NOTE 12 — RETIREMENT PLAN

The Supplemental Employee Retirement Plan (“SERP”) is an unfunded, non-qualified benefit plan that will provide eligible participants with monthly benefits upon retirement, disability or death, subject to certain conditions. Benefits paid to retirees are based on age at retirement, years of credited service, and average compensation. We use our fiscal year-end as the measurement date for the obligation calculation. Accounting guidance in ASC Topic 715, Compensation — Retirement Benefits requires the recognition of the funded status of the SERP on the Consolidated Balance Sheet. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized are recorded as a component of “Accumulated Other Comprehensive Loss” (“AOCL”).

The following table presents the changes in the projected benefit obligation for the fiscal years ended:


	June 29, 2017			June 30, 2016
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	22,791		$	18,538
Service cost		631			491
Interest cost		811			843
Actuarial (gain) loss		(1,938	)		3,573
Benefits paid		(654	)		(654	)

Projected benefit obligation at end of year	$	21,641		$	22,791

The accumulated benefit obligation, which represents benefits earned up to the measurement date, was $17,774 and $18,247 at June 29, 2017 and June 30, 2016, respectively.

Components of the actuarial (gain) loss portion of the change in projected benefit obligation are presented below for the fiscal years ended:


	June 29, 2017			June 30, 2016			June 25, 2015
Actuarial Loss
Change in assumed pay increases	$	124		$	68		$	342
Change in discount rate		(1,402	)		3,509			(801	)
Change in mortality assumptions		(193	)		(132	)		2,150
Change in bonus assumption		—			—			1,191
Other		(467	)		128			257

Actuarial (gain) loss	$	(1,938	)	$	3,573		$	3,139

The components of the net periodic pension cost are as follows for the fiscal years ended:


	June 29, 2017		June 30, 2016		June 25, 2015
Service cost	$	631	$	491	$	386
Interest cost		811		843		642
Recognized loss amortization		365		50		—
Prior service cost amortization		957		957		957

Net periodic pension cost	$	2,764	$	2,341	$	1,985

Significant assumptions related to our SERP include the discount rate used to calculate the actuarial present value of benefit obligations to be paid in the future, the average rate of compensation expense increase by SERP participants, and anticipated mortality rates. The RP-2014 white collar fully generational mortality table with mortality improvement scale MP-2016 was utilized in the preparation of our pension obligation as of June 29, 2017.

We used the following assumptions to calculate the benefit obligation of our SERP as of the following dates:


	June 29, 2017	June 30, 2016
Discount rate	3.99%	3.61%
Rate of compensation increases	4.50%	4.50%
Bonus payment	60% - 85% of base, paid 4 of 5 years	60% - 85% of base, paid 4 of 5 years

We used the following assumptions to calculate the net periodic costs of our SERP as follows for the fiscal years ended:


	June 29, 2017	June 30, 2016	June 25, 2015
Discount rate	3.61%	4.63%	4.37%
Rate of compensation increases	4.50%	4.50%	4.50%
Mortality	RP-2014 white collar with MP- 2015 scale	RP-2014 white collar with MP- 2014 scale	IRS 2014 (Unisex)
Bonus payment	60% -85% of base, paid 4 of 5 years	60% -85% of base, paid 4 of 5 years	60% - 85% of base, paid 3 of 5 years

The assumed discount rate is based, in part, upon a discount rate modeling process that considers both high quality long-term indices and the duration of the SERP plan relative to the durations implicit in the broader indices. The discount rate is utilized principally in calculating the actuarial present value of our obligation and periodic expense pursuant to the SERP. To the extent the discount rate increases or decreases, our SERP obligation is decreased or increased, respectively.

The following table presents the benefits expected to be paid in the next ten fiscal years:


Fiscal year
2018	$	647
2019		631
2020		612
2021		727
2022		699
2023 — 2027		4,635

At June 29, 2017 and June 30, 2016 the current portion of the SERP liability was $647 and $653, respectively, and recorded in Accrued payroll and related benefits on the Consolidated Balance Sheets.

The following table presents the components of AOCL that have not yet been recognized in net pension expense:


	June 29, 2017			June 30, 2016
Unrecognized net loss	$	(3,624	)	$	(5,926	)
Unrecognized prior service cost		(3,349	)		(4,306	)
Tax effect		2,569			3,807

Net amount unrecognized	$	(4,404	)	$	(6,425	)

We expect to recognize $957 of the prior service cost and $162 of net loss into net periodic pension expense during the fiscal year ending June 28, 2018.