The Company and its subsidiaries sponsor several retirement plans that are primarily 401(k) defined contribution plans covering nonunion associates and certain union associates. The Company does not contribute to all of the plans. In accordance with those plan provisions, the Company matches 100% of a participant’s pretax payroll contributions, up to a maximum of 3% of such participant’s pretax annual compensation. Thereafter, the Company will match 50% of the participant’s additional pretax payroll contributions, up to a maximum of 2% of such participant’s

additional pretax annual compensation. Total expense recognized for the above plans was $42,746 in fiscal 2020, $44,564 in fiscal 2019 and $67,949 in fiscal 2018.

The Company sponsored a Supplemental Executive Retirement Plan (“SERP”) for its officers, based on an account-based plan design, that was subject to a five year graduated vesting schedule. On February 25, 2019, the SERP was terminated and additional allocations were discontinued and all prior benefits under the program became fully vested. During fiscal 2020, participant benefits under this program were paid in full. The expense recognized for the SERP was $3,871 in fiscal 2020, $4,913 in fiscal 2019 and $12,426 in fiscal 2018.

The Company and its subsidiaries also sponsor a qualified defined benefit pension plan that requires benefits to be paid to eligible associates based upon years of service and, in some cases, eligible compensation. The Company’s funding policy for The Rite Aid Pension Plan (the “Defined Benefit Pension Plan”) is to contribute the minimum amount required by the Employee Retirement Income Security Act of 1974. However, the Company may, at its sole discretion, contribute additional funds to the plan. The Company made contributions of $0 in fiscal 2020, $2,715 in fiscal 2019 and $9,023 in fiscal 2018.

Net periodic pension expense and other changes recognized in other comprehensive income for the defined benefit pension plans included the following components:

The table below sets forth reconciliation from the beginning of the year for both the benefit obligation and plan assets of the Company’s defined benefit plans, as well as the funded status and amounts recognized in the Company’s balance sheet as of February 29, 2020 and March 2, 2019:

The estimated net actuarial loss and prior service cost amounts that will be amortized from accumulated other comprehensive loss into net periodic pension expense in fiscal 2021 are $3,646 and $0, respectively.

The accumulated benefit obligation for the defined benefit pension plan was $178,904 and $150,705 as of February 29, 2020 and March 2, 2019, respectively.

The significant actuarial assumptions used for all defined benefit plans to determine the benefit obligation as of February 29, 2020, March 2, 2019 and March 3, 2018 were as follows:

Weighted average assumptions used to determine net cost for the fiscal years ended February 29, 2020, March 2, 2019 and March 3, 2018 were:

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of the 6.25% long-term rate of return on plan assets assumption for fiscal 2020, 2019 and 2018.

The Company’s pension plan asset allocations at February 29, 2020 and March 2, 2019 by asset category were as follows:

The investment objectives of the Defined Benefit Pension Plan, the only defined benefit plan with assets, are to:

The asset allocation established for the pension investment program reflects the risk tolerance of the Company, as determined by:

●

the current and anticipated financial strength of the Company;

●

the funded status of the plan; and

●

plan liabilities.

Investments in both the equity and fixed income markets will be maintained, recognizing that historical results indicate that equities (primarily common stocks) have higher expected returns than fixed income investments. It is also recognized that the correlation between assets and liabilities must be balanced to address higher volatility of equity investments (return risk) and interest rate risk.

The following targets are to be applied to the allocation of plan assets.


	Target
Category	Allocation
Equity securities	52	%
Fixed income securities	48	%
Total	100	%

On March 27, 2020, in an effort to mitigate the economic impact of COVID-19, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) into law. While the Company expects to contribute $6,330 to the Defined Benefit Pension Plan during fiscal 2021, it is still evaluating the impact of the CARES act on its fiscal 2021 contributions.

Short Term Investments

Short term investments, which is a short term investment fund, and is considered cash and cash equivalents, is classified within Level 2 of the valuation hierarchy due to the lack of an active market for trading.

Common and Collective Trusts

Common collective trust funds are stated at fair value as determined by the issuer of the common collective trust funds based on the net asset value (“NAV”) of the underlying investments in accordance with ASC 820. There are generally no restrictions on redemptions from these funds and no unfunded commitments to invest. In accordance with ASC subtopic 820-10, certain investments that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The underlying investments mainly consist of equity and fixed income securities funds that are valued based on the daily closing price as reported by the fund.

The proceeding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at February 29, 2020.

The following table sets forth by level within the fair value hierarchy a summary of the plan’s investments measured at fair value on a recurring basis as of February 29, 2020 and March 2, 2019:


	Fair Value Measurements at February 29, 2020
	Quoted Prices in
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total
Equity Securities
International equity	$	—	$	—	$	—	$	15,251
Large Cap		—		—		—		33,174
Small-Mid Cap		—		—		—		14,223
Fixed Income
Long Term Credit Bond Index		—		—		—		25,129
Long Term US Government Bonds		—		—		—		18,897
20+ Year Treasury STRIPS		—		—		—		1,447
Intermediate Fixed Income		—		—		—		14,606
AGT High Yield Bond		—		—		—		7,673
Other types of investments
Short Term Investments		—		1,729		—		1,729
Total	$	—	$	1,729	$	—	$	132,129


	Fair Value Measurements at March 2, 2019
	Quoted Prices in
	Active Markets		Significant		Significant
	for Identical		Observable		Unobservable
	Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total
Equity Securities
International equity	$	—	$	—	$	—	$	15,396
Large Cap		—		—		—		34,058
Small-Mid Cap		—		—		—		14,534
Fixed Income
Long Term Credit Bond Index		—		—		—		44,103
Long Term US Government Bonds		—		—		—		8,383
20+ Year Treasury STRIPS		—		—		—		847
Intermediate Fixed Income		—		—		—		5,920
Other types of investments
Short Term Investments		—		—		—		1,591
Total	$	—	$	—	$	—	$	124,832

Following are the future benefit payments expected to be paid for the Defined Benefit Pension Plan during the years indicated:


	Defined Benefit
Fiscal Year	Pension Plan
2021	$	8,992
2022		9,025
2023		8,963
2024		9,212
2025		9,157
2026 - 2030		45,471
Total	$	90,820