EMPLOYEE BENEFITS

The Company has non-contributory defined benefit pension plans covering certain U.S. employees. Retirement benefits are generally provided based on the employees’ years of service and average earnings. Normal retirement age is 65, with provisions for earlier retirement. The Company elected to freeze its U.S. defined benefit pension plans as of September 30, 2009 and, as a result, there are no benefit accruals related to service performed after that date.

The financial position of the Company’s non-contributory defined benefit plans as of fiscal year end 2019 and 2018 was as follows:



	2019			2018
Projected benefit obligation:
Projected benefit obligation, beginning of year	$	26,831		$	28,472
Service cost	—			—
Interest cost	1,103			1,058
Actuarial (gain) loss	3,358			(1,712		)
Benefits paid	(1,044		)	(987		)
Projected benefit obligation, end of year	30,248			26,831
Fair value of plan assets:
Fair value of plan assets, beginning of year	25,971			20,802
Actual gain on plan assets	5,250			968
Company contributions	179			5,188
Benefits paid	(1,044		)	(987		)
Fair value of plan assets, end of year	30,356			25,971
Funded status of the plans	108			(860		)
Amounts recognized in the Consolidated Balance Sheets consist of:
Current pension liabilities	172			184
Non-current pension liabilities	—			676
Non-current pension assets	280			—
Accumulated other comprehensive loss	(3,964		)	(5,329		)
Components of accumulated other comprehensive loss:
Net actuarial loss	(3,964		)	(5,329		)
Accumulated other comprehensive loss	$	(3,964	)	$	(5,329	)

Net periodic benefit cost for the non-contributory defined benefit pension plans for the respective years included the following pre-tax amounts:



	2019			2018			2017
Interest cost	$	1,103		$	1,058		$	1,043
Expected return on plan assets	(855		)	(763		)	(1,193		)
Amortization of unrecognized net actuarial loss	328			553			731
Net periodic pension cost	576			848			581
Other changes in benefit obligations recognized in other comprehensive income ("OCI"):
Net actuarial gain	(1,365		)	(2,470		)	(3,201		)
Total recognized in net periodic pension cost and OCI	$	(789	)	$	(1,622	)	$	(2,620	)

The Company expects to recognize $420 of unrecognized loss amortization as a component of net periodic benefit cost in 2020. This amount is included in accumulated other comprehensive income as of September 27, 2019.

At September 27, 2019, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with plan assets in excess of benefit obligations was $29,018 and $30,356, respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $1,230 and $0, respectively. At September 28, 2018, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with plan assets in excess of benefit obligations was $25,504 and $25,971, respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was$1,327 and $0, respectively.

The Company anticipates making contributions to the defined benefit pension plans of $172 through October 2, 2020.

Estimated benefit payments from the Company’s defined benefit plans to participants for each of the next five years and the five years thereafter are as follows:



2020	$	1,211
2021	1,225
2022	1,241
2023	1,279
2024	1,345
Five years thereafter	7,356

Actuarial assumptions used to determine the projected benefit obligation and net periodic pension cost as of the following fiscal years were as follows:



	Projected Benefit Obligation						Net Periodic Pension Cost
	2019		2018		2017		2019		2018		2017
Discount rate	3.13	%	4.22	%	3.79	%	4.22	%	3.79	%	3.60	%
Long-term rate of return	N/A		N/A		N/A		3.45	%	3.45	%	6.50	%
Average salary increase rate	N/A		N/A		N/A		N/A		N/A		N/A

The change in discount rates in 2019, 2018 and 2017 resulted in an actuarial loss during the year of approximately $4,320, and actuarial gains of $1,633, and 795, respectively. The remainder of the actuarial gains or losses for each of the three years was related to adjustments to mortality tables and other modifications to actuarial assumptions.

To determine the discount rate assumption used in the Company’s pension valuation, the Company identified a benefit payout stream based on the demographics of the pension plans and constructed a hypothetical bond portfolio using high-quality corporate bonds with cash flows that matched that benefit payout stream. A yield curve was calculated based on this hypothetical portfolio which was used for the discount rate determination.

The Company determines the long-term rate of return assumption for plan assets by using the historical asset returns for various investment asset classes and adjusting them to reflect future expectations. The expected asset class returns are weighted by the targeted asset allocations, resulting in a weighted average return which is rounded to the nearest quarter percent.

The Company uses measurement dates of October 1 to determine pension expenses for each year and the last day of the fiscal year to determine the fair value of the pension assets.

The Company’s pension plans’ weighted average asset allocations at September 27, 2019 and September 28, 2018, by asset category were as follows:



	2019		2018
Equity securities	4	%	5	%
Fixed income securities	94	%	93	%
Other securities	2	%	2	%
	100	%	100	%

The Company elected to make additional contributions to its defined benefit plans in fiscal 2018, continuing its strategy to de-risk the plans. As a result of the improved funded status, the Company changed its investment strategy for the plans, allocating the majority of its assets, 95%, into fixed income securities designed to minimize the pension plans' exposure to changes in interest rates. The remaining 5% of assets are allocated to global equities.

The following table summarizes the Company’s pension plan assets measured at fair value as of September 27, 2019:



	Level 1		Level 2		Level 3		Total
Description:
Fixed income	$	4,066	$	24,553	$	—	$	28,619
Mutual funds	1,304		—		—		1,304
Money market funds	—		402		—		402
Group annuity contract	—		—		31		31
Total	$	5,370	$	24,955	$	31	$	30,356

The following table summarizes the Company’s pension plan assets measured at fair value as of September 28, 2018:



	Level 1		Level 2		Level 3		Total
Description:
Fixed income	$	4,273	$	19,987	$	—	$	24,260
Mutual funds	1,328		—		—		1,328
Money market funds	—		331		—		331
Group annuity contract	—		—		52		52
Total	$	5,601	$	20,318	$	52	$	25,971

The tables below set forth a summary of changes in fair value of the Company’s Level 3 pension plan assets for the years ended September 27, 2019 and September 28, 2018:



	2019			2018
Level 3 assets, beginning of year	$	52		$	80
Unrealized gain (loss)	2			(2		)
Sales	(23		)	(26		)
Level 3 assets, end of year	$	31		$	52

The fair values of the treasury fixed income and mutual fund assets were derived from quoted market prices as substantially all of these instruments have active markets. The fair values of agency and corporate bond fixed income and money market assets are derived from other observable market inputs or independent pricing services. The fair value of the group annuity contract was derived using a discounted cash flow model with inputs based on current yields of similar instruments with comparable durations. The annuity contract consists of high quality bonds.

The Company also has a non-qualified deferred compensation plan that provides certain officers and employees the ability to defer a portion of their compensation until a later date. The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at specified future dates upon retirement, death or termination of employment from the Company. The deferred compensation liability, which is reported at fair value equal to the related rabbi trust assets, and is classified as “Deferred compensation liability” on our accompanying Consolidated Balance Sheets, was approximately $19,092 and $17,477 as of September 27, 2019 and September 28, 2018, respectively. See “Note 4 Fair Value” for additional information.

A majority of the Company’s full-time employees are covered by defined contribution programs. Expenses attributable to the defined contribution programs were approximately $1,422, $1,321 and $1,189 for 2019, 2018 and 2017, respectively.