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. Signet used February 3, 2018 and January 28, 2017 measurement dates in determining the UK Plan’s benefit obligation and fair value of plan assets.

In September 2017, the Company approved an amendment to freeze benefit accruals under the UK Plan in an effort to reduce anticipated future pension expense. As a result of this amendment, the Company will freeze the pension plan for all participants with an effective date of either December 2017 or October 2019 as elected by the plan participants. All future benefit accruals under the plan shall cease. The amendment to the plan was accounted for in accordance with FASB Accounting Standards Codification (“ASC”) Topic 715, “Compensation - Retirement Benefits.”

The following tables provide information concerning the UK Plan as of and for the fiscal years ended February 3, 2018 and January 28, 2017:



(in millions)	Fiscal 2018			Fiscal 2017
Change in UK Plan assets:
Fair value at beginning of year	$	247.6		$	266.2
Actual return on UK Plan assets	11.0			18.2
Employer contributions	3.2			3.3
Members’ contributions	0.4			0.6
Benefits paid	(8.7		)	(9.9		)
Plan settlements	(10.8		)	—
Foreign currency translation	29.5			(30.8		)
Fair value at end of year	$	272.2		$	247.6



(in millions)	Fiscal 2018			Fiscal 2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	215.7		$	214.9
Service cost	2.1			2.0
Past service cost	—			0.5
Interest cost	6.1			7.2
Members’ contributions	0.4			0.6
Actuarial (gain) loss	2.3			24.1
Benefits paid	(8.7		)	(9.9		)
Plan settlements	(10.8		)	0.0
Foreign currency translation	25.3			(23.7		)
Benefit obligation at end of year	$	232.4		$	215.7
Funded status at end of year	$	39.8		$	31.9



(in millions)	February 3, 2018		January 28, 2017
Amounts recognized in the balance sheet consist of:
Non-current assets	$	39.8	$	31.9

Items in AOCI not yet recognized as income (expense) in the income statement:



(in millions)	February 3, 2018			January 28, 2017			January 30, 2016
Net actuarial losses	$	(51.1	)	$	(55.5	)	$	(43.1	)
Net prior service credits	2.4			9.2			11.1

The estimated actuarial losses and prior service credits for the UK Plan that will be amortized from AOCI into net periodic pension cost over the next fiscal year are $(1.1) million and $0.2 million, respectively.

The accumulated benefit obligation for the UK Plan was $231.1 million and $208.0 million as of February 3, 2018 and January 28, 2017, respectively.

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



(in millions)	Fiscal 2018			Fiscal 2017			Fiscal 2016
Components of net periodic pension benefit (cost):
Service cost	$	(2.1	)	$	(2.0	)	$	(2.6	)
Interest cost	(6.1		)	(7.2		)	(7.7		)
Expected return on UK Plan assets	9.4			10.4			11.5
Amortization of unrecognized actuarial losses	(2.8		)	(1.5		)	(3.4		)
Amortization of unrecognized net prior service credits	1.4			1.9			2.2
Net curtailment gain and settlement loss	3.7			—			—
Net periodic pension benefit	$	3.5		$	1.6		$	—
Other changes in assets and benefit obligations recognized in OCI	(2.9		)	(17.8		)	14.4
Total recognized in net periodic pension benefit (cost) and OCI	$	0.6		$	(16.2	)	$	14.4



	February 3, 2018		January 28, 2017
Assumptions used to determine benefit obligations (at the end of the year):
Discount rate	2.60	%	2.90	%
Salary increases	2.50	%	2.00	%
Assumptions used to determine net periodic pension costs (at the start of the year):
Discount rate	2.90	%	3.60	%
Expected return on UK Plan assets	3.80	%	4.20	%
Salary increases	2.00	%	2.50	%

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 and funding policy, to ensure the UK Plan obligations are met. The investment policy is to allocate funds to a diverse portfolio of investments, including UK and overseas equities, diversified growth funds, UK corporate bonds, open-ended funds and commercial property. The commercial property investment is through a Pooled Pensions Property Fund that provides a diversified portfolio of property assets. As of February 3, 2018, the target allocation for the UK Plan’s assets was bonds 53%, diversified growth funds 34%, equities 8% and property 5%. This allocation is consistent with the long-term target allocation of investments underlying the UK Plan’s funding strategy.

