Pension, Postretirement Health Care and Other Benefits

3 Months Ended

May 02, 2015

Compensation and Retirement Disclosure [Abstract]

Pension, Postretirement Health Care and Other Benefits

Pension, Postretirement Health Care and Other Benefits

Pension and Postretirement Health Care Benefits

We provide qualified defined benefit pension plans, unfunded nonqualified pension plans and certain postretirement health care benefits to eligible team members.

Net Pension and Postretirement Health Care Benefits Expense	Pension Benefits						Postretirement Health Care Benefits
	Three Months Ended						Three Months Ended
(millions)	May 2, 2015			May 3, 2014			May 2, 2015			May 3, 2014
Service cost	$	28		$	28		$	1		$	1
Interest cost	38			38			—			1
Expected return on assets	(65		)	(58		)	—			—
Amortization of losses	23			16			1			1
Amortization of prior service cost	(3		)	(3		)	(4		)	(4		)
Settlement charges	2			—			—			—
Total	$	23		$	21		$	(2	)	$	(1	)

As a result of the restructuring initiatives discussed in Note 3, we remeasured the assets and liabilities of our largest pension plan as of March 9, 2015. The remeasurement resulted in a $208 million reduction to the projected benefit obligation, primarily resulting from a 41 basis point increase in the discount rate used, and a $47 million reduction of plan assets. Subsequent to the remeasurement, the pension plan was overfunded, with plan assets of $3,725 million exceeding the projected benefit obligation of $3,604 million. We expect this remeasurement will reduce 2015 pension expense by $26 million, $3 million of which was recognized during the first quarter.

Other Benefits

We offer unfunded nonqualified deferred compensation plans to certain team members. We mitigate some of our risk of these plans through investing in vehicles, including company-owned life insurance and prepaid forward contracts in our own common stock, that offset a substantial portion of our economic exposure to the returns of these plans. These investment vehicles are general corporate assets and are marked to market with the related gains and losses recognized in the Consolidated Statements of Operations in the period they occur.

The total change in fair value for contracts indexed to our own common stock recognized in earnings was pretax income of $3 million and $7 million for the three months ended May 2, 2015 and May 3, 2014, respectively. During the three months ended May 2, 2015 and May 3, 2014, we made no investments in prepaid forward contracts in our own common stock. Adjusting our position in these investment vehicles may involve repurchasing shares of Target common stock when settling the forward contracts as described in Note 8. The settlement dates of these instruments are regularly renegotiated with the counterparty.

Prepaid Forward Contracts on Target Common Stock (millions, except per share data)	Number of Shares	Contractual Price Paid per Share		Contractual Fair Value		Total Cash Investment
May 2, 2015	0.4	$	41.13	$	35	$	18
January 31, 2015	0.5	$	41.11	$	38	$	21
May 3, 2014	1.3	$	48.81	$	80	$	63