| Components of Pension Cost and Income |
The components of pension cost (income) for ±«ÓãÖ±²¥â€™s defined benefit plans were as follows:
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Year Ended March |
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| (In thousands) |
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2021 |
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2020 |
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2019 |
| Service cost — benefits earned during the period |
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$ |
15,747Ìý |
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$ |
14,476Ìý |
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$ |
22,352Ìý |
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| Interest cost on projected benefit obligations |
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47,316Ìý |
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55,575Ìý |
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63,434Ìý |
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| Expected return on plan assets |
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(83,107) |
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(91,309) |
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(93,409) |
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| Settlement charges |
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1,584Ìý |
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27,443Ìý |
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8,856Ìý |
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| Curtailments |
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920Ìý |
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—Ìý |
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9,530Ìý |
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| Transfers to Kontoor Brands |
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—Ìý |
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668Ìý |
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—Ìý |
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| Amortization of deferred amounts: |
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| Net deferred actuarial losses |
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11,911Ìý |
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14,848Ìý |
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28,474Ìý |
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| Deferred prior service costs (credits) |
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(81) |
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1,887Ìý |
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494Ìý |
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| Net periodic pension cost (income) |
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$ |
(5,710) |
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$ |
23,588Ìý
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$ |
39,731Ìý
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| Weighted average actuarial assumptions used to determine pension expense: |
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| Discount rate in effect for determining service cost |
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1.32Ìý |
% |
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1.46Ìý |
% |
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3.85Ìý |
% |
| Discount rate in effect for determining interest cost |
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2.82Ìý |
% |
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3.20Ìý |
% |
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3.51Ìý |
% |
| Expected long-term return on plan assets |
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4.97Ìý |
% |
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5.40Ìý |
% |
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5.58Ìý |
% |
Rate of compensation increase (a)
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2.04Ìý |
% |
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2.74Ìý |
% |
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3.73Ìý |
% |
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| Reconciliation of Changes in Fair Value of Defined Benefit Plan Assets and Projected Benefit Obligations |
The following provides a reconciliation of the changes in fair value of ±«ÓãÖ±²¥â€™s defined benefit plan assets and projected benefit obligations for each period, and the funded status at the end of each period:
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| (In thousands) |
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March 2021 |
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March 2020 |
| Fair value of plan assets, beginning of period |
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$ |
1,712,775Ìý |
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$ |
1,751,094Ìý |
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| Actual return on plan assets |
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110,467Ìý |
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173,261Ìý |
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| ±«ÓãÖ±²¥ contributions |
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17,714Ìý |
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26,372Ìý |
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| Participant contributions |
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4,434Ìý |
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4,298Ìý |
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| Transfer to Kontoor Brands |
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—Ìý |
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(6,697) |
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| Benefits paid |
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(101,753) |
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(233,398) |
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| Currency translation |
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11,777Ìý |
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(2,155) |
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| Fair value of plan assets, end of period |
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1,755,414Ìý |
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1,712,775Ìý |
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| Projected benefit obligations, beginning of period |
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1,726,776Ìý |
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1,818,931Ìý |
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| Service cost |
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15,747Ìý |
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14,476Ìý |
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| Interest cost |
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47,316Ìý |
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55,575Ìý |
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| Participant contributions |
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4,434Ìý |
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4,298Ìý |
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| Actuarial loss |
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40,264Ìý |
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84,057Ìý |
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| Benefits paid |
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(101,753) |
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(233,398) |
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| Plan amendments |
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(3,098) |
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655Ìý |
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| Transfer to Kontoor Brands |
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—Ìý |
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(17,279) |
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| Curtailments |
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(729) |
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—Ìý |
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| Currency translation |
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12,753Ìý |
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(539) |
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Projected benefit obligations, end of period (a)
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1,741,710Ìý |
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1,726,776Ìý |
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| Funded status, end of period |
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$ |
13,704Ìý
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$ |
(14,001) |
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(a)The changes in projected benefit obligations in the years ended March 2021 and 2020 were driven by actuarial losses primarily as a result of decreases in discount rates. The change in projected benefit obligations in the year ended March 2020 was also driven by a lump-sum distribution of approximately $130.0Ìýmillion related to the U.S. qualified plan.
Pension benefits are reported in the Consolidated Balance Sheets as a net asset or liability based on the overfunded or underfunded status of the defined benefit plans, assessed on a plan-by-plan basis.
