Pension and Other Postretirement Benefits

12 Months Ended

Jun. 30, 2023

Retirement Benefits [Abstract]

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits

The Company provides several noncontributory defined benefit pension plans to certain employees. The plans provide defined benefits based on years of service and final average salary.

The Company also provides other postretirement benefit plans to certain of its employees. The postretirement benefit plans consist of health care and life insurance plans. Plan assets are maintained in a Voluntary Employee Benefit Association ("VEBA") Trust. During fiscal years 2023 and 2022, the Company funded benefit payments using assets in the VEBA Trust.

The following provides a reconciliation of benefit obligations, plan assets and funded status of the plans:

	Pension Plans				Other Postretirement Plans
($ in millions)	2023		2022		2023		2022
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	959.4	$	1,225.5	$	206.2	$	249.3
Service cost	8.1		8.6		1.8		2.4
Interest cost	46.2		36.6		10.0		7.4
Benefits paid	(77.5)		(62.8)		(13.5)		(11.6)
Actuarial gain	(65.3)		(221.2)		(22.2)		(41.3)
Plan settlements	(23.3)		(27.3)		—		—
Other	0.6		—		—		—
Projected benefit obligation at end of year	848.2		959.4		182.3		206.2
Change in plan assets:
Fair value of plan assets at beginning of year	759.4		999.4		114.7		136.3
Actual return	(7.4)		(153.7)		15.9		(11.7)
Benefits paid	(77.5)		(62.8)		(13.5)		(11.5)
Contributions	3.6		3.8		3.3		1.6
Plan settlements	(23.3)		(27.3)		—		—
Fair value of plan assets at end of year	654.8		759.4		120.4		114.7
Funded status of the plans	$	(193.4)	$	(200.0)	$	(61.9)	$	(91.5)
Amounts recognized in the consolidated balance sheets:
Accrued liabilities - current	(3.3)		(3.4)		(16.1)		(14.1)
Accrued pension liabilities - noncurrent	(190.1)		(196.6)		—		—
Accrued postretirement benefits - noncurrent	—		—		(45.8)		(77.4)
Funded status of the plans	$	(193.4)	$	(200.0)	$	(61.9)	$	(91.5)

	Pension Plans				Other Postretirement Plans
($ in millions)	2023		2022		2023		2022
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss (gain)	$	260.3	$	282.0	$	(39.7)	$	(10.3)
Prior service cost (credit)	5.8		7.9		(2.4)		(6.2)
Total	$	266.1	$	289.9	$	(42.1)	$	(16.5)
Other changes in plan assets and benefit obligations recognized in other comprehensive income consist of:
Net actuarial gain	$	(12.5)	$	(7.5)	$	(31.2)	$	(21.3)
Amortization of net (loss) gain	(9.5)		(8.4)		1.8		0.8
Amortization of prior service (cost) benefit	(2.1)		(2.1)		3.9		3.9
Total, before tax effect	$	(24.1)	$	(18.0)	$	(25.5)	$	(16.6)
Additional information:
Accumulated benefit obligation for all pension plans	$	843.8	$	956.4	N/A		N/A

For the year ended June 30, 2023, actuarial gains in pension plans were significantly impacted by a change in discount rate of $70.9 million partially offset by a change in plan experience of $9.2 million. Actuarial gains in other postretirement plans were significantly impacted by a change in discount rate of $13.8 million. For the year ended June 30, 2022, actuarial gains in pension plans were significantly impacted by a change in discount rate of $225.2 million and actuarial gains in other postretirement plans were significantly impacted by a change in discount rate of $41.9 million.

