20. Pension plans

The UK Plan, which ceased to admit new employees from April 2004, is a funded plan with assets held in a separate trustee administered fund, which is independently managed. February 2, 2013 and January 28, 2012 measurement dates were used in determining the UK Plan’s benefit obligation and fair value of plan assets.

The following tables provide information concerning the UK Plan as of and for the fiscal years ended February 2, 2013 and January 28, 2012:


	Fiscal 2013			Fiscal 2012
(in millions)
Change in UK Plan assets:
Fair value at beginning of year	$	236.0		$	216.7
Actual return on UK Plan assets		22.1			16.2
Employer contributions		13.7			14.4
Members’ contributions		0.5			0.6
Benefits paid		(10.9	)		(8.8	)
Foreign currency changes		(0.3	)		(3.1	)

Fair value of UK Plan assets at end of year	$	261.1		$	236.0


	Fiscal 2013			Fiscal 2012
(in millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	204.5		$	193.9
Service cost		3.6			4.8
Past service cost		1.1			(7.4	)
Interest cost		9.5			10.7
Members’ contributions		0.5			0.6
Actuarial loss (gain)		4.3			13.5
Benefits paid		(10.9	)		(8.8	)
Foreign currency changes		—			(2.8	)

Benefit obligation at end of year	$	212.6		$	204.5

Funded status at end of year: UK Plan assets less benefit obligation	$	48.5		$	31.5


	Fiscal 2013		Fiscal 2012
(in millions)
Amounts recognized in the balance sheet consist of:
Non-current assets	$	48.5	$	31.5
Non-current liabilities		—		—

Net asset recognized	$	48.5	$	31.5

Items in accumulated other comprehensive income (loss) not yet recognized as income (expense) in the income statement:


	Fiscal 2013			Fiscal 2012			Fiscal 2011
(in millions)
Net actuarial loss	$	(44.4	)	$	(51.5	)	$	(46.0	)
Net prior service credit		17.1			19.1			14.3

The estimated actuarial loss and prior service credit for the UK Plan that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $2.3 million and $(1.5) million, respectively.

The accumulated benefit obligation for the UK Plan was $197.5 million and $187.9 million at February 2, 2013 and January 28, 2012, respectively.

The components of net periodic pension cost and other amounts recognized in other comprehensive income (loss) for the UK Plan are as follows:


	Fiscal 2013			Fiscal 2012			Fiscal 2011
(in millions)
Components of net periodic benefit cost:
Service cost	$	(3.6	)	$	(4.8	)	$	(5.5	)
Interest cost		(9.5	)		(10.7	)		(10.1	)
Expected return on UK Plan assets		11.5			13.8			12.4
Amortization of unrecognized net prior service credit		1.6			1.0			1.0
Amortization of unrecognized actuarial loss		(3.2	)		(2.6	)		(4.8	)

Net periodic benefit cost	$	(3.2	)	$	(3.3	)	$	(7.0	)
Other changes in assets and benefit obligations recognized in other comprehensive income (loss)		6.7			(1.7	)		20.0

Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	3.5		$	(5.0	)	$	13.0


	February 2, 2013			January 28, 2012
Assumptions used to determine benefit obligations (at the end of the year):
Discount rate		4.50	%		4.70	%
Salary increases		3.20	%		3.20	%
Assumptions used to determine net periodic pension costs (at the start of the year):
Discount rate		4.70	%		5.60	%
Expected return on UK Plan assets		4.75	%		6.25	%
Salary increases		3.20	%		5.00	%

The discount rate is based upon published rates for high-quality fixed-income investments that produce expected cash flows that approximate the timing and amount of expected future benefit payments.

The expected return on the UK Plan assets assumption is based upon the historical return and future expected returns for each asset class, as well as the target asset allocation of the portfolio of UK Plan assets.

The UK Plan’s investment strategy is guided by an objective of achieving a return on the investments, which is consistent with the long-term return assumptions, to ensure the UK Plan obligations are met. The investment policy is to carry a balance of funds to achieve these aims. These funds carry investments in UK and overseas equities, UK corporate bonds, UK Gilts and commercial property. The property investment is through a Pooled Pensions Property Fund that provides a diversified portfolio of property assets.

In Fiscal 2011, a de-risking framework was adopted in which a portion of the UK Plan’s equities would gradually be switched into bonds when pre-agreed funding trigger levels are reached. As a result of the operation of this policy, the target allocation for the UK Plan’s assets at February 2, 2013 was bonds 45%, equities 30%, diversified growth funds 20% and property 5%. This allocation is consistent with the long-term target allocation of investments set out in the 2012 Actuarial Valuation.

