Big Lots 2014 Annual Report Download - page 141

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The following table sets forth certain information for the Pension Plan and the Supplemental Pension Plan at January 31, 2015
and February 1, 2014:
Pension Plan Supplemental Pension Plan
(In thousands) January 31, 2015 February 1, 2014 January 31, 2015 February 1, 2014
Projected benefit obligation $ 72,659 $ 59,724 $ 5,528 $ 5,154
Accumulated benefit obligation 65,627 54,635 4,667 4,643
Fair market value of plan assets $ 55,292 $ 56,329 $ — $ —
We elected not to make a discretionary contribution to the Pension Plan in 2014 or 2013. Our funding policy of the Pension
Plan is to make annual contributions based on advice from our actuaries and the evaluation of our cash position, but not less
than the minimum required by applicable regulations. Currently, we expect no required contributions to the Pension Plan
during 2015, however, discretionary contributions could be made depending upon further analysis.
Using the same assumptions as those used to measure our benefit obligations, the Pension Plan and the Supplemental Pension
Plan benefits expected to be paid in each of the following fiscal years are as follows:
Fiscal Year (In thousands)
2015 $ 6,030
2016 5,650
2017 5,689
2018 5,337
2019 5,476
2020 - 2024 $ 27,007
Our overall investment strategy is to earn a long-term rate of return sufficient to meet the liability needs of the Pension Plan,
within prudent risk constraints. In order to develop the appropriate asset allocation and investment strategy, an actuarial review
of the Pension Plan's expected future distributions was completed. The strategy provides a well-defined risk management
approach designed to reduce risks based on the Pension Plan's funded status.
Assets can generally be considered as filling one of the following roles within the strategy: (1) liability-hedging assets, which
are designed to meet the cash payment needs of the plan's obligation and provide downside protection, primarily invested in
intermediate and long maturity investment grade bonds; or (2) return-seeking assets, which are designed to deliver returns in
excess of the Pension Plan's obligation growth rates, with broadly diversified assets including U.S. and non-U.S. equities, real
estate, and high yield bonds. The current target allocation is approximately 80% liability-hedging assets and 20% return-
seeking assets. Target allocations may change over time due to changes in the plan's funded status, or in response to changes in
plan or market conditions. All assets must have readily ascertainable market values and be easily marketable. The portfolio of
assets maintains a high degree of liquidity in order to meet benefit payment requirements and to allow responsiveness to
evolving Pension Plan and market conditions.
The investment managers have the discretion to invest within sub-classes of assets within the parameters of their investment
guidelines. Fixed income managers can adjust duration exposure as deemed appropriate given current or expected market
conditions. Additionally, the investment managers have the authority to invest in financial futures contracts and financial
options contracts for the purposes of implementing hedging strategies. There were no futures contracts owned directly by the
Pension Plan at January 31, 2015 and February 1, 2014. The primary benchmark for assessing the effectiveness of the Pension
Plan investments is that of the plan’s liabilities themselves. Asset class returns are also judged relative to common benchmark
indices such as the Russell 3000 and Barclay's Capital Long Credit Bond. Investment results and plan funded status are
monitored daily, with a detailed performance review completed on a quarterly basis.