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Associate Retirement Plans
 12 Months Ended
Jan. 02, 2021
Compensation And Retirement Disclosure [Abstract]  
Associate Retirement Plans

Note 11 – Associate Retirement Plans

The Company provides salary deferral defined contribution plans to substantially all of the Company’s associates not covered by CBAs. Associates covered by CBAs at the Company’s Columbus, Georgia; Norfolk, Virginia; and Landover, Maryland facilities all participate in a defined contribution plan; the remaining associates covered under CBAs participate in a multi-employer pension plan. The Company’s former non-contributory pension plan has been terminated.

Defined Contribution Plans

Expense for employer matching contributions made to defined contribution plans totaled $12.2 million, $11.5 million and $7.0 million in 2020, 2019 and 2018, respectively.

Executive Compensation Plans

The Company has a deferred compensation plan for a select group of management personnel or highly compensated associates. The plan is unfunded and permits participants to defer receipt of a portion of their base salary, annual bonus, or long-term incentive compensation which would otherwise be paid to them. The deferred amounts, plus earnings, are distributed following the associate’s termination of employment. Earnings are based on the performance of hypothetical investments elected by the participant from a portfolio of investment options.

The Company holds variable universal life insurance policies on certain key associates intended to fund distributions under the deferred compensation plan referenced above. The net cash surrender value of approximately $4.3 million at both January 2, 2021 and December 28, 2019 is recorded in “Other assets, net” in the consolidated balance sheets. These policies have an aggregate amount of life insurance coverage of approximately $15.0 million.

Defined Benefit Plans

On February 28, 2018, the Company’s Board of Directors granted approval to proceed with terminating the SpartanNash Company Pension Plan (the “Pension Plan”), a frozen defined benefit pension plan. The Plan was terminated on July 31, 2018 and the distribution of assets to plan participants occurred in 2019. The remaining overfunding of the Plan will be utilized by the Company to fund obligations associated with other qualified retirement programs. In 2020, the Company realized gains of $1.2 million related to refunds from the annuity provider to the Plan associated with the final reconciliation of participant data.

In 2019, lump sum distributions and annuity payouts of $72.6 million were made resulting in pre-tax settlement charges of $18.2 million, including $18.0 million related to the Plan termination. The Company also recognized other termination expenses of $1.5 million in 2019. Lump sum distributions of $3.3 million were made in 2018, resulting in pension settlement charges of $0.8 million.

Postretirement Medical Plans

SpartanNash Company and certain subsidiaries provide healthcare benefits to retired associates under the SpartanNash Company Retiree Medical Plan (the “Retiree Medical Plan”). Former Spartan Stores, Inc. associates hired prior to January 1, 2002 who were not covered by CBAs during their employment, who have at least 10 years of service and have attained age 55 upon retirement qualify as “covered associates.” Covered associates who retired prior to March 31, 1992 receive Medicare supplemental benefits. Covered associates retiring after April 1, 1992 are eligible for monthly postretirement healthcare benefits of $5 multiplied by the associate’s years of service. This benefit is in the form of a credit against their monthly insurance premium or Medicare supplemental insurance. The retiree pays the balance of the premium.

The following tables set forth the actuarial present value of benefit obligations, funded status, changes in benefit obligations and plan assets, weighted average assumptions used in actuarial calculations and components of net periodic benefit costs for the Company’s significant pension and postretirement benefit plans, excluding multi-employer plans. The prepaid, current accrued, and noncurrent accrued benefit costs associated with pension and postretirement benefits are reported in “Prepaid expenses and other current assets,” “Other assets, net,” “Accrued payroll and benefits,” and “Other long-term liabilities,” respectively, in the consolidated balance sheets.

 

 

 

 

 

 

 

Pension Plan

 

 

Retiree Medical Plan

 

 

 

 

 

 

 

 

January 2,

 

 

December 28,

 

 

January 2,

 

 

December 28,

 

(In thousands, except percentages)

 

 

 

 

 

 

2021

 

 

2019

 

 

2021

 

 

2019

 

Funded Status

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected/Accumulated benefit obligation:

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of year

 

 

 

 

 

 

$

 

—

 

 

$

 

73,275

 

 

$

 

10,783

 

 

$

 

9,443

 

Service cost

 

 

 

 

 

 

 

 

—

 

 

 

 

—

 

 

 

 

182

 

 

 

 

171

 

Interest cost

 

 

 

 

 

 

 

 

—

 

 

 

 

1,134

 

 

 

 

303

 

 

 

 

375

 

