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Pension Plans | 12 Months Ended
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Feb. 03, 2024
Retirement Benefits [Abstract] |
Pension Plans | Pension Plans We have a U.S. qualified defined benefit pension plan covering team members who meet eligibility requirements. This plan is closed to new participants. Active participants accrue benefits under a final average pay feature or a cash balance feature. We also have unfunded, nonqualified pension plans for team members with qualified plan compensation restrictions, as well as international plans. Eligibility and the level of benefits under all plans vary depending on each team member's full-time or part-time status, date of hire, age, length of service, and/or compensation.
Funded Status | Qualified Plan |  | Nonqualified and International Plans
(millions) | 2023 | 2022 |  | 2023 | 2022
Projected benefit obligations | $ | 3,436 |  | $ | 3,616 |  |  | $ | 60 |  | $ | 64 |
Fair value of plan assets | 3,493 |  | 3,691 |  |  | 21 |  | 17 |
Funded / (underfunded) status | $ | 57 |  | $ | 75 |  |  | $ | (39) |  | $ | (47) |
Contributions and Estimated Future Benefit Payments Our obligations to plan participants can be met over time through a combination of company contributions to these plans and earnings on plan assets. In 2023, we made no contributions to our qualified defined benefit pension plan, and in 2022 we made a discretionary contribution of $150 million. We are not required to make any contributions to our qualified defined benefit pension plan in 2024. However, depending on investment performance and plan funded status, we may elect to make a contribution.
Estimated Future Benefit Payments (millions) | Pension Benefits
2024 | $ | 341 |
2025 | 220 |
2026 | 227 |
2027 | 235 |
2028 | 240 |
2029 - 2033 | 1,267 |
Cost of Plans
Net Pension Benefits Expense |  |  |  |
(millions) | Classification | 2023 | 2022 | 2021
Service cost benefits earned | SG&A Expenses | $ | 79 |  | $ | 94 |  | $ | 100 |
Interest cost on projected benefit obligation | Net Other Income | 166 |  | 117 |  | 96 |
Expected return on assets | Net Other Income | (269) |  | (234) |  | (238) |
Amortization of losses | Net Other Income | 1 |  | 61 |  | 113 |
Prior service cost | Net Other Income | 11 |  | 10 |  | — |
Total |  | $ | (12) |  | $ | 48 |  | $ | 71 |
Assumptions
Benefit Obligation Weighted Average Assumptions | 2023 | 2022 |
Discount rate | 5.20 | % | 4.83 | % |
Average assumed rate of compensation increase | 3.00 |  | 3.00 |  |
Cash balance plan interest crediting rate | 4.64 |  | 4.64 |  |
Net Periodic Benefit Expense Weighted Average Assumptions | 2023 | 2022 | 2021
Discount rate | 4.83 | % | 3.30 | % | 2.84 | %
Expected long-term rate of return on plan assets | 6.50 |  | 5.60 |  | 5.80 |
Average assumed rate of compensation increase | 3.00 |  | 3.00 |  | 3.00 |
Cash balance plan interest crediting rate | 4.64 |  | 4.64 |  | 4.64 |
The weighted average assumptions used to measure net periodic benefit expense each year are the rates as of the beginning of the year (i.e., the prior measurement date). Our most recent compound annual rate of return on qualified plan assets was 4.6 percent, 4.8 percent, 6.4 percent, and 6.2 percent for the 5-year, 10-year, 15-year, and 20-year time periods, respectively. The market-related value of plan assets is used in calculating the expected return on assets. Historical differences between expected and actual returns are deferred and recognized in the market-related value over a 5-year period from the year in which they occur. We review the expected long-term rate of return annually and revise it as appropriate. Additionally, we monitor the mix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and reduce volatility in our assets. Our 2023 expected annualized long-term rate of return assumptions were 7.5 percent for domestic equity securities, 8.0 percent for international equity securities, 5.5 percent for long-duration debt securities, 9.0 percent for diversified funds, and 8.0 percent for other investments. These estimates are a judgmental matter in which we consider the composition of our asset portfolio, our historical long-term investment performance, and current market conditions. Benefit Obligation