The following is additional information related to plans with projected benefit obligations in excess of plan assets as of June 30, 2023 and 2022:

	Pension Plans				Other Postretirement Plans
($ in millions)	2023		2022		2023		2022
Projected benefit obligation	$	848.2	$	959.4	$	182.3	$	206.1
Fair value of plan assets	$	654.8	$	759.4	$	120.4	$	114.7

The following additional information is for plans with accumulated benefit obligations in excess of plan assets as of June 30, 2023 and 2022:

	Pension Plans				Other Postretirement Plans
($ in millions)	2023		2022		2023		2022
Accumulated benefit obligation	$	843.8	$	956.4	$	182.3	$	206.1
Fair value of plan assets	$	654.8	$	759.4	$	120.4	$	114.7

The components of the net periodic pension expense (income) related to the Company's pension and other postretirement benefits for the years ended June 30, 2023, 2022 and 2021 are as follows:

	Pension Plans						Other Postretirement Plans
($ in millions)	2023		2022		2021		2023		2022		2021
Service cost	$	8.1	$	8.6	$	9.6	$	1.8	$	2.4	$	2.7
Interest cost	46.2		36.6		39.4		10.0		7.4		7.7
Expected return on plan assets	(45.3)		(59.9)		(56.5)		(6.8)		(8.2)		(6.8)
Amortization of net loss (gain)	9.5		8.4		15.3		(1.8)		(0.8)		3.6
Amortization of prior service cost (benefit)	2.1		2.1		2.1		(3.9)		(3.9)		(3.9)
Settlement charge	—		—		11.4		—		—		—
Net pension expense (income)	$	20.6	$	(4.2)	$	21.3	$	(0.7)	$	(3.1)	$	3.3

The service cost component of the Company's net pension expense (income), which represents the estimated cost of future pension liabilities earned associated with active employees, is included in the operating income of the business segments. The residual net pension expense (income), which is comprised of the expected return on plan assets, interest costs on the projected benefit obligations of the plans, and amortization of actuarial gains and losses and prior service costs and benefits, is presented within other expense (income), net. See Note 18 to our consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data."

During fiscal year ended June 30, 2021, the Company evaluated the need for settlement accounting under ASC 715-30-35-82 based on the higher than normal lump-sum payments made during fiscal year 2021 in the Company's largest defined benefit plan. The Company determined that the lump-sum payments exceeded the threshold of service cost and interest cost components and settlement accounting was required. The Company recorded settlement charges of $11.4 million in the year ended June 30, 2021, within other expense (income), net.

Weighted-average assumptions used to determine benefit obligations at fiscal year end	Pension Plans				Other Postretirement Plans
	2023		2022		2023		2022
Discount rate	5.85	%	5.00	%	5.87	%	5.02	%
Rate of compensation increase	3.28	%	3.29	%	N/A		N/A

Weighted-average assumptions used to determine net periodic benefit cost for the fiscal year	Pension Plans						Other Postretirement Plans
	2023		2022		2021		2023		2022		2021
Discount rate	5.01	%	3.06	%	3.12	%	5.02	%	3.04	%	2.99	%
Expected long-term rate of return on plan assets	6.25	%	6.22	%	6.21	%	6.25	%	6.25	%	6.25	%
Long-term rate of compensation increase	3.28	%	3.29	%	3.29	%	N/A		N/A		N/A

The following table shows the expected health care rate increase and the future rate and time at which it is expected to remain constant:

	June 30,
	2023		2022
Assumed health care cost trend rate	6.25	%	6.25	%
Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2028		2027

 Amounts in other accumulated comprehensive loss (gain) that are expected to be recognized as components of net periodic benefit cost in the fiscal year ended June 30, 2024, are:

($ in millions)	Pension Plans		Other Postretirement Plans		Total
Amortization of prior service cost (benefit)	$	2.1	$	(3.8)	$	(1.7)
Amortization of net actuarial loss (gain)	8.6		(2.5)		6.1
Amortization of accumulated other comprehensive loss (gain)	$	10.7	$	(6.3)	$	4.4

The Company's U.S. pension plans' weighted-average asset allocations at June 30, 2023 and 2022, by asset category are as follows: 

	2023		2022
Equity securities	43.8	%	35.7	%
Fixed income securities	36.5		40.5
Real assets securities	19.7		23.8
Total	100.0	%	100.0	%

The Company's policy for developing a pension plan investment strategy includes the periodic development of an asset and liability study by an independent investment consultant. Management considers this study in establishing an asset allocation that is presented to and approved by the Company's Retirement Committee.