Actuarial loss

 

 

 

 

 

 

 

 

—

 

 

 

 

618

 

 

 

 

1,027

 

 

 

 

1,181

 

Benefits paid

 

 

 

 

 

 

 

 

—

 

 

 

 

(75,027

)

 

 

 

(386

)

 

 

 

(387

)

Balance at end of year

 

 

 

 

 

 

$

 

—

 

 

$

 

—

 

 

$

 

11,909

 

 

$

 

10,783

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of year

 

 

 

 

 

 

$

 

1,496

 

 

$

 

74,241

 

 

$

 

—

 

 

$

 

—

 

Actual return on plan assets

 

 

 

 

 

 

 

 

—

 

 

 

 

2,282

 

 

 

 

—

 

 

 

 

—

 

Refund from annuity provider

 

 

 

 

 

 

 

 

1,193

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

Company contributions

 

 

 

 

 

 

 

 

—

 

 

 

 

—

 

 

 

 

386

 

 

 

 

387

 

Benefits paid

 

 

 

 

 

 

 

 

—

 

 

 

 

(75,027

)

 

 

 

(386

)

 

 

 

(387

)

Balance at end of year

 

 

 

 

 

 

$

 

2,689

 

 

$

 

1,496

 

 

$

 

—

 

 

$

 

—

 

Funded (unfunded) status

 

 

 

 

 

 

$

 

2,689

 

 

$

 

1,496

 

 

$

 

(11,909

)

 

$

 

(10,783

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of net amount recognized in consolidated balance sheets:

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

$

 

2,689

 

 

$

 

1,496

 

 

$

 

—

 

 

$

 

—

 

Current liabilities

 

 

 

 

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(471

)

 

 

 

(466

)

Noncurrent liabilities

 

 

 

 

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(11,438

)

 

 

 

(10,317

)

Net asset (liability)

 

 

 

 

 

 

$

 

2,689

 

 

$

 

1,496

 

 

$

 

(11,909

)

 

$

 

(10,783

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts recognized in AOCI:

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss

 

 

 

 

 

 

$

 

—

 

 

$

 

—

 

 

$

 

2,732

 

 

$

 

1,809

 

Accumulated other comprehensive loss

 

$

 

—

 

 

$

 

—

 

 

$

 

2,732

 

 

$

 

1,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average assumptions at measurement date:

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

 

 

 

 

N/A

 

 

N/A

 

 

2.57%

 

 

3.26%

 

Ultimate health care cost trend rate

 

 

 

 

 

 

N/A

 

 

N/A

 

 

4.50%

 

 

4.50%

 

 

 

 

Pension Plan

 

 

Retiree Medical Plan

 

(In thousands, except percentages)

2020

 

 

2019

 

 

2018

 

 

2020

 

 

2019

 

 

2018

 

Components of net periodic benefit (income) cost:

 

Service cost

$

 

—

 

 

$

 

—

 

 

$

 

—

 

 

$

 

182

 

 

$

 

171

 

 

$

 

195

 

Interest cost

 

 

—

 

 

 

 

1,134

 

 

 

 

2,283

 

 

 

 

303

 

 

 

 

375

 

 

 

 

339

 

Amortization of prior service cost

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

(92

)

 

 

 

(158

)

Expected return on plan assets

 

 

—

 

 

 

 

(714

)

 

 

 

(3,631

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

Gain on reconciliation with annuity provider

 

 

(1,193

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

Recognized actuarial net loss

 

 

—

 

 

 

 

691

 

 

 

 

417

 

 

 

 

104

 

 

 

 

—

 

 

 

 

88

 

Net periodic benefit (income) expense

$

 

(1,193

)

 

$

 

1,111

 

 

$

 

(931

)

 

$

 

589

 

 

$

 

454

 

 

$

 

464

 

Settlement expense

 

 

—

 

 

 

 

18,244

 

 

 

 

785

 

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

Total net periodic benefit (income) cost

$

 

(1,193

)

 

$

 

19,355

 

 

$

 

(146

)

 

$

 

589

 

 

$

 

454

 

 

$

 

464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average assumptions used to determine net periodic benefit (income) cost:

 

Discount rate

N/A

 

 

3.48%

 

 

3.45%

 

 

3.26%

 

 

4.41%

 

 

3.72%

 

Expected return on plan assets

N/A

 

 

2.80%

 

 

4.84%

 

 

N/A

 

 

N/A

 

 

N/A

 

Prior service costs (credits) are amortized on a straight-line basis over the average remaining service period of active participants. Actuarial gains and losses for the Pension Plan were amortized over the average remaining life of all participants when the accumulation of such gains and losses exceeded 10% of the greater of the projected benefit obligation and the market-related value of plan assets.

