)		—		(232)
Mutual fund		31,595		31,595		—		—
Exchange-traded funds		120,323		120,323		—		—
Corporate stocks - common		155,014		155,014		—		—
Preferred securities		523		—		—		523
S&P 500 Index options		5,694		5,694		—		—
Total investments in the fair value hierarchy	$	427,156	$	371,008	$	55,625	$	523

Investments measured at net asset value:
Alternative investment fund		16,891		—		—		—
Unallocated insurance contract		44		—		—		—
Total investments measured at net asset value		16,935		—		—		—

Total investments at fair value	$	444,091	$	371,008	$	55,625	$	523

The following table sets forth changes in the fair value of plan assets, including all domestic and Canadian plans:


	Pension Benefits				Other Postretirement Benefits
($ thousands)	2022		2021		2022		2021
Fair value of plan assets at beginning of year	$	444,091	$	444,717	$	—	$	—
Actual return on plan assets		(69,361)		14,322		—		—
Employer contributions		494		104		75		91
Plan participants’ contributions		10		11		4		5
Benefits paid		(15,440)		(15,062)		(79)		(96)
Settlements		(3,032)		—		—		—
Foreign exchange rate changes		(17)		(1)		—		—
Fair value of plan assets at end of year	$	356,745	$	444,091	$	—	$	—

Funded Status

The over-funded status as of January 28, 2023 and January 29, 2022 for pension benefits was $71.2 million and $88.8 million, respectively. The under-funded status for other postretirement benefits was $1.0 million and $1.1 million as of January 28, 2023 and January 29, 2022, respectively.

Amounts recognized in the consolidated balance sheets consist of:

…..
	Pension Benefits				Other Postretirement Benefits
($ thousands)	2022		2021		2022		2021
Prepaid pension costs (noncurrent assets)	$	83,396	$	99,139	$	—	$	—
Accrued benefit liabilities (current liability)		(5,189)		(3,755)		(182)		(189)
Accrued benefit liabilities (noncurrent liability)		(7,034)		(6,579)		(836)		(954)
Net amount recognized at end of year	$	71,173	$	88,805	$	(1,018)	$	(1,143)

The projected benefit obligation, the accumulated benefit obligation and the fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and for pension plans with an accumulated benefit obligation in excess of plan assets, which includes only the Company’s SERP, were as follows:


		Projected Benefit Obligation Exceeds the				Accumulated Benefit Obligation
		Fair Value of Plan Assets				Exceeds the Fair Value of Plan Assets
($ thousands)		2022		2021		2022		2021
End of Year
Projected benefit obligation	$	12,223	$	10,334	$	12,223	$	10,334
Accumulated benefit obligation		11,392		9,247		11,392		9,247
Fair value of plan assets		—		—		—		—

The accumulated postretirement benefit obligation exceeds assets for all of the Company’s other postretirement benefit plans.

The amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit income at January 28, 2023 and January 29, 2022 are as follows:


	Pension Benefits				Other Postretirement Benefits
($ thousands)	2022		2021		2022		2021
Components of accumulated other comprehensive loss, net of tax:
Net actuarial loss (gain)	$	25,967	$	8,807	$	(410)	$	(424)
Net prior service credit		(20)		(565)		—		—
Accumulated other comprehensive loss, net of tax	$	25,947	$	8,242	$	(410)	$	(424)

Net Periodic Benefit Income

Net periodic benefit income for 2022, 2021 and 2020 for all domestic and Canadian plans included the following components:


	Pension Benefits						Other Postretirement Benefits
($ thousands)	2022		2021		2020		2022		2021		2020
Service cost	$	7,143	$	7,494	$	8,492	$	—	$	—	$	—
Interest cost		11,977		11,236		12,205		35		35		41
Expected return on assets		(27,987)		(28,437)		(31,498)		—		—		—
Amortization of:
Actuarial loss (gain)		3,088		2,410		2,718		(103)		(108)		(110)
Prior service credit		(314)		(514)		(1,354)		—		—		—
Settlement cost		320		—		1,353		—		—		—
Curtailments		13		—		(189)		—		—		—
Total net periodic benefit income	$	(5,760)	$	(7,811)	$	(8,273)	$	(68)	$	(73)	$	(69)

The non-service cost components of net periodic benefit income are included in other income, net in the consolidated statements of earnings (loss). Service cost is included in selling and administrative expenses.