Change in Projected Benefit Obligation | Qualified Plan |  | Nonqualified and International Plans
(millions) | 2023 | 2022 |  | 2023 | 2022
Benefit obligation at beginning of period | $ | 3,616 |  | $ | 4,305 |  |  | $ | 64 |  | $ | 72 |
Service cost | 76 |  | 89 |  |  | 3 |  | 5 |
Interest cost | 164 |  | 116 |  |  | 2 |  | 2 |
Plan amendments | 11 |  | 10 |  |  | — |  | — |
Actuarial gain (a) | (114) |  | (612) |  |  | (4) |  | (9) |
Participant contributions | 4 |  | 2 |  |  | — |  | — |
Benefits paid | (321) |  | (294) |  |  | (5) |  | (6) |
Benefit obligation at end of period (b) | $ | 3,436 |  | $ | 3,616 |  |  | $ | 60 |  | $ | 64 |
(a)The actuarial gain was primarily driven by changes in the weighted average discount rate. (b)Accumulated benefit obligation—the present value of benefits earned to date assuming no future salary growth—is materially consistent with the projected benefit obligation in each period presented. Plan Assets
Change in Plan Assets | Qualified Plan |  | Nonqualified and International Plans
(millions) | 2023 | 2022 |  | 2023 | 2022
Fair value of plan assets at beginning of period | $ | 3,691 |  | $ | 4,433 |  |  | $ | 17 |  | $ | 16 |
Actual return on plan assets | 119 |  | (600) |  |  | 1 |  | (3) |
Employer contributions | — |  | 150 |  |  | 8 |  | 10 |
Participant contributions | 4 |  | 2 |  |  | — |  | — |
Benefits paid | (321) |  | (294) |  |  | (5) |  | (6) |
Fair value of plan assets at end of period | $ | 3,493 |  | $ | 3,691 |  |  | $ | 21 |  | $ | 17 |
Our asset allocation policy is designed to reduce the long-term cost of funding our pension obligations. The plan invests with both passive and active investment managers depending on the investment. The plan also seeks to reduce the risk associated with adverse movements in interest rates by employing an interest rate hedging program, which includes the use of derivative instruments.
Asset Category | Current Targeted Allocation | Actual Allocation
| 2023 | 2022
Domestic equity securities (a) | 12 | % | 12 | % | 12 | %
International equity securities | 8 |  | 8 |  | 8 |
Debt securities | 50 |  | 52 |  | 51 |
Diversified funds | 25 |  | 24 |  | 23 |
Other (b) | 5 |  | 4 |  | 6 |
Total | 100 | % | 100 | % | 100 | %
(a)Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets in both periods presented. (b)Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds, derivative instruments, and real estate.
Fair Value Measurements |  | Fair Value as of
(millions) | Measurement Level | January 31, 2024 |  | January 31, 2023
Cash and cash equivalents | Level 1 | $ | 5 |  |  | $ | 13 |
Derivatives | Level 2 | 10 |  |  | 6 |
Government securities (a) | Level 2 | 551 |  |  | 619 |
Fixed income (b) | Level 2 | 1,195 |  |  | 1,214 |
|  | 1,761 |  |  | 1,852 |
Investments valued using NAV per share (c) |  |  |  |
Fixed income |  | 6 |  |  | 6 |
Private equity funds |  | 64 |  |  | 64 |
Cash and cash equivalents |  | 141 |  |  | 240 |
Common collective trusts |  | 623 |  |  | 594 |
Diversified funds |  | 825 |  |  | 844 |
Other |  | 94 |  |  | 108 |
Total plan assets |  | $ | 3,514 |  |  | $ | 3,708 |
(a)Investments in government securities and long-term government bonds. (b)Investments in corporate and municipal bonds. (c)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
Position |  | Valuation Technique
Cash and cash equivalents |  | Carrying value approximates fair value.
Derivatives |  | Valuations are based on observable inputs to the valuation model (e.g., interest rates and credit spreads). Model inputs are changed only when corroborated by market data. A credit risk adjustment is made on each swap using observable market credit spreads.
Government securities and fixed income |  | Valued using matrix pricing models and quoted prices of securities with similar characteristics.
Amounts Included in Shareholders' Investment Actuarial gains and losses are recorded in AOCI and amortized using the corridor approach. As of February 3, 2024, and January 28, 2023, pretax net actuarial losses recorded in AOCI totaled $969 million and $937 million, respectively.

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