Based on the current funding level, the benchmark allocation policy for the Company's largest pension plan assets is to have approximately 75 percent in return seeking assets and 25 percent in liability-hedging assets. Return seeking assets include global equities, diversified credit and real assets. Liability-hedging assets include bond funds and cash. When the funding level of the plan reaches 95 percent and improves to fully or over-funded status in increments of 5 percent, assets will be shifted from return seeking to liability-hedging assets in accordance with the glidepath policy outlined in the pension plan's Investment Policy Statement. The assets related to the Company's other postretirement benefit plans were invested in approximately 85 percent U.S. equities and 15 percent short-term investments as of June 30, 2023. Management establishes the expected long-term rate of return assumption by reviewing historical trends and analyzing the current and projected market conditions in relation to the plan's asset allocation and risk management objectives. In determining the expected long-term rate of return, the Company considered historical returns for individual asset classes and the impact of active portfolio management.

The fair values of the Company's pension plan assets as of June 30, 2023 and 2022, by asset category and by the levels of inputs used to determine fair value were as follows:

	June 30, 2023
	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Net Asset Value		Total
Short-term investments	$	6.7	$	—	$	—	$	6.7
Commingled trust funds	—		—		646.8		646.8
Mortgage/asset backed securities and other	—		1.3		—		1.3
	$	6.7	$	1.3	$	646.8	$	654.8

	June 30, 2022
	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Net Asset Value		Total
Short-term investments	$	25.5	$	—	$	—	$	25.5
Commingled funds	—		—		732.8		732.8
Mortgage/asset backed securities and other	—		1.1		—		1.1
	$	25.5	$	1.1	$	732.8	$	759.4

The fair values of the Company's other postretirement benefit plans as of June 30, 2023 and 2022, by asset category and by the level of inputs used to determine fair value, were as follows:

	June 30, 2023
	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Net Asset Value		Total
Commingled trust fund	$	—	$	—	$	110.1	$	110.1
Short-term investments	10.3		—		—		10.3
	$	10.3	$	—	$	110.1	$	120.4

	June 30, 2022
	Fair Value Measurements Using Input Type
($ in millions)	Level 1		Level 2		Net Asset Value		Total
Commingled fund	$	—	$	—	$	97.7	$	97.7
Short-term investments	17.0		—		—		17.0
	$	17.0	$	—	$	97.7	$	114.7

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments in domestic and international equities are generally valued at the closing price reported on the active market on which they are traded. Commingled funds, limited partnerships and mutual funds are valued based on the net asset value ("NAV") established for the fund at each valuation date. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units/shares outstanding. Corporate and government agency bonds and other fixed income securities are valued using closing bid prices on an active market when possible, otherwise using evaluated bid prices.

Cash Flows — Employer Contributions

The Company made contributions to the qualified defined benefit pension plans of $0.0 million, $0.7 million and $19.9 million during fiscal years 2023, 2022 and 2021, respectively. The Company currently expects to make $11.5 million of required cash pension contributions to the domestic qualified defined benefit pension plans during fiscal year 2024. During the fiscal years ended June 30, 2023, 2022 and 2021, the Company made contributions of $3.6 million, $3.1 million and $3.8 million, respectively to other non-qualified pension plans.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by fiscal year. Pension benefits are currently paid from plan assets and other benefits are currently paid from both corporate assets and the VEBA trust.

($ in millions)	Pension Benefits		Other Benefits
2024	$	76.1	$	16.1
2025	$	73.5	$	16.0
2026	$	72.5	$	15.9
2027	$	71.3	$	15.6
2028	$	69.8	$	15.4
2029-2033	$	323.7	$	72.2

Other Benefit Plans

The Company also maintains defined contribution retirement and savings plans for substantially all domestic employees. Company contributions to the plans were $23.3 million in fiscal year 2023, $21.0 million in fiscal year 2022 and $19.2 million in fiscal year 2021.