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the Retiree Medical Plan. Assumed current healthcare cost trend rates used to determine net periodic benefit cost were as follows:

 

 

 

 

 

 

 

 

 

 

2020

 

2019

 

2018

Post-65

 

 

 

 

 

 

 

 

 

7.50%

 

7.50%

 

8.00%

Expected Return on Assets and Investment Strategy

Pension plan assets consisted of money market funds of $2.7 million at January 2, 2021 and $1.5 million at December 28, 2019. Money market funds are valued on a daily basis at NAV using the amortized cost of the securities held in the fund. Since amortized cost does not meet the criteria for an active market, money market funds are classified within level 2 of the fair value hierarchy of ASC 820, Fair Value Measurement. The pension plan did not hold any level three assets as of January 2, 2021 or December 28, 2019.

See Note 8 for a discussion of the levels of the fair value hierarchy. The fair value measurement level used is based on the lowest level of any input that is significant to the fair value measurement.

The Company expects to make contributions in 2021 of $0.5 million to the Retiree Medical Plan.

The following estimated benefit payments are expected to be paid in the following fiscal years:

  (In thousands)

2021

 

 

2022

 

 

2023

 

 

2024

 

 

2025

 

 

2026 to 2030

 

Post-retirement medical benefits

$

 

471

 

 

$

 

510

 

 

$

 

548

 

 

$

 

579

 

 

$

 

607

 

 

$

 

3,346

 

 

Multi-Employer Health and Welfare Plans

In addition to the plans described above, the Company participates in the Michigan Conference of Teamsters and Ohio Conference of Teamsters Health and Welfare plans. The Company contributes to these multi-employer plans under the terms contained in existing CBAs and in the amounts set forth within these agreements. The health and welfare plans provide medical, dental, pharmacy, vision, and other ancillary benefits to active associates and retirees, as determined by the trustees of the plan. The Company’s contributions largely benefit active associates, and as such, may not constitute contributions to a postretirement benefit plan. However, the Company is unable to separate contribution amounts for postretirement benefits from contribution amounts paid for active participants in the plan. These plans have a significant surplus of funds held in reserve in excess of claims incurred, and there is no potential withdrawal liability related to the Company’s participation in the plans. With respect to the Company’s participation in these plans, expense is recognized as contributions are funded. The Company contributed $13.7 million, $13.8 million and $13.8 million to these plans in 2020, 2019 and 2018, respectively.

Multi-Employer Pension Plan

The Company also contributes to the Central States Plan, a multi-employer plan defined previously, under the terms of CBAs that cover its union-represented associates and in the amounts set forth within these agreements. The Company is party to four CBAs that require contributions to the Plan with expiration dates ranging from January 2022 to October 2022. These CBAs cover warehouse personnel and drivers in Grand Rapids, Michigan and Bellefontaine and Lima, Ohio. With respect to the Company’s participation in the Central States Plan (EIN 36-60442343 / Pension Plan Number 001), expense is recognized as contributions are funded. The Company contributed $14.1 million, $14.0 million and $13.3 million to this plan in 2020, 2019 and 2018, respectively. The contributions made by the Company represent less than five percent of the Plan’s total contributions in 2020.

The risk of participating in a multi-employer pension plan is different from the risk associated with single-employer plans in the following respects:

 

a.

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

 

b.

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

 

c.

If a company chooses to stop participating in a multi-employer plan, makes market exits such as closing a distribution center without opening another one in the same locale, or otherwise has participation in the plan drop below certain levels, the company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The PPA zone status of the Plan, which is based on information the Company received from the Plan and is certified by the Plan’s actuary, is “critical and declining” for the Plan’s two most recent fiscal years ending December 31, 2020 and 2019. Among other factors, plans in the “critical and declining” zone are generally less than 65% funded and projected to become insolvent within the next 15 years (or 20 years depending on the ratio of active-to-inactive participants). A rehabilitation plan has been implemented by the trustees of the Plan, and the CBAs that cover warehouse personnel and drivers in the Bellefontaine and Lima, Ohio distribution centers have permanent surcharges imposed due to the failure to adopt the trustee recommended rehabilitation plan. Refer to Note 9, for further information regarding the Company’s participation in the Central States Plan. As of the date the consolidated financial statements were issued, Form 5500 was not available for the plan year ended December 31, 2020.