The Company maintains a domestic 401(k) plan that allows employees to contribute a portion of their salary to help them save for retirement. The Company currently matches employee contributions up to 4.5 percent of their compensation. The Company’s expense for defined contribution employee benefit plans during fiscal 2024, 2023, and 2022 was $8.3 million, $6.9 million, and $6.4 million, respectively.

In addition, the Company maintains non-qualified deferred compensation plans for eligible employees, and various non-U.S. subsidiaries have government-required defined contribution plans in place, under which they contribute a percentage of employee earnings into accounts, consistent with local laws.

Certain non-U.S. subsidiaries have statutory termination indemnity plans covering eligible employees. The benefits under these plans are based upon years of service and final average compensation levels or a monthly retirement benefit amount. These programs are substantially unfunded in accordance with local laws.

The Company maintains non-contributory defined benefit pension plans that cover eligible domestic employees. These plans are closed to new participants. The primary domestic plans cover most domestic employees hired on or before December 31, 2003 and provide benefits based primarily upon years of service and average compensation for salaried and some hourly employees. Benefits for other hourly employees are based upon a monthly retirement benefit amount. Currently, the Company’s domestic pension plans do not include increases in annual earnings or future service in calculating the average annual earnings and years of credited service under the pension plan benefit formula. Certain non-U.S. subsidiaries of the Company also have legacy defined benefit plans which cover a smaller number of active employees and are substantially unfunded. The primary non-U.S. plans are maintained in Germany and Italy and are closed to new participants. The Company previously maintained certain pension plans in Germany and Austria that conveyed to the buyers of the Germany automotive businesses and Austrian air-cooled automotive business during fiscal 2024 and 2022, respectively; see Note 2 for additional information.

In connection with funding relief provisions within the American Rescue Plan Act of 2021, the Company made $0.9 million cash contributions to its U.S. pension plans during fiscal 2024 and no cash contributions in fiscal 2023. The Company contributed $3.5 million to its U.S. pension plans during fiscal 2022. In addition, the Company contributed $1.8 million, $1.5 million, and $1.5 million to its non-U.S. pension plans during fiscal 2024, 2023, and 2022, respectively. These contributions are reported within the change in other liabilities in the consolidated statements of cash flows.

The Company provides selected healthcare and life insurance benefits for eligible retired domestic employees. The Company periodically amends these unfunded plans to change the contribution rate of retirees and the amounts and forms of coverage. An annual limit on the Company’s cost is defined for the majority of these plans. The Company’s net periodic income for its postretirement plans in fiscal 2024 was $0.4 million. The net periodic income for its postretirement plans in each fiscal 2023 and 2022 was $0.3 million.

As of March 31, 2024, 2023, and 2022, the benefit obligation associated with the Company’s non-U.S. pension plans totaled $13.0 million, $21.2 million, and $26.5 million, respectively. The $8.2 million decrease in the benefit obligation associated with non-U.S. pension plans as of March 31, 2024, compared with the prior year, was primarily due to the sale of the Germany automotive businesses and employer contributions for benefits paid to plan participants which decreased the obligation by $7.4 million and $1.8 million, respectively, and to a lesser extent, the impact of foreign currency exchange rates. The decreases were partially offset by service and interest cost and net actuarial losses during the year totaling $0.8 million and $0.5 million, respectively. In fiscal 2023, the $5.3 million decrease was primarily due to net actuarial gains during the year from an increase in discount rates and employer contributions for benefits paid to plan participants which decreased the obligation by $4.4 million and $1.5 million, respectively, and to a lesser extent, the impact of foreign currency exchange rates. The decreases were partially offset by service and interest cost totaling $0.7 million.

The accumulated benefit obligation for pension plans was $178.6 million and $194.4 million as of March 31, 2024 and 2023, respectively. The net actuarial loss related to the pension plans recognized in accumulated other comprehensive loss was $117.9 million and $123.5 million as of March 31, 2024 and 2023, respectively.

(b)

The fiscal 2024 amount includes $0.6 million of net actuarial gains written-off as a result of the sale of the Germany automotive businesses. The fiscal 2022 amount includes $1.7 million of net actuarial losses written-off as a result of the sale of the Austrian air-cooled automotive business. See Note 2 for additional information on the sale of these businesses.

The Company amortized $3.9 million, $5.7 million, and $8.6 million of net actuarial loss in fiscal 2024, 2023, and 2022, respectively. Exclusive of the $0.6 million and $1.7 million written-off in fiscal 2024 and 2022 upon the sale of the Germany automotive businesses and Austrian air-cooled automotive business, respectively, referenced above, less than $1.0 million of the amortization was attributable to the Company’s non-U.S. pension plans in each of these years.

The Company used a discount rate of 5.4% and 5.2% as of March 31, 2024 and 2023, respectively, for determining its benefit obligations under its U.S. pension plans. The Company used a weighted-average discount rate of 3.7% and 3.8% as of March 31, 2024 and 2023, respectively, for determining its benefit obligations under its non-U.S. pension plans. The Company used a discount rate of 5.2%, 3.9%, and 3.2% to determine its costs under its U.S. pension plans for fiscal 2024, 2023, and 2022, respectively. The Company used a weighted-average discount rate of 4.0%, 2.9%, and 1.6% to determine its costs under its non-U.S. pension plans for fiscal 2024, 2023, and 2022, respectively. The Company determined the discount rates used for its U.S. pension plans by modeling a portfolio of high-quality corporate bonds, with appropriate consideration given to expected defined benefit payment terms and duration of the respective pension obligations. The Company used a similar process to determine the discount rate for its non-U.S. pension obligations.

Plan assets in the Company’s U.S. pension plans comprise 100 percent of the Company’s world-wide pension plan assets. The Company establishes its pension plan investment guidelines considering market conditions, its tolerance for risk, and cash requirements for benefit payments. The Company measures and monitors investment risk on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements and periodic asset/liability studies. For fiscal 2024, in light of the highly funded status of the U.S. pension plans, the Company revised its target allocation to increase weighting towards debt securities with durations matched to plan liabilities. The Company’s U.S. pension plan weighted-average asset allocations at the measurement dates of March 31, 2024 and 2023 were as follows:

	March 31, 2024						March 31, 2023
	Target allocation			Plan assets			Target allocation			Plan assets
Debt securities		80	%		72	%		18	%		15	%
Equity securities		19	%		18	%		76	%		76	%
Cash and cash equivalents		1	%		5	%		1	%		1	%
Real estate investments		-			5	%		5	%		8	%
		100	%		100	%		100	%		100	%

Due to market conditions and other factors, including timing of benefit payments and other transactions, actual asset allocation may vary from the target allocation outlined above. The Company periodically rebalances the assets to the target allocations. During fiscal 2024, 2023 and 2022, the Company’s pension plans did not directly own shares of Modine common stock.

The expected rate of return on U.S. plan assets is based upon historical return experience and forward-looking return expectations for major asset class categories. For fiscal 2024, 2023, and 2022 U.S. pension plan expense, the expected rate of return on plan assets was 6.5 percent, 7.0 percent, and 7.5 percent, respectively. For fiscal 2025 U.S. pension plan expense, the Company has assumed a rate of return on plan assets of 5.5 percent.

The Company’s funding policy for its U.S. pension plans is to contribute annually, at a minimum, the amount necessary on an actuarial basis to provide for benefits in accordance with applicable laws and regulations. The Company expects to contribute approximately $8.0 million to its U.S. plans during fiscal 2025.