Pension and Other Benefits

3 Months Ended

Apr. 30, 2016

Compensation and Retirement Disclosure [Abstract]

Pension Benefits

We provide pension plan benefits to certain eligible team members.



Net Pension Benefits Expense	Three Months Ended
(millions)	Apr 30, 2016			May 2, 2015
Service cost	$	21		$	28
Interest cost	34			38
Expected return on assets	(64		)	(65		)
Amortization of losses	12			23
Amortization of prior service cost	(3		)	(3		)
Settlement charges	—			2
Total	$	—		$	23

Beginning in 2016, we have used a spot rate approach to calculate pension interest cost. Prior to 2016, we used a single-weighted average discount rate in the calculation. The spot rate approach applies separate discount rates for each projected benefit payment in the calculation of pension interest cost. This calculation change is considered a change in accounting estimate and has been applied prospectively. The use of the spot rate approach is expected to result in a favorable impact to pension expense of $30 million in 2016 relative to the estimated pension expense had we not changed our approach.

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 for both the three months ended April 30, 2016 and May 2, 2015. During the three months ended April 30, 2016 and May 2, 2015, 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. At April 30, 2016, January 30, 2016 and May 2, 2015, we held asset positions in prepaid forward contracts for 0.4 million shares of our common stock, for a total cash investment of $18 million ($41.11 per share) and a contractual fair value of $35 million, $32 million and $35 million, respectively.