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Retirement Plans
 12 Months Ended
Jan. 31, 2021
Retirement Benefits [Abstract]  
Retirement Plans Retirement Plans
Pension Plans

The Company maintains two defined benefit pension plans, the Virco Employees Retirement Plan (“Employee Plan”), and the Virco Important Performers Retirement Plan (“VIP Plan”). The annual measurement date for both plans is January 31. The Company and its subsidiaries cover all employees hired prior to December 31, 2003 under the Employee Plan, which is a qualified noncontributory defined benefit retirement plan. Benefits under the Employee Plan are based on years of service and career average earnings. Benefit accruals under the Employee Plan were frozen effective December 31, 2003. All benefits were fully vested as of January 31, 2021 and 2020.

The Company also provides a supplementary retirement plan for certain key employees, the VIP Plan. The VIP Plan provides a benefit up to 50% of average compensation for the last five years in the VIP Plan offset by benefits earned under the Employee Plan. Benefit accruals under the VIP Plan were frozen effective December 31, 2003. Substantially all assets, consisting of life insurance contracts and cash equivalents, securing the VIP Plan are held in a rabbi trust. The cash surrender values of the life insurance policies are included in other assets and money market funds in the accompanying consolidated balance sheets. The cash surrender values of the life insurance policies securing the VIP Plan were $3,430,000 and $3,384,000 at January 31, 2021 and 2020, respectively. Death benefits payable under life insurance policies held by the Plan were approximately $8,845,000 and $8,919,000 at January 31, 2021 and 2020, respectively.

Accounting policy regarding pensions requires management to make complex and subjective estimates and assumptions relating to amounts which are inherently uncertain. Three primary economic assumptions influence the reported values of plan liabilities and pension costs. The Company takes the following factors into consideration: discount rate, assumed rate of return and rate of increase in compensation.

The discount rate represents an estimate of the rate of return on a portfolio of high-quality, fixed-income securities that would provide cash flows that match the expected benefit payment stream from the plans. When setting the discount rate, the Company utilizes a spot-rate yield curve developed from high-quality bonds currently available which reflects changes in rates that have occurred over the past year. This assumption is sensitive to movements in market rates that have occurred since the preceding valuation date, and therefore, may change from year to year. Discount rate ranges for the Employee Plan and the VIP Plan 2.75% - 2.80% and 3.00% - 3.05% at January 31, 2021 and 2020, respectively.
Because the Company’s future benefit accruals for both benefit plans were frozen in 2003, the compensation increase assumption had no impact on pension expense, accumulated benefit obligation or projected benefit obligation for the period ended January 31, 2021 or 2020.
The assumed rate of return on plan assets represents an estimate of long-term returns available to investors who hold a mixture of stocks, bonds and cash equivalent securities. When setting its expected return on plan asset assumptions, the Company considers long-term rates of return on various asset classes (both historical and forecasted, using data collected from various sources generally regarded as authoritative) in the context of expected long-term average asset allocations for its defined benefit pension plan.
The Company maintains a trust for and funds the pension obligations for the Employee Plan. The Board of Directors appoints a Retirement Plan Committee that establishes a policy for investment and funding strategies. Approximately 49% of the trust assets are managed by investment advisors and held in common trust funds with the balance managed by the Retirement Plan Committee. The Retirement Plan Committee has established target asset allocations for its investment advisors, who invest the trust assets in a variety of institutional collective trust funds. The Company’s investment advisors have developed a funding strategy that moves fund asset allocation from equity and other investments to fixed income instruments designed to mirror the changes in discount rates as the Plan becomes more fully funded. At January 31, 2021, approximately 12% of the trust assets were held in these investments. The Retirement Plan Committee receives quarterly reports addressing investment returns, funded status of the plan and progress on the glidepath to fully funded status from the investment advisors and meets periodically with them to discuss investment performance. At January 31, 2021 and 2020, the amount of the plan assets invested in bond or short-term investment funds was 15% and 16%, respectively, and the balance of the trust was held in equity funds or other investments. The trust does not hold any Company stock.
It is the Company's policy to contribute adequate funds to the trust accounts to cover benefit payments under the VIP Plan and to maintain the funded status of the Employee Plan at a level which is adequate to avoid significant restrictions to the Employee Plan under the Pension Protection Act of 2006. Contributions to the Qualified Plan Trust and benefit payments under the VIP Plan totaled $604,000 in fiscal 2021 and $954,000 in fiscal 2020. Contributions during fiscal 2022 will depend upon actual investment results and benefit payments but are anticipated to be approximately $428,000. At January 31, 2021, accumulated other comprehensive loss of approximately $13.6 million, net of tax, is attributable to the pension plans.
The Company does not anticipate making any significant changes to the pension assumptions in the near future. If the Company were to have used different assumptions in the fiscal year ended January 31, 2021, a 1% reduction in investment return would have increased expense by approximately $210,000, a 1% change in the rate of compensation increase would have no impact, and a 1% reduction in discount rates would cause obligations under the Plans to increase by approximately $6.7 million and increase pension expense by approximately $800,000.
The following tables set forth (in thousands) the combined funded status of the Company’s pension plans at January 31, 2021 and 2020:
 Combined Employee Retirement Plans
1/31/20211/31/2020
Change in Benefit Obligation
Benefit obligation at beginning of year$43,292 $36,299 
Service cost— — 
Interest cost1,211 1,382 
Participant contributions— — 
Amendments— — 
Actuarial losses (gains) 1,588 8,280 
Plan settlement— — 
Benefits paid(1,913)(2,669)
Benefit obligation at end of year$44,178 $43,292 
Change in Plan Assets
Fair value at beginning of year $23,654 $23,527 
Actual return on plan assets1,591 1,806 
Company contributions640 990 
Settlements— — 
Benefits paid(1,913)(2,669)
Fair value at end of year$23,972 $23,654 
Funded Status
Unfunded status of the plans$(20,206)$(19,638)
Amounts Recognized in Statement of Financial Position
Current liabilities$(364)$(314)
Non-current liabilities(19,842)(19,324)
Accrued benefit cost$(20,206)$(19,638)
Amounts Recognized in Statement of Financial Position and Operations
Accrued benefit liability(20,206)(19,638)
Accumulated other compensation loss14,444 15,427 
Net amount recognized$(5,762)$(4,211)
Items not yet Recognized as a Component of Net Periodic Pension Expense, Included in AOCI
Unrecognized net actuarial loss$14,444 $15,427 
Unamortized prior service costs— — 
Net initial asset recognition— — 
$14,444 $15,427 
 Combined Employee Retirement Plans
1/31/20211/31/2020
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income
Net loss$849 $7,885 
Prior service cost— — 
Amortization of loss(1,831)(776)
Amortization of prior service cost (credit)— — 
Amortization of initial asset— — 
Total recognized in other comprehensive (loss) income $(982)$7,109 
Items to be Recognized as a Component of Periodic Pension Cost for next fiscal year
Prior service cost$— $— 
Net actuarial loss 1,771 1,872 
$1,771 $1,872 
Supplemental Data
Projected benefit obligation$44,178 $43,292 
Accumulated benefit obligation44,178 43,292 
Fair value of plan assets23,972 23,654 
Components of Net Cost
Service cost$— $— 
Interest cost1,211 1,382 
Expected return on plan assets(869)(1,432)
Amortization of transition amount— — 
Recognized (gain) loss due to settlement— — 
Amortization of prior service cost— — 
Recognized net actuarial loss1,831 776 
Benefit cost$2,173 $726 
Estimated Future Benefit Payments
FYE 01-31-2022$6,724 
FYE 01-31-20233,122 
FYE 01-31-20242,791 
FYE 01-31-20253,169 
FYE 01-31-20262,647 
FYE 01-31-2027 to 203111,917 
Total$30,370 
Weighted Average Assumptions to Determine Benefit Obligations at
Year-End
Discount rate
2.75% -2.80%
3.00% - 3.05%
Rate of compensation increaseN/AN/A
Weighted Average Assumptions to Determine Net Periodic Pension Cost
Discount rate
3.00% - 3.05%
4.10%
Expected return on plan assets6.00%6.50%
Rate of compensation increaseN/AN/A
The Employee Plan held no Level 2 or 3 investments at January 31, 2021 and 2020. The following table sets for the fair value of the Level 1 investments for the Employee Plan as of January 31, 2021 and 2020 (in thousands):
Fair Value Measurements of Plan Assets
Employee Plan
 