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| (In thousands) |
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March 2021 |
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March 2020 |
| Amounts included in Consolidated Balance Sheets: |
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| Other assets (Note 11) |
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$ |
197,484Ìý |
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$ |
166,955Ìý |
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| Accrued liabilities (Note 13) |
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(17,030) |
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(10,449) |
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| Other liabilities (Note 15) |
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(166,750) |
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(170,507) |
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| Funded status |
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$ |
13,704Ìý
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$ |
(14,001) |
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| Accumulated other comprehensive loss, pretax: |
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| Net deferred actuarial losses |
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$ |
358,916Ìý |
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$ |
357,989Ìý |
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| Net deferred prior service credits |
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(4,588) |
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(733) |
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| Total accumulated other comprehensive loss, pretax |
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$ |
354,328Ìý
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$ |
357,256Ìý
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| Accumulated benefit obligations |
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$ |
1,710,678Ìý
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$ |
1,703,224Ìý
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| Weighted average actuarial assumptions used to determine pension obligations: |
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| Discount rate |
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2.94% |
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3.18% |
Rate of compensation increase (a)
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2.30% |
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2.22% |
(a)Rate of compensation increase is calculated as the weighted average rate of compensation increase for active plans. Frozen plans are excluded from the calculation.
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| Fair Value of Investments Held by Pension Plan |
The fair value of investments held by ±«ÓãÖ±²¥â€™s defined benefit plans at March 2021 and March 2020, by asset class, is summarized below. Refer to Note 23 for a description of the three levels of the fair value measurement hierarchy.
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| Ìý |
Total Plan
Assets |
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Fair Value Measurements |
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| (In thousands) |
Level 1 |
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Level 2 |
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LevelÌý3 |
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| March 2021 |
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| Plan assets |
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| Cash equivalents |
$ |
7,410Ìý |
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$ |
7,410Ìý |
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$ |
—Ìý |
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$ |
—Ìý |
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| Fixed income securities: |
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| U.S. Treasury and government agencies |
5Ìý |
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—Ìý |
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|
5Ìý |
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—Ìý |
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| Insurance contracts |
84,497Ìý |
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—Ìý |
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84,497Ìý |
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—Ìý |
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| Futures contracts |
(4,452) |
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(4,452) |
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—Ìý |
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—Ìý |
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| Total plan assets in the fair value hierarchy |
87,460Ìý
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$ |
2,958Ìý
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$ |
84,502Ìý
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$ |
—Ìý
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| Plan assets measured at net asset value |
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| Cash equivalents |
78,191Ìý |
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| Equity securities: |
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| Domestic |
96,509Ìý |
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| International |
88,488Ìý |
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| Fixed income securities: |
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| Corporate and international bonds |
1,240,551Ìý |
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| Alternative investments |
164,215Ìý |
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| Total plan assets measured at net asset value |
1,667,954Ìý |
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| Total plan assets |
$ |
1,755,414Ìý
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| Ìý |
Total Plan
Assets |
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Fair Value Measurements |
| (In thousands) |
Level 1 |
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Level 2 |
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LevelÌý3 |
| March 2020 |
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| Plan assets |
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| Cash equivalents |
$ |
9,421Ìý |
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$ |
9,421Ìý |
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$ |
—Ìý |
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$ |
—Ìý |
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| Fixed income securities: |
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| U.S. Treasury and government agencies |
6Ìý |
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—Ìý |
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6Ìý |
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—Ìý |
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| Insurance contracts |
76,161Ìý |
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—Ìý |
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76,161Ìý |
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—Ìý |
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| Futures contracts |
3,878Ìý |
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3,878Ìý |
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|
—Ìý |
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|
—Ìý |
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| Total plan assets in the fair value hierarchy |
89,466Ìý
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$ |
13,299Ìý
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$ |
76,167Ìý
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$ |
—Ìý
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| Plan assets measured at net asset value |
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| Cash equivalents |
54,745Ìý |
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| Equity securities: |
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| Domestic |
70,503Ìý |
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| International |
71,365Ìý |
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| Fixed income securities: |
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| Corporate and international bonds |
1,293,768Ìý |
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| Alternative investments |
132,928Ìý |
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| Total plan assets measured at net asset value |
1,623,309Ìý |
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| Total plan assets |
$ |
1,712,775Ìý
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