Kroger 2015 Annual Report Download - page 94

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A-20
Sensitivity to changes in the major assumptions used in the calculation of Kroger’s pension plan
liabilities is illustrated below (in millions).
Percentage
Point
Change
Projected
Benefit
Obligation
Decrease/
(Increase)
Expense
Decrease/
(Increase)
Discount Rate +/- 1.0% $438/(530) $36/($42)
Expected Return on Assets +/- 1.0% — $38/($38)
In 2015, we contributed $5 million to our Company-sponsored defined benefit plans and do not
expect to make any contributions to these plans in 2016. In 2014, we did not contribute to our Company-
sponsored defined benefit plans and do not expect to make any contributions to this plan in 2015. We did
not make a contribution in 2014 and contributed $100 million in 2013 to our Company-sponsored defined
benefit pension plans. Among other things, investment performance of plan assets, the interest rates
required to be used to calculate the pension obligations, and future changes in legislation, will determine
the amounts of contributions.
We contributed and expensed $196 million in 2015, $177 million in 2014 and $148 million in 2013 to
employee 401(k) retirement savings accounts. The increase in 2015, compared to 2014, is due to a higher
employee savings rate. The increase in 2014, compared to 2013, is due to the effect of our merger with
Harris Teeter. The 401(k) retirement savings account plans provide to eligible employees both matching
contributions and automatic contributions from the Company based on participant contributions, plan
compensation, and length of service.
Multi-Employer Pension Plans
We contribute to various multi-employer pension plans, including the UFCW Consolidated Pension
Plan, based on obligations arising from collective bargaining agreements. We are designated as the
named fiduciary of the UFCW Consolidated Pension Plan and have sole investment authority over
these assets. These multi-employer pension plans provide retirement benefits to participants based on
their service to contributing employers. The benefits are paid from assets held in trust for that purpose.
Trustees are appointed in equal number by employers and unions. The trustees typically are responsible
for determining the level of benefits to be provided to participants as well as for such matters as the
investment of the assets and the administration of the plans.
In 2015, we contributed $190 million to the UFCW Consolidated Pension Plan. We had previously
accrued $60 million of the total contributions at January 31, 2015 and recorded expense for the remaining
$130 million at the time of payment in 2015. In 2014, we incurred a charge of $56 million (after-tax)
related to commitments and withdrawal liabilities associated with the restructuring of pension plan
agreements, of which $15 million was contributed to the UFCW Consolidated Pension Plan in 2014. As of
January 30, 2016, we are not required to contribute to the UFCW Consolidated Pension Plan in 2016.
We recognize expense in connection with these plans as contributions are funded or when
commitments are made, in accordance with GAAP. We made cash contributions to these plans of
$426 million in 2015, $297 million in 2014 and $228 million in 2013.
Based on the most recent information available to us, we believe that the present value of actuarially
accrued liabilities in most of the multi-employer plans to which we contribute substantially exceeds the
value of the assets held in trust to pay benefits. We have attempted to estimate the amount by which
these liabilities exceed the assets, (i.e., the amount of underfunding), as of December 31, 2015. Because
we are only one of a number of employers contributing to these plans, we also have attempted to
estimate the ratio of our contributions to the total of all contributions to these plans in a year as a way
of assessing our “share” of the underfunding. Nonetheless, the underfunding is not a direct obligation
or liability of ours or of any employer. As of December 31, 2015, we estimate that our share of the
underfunding of multi-employer plans to which we contribute was approximately $2.9 billion, pre-tax, or