PENSION PLANS

Company-Sponsored Pension Plans

The Company sponsors four defined benefit pension plans. Two are tax-qualified plans covering members of unions. Benefits under these two plans are based on a fixed amount for each year of service. One is a tax-qualified plan covering nonunion associates. Benefits under this plan are based upon percentages of annual compensation. Funding for these plans is based on an analysis of the specific requirements and an evaluation of the assets and liabilities of each plan. The fourth plan is an unfunded, nonqualified plan providing supplemental pension benefits to certain executives.

On November 29, 2016, the Company amended the Village Super Market Local 72 Retail Clerks Employees’ Retirement Plan, which covers union employees in the Stroudsburg store, to freeze all benefits effective January 31, 2017. As a result of this amendment, the Company recognized a pre-tax remeasurement gain totaling $629 in accumulated other comprehensive loss during fiscal 2017. The remeasurement had no impact on the consolidated statements of operations.

Net periodic pension cost for the four plans include the following components:



	2018			2017
Service cost	$	259		$	388
Interest cost on projected benefit obligation	2,515			2,424
Expected return on plan assets	(3,280		)	(3,684		)
Loss on settlement	866			965
Amortization of gains and losses	569			1,343
Net periodic pension cost	$	929		$	1,436

The Company recognized a settlement loss of $866 and $965 in fiscal 2018 and 2017, respectively, for plans where benefits paid exceeded the sum of the service cost and interest cost components of net periodic pension cost during the year.

The changes in benefit obligations and the reconciliation of the funded status of the Company’s plans to the consolidated balance sheets were as follows:



	2018			2017
Changes in Benefit Obligation:
Benefit obligation at beginning of year	$	71,701		$	80,021
Service cost	259			388
Interest cost	2,515			2,424
Benefits paid	(643		)	(549		)
Settlement	(4,317		)	(4,487		)
Actuarial loss (gain)	38			(6,096		)
Benefit obligation at end of year	$	69,553		$	71,701

Changes in Plan Assets:
Fair value of plan assets at beginning of year	$	56,507		$	53,281
Actual return on plan assets	3,014			5,262
Employer contributions	6,510			3,000
Benefits paid	(643		)	(549		)
Settlements paid	(4,317		)	(4,487		)
Fair value of plan assets at end of year	61,071			56,507

Funded status at end of year	$	8,482		$	15,194

Amounts recognized in the consolidated balance sheets:
Pension liabilities	8,482			15,194
Accumulated other comprehensive loss, net of income taxes	8,185			7,406

Amounts included in Accumulated other comprehensive loss (pre-tax):
Net actuarial loss	$	11,388		$	12,521

The Company expects approximately $583 of the net actuarial loss to be recognized as a component of net periodic benefit costs in fiscal 2019.

The accumulated benefit obligations of the four plans were $69,553 and $71,701 at July 28, 2018 and July 29, 2017, respectively. The following information is presented for those plans with an accumulated benefit obligation in excess of plan assets:



	2018		2017
Projected benefit obligation	$	67,861	$	70,019
Accumulated benefit obligation	67,861		70,019
Fair value of plan assets	59,283		54,557

Weighted average assumptions used to determine benefit obligations and net periodic pension cost for the Company’s defined benefit plans were as follows:



	2018		2017
Assumed discount rate — net periodic pension cost	3.60	%	3.08	%
Assumed discount rate — benefit obligation	3.99	%	3.60	%
Assumed rate of increase in compensation levels	4.5	%	4.5	%
Expected rate of return on plan assets	7.50	%	7.50	%

Investments in the pension trusts are overseen by the trustees of the plans, who are officers of Village. In fiscal 2018, the Company transitioned to a liability-driven investment ("LDI") strategy. A LDI strategy focuses on maintaining a close to fully-funded status over the long-term with minimal funded status risk. This is achieved by investing more of the plan assets in fixed income instruments to more closely match the duration of the plan liability. The investment allocation to fixed income instruments will increase as each plans funded status increases. The target allocations for plan assets are 25-35% equity securities, 65-75% fixed income securities and 0-10% cash. Asset allocations are reviewed periodically and appropriate rebalancing is performed.

Equity securities include investments in large-cap, small-cap and mid-cap companies located both in and outside the United States. Fixed income securities include U.S. treasuries, mortgage-backed securities and corporate bonds of companies from diversified industries. Investments in securities are made through mutual funds. In addition, one plan held Class A common stock of Village in the amount of $611 and $636 at July 28, 2018 and July 29, 2017, respectively.

Risk management is accomplished through diversification across asset classes and fund strategies, multiple investment portfolios and investment guidelines. The plans do not allow for investments in derivative instruments.

