v3.25.1
Postretirement Benefit Plans
 12 Months Ended
Mar. 31, 2025
Retirement Benefits [Abstract]  
13. POSTRETIREMENT BENEFIT PLANS
13. POSTRETIREMENT BENEFIT PLANS
Our pension obligations relate to: (1) funded defined benefit pension plans in the U.S., Canada, Switzerland, and the U.K., (2) funded and unfunded defined benefit pension plans in Germany, (3) unfunded lump sum indemnities payable upon retirement to employees in France and Italy, and (4) partially funded lump sum indemnities in South Korea. Our other postretirement obligations (other benefits, as shown in certain tables below) include unfunded health care and life insurance benefits provided to retired employees in the U.S., Canada, and Brazil. We have combined our domestic (i.e. Canadian Plans) and foreign (i.e. all plans other than Canadian Plans) postretirement benefit plan disclosures because our domestic benefit obligation is not significant as compared to our total benefit obligation. Our foreign benefit obligation is 97% of the total benefit obligation, and the assumptions used to value domestic and foreign plans were not significantly different.
The Company recognizes actuarial gains and losses and prior service costs in the consolidated balance sheet and recognizes changes in these amounts during the year in which changes occur through other comprehensive income (loss). The Company uses various assumptions when computing amounts relating to its defined benefit pension plan obligations and their associated expenses (including the discount rate and the expected rate of return on plan assets).
During the first quarter of fiscal 2024, Novelis transferred the liabilities associated with the retirees and beneficiaries of the Novelis ZVO II 2007 - Casthouse and Novelis ZVO II 2007 - Koblenz plans to an insurer through buy-out annuities. The transfer occurred on April 1, 2023, which settled obligations of $2 million. Novelis remeasured the plan's assets and obligations as of March 31, 2023, which was the nearest calendar month-end to the transfer. As a result of this transaction, a settlement gain of $1 million was recorded during fiscal 2024.
During fiscal 2025 and 2024, Novelis offered lump sum payouts to retiring participants in the Voreppe, TFR, and Pensions Kasse Sierre plans as required under those countries' laws, as well as to some other participants with special circumstances. Lump sum payouts to plan participants totaled approximately $9 million and $8 million, respectively. Novelis remeasured the plan's assets and obligations as of March 31, 2025 and 2024, as these activities occurred throughout each fiscal year. As a result of these transactions, settlement losses of $1 million were recorded during each of fiscal 2025 and 2024.
Employer Contributions to Plans
For pension plans, our policy is to fund an amount required to provide for contractual benefits attributed to service to-date and amortize unfunded actuarial liabilities typically over periods of 15 years or less. We also participate in savings plans in Canada and the U.S., as well as defined contribution pension plans in the U.S., the U.K., Canada, Germany, Italy, Switzerland, and Brazil.
We contributed the following amounts to all plans.
in millions
Fiscal 2025
Fiscal 2024
Fiscal 2023
Funded pension plans$39 $30 $22 
Unfunded pension plans17 17 15 
Savings and defined contribution pension plans62 59 54 
Total contributions$118 $106 $91 
During fiscal 2026, we expect to contribute $24 million to our funded pension plans, $18 million to our unfunded pension plans, and $63 million to our savings and defined contribution pension plans.
Benefit Obligations, Fair Value of Plan Assets, Funded Status, and Amounts Recognized in Financial Statements
The increases in the discount rates of pension benefit plans in fiscal 2025, as compared to fiscal 2024, was the primary driver of actuarial losses in fiscal 2025.
The following tables present the change in benefit obligation, change in fair value of plan assets, and the funded status for pension and other benefits.