The fair value of the assets in the UK Plan at February 3, 2018 and January 28, 2017 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 methods Signet uses to determine fair value on an instrument-specific basis are detailed below:



	Fair value measurements as of February 3, 2018								Fair value measurements as of January 28, 2017
(in millions)	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant Unobservable inputs (Level 3)		Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Asset category:
Diversified equity securities	$	24.0	$	—	$	24.0	$	—	$	22.3	$	—	$	22.3	$	—
Diversified growth funds	96.3		49.4		46.9		—		80.9		40.7		40.2		—
Fixed income – government bonds	83.9		—		83.9		—		81.0		—		81.0		—
Fixed income – corporate bonds	52.6		—		52.6		—		48.1		—		48.1		—
Property	14.3		—		—		14.3		11.8		—		—		11.8
Cash	1.1		1.1		—		—		3.5		3.5		—		—
Total	$	272.2	$	50.5	$	207.4	$	14.3	$	247.6	$	44.2	$	191.6	$	11.8

Investments in diversified equity securities, diversified growth funds and fixed income securities are in pooled funds. Investments are valued based on unadjusted quoted prices for each fund in active markets, where possible and, therefore, classified in Level 1 of the fair value hierarchy. If unadjusted quoted prices for identical assets are unavailable, investments are valued by the administrators of the funds. The valuation is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. The unit price is based on underlying investments which are generally either traded in an active market or are valued based on observable inputs such as market interest rates and quoted prices for similar securities and, therefore, classified in Level 2 of the fair value hierarchy.

The investment in property is in pooled funds valued by the administrators of the fund. The valuation is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of units outstanding. The unit price is based on underlying investments which are independently valued on a monthly basis. The investment in the property fund is subject to certain restrictions on withdrawals that could delay the receipt of funds by up to 16 months. Property investments are classified in Level 3 of the fair value hierarchy.

The table below sets forth changes in the fair value of the Level 3 investment assets in Fiscal 2018 and Fiscal 2017:



(in millions)	Significant unobservable inputs (Level 3)
Balance as of January 30, 2016	$	13.0
Actual return on assets	(1.2		)
Balance as of January 28, 2017	$	11.8
Actual return on assets	2.5
Balance as of February 3, 2018	$	14.3

Signet contributed $3.2 million to the UK Plan in Fiscal 2018 and expects to contribute a minimum of $2.8 million to the UK Plan in Fiscal 2019. 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, 2015.

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



(in millions)	Expected benefit payments
Fiscal 2019	$	9.6
Fiscal 2020	9.5
Fiscal 2021	10.0
Fiscal 2022	10.3
Fiscal 2023	10.3
Thereafter	$	53.4

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 2018 were $2.6 million (Fiscal 2017: $1.8 million; Fiscal 2016: $2.0 million).

In the US, Signet operates 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. Signet’s contributions to this plan in Fiscal 2018 were $10.0 million (Fiscal 2017: $14.6 million; Fiscal 2016: $8.3 million). The Company 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 2018 was $3.8 million (Fiscal 2017: $4.6 million; Fiscal 2016: $2.9 million).

The fair value of the assets in the two unfunded, non-qualified deferred compensation plans at February 3, 2018 and January 28, 2017 are required to be classified and disclosed. Although these plans are not required to be funded by the Company, the Company may elect to fund the plans. The value and classification of these assets are as follows:



	Fair value measurements as of February 3, 2018						Fair value measurements as of January 28, 2017
(in millions)	Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)
Assets:
Corporate-owned life insurance plans	$	7.3	$	—	$	7.3	$	7.5	$	—	$	7.5
Money market funds	30.2		30.2		—		29.6		29.6		—
Total assets	$	37.5	$	30.2	$	7.3	$	37.1	$	29.6	$	7.5