RETIREMENT-RELATED BENEFITS (Tables)
|
12 Months Ended |
Mar. 31, 2026 |
|---|
| RETIREMENT-RELATED BENEFITS |
|
| Components of net periodic pension cost for the defined benefit pension plans |
| | | | | | | | | | | | Year Ended March 31, | (Dollars in millions) | | 2026 | | 2025 | | 2024 | Service cost | | $ | 32 | | $ | 34 | | $ | 38 | Interest cost* | | | 62 | | | 52 | | | 55 | Expected return on plan assets* | | | (63) | | | (59) | | | (60) | Amortization of prior service costs (credits)* | | | 3 | | | 1 | | | 1 | Recognized actuarial losses* | | | 10 | | | 16 | | | 4 | Curtailments and settlements* | | | 10 | | | 8 | | | 13 | Total net periodic pension cost | | $ | 54 | | $ | 53 | | $ | 51 |
*These components of net periodic pension cost are included in Other expense (income) in the Consolidated Income Statement.
|
| Changes in benefit obligations |
| | | | | | | | | Year Ended March 31, | (Dollars in millions) | | 2026 | | 2025 | Change in benefit obligation | | | | | | | Benefit obligation at beginning of period | | $ | 1,563 | | $ | 1,670 | Service cost | | | 32 | | | 34 | Interest cost | | | 62 | | | 52 | Plan participants’ contributions | | | 3 | | | 3 | Actuarial losses (gains)* | | | (91) | | | (53) | Benefits paid from trust | | | (24) | | | (22) | Direct benefit payments | | | (43) | | | (39) | Foreign exchange impact | | | 81 | | | (2) | Plan amendments | | | 36 | | | — | Curtailments, settlements and other | | | (45) | | | (80) | Benefit obligation at end of period | | $ | 1,575 | | $ | 1,563 | Accumulated benefit obligation | | $ | 1,492 | | $ | 1,484 | Change in plan assets | | | | | | | Fair value of plan assets at beginning of period | | $ | 1,199 | | $ | 1,248 | Actual return on plan assets | | | 37 | | | 15 | Employer contributions | | | 12 | | | 17 | Plan participants’ contributions | | | 3 | | | 3 | Benefits paid from trust | | | (24) | | | (22) | Foreign exchange impact | | | 76 | | | 3 | Settlements | | | (40) | | | (65) | Fair value of plan assets at end of period | | $ | 1,264 | | $ | 1,199 | Funded status at end of period | | $ | (311) | | $ | (364) |
* | The year-over-year change was primarily driven by higher discount rates. |
|
| Changes in plan assets |
The following table presents the changes in net benefit obligation and plan assets for the defined benefit pension plans. | | | | | | | | | Year Ended March 31, | (Dollars in millions) | | 2026 | | 2025 | Change in benefit obligation | | | | | | | Benefit obligation at beginning of period | | $ | 1,563 | | $ | 1,670 | Service cost | | | 32 | | | 34 | Interest cost | | | 62 | | | 52 | Plan participants’ contributions | | | 3 | | | 3 | Actuarial losses (gains)* | | | (91) | | | (53) | Benefits paid from trust | | | (24) | | | (22) | Direct benefit payments | | | (43) | | | (39) | Foreign exchange impact | | | 81 | | | (2) | Plan amendments | | | 36 | | | — | Curtailments, settlements and other | | | (45) | | | (80) | Benefit obligation at end of period | | $ | 1,575 | | $ | 1,563 | Accumulated benefit obligation | | $ | 1,492 | | $ | 1,484 | Change in plan assets | | | | | | | Fair value of plan assets at beginning of period | | $ | 1,199 | | $ | 1,248 | Actual return on plan assets | | | 37 | | | 15 | Employer contributions | | | 12 | | | 17 | Plan participants’ contributions | | | 3 | | | 3 | Benefits paid from trust | | | (24) | | | (22) | Foreign exchange impact | | | 76 | | | 3 | Settlements | | | (40) | | | (65) | Fair value of plan assets at end of period | | $ | 1,264 | | $ | 1,199 | Funded status at end of period | | $ | (311) | | $ | (364) |
* | The year-over-year change was primarily driven by higher discount rates. |
|
| Net funded status |
| | | | | | | | | At March 31, | (Dollars in millions) | | 2026 | | 2025 | Noncurrent assets – pension assets | | $ | 222 | | $ | 148 | Current liabilities – accrued compensation and benefits | | | (54) | | | (40) | Noncurrent liabilities – retirement and nonpension postretirement benefit obligations | | | (480) | | | (471) | Funded status, net | | $ | (311) | | $ | (364) |
|
| Defined benefit pension plans with accumulated benefit obligations (ABO) or projected benefit obligations (PBO) in excess of plan assets |