The fair value of the pension assets were as follows:



	July 28, 2018						July 29, 2017
Asset Category	Level 1		Assets Measured at NAV		Total		Level 1		Level 2		Total
Cash	$	17	$	—	$	17	$	166	$	610	$	776

Equity securities:
Company stock	611		—		611		636		—		636
Mutual/Collective Trust Funds - U.S. (1)	—		10,213		10,213		—		—		—
Mutual/Collective Trust Funds - International (1)	—		8,337		8,337		—		—		—
U.S. large cap (2)	—		—		—		19,696		1,197		20,893
U.S. small/mid cap (3)	—		—		—		6,644		179		6,823
International (4)	—		—		—		7,187		421		7,608
Emerging markets (5)	—		—		—		1,277		—		1,277

Fixed income securities:
Mutual/Collective Trust Funds - Fixed Income (1)	—		41,893		41,893		—		—		—
U.S. treasuries (6)	—		—		—		9,520		356		9,876
Mortgage-backed (6)	—		—		—		1,783		106		1,889
Corporate bonds (6)	—		—		—		2,931		3,179		6,110
International (7)	—		—		—		619		—		619

Total	$	628	$	60,443	$	61,071	$	50,459	$	6,048	$	56,507

(1)

Includes pools of investments that are measured at fair value using the Net Asset Value (NAV) per share (or its equivalent) practical expedient. The NAV is based on the underlying net assets owned by the fund and the relative interest of each participating investor in the fair value of the underlying assets. The underlying investments are classified as either level 1 or 2 of the fair value hierarchy.


(2)	Includes directly owned securities and mutual funds, primarily low-cost equity index funds not actively managed that track the S&P 500.


(3)	Includes directly owned securities and mutual funds, which invest in diversified portfolios of publicly traded U.S. common stocks of small and medium cap companies.


(4)	Includes directly owned securities and mutual funds, which invest in diversified portfolios of publicly traded common stocks of large, non-U.S. companies.


(5)	Consists of mutual and exchange traded funds which invest in non-U.S. stocks in emerging markets.


(6)	Includes directly owned securities, mutual funds and exchange traded funds.


(7)	Consists of exchange traded funds which invest in non-U.S. bonds in emerging markets.

Based on actuarial assumptions, estimated future defined benefit payments, which may be significantly impacted by participant elections related to retirement dates and forms of payment, are as follows:



Fiscal Year
2019	$	7,336
2020	2,980
2021	2,950
2022	3,000
2023	11,446
2024 - 2028	17,300

The Company expects to contribute $3,000 in cash to all defined benefit pension plans in fiscal 2019.

Multi-Employer Plans

The Company contributes to three multi-employer pension plans under collective bargaining agreements covering union-represented employees. These plans provide benefits to participants that are generally based on a fixed amount for each year of service. Based on the most recent information available, certain of these multi-employer plans are underfunded. The amount of any increase or decrease in Village’s required contributions to these multi-employer pension plans will depend upon the outcome of collective bargaining, actions taken by trustees who manage the plans, government regulations and the actual return on assets held in the plans, among other factors.

The risks of participating in multi-employer pension plans are different from the risks of participating in single-employer pension plans in the following respects:


•	Assets contributed to a multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.


•	If a participating employer stops contributing to the plan, the unfunded obligations of the plan allocable to such withdrawing employer may be borne by the remaining participating employers.


•	If the Company stops participating in some of its multi-employer pension plans, the Company may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in these plans is outlined in the following tables. The “EIN / Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three-digit pension plan number. The most recent “Pension Protection Act Zone Status” available in 2017 and 2016 is for the plan’s year-end at December 31, 2017 and December 31, 2016, respectively, unless otherwise noted. Among other factors, generally, plans in the red zone are less than 65 percent funded, plans in the yellow zone are between 65 and 80 percent funded and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending / Implemented” column indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending or has been implemented.

Pension Protection Act Zone Status

FIP/RP Status

Pending

/ Implemented

Contributions for the

year ended (5)

Expiration

date of

Collective-

Bargaining

Agreement

Pension Fund

EIN / Pension Plan Number

2017

2016

July 28,
2018

July 29,
2017

Surcharge

Imposed (6)

Pension Plan of Local 464A (1)

22-6051600-001

Green

N/A

779

762

N/A

October 2020

UFCW Local 1262 & Employers Pension Fund (2), (4)

22-6074414-001

Red

Implemented

3,481

3,498

October 2023

UFCW Regional Pension Plan (3), (4)

16-6062287-074

Red

Implemented

1,373

1,314

March 2019

Total Contributions

5,633

5,574


(1)	The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at December 31, 2017 and December 31, 2016.


(2)	The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at December 31, 2016 and December 31, 2015.


(3)	The information for this fund was obtained from the Form 5500 filed for the plan’s year-end at September 30, 2017 and September 30, 2016.


(4)	This plan has elected to utilize special amortization provisions provided under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010. There were no changes to the plan’s zone status as a result of this election.


(5)	The Company’s contributions represent more than 5% of the total contributions received by each applicable pension fund for all periods presented.


(6)	Under the Pension Protection Act, a surcharge may be imposed when employers make contributions under a collective bargaining agreement that is not in compliance with a rehabilitation plan. As of July 28, 2018, the collective bargaining agreements under which the Company was making contributions were in compliance with rehabilitation plans adopted by each applicable pension fund.

Other Multi-Employer Benefit Plans

The Company also contributes to various other multi-employer benefit plans that provide health and welfare benefits to active and retired participants. Total contributions made by the Company to these other multi-employer benefit plans were $27,713 and $28,137 in fiscal 2018 and 2017, respectively.

Defined Contribution Plans

The Company sponsors a 401(k) savings plan for certain eligible associates. Company contributions under that plan, which are based on specified percentages of associate contributions, were $1,260 and $1,132 in fiscal 2018 and 2017, respectively. The Company also contributes to union sponsored defined contribution plans for certain eligible associates. Company contributions under these plans were $820 and $783 in fiscal 2018 and 2017, respectively.