	Pension Benefits						Other Postretirement Benefits
Weighted–average assumptions used to determine net periodic benefit income	2022		2021		2020		2022		2021		2020
Discount rate	3.40	%	3.10	%	3.25	%	3.40	%	3.10	%	3.25	%
Rate of compensation increase	3.00	%	3.00	%	3.00	%	N/A		N/A		N/A
Expected return on plan assets	7.20	%	7.25	%	7.50	%	N/A		N/A		N/A

The net actuarial loss (gain) subject to amortization is amortized on a straight-line basis over the average future service of active plan participants as of the measurement date. The prior service credit is amortized on a straight-line basis over the average future service of active plan participants benefiting under the plan at the time of each plan amendment.

The expected long-term rate of return on plan assets is based on historical and projected rates of return for current and planned asset classes in the plan’s investment portfolio. Assumed projected rates of return for each asset class were selected after analyzing experience and future expectations of the returns. The overall expected rate of return for the portfolio was developed based on the target allocation for each asset class.

Expected Cash Flows

Information about expected cash flows for all pension and postretirement benefit plans follows:


	Pension Benefits
							Other
							Postretirement
($ thousands)	Funded Plan		SERP		Total		Benefits
Employer Contributions
2023 expected contributions to plan trusts	$	91	$	—	$	91	$	—
2023 expected contributions to plan participants		—		5,323		5,323		187
2023 refund of assets (e.g. surplus) to employer		135		—		135		—
Expected Benefit Payments						—
2023	$	15,174	$	5,323	$	20,497	$	187
2024		15,591		2,348		17,939		153
2025		16,272		3,011		19,283		124
2026		16,855		675		17,530		101
2027		17,302		856		18,158		81
2028-2032		91,942		1,641		93,583		217

Defined Contribution Plans

The Company’s domestic defined contribution 401(k) plan covers certain salaried employees. For eligible salaried employees, the Company makes a core contribution of 1.5% and a matching contribution of up to 50% of the first 6% of the employees’ contributions. The Company’s expense for this plan was $4.6 million in 2022, $5.5 million in 2021, and $4.0 million in 2020. In addition to the core and matching contributions, the Company has the discretion to contribute up to an additional 2% profit-sharing benefit based on the Company’s performance. The Company’s expense for the profit-sharing contribution was $2.6 million for 2022 and $3.3 million for 2021.

Deferred Compensation Plan

The Company has a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for the benefit of certain management employees. The investment funds offered to the participants generally correspond to the funds offered in the Company’s 401(k) plan and the account balance fluctuates with the investment returns on those funds. The Deferred Compensation Plan permits the deferral of up to 50% of base salary and 100% of compensation received under the Company’s annual incentive plan. The deferrals are held in a separate trust, which has been established by the Company to administer the Deferred Compensation Plan. The assets of the trust are subject to the claims of the Company’s creditors in the event that the Company becomes insolvent. Consequently, the trust qualifies as a grantor trust for income tax purposes (i.e., a “Rabbi Trust”). The liabilities of the Deferred Compensation Plan of $7.9 million and $7.5 million as of January 28, 2023 and January 29, 2022, respectively, are presented in employee compensation and benefits in the accompanying consolidated balance sheets. The assets held by the trust of $7.9 million and $7.5 million as of January 28, 2023 and January 29, 2022, respectively, are presented within prepaid expenses and other current assets in the accompanying consolidated balance sheets, with changes in the deferred compensation charged to selling and administrative expenses in the accompanying consolidated statements of earnings (loss).

Deferred Compensation Plan for Non-Employee Directors

Non-employee directors are eligible to participate in a deferred compensation plan, whereby deferred compensation amounts are valued as if invested in the Company’s common stock through the use of phantom stock units (“PSUs”). Under the plan, each participating director’s account is credited with the number of PSUs equal to the number of shares of the Company’s common stock that the participant could purchase or receive with the amount of the deferred compensation, based upon the fair value (as determined based on the average of the high and low prices) of the Company’s common stock on the last trading day of the fiscal quarter when the cash compensation was earned. Dividend equivalents are paid on PSUs at the same rate as dividends on the Company’s common stock and are re-invested in additional PSUs at the next fiscal quarter-end. The PSUs are payable in cash based on the number of PSUs credited to the participating director’s account, valued on the basis of the fair value at fiscal quarter-end on or following termination of the director’s service. The liabilities of the plan of $1.8 million as of both January 28, 2023 and January 29, 2022 are based on 60,067 and 64,227 outstanding PSUs, respectively, and are presented in other liabilities in the accompanying consolidated balance sheets.

Gains and losses resulting from changes in the fair value of the PSUs are charged to selling and administrative expenses in the accompanying consolidated statements of earnings (loss).