The fair value of the assets in the UK Plan at February 2, 2013 and January 28, 2012 are required to be classified and disclosed in one of the following three categories:

Level 1—quoted market prices in active markets for identical assets and liabilities

Level 2—observable market based inputs or unobservable inputs that are corroborated by market data

Level 3—unobservable inputs that are not corroborated by market data

The value and classification of these assets was as follows:


	Fair value measurements at February 2, 2013						Fair value measurements at January 28, 2012
	Total		Quoted prices in active markets for identical assets (Level 1)		Significant Unobservable inputs (Level 3)		Total		Quoted prices in active markets for identical assets (Level 1)		Significant Unobservable inputs (Level 3)
(in millions)
Asset category:
Diversified equity securities	$	73.2	$	73.2	$	—	$	63.5	$	63.5	$	—
Diversified growth funds		51.2		51.2		—		44.6		44.6		—
Bonds		125.1		125.1		—		115.7		115.7		—
Property		10.4		—		10.4		10.3		—		10.3
Cash		1.2		1.2		—		1.9		1.9		—

Total	$	261.1	$	250.7	$	10.4	$	236.0	$	225.7	$	10.3

The table below sets forth changes in the fair value of the Level 3 investment assets in Fiscal 2013 and 2012:


(in millions)
Balance at January 29, 2011	$	9.8
Actual return on assets		0.5

Balance at January 28, 2012	$	10.3
Actual return on assets		0.1

Balance at February 2, 2013	$	10.4

The UK Plan does not hold any investment in Signet shares or in property occupied by or other assets used by Signet.

Signet contributed $13.7 million to the UK Plan in Fiscal 2013 and expects to contribute a minimum of $5.2 million to the UK Plan in Fiscal 2014. The level of contributions is in accordance with an agreed upon deficit recovery plan and based on the results of the actuarial valuation as of April 5, 2012.

The following benefit payments, which reflect expected future service, as appropriate, are estimated to be paid by the UK Plan:


(in millions)
Fiscal 2014	$	9.4
Fiscal 2015		10.0
Fiscal 2016		11.1
Fiscal 2017		11.5
Fiscal 2018		11.1
Fiscal 2019 to Fiscal 2023		65.6

In June 2004, Signet introduced a defined contribution plan which replaced the UK Plan for new UK employees. The contributions to this plan in Fiscal 2013 were $0.7 million (Fiscal 2012: $0.6 million; Fiscal 2011: $0.4 million).

In the US, Signet sponsors a defined contribution 401(k) retirement savings plan for all eligible employees who meet minimum age and service requirements. The assets of this plan are held in a separate trust and Signet matches 50% of up to 6% of employee elective salary deferrals, subject to statutory limitations. From March 2009 through June 2010, Signet’s matching element was suspended but was reinstated in July 2010, with Signet at a matching level of 25% of up to 6% of employee elective salary deferral. The 25% match continued until March 31, 2011. Effective April 1, 2011, Signet increased the matching element to 50% of up to 6% of employee elective salary deferrals. Signet’s contributions to this plan in Fiscal 2013 were $6.5 million (Fiscal 2012: $5.4 million; Fiscal 2011: $1.2 million). The US division has also established two unfunded, non-qualified deferred compensation plans, one of which permits certain management and highly compensated employees to elect annually to defer all or a portion of their compensation and earn interest on the deferred amounts (“DCP”) and the other of which is frozen as to new participants and new deferrals. Beginning in April 2011, the DCP provided for a matching contribution based on each participant’s annual compensation deferral. The plan also permits employer contributions on a discretionary basis. In connection with these plans, Signet has invested in trust-owned life insurance policies and money market funds. The cost recognized in connection with the DCP in Fiscal 2013 was $2.1 million (Fiscal 2012: $2.2 million; Fiscal 2011: $0.0 million).

The fair value of the assets and liabilities in the DCP Plan at February 2, 2013 and January 28, 2012 are required to be classified and disclosed. The value and classification of these assets was as follows:


	Fair value measurements at February 2, 2013								Fair value measurements at January 28, 2012
	Total			Quoted prices in active markets for identical assets (Level 1)			Observable inputs (Level 2)		Total			Quoted prices in active markets for identical assets (Level 1)			Observable inputs (Level 2)
(in millions)
Assets:
Corporate-owned life insurance plans	$	8.9		$	—		$	8.9	$	9.0		$	—		$	9.0
Money market funds		8.6			8.6			—		8.5			8.5			—

Total assets	$	17.5		$	8.6		$	8.9	$	17.5		$	8.5		$	9.0

Liabilities:
Deferred compensation	$	(19.5	)	$	(19.5	)	$	—	$	(13.3	)	$	(13.3	)	$	—

Total liabilities	$	(19.5	)	$	(19.5	)	$	—	$	(13.3	)	$	(13.3	)	$	—