 Pension Benefit PlansOther Benefit Plans
in millions
Fiscal 2025
Fiscal 2024
Fiscal 2025
Fiscal 2024
Benefit obligation at beginning of period$1,719 $1,705 $125 $128 
Service cost23 23 3 3 
Interest cost78 76 7 7 
Members' contributions6 6 — — 
Benefits paid(92)(93)(8)(9)
Amendments(5)— — — 
Curtailments, settlements and special termination benefits(9)(10)— — 
Actuarial (gains) losses
(31)15 (3)(4)
Other(4)(4)— — 
Currency losses (gains)
— 1 (2)— 
Benefit obligation at end of period$1,685 $1,719 $122 $125 
Benefit obligation of funded plans$1,369 $1,386 $— $— 
Benefit obligation of unfunded plans316 333 122 125 
Benefit obligation at end of period$1,685 $1,719 $122 $125 

 Pension Benefit Plans
in millions
Fiscal 2025
Fiscal 2024
Change in fair value of plan assets
Fair value of plan assets at beginning of period$1,276 $1,275 
Actual return on plan assets24 52 
Members' contributions6 6 
Benefits paid(93)(93)
Company contributions56 47 
Settlements(9)(12)
Other(3)(4)
Currency gains
— 5 
Fair value of plan assets at end of period$1,257 $1,276 

 March 31,
 20252024
in millionsPension Benefit PlansOther Benefit PlansPension Benefit PlansOther Benefit Plans
Funded status
Assets less the benefit obligation of funded plans$(112)$— $(110)$— 
Benefit obligation of unfunded plans(316)(122)(333)(125)
Total net plan liabilities
$(428)$(122)$(443)$(125)
As included in our consolidated balance sheets within Total assets / (Total liabilities)
Other long–term assets$11 $— $15 $— 
Accrued expenses and other current liabilities(19)(8)(16)(8)
Accrued postretirement benefits(420)(114)(442)(117)
Total net plan liabilities
$(428)$(122)$(443)$(125)
The postretirement amounts recognized in accumulated other comprehensive loss, before tax effects, are presented in the table below and include the impact related to our equity method investments. Amounts are amortized to net periodic benefit cost over the group's average future service life of the employees or the group's average life expectancy.
 March 31,
 20252024
in millionsPension Benefit PlansOther Benefit PlansPension Benefit PlansOther Benefit Plans
Net actuarial (losses) gains
$(46)$37 $(27)$37 
Prior service credit12 31 9 35 
Total postretirement amounts recognized in accumulated other comprehensive loss
$(34)$68 $(18)$72 
The postretirement changes recognized in accumulated other comprehensive loss, before tax effects, are presented in the table below and include the impact related to our equity method investments.
 March 31,
 20252024
in millionsPension Benefit PlansOther Benefit PlansPension Benefit PlansOther Benefit Plans
Beginning balance in accumulated other comprehensive loss
$(18)$72 $34 $74 
Curtailments, settlements, and special termination benefits1 — — — 
Net actuarial (losses) gains
(20)3 (46)4 
Prior service cost5 — — — 
Amortization of:
Prior service credit(2)(4)(1)(3)
Actuarial losses (gains)
1 (3)(5)(3)
Effect of currency exchange(1)— — — 
Total postretirement amounts recognized in accumulated other comprehensive loss
$(34)$68 $(18)$72 
Pension Plan Obligations
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets are presented in the table below.
 March 31,
in millions20252024
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans:
Projected benefit obligation $1,685 $1,719 
Accumulated benefit obligation1,615 1,654 
Pension plans with projected benefit obligations in excess of plan assets:
Projected benefit obligation $1,591 $1,627 
Fair value of plan assets1,152 1,169 
Pension plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligation$1,520 $1,516 
Fair value of plan assets1,141 1,112 
Pension plans with projected benefit obligations less than plan assets:
Projected benefit obligation $94 $92 
Fair value of plan assets105 107 
Future Benefit Payments
Expected benefit payments to be made during the next 10 fiscal years are listed in the table below (in millions).
Fiscal Year Ending March 31,Pension Benefit PlansOther Benefit Plans
2026$109 $8 
2027116 9 
2028114 9 
2029117 9 
2030118 10 
2031 through 2035572 58 
Total$1,146 $103 
Components of Net Periodic Benefit Cost
The components of net periodic benefit cost for the respective periods are listed in the table below.
Pension Benefit PlansOther Benefit Plans
in millions
Fiscal 2025
Fiscal 2024
Fiscal 2023
Fiscal 2025
Fiscal 2024
Fiscal 2023
Service cost$23 $23 $26 $3 $3 $4 
Interest cost78 76 61 7 7 6 
Expected return on assets(80)(77)(72)— — — 
Amortization — losses (gains), net (gains (losses), net)
3 (1)9 (3)(3)(2)
Amortization — prior service credit(2)(2)(2)(4)(3)(4)
Settlement/curtailment (gain) loss1 — — — — — 
Net periodic benefit cost(1)
23 19 22 3 4 4 
Proportionate share of non-consolidated affiliates' pension costs4 4 7 — — — 
Total net periodic benefit cost recognized$27 $23 $29 $3 $4 $4 
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(1)Service cost is included within cost of goods sold (exclusive of depreciation and amortization) and selling, general and administrative expenses while all other cost components are recorded within other expenses (income), net.
