9. Postretirement Benefit Plans

Pension Plan

As a result of the Acquisition in fiscal year 2015, the Company now fully funds a defined benefit pension scheme (“the Scheme”), formerly maintained by Wolfson, for some of the employees in the United Kingdom. The Scheme was closed to new participants as of July 2, 2002. As of April 30, 2011, the participants in the Scheme no longer accrue benefits and therefore the Company will not be required to pay contributions in respect of future accrual.

The Scheme is a trustee-administered fund that is legally separate from Wolfson, which holds the pension plan assets to meet long-term pension liabilities. The pension fund trustees comprise one employee and one employer representative and an independent chairman. The trustees are required by law to act in the best interests of the Scheme’s beneficiaries and the trustees are responsible, in consultation with Wolfson and the Company, for setting certain policies (including the investment policies and strategies) of the fund.

As of March 26, 2016, the Company was obligated to contribute approximately $0.5 million to the Scheme, which was recorded on the fiscal year 2016 Consolidated Balance Sheet in “Accrued salaries and benefits”. On April 25, 2016, the Company paid the $0.5 million, which was previously accrued. No further obligations are accrued as of March 25, 2017.

The Company initiated an Enhanced Transfer Value (ETV) offer to 49 Scheme participants in fiscal year 2017. The ETV offer expired on December 23, 2016, and nine participants accepted. As a result, the Company paid the required ETV contribution of $0.5 million and recorded the associated pension expense of $0.4 million. The Company expects to completely close the Scheme over the next ten years.

The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Scheme (in thousands):



	March 25,		March 26,
	2017		2016
Change in benefit obligation:
Beginning balance	$	23,968	$	27,091
Expenses		-		15
Interest cost		759		821
Plan settlements		(4,517)		-
Benefits paid and expenses		(264)		(1,095)
Change in foreign currency exchange rate		(2,763)		(1,221)
Actuarial (gain) / loss		3,940		(1,643)
Total benefit obligation ending balance		21,123		23,968

Change in plan assets:
Beginning balance		25,688		26,735
Actual return on plan assets		3,933		(155)
Employer contributions		990		1,409
Plan settlements		(5,243)		-
Change in foreign currency exchange rate		(2,961)		(1,206)
Benefits paid and expenses		(264)		(1,095)
Fair value of plan assets ending balance		22,143		25,688

Funded status of Scheme at end of year	$	1,020	$	1,720

The assets and obligations of the Scheme are denominated in British Pound Sterling. Based on an actuarial study performed as of March 25, 2017, the Scheme is overfunded and a long-term asset is reflected in the Company’s Consolidated Balance Sheet under the caption “Other assets”. The Company’s plan assets and obligations are measured as of the fiscal year-end. The weighted-average discount rate assumption used to determine benefit obligations as of March 25, 2017 March 26, 2016 and March 28, 2015 was 2.7%, 3.6%, and 3.2%, respectively.

The components of the Company’s net periodic pension expense (income) are as follows (in thousands):



	Fiscal Years Ended
	March 25,		March 26,		March 28,
	2017		2016		2015
Expenses	$	-	$	15	$	16
Interest cost		759		821		544
Expected return on plan assets		(1,126)		(1,212)		(792)
Settlement (gain) loss		1,063		-		-
Amortization of actuarial (gain) loss		(89)		49		-
	$	607	$	(327)	$	(232)

The following weighted-average assumptions were used to determine net periodic benefit costs for the year ended March 25, 2017, March 26, 2016, and March 28, 2015:



	2017			2016			2015
Discount rate		3.60	%		3.20	%		4.00	%
Expected long-term return on plan assets		4.93	%		4.65	%		5.36	%

We report and measure the plan assets of our defined benefit pension at fair value. The Company’s pension plan assets consist of cash, equity securities, corporate debt securities, and diversified growth funds. The fair value of the pension plan assets is determined through an external actuarial valuation, following a similar process of obtaining inputs as described above.

The table below sets forth the fair value of our plan assets as of March 25, 2017, using the same three-level hierarchy of fair-value inputs described in Note 4 (in thousands):



	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	Level 1		Level 2		Level 3		Total
Plan Assets:
Cash	$	160	$	-	$	-	$	160
Pension funds		-		21,983		-		21,983
	$	160	$	21,983	$	-	$	22,143

The table below sets forth the fair value of our plan assets as of March 26, 2016, (in thousands):



	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	Level 1		Level 2		Level 3		Total
Plan Assets:
Cash	$	42	$	-	$	-	$	42
Pension funds		-		25,646		-		25,646
	$	42	$	25,646	$	-	$	25,688

Amounts recognized in accumulated other comprehensive income (loss) for the period that have not yet been recognized as components of net periodic benefit cost consist of (in thousands):



		Fiscal Year
		2017
Net actuarial loss	$	(79)

Accumulated other comprehensive income, before tax	$	(79)

The Company will amortize the actuarial gain over a period of twenty-five years based on actuarial assumptions, including life expectancy. The following table provides the estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal year 2018 (in thousands):



		Fiscal Year
		2018
Transition (asset) obligation	$	-
Prior service cost		-
Actuarial loss (gain)		(37)

The Company contributed $0.5 million to the pension plan in fiscal year 2017 as discussed above.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following fiscal years (in thousands):


		Benefit
		Payments
2018	$	266
2019		411
2020		481
2021		472
2022		415
Thereafter		2,765

The expected long-term return on plan assets is based on historical actual return experience and estimates of future long-term performance with consideration to the expected investment mix of the plan assets. It is the policy of the Trustees and the Company to review the investment strategy periodically. The Trustees’ investment objectives and the processes undertaken to measure and manage the risks inherent in the Scheme investment strategy are illustrated by the current asset allocation. The current mix of the assets is as follows:



	Actual Allocation
	2017			2016
Equity securities		33	%		32	%
Corporate bonds		48			47
Diversified growth		19			21
Cash		-			-
Total		100	%		100	%

See the related fair value of the assets above.

The Scheme exposes the Company to actuarial risks such as investment (market) risk, interest rate risk, mortality risk, longevity risk and currency risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result in an increase to the Scheme liabilities and may give rise to increased benefit expenses in future periods. Caps on inflationary increases are currently in place to protect the Scheme against extreme inflation, however.

The indicative impact on net periodic benefit cost based on defined sensitivities is as follows:



Change		Approximate impact on liabilities
Decrease discount rate by 0.1%, per year		2% increase
Increase inflation linked assumptions by 0.1%, per year		2% increase (of inflation-linked liabilities)
Increase life expectancy by 1 year		2% increase

401(k) Plans

We have 401(k) Profit Sharing Plans (the “401(k) Plans”) covering all of our qualifying employees. Under the 401(k) Plans, employees may elect to contribute any percentage of their annual compensation up to the annual IRS limitations. The Company matches 50 percent of the first 8 percent of the employees’ annual contribution. We made matching employee contributions of $5.5 million, $4.3 million, and $2.5 million during fiscal years 2017, 2016, and 2015, respectively.