1/31/20211/31/2020
Level 1 Measurement
Common Stock10,323 10,080 
Principal Money Market458 799 
PNC Govt Money Fund271 175 
Vanguard INTM Term Investment410 250 
Vanguard LT Investment1,044 1,161 
Ishares Russell 20001,724 1,560 
Ishares Russell MID-CAP1,890 1,850 
Ishares Emerging Markets1,191 1,103 
Ishares MCSI RAFE1,636 1,577 
Ishares S&P Index2,091 2,252 
  Vanguard INTM Term Treasury410 250 
  Vanguard LT Treasury1,047 1,183 
Total Level 1 Investments$22,495 $22,240 


In addition to the holdings above, the Employee Plan has a holding in a mutual fund investment, Managed Investment Fund. The mutual fund investment is valued using the net asset value (“NAV”) as a practical expedient and is not required to be categorized in the fair value hierarchy table. The total fair value of this investment was $1,454,000 and $1,414,000 as of January 31, 2021 and 2020, respectively, and is not included in the table above. In relation to this investment, there is no unfunded commitments and the shares can be redeemed on a daily basis with minimal restrictions. Events that may lead to a restriction to transact with the fund is not considered probable.
401(k) Retirement Plan

The Company’s retirement plan, which covers all U.S. employees, allows participants to defer from 1% to 75% of their eligible compensation through a 401(k)-retirement program. Through December 31, 2001, the plan included an employee stock ownership component. The plan continues to include Virco stock as one of the investment options. At January 31, 2021 and 2020, the plan held 915,542 shares and 706,654 shares of the Company’s common stock, respectively. Effective January 1, 2019, the Company initiated an employer match. For the fiscal years ended January 31, 2021 and 2020, the compensation costs incurred for employer match was $774,000 and $765,000, respectively.
Life Insurance

The Company provided post-retirement life insurance to certain retired employees under the Dual Option Life Insurance Plan (the "Plan"). Effective January 2004, the Company terminated this plan for active employees. The Company has purchased split-dollar life insurance on the lives of the remaining covered participants. Death benefits due to participants are approximately $2,250,000. Cash surrender values of these policies, which are included in other assets in the accompanying consolidated balance sheets, were $1,895,000 and $1,906,000 at January 31, 2021 and 2020, respectively. Death benefits payable under the policies were approximately $3,917,000 and $3,902,000 at January 31, 2021 and 2020, respectively. Death benefits received under the Plan in excess of the benefit obligation will be retained in the trust and used to secure and fund benefits payable under the VIP Pension Plan. The Company maintains a rabbi trust to hold assets related to the Dual Option Life Insurance Plan. All assets securing this plan are held in the rabbi trust.
The following sets forth the Company's change in death benefits payable during the years ended January 31, 2021 and 2020:
1/31/20211/31/2020
Liability beginning of year$1,986,000 $2,037,000 
Accretion expense48,000 49,000 
Death benefits paid— (100,000)
Liability end of year$2,034,000 $1,986,000