Actuarial Assumptions and Sensitivity Analysis
The weighted average assumptions used to determine benefit obligations and net periodic benefit cost for the respective periods are listed in the table below.
Pension Benefit PlansOther Benefit Plans
Fiscal 2025
Fiscal 2024
Fiscal 2023
Fiscal 2025
Fiscal 2024
Fiscal 2023
Weighted average assumptions used to determine benefit obligations
Discount rate4.5 %4.4 %4.5 %5.8 %5.7 %5.5 %
Average compensation growth3.0 3.0 3.1 3.0 3.0 3.0 
Weighted average assumptions used to determine net periodic benefit cost
Discount rate4.4 %4.5 %3.1 %5.7 %5.5 %4.0 %
Average compensation growth3.0 3.1 3.1 3.0 3.0 3.0 
Expected return on plan assets6.3 6.1 4.8 — — — 
Cash balance interest crediting rate1.6 2.2 1.4 — — — 
In selecting the appropriate discount rate for each plan, for pension and other postretirement plans in Canada, the U.S., the U.K., and other eurozone countries, we used spot rate yield curves and individual bond matching models. For other countries, we used published long-term high quality corporate bond indices with adjustments made to the index rates based on the duration of the plans' obligation.
In estimating the expected return on assets of a pension plan, consideration is given primarily to its target allocation, the current yield on long-term bonds in the country where the plan is established, and the historical risk premium of equity or real estate over long-term bond yields in each relevant country. The approach is consistent with the principle that assets with higher risk provide a greater return over the long term. The expected long-term rate of return on plan assets is 6.5% in fiscal 2026.
We provide unfunded health care and life insurance benefits to our retired employees in Canada, the U.S., the U.K., and Brazil, for which we paid $8 million, $9 million, and $6 million in fiscal 2025, 2024, and 2023, respectively. The assumed health care cost trend used for measurement purposes is 7.2% for fiscal 2026, decreasing gradually to 5.1% in 2034 and remaining at that level thereafter.
In addition, we provide post-employment benefits, including disability, early retirement, and continuation of benefits (medical, dental, and life insurance) to our former or inactive employees, which are accounted for on the accrual basis in accordance with ASC 712. As of March 31, 2025, other long–term liabilities and accrued expenses and other current liabilities on our consolidated balance sheets include $3 million and $3 million, respectively, for these benefits. Comparatively, as of March 31, 2024, other long–term liabilities and accrued expenses and other current liabilities on our consolidated balance sheets include $4 million and $3 million, respectively, for these benefits.
Investment Policy and Asset Allocation
The Company's overall investment strategy is to achieve a mix of approximately 50% of investments for long-term growth (equities, real estate) and 50% for near-term benefit payments (debt securities, other) with a wide diversification of asset categories, investment styles, fund strategies, and fund managers. Since most of the defined benefit plans are closed to new entrants, we expect this strategy to gradually shift more investments toward near-term benefit payments.
Each of our funded pension plans is governed by an Investment Fiduciary, who establishes an investment policy appropriate for the pension plan. The Investment Fiduciary is responsible for selecting the asset allocation for each plan, monitoring investment managers, monitoring returns versus benchmarks, and monitoring compliance with the investment policy. The targeted allocation ranges by asset class and the actual allocation percentages for each class are listed in the table below. 
Asset CategoryTarget Allocation RangesAllocation in Aggregate as of March 31,
20252024
Equity
10-50%
29 %29 %
Fixed income
15-89%
53 %53 %
Real estate
3-25%
7 %7 %
Other
1-100%
11 %11 %
Fair Value of Plan Assets
The following pension plan assets are measured and recognized at fair value on a recurring basis. See Note 17 – Fair Value Measurements for a description of the fair value hierarchy. The U.S. and Canadian pension plan assets are invested exclusively in commingled funds and measured at net asset value, and the U.K., Switzerland, and South Korea pension plan assets are invested in both direct investments (Levels 1 and 2) and commingled funds (Level 2).
Pension Plan Assets
 March 31, 2025March 31, 2024
in millionsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Fixed income$86 $54 $— $140 $92 $55 $— $147 
Cash and cash equivalents3 — — 3 4 — — 4 
Other6 1 — 7 4 1 — 5 
Investments measured at net asset value(1)
— — — 1,107 — — — 1,120 
Total$95 $55 $— $1,257 $100 $56 $— $1,276 
_________________________
(1)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated balance sheets.