| | | | | | | | | | | | | | | At March 31, 2026 | | At March 31, 2025 | | | Benefit | | Plan | | Benefit | | Plan | (Dollars in millions) | | Obligation | | Assets | | Obligation | | Assets | Plans with PBO in excess of plan assets | | $ | 753 | | $ | 220 | | $ | 745 | | $ | 233 | Plans with ABO in excess of plan assets | | | 637 | | | 167 | | | 605 | | | 157 | Plans with plan assets in excess of PBO | | | 822 | | | 1,044 | | | 818 | | | 966 |
|
| Pretax net loss and prior service costs (credits) recognized in OCI and the changes in pretax net loss and prior service costs (credits) recognized in AOCI |
| | | | | | | | | Year Ended March 31, | (Dollars in millions) | | 2026 | | 2025 | Net loss (gain) at beginning of period | | $ | 256 | | $ | 296 | Current period loss (gain) | | | (63) | | | (17) | Curtailments and settlements | | | (10) | | | (8) | Amortization of net loss included in net periodic benefit cost | | | (10) | | | (16) | Net loss (gain) at end of period | | $ | 173 | | $ | 256 | Prior service costs (credits) at beginning of period | | | 1 | | | 4 | Current period prior service costs (credits) | | | 35 | | | (2) | Amortization for prior service costs (credits) included in net periodic benefit cost | | | (3) | | | (1) | Prior service costs (credits) at end of period | | $ | 34 | | $ | 1 | Total amounts recognized in accumulated other comprehensive loss (income)* | | $ | 207 | | $ | 257 |
* | See Note 15 – Equity for the total change in AOCI and the Consolidated Statement of Comprehensive Income for the components of net periodic benefit cost, which includes components related to nonpension postretirement benefit plans as well as the related tax effects, recognized in OCI for the retirement-related benefit plans. |
|
| Assumptions used to measure the net periodic pension cost and the year-end benefit obligations |
| | | | | | | | | | | | At March 31, | Weighted-average assumptions used to measure: | | 2026 | | 2025 | | 2024 | Net periodic pension cost | | | | | | | | | | Discount rate | | 3.68 | % | | 3.30 | % | | 3.57 | % | Expected long-term returns on plan assets | | 4.77 | % | | 4.63 | % | | 4.69 | % | Rate of compensation increase | | 2.80 | % | | 2.84 | % | | 2.85 | % | Benefit obligations | | | | | | | | | | Discount rate | | 4.31 | % | | 3.68 | % | | 3.30 | % | Rate of compensation increase | | 2.95 | % | | 2.80 | % | | 2.84 | % | Interest crediting rate – cash balance plans | | 1.90 | % | | 1.83 | % | | 1.65 | % |
|
| Defined benefit pension plans' asset classes and their associated fair value |
| | | | | | | | | | | | | | | | | | | | | | | | | | | At March 31, 2026 | | At March 31, 2025 | (Dollars in millions) | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | Equity | | | | | | | | | | | | | | | | | | | | | | | | | Equity securities | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | Fixed income | | | | | | | | | | | | | | | | | | | | | | | | | Government and related (1) | | | — | | | 109 | | | — | | | 109 | | | — | | | 104 | | | — | | | 104 | Corporate bonds | | | — | | | 22 | | | — | | | 22 | | | — | | | 21 | | | — | | | 21 | Insurance contracts | | | — | | | 179 | | | — | | | 179 | | | — | | | 169 | | | — | | | 169 | Cash and short-term investments (2) | | | 4 | | | — | | | — | | | 5 | | | 3 | | | — | | | — | | | 3 | Derivative assets (3) | | | — | | | 4 | | | — | | | 4 | | | — | | | 4 | | | — | | | 4 | Subtotal | | $ | 4 | | $ | 314 | | $ | — | | $ | 318 | | $ | 3 | | $ | 297 | | $ | — | | $ | 301 | Investments measured at net asset value using NAV as a practical expedient (4) | | | — | | | — | | | — | | | 946 | | | — | | | — | | | — | | | 898 | Fair value of plan assets | | $ | 4 | | $ | 314 | | $ | — | | $ | 1,264 | | $ | 3 | | $ | 297 | | $ | — | | $ | 1,199 |
(1) | Includes debt issued by national, state and local governments and agencies. |
(2) | Includes cash, cash equivalents and short-term marketable securities. |
(3) | Includes forward contracts, interest rate swaps, exchange traded and other over-the-counter derivatives. |
(4) | Investments measured at fair value using the net asset value (NAV) per share (or its equivalent), as a practical expedient. These investments
include commingled funds, hedge funds, common collective trusts, private equity partnerships and real estate partnerships. |
|
| Total expected benefit payments |
| | | | | | Expected | (Dollars in millions) | | Benefit Payments | Fiscal year ending March 31, | | | | 2027 | | $ | 140 | 2028 | | | 116 | 2029 | | | 122 | 2030 | | | 118 | 2031 | | | 126 | 2032-2036 | | | 650 |
|