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Pension and Employee Benefit Plans
 12 Months Ended
Mar. 31, 2021
Pension and Employee Benefit Plans [Abstract]  
Pension and Employee Benefit Plans

Note 18: Pension and Employee Benefit Plans

Defined Contribution Employee Benefit Plans
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. During fiscal 2021, as part of its response to the negative impacts of the COVID-19 pandemic, the Company suspended matching employee contributions for part of the year. The Company’s expense for defined contribution employee benefit plans during fiscal 2021, 2020, and 2019 was $3.0 million, $6.6 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.

Statutory Termination Plans
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.

Pension Plans
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, Austria, and Italy and are closed to new participants. Liabilities associated with pension plans maintained in Austria and Germany have been classified as liabilities held for sale on the March 31, 2021 consolidated balance sheet since the pension plans will convey to the buyers of the Company’s liquid- and air-cooled automotive businesses.  The held for sale pension liabilities totaled $17.8 million as of March 31, 2021.  See Note 2 for additional information.

The Company contributed $19.3 million, $3.5 million, and $8.0 million to its U.S. pension plans during fiscal 2021, 2020, and 2019, respectively.  In addition, the Company contributed $2.2 million, $2.3 million, and $5.9 million to its non-U.S. pension plans during fiscal 2021, 2020, and 2019, respectively.  These contributions are reported in the change in other liabilities in the consolidated statements of cash flows.


Postretirement Plans
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 each of fiscal 2021, 2020, and 2019 was $0.3 million.

Measurement Date
The Company uses March 31 as the measurement date for its pension and postretirement plans.

Changes in benefit obligations and plan assets, as well as the funded status of the Company’s global pension plans, were as follows:

  
Years ended March 31,
  
   
2021
    
2020
  
Change in benefit obligation:
            
Benefit obligation at beginning of year
  
$
264.7
    
$
258.8
  
Service cost
    
0.4
      
0.4
  
Interest cost
    
7.9
      
9.1
  
Actuarial loss
    
2.7
      
15.5
  
Benefits paid
    
(17.1
)
    
(18.2
)
Curtailment gains (a)
    
(0.1
)
    
(0.3
)
Effect of exchange rate changes
    
2.1
      
(0.6
)
Benefit obligation at end of year
  
$
260.6
    
$
264.7
  
                 
Change in plan assets:
                
Fair value of plan assets at beginning of year
  
$
131.1
    
$
155.1
  
Actual return on plan assets
    
47.8
      
(11.6
)
Benefits paid
    
(17.1
)
    
(18.2
)
Employer contributions
    
21.5
      
5.8
  
Fair value of plan assets at end of year
  
$
183.3
    
$
131.1
  
Funded status at end of year
  
$
(77.3
)
  
$
(133.6
)
                 
Amounts recognized in the consolidated balance sheets:
                
Current liability
  
$
(0.9
)
  
$
(2.7
)
Noncurrent liability
    
(58.6
)
    
(130.9
)
Liabilities held for sale
    
(17.8
)
    
-
  
   
$
(77.3
)
  
$
(133.6
)
(a)
The curtailment gains in fiscal 2021 and 2020 are associated with headcount reductions in Europe within the Automotive segment.  The Company recognizes curtailment gains as a component of net periodic benefit cost in the period headcount reductions occur.  See Note 6 for additional information on the Company’s restructuring activities.

As of March 31, 2021, 2020, and 2019, the benefit obligation associated with the Company’s non-U.S. pension plans totaled $36.4 million, $35.7 million, and $36.5 million respectively. The $0.7 million increase in the benefit obligation associated with non-U.S. pension plans as of March 31, 2021, compared with the prior year, was primarily due to a $2.2 million impact of foreign currency exchange rate changes and service and interest cost totaling $0.7 million, partially offset by employer contributions of $2.2 million for benefits paid to plan participants during the year. In fiscal 2020, the $0.8 million decrease primarily resulted from employer contributions of $2.2 million for benefits paid to plan participants during the year, partially offset by service and interest cost totaling $0.9 million.

The accumulated benefit obligation for pension plans was $258.9 million and $263.1 million as of March 31, 2021 and 2020, respectively.  The net actuarial loss related to the pension plans recognized in accumulated other comprehensive loss was $151.1 million and $191.5 million as of March 31, 2021 and 2020, respectively.


Costs for the Company’s global pension plans included the following components:

  
Years ended March 31,
  
   
2021
    
2020
    
2019
  
Components of net periodic benefit cost:
                  
Service cost
  
$
0.4
    
$
0.4
    
$
0.5
  
Interest cost
    
7.9
      
9.1
      
9.6
  
Expected return on plan assets
    
(11.5
)
    
(12.0
)
    
(12.3
)
Amortization of net actuarial loss
    
6.9
      
6.0
      
5.6
  
Settlements (a)
    
0.2
      
0.2
      
0.2
  
Net periodic benefit cost
  
$
3.9
    
$
3.7
    
$
3.6
  
                         
Other changes in benefit obligation recognized in other comprehensive income (loss):
                        
Net actuarial gain (loss)
  
$
33.8
    
$
(38.7
)
  
$
(7.7
)
Amortization of net actuarial loss
    
7.1
      
6.2
      
5.8
  
Total recognized in other comprehensive income (loss)
  
$
40.9
    
$
(32.5
)
  
$
(1.9
)
(a)
The settlement charges resulted from activity associated with the Company’s non-U.S. pension plans.

The Company amortized $7.1 million, $6.2 million, and $5.6 million of net actuarial loss in fiscal 2021, 2020, and 2019, respectively.  In each of these years, less than $1.0 million of the amortization was attributable to the Company’s non-U.S. pension plans.  The Company estimates $6.6 million of net actuarial loss for its pension plans will be amortized from accumulated other comprehensive loss into net periodic benefit cost during fiscal 2022.  The fiscal 2022 estimated amortization includes less than $1.0 million related to the Company’s non-U.S. pension plans. In addition, the Company expects to recognize approximately $7.0 million of net actuarial losses in fiscal 2022 as part of the anticipated losses to be recorded upon sale of the liquid- and air-cooled automotive businesses.

The Company used a discount rate of 3.2% and 3.4% as of March 31, 2021 and 2020, respectively, for determining its benefit obligations under its U.S. pension plans. The Company used a weighted-average discount rate of 1.0% as of both March 31, 2021 and 2020, respectively, for determining its benefit obligations under its non-U.S. pension plans.  The Company used a discount rate of 3.4%, 4.0%, and 4.0% to determine its costs under its U.S. pension plans for fiscal 2021, 2020, and 2019, respectively.  The Company used a weighted-average discount rate of 1.4%, 1.7%, and 1.9% to determine its costs under its non-U.S. pension plans for fiscal 2021, 2020, and 2019, 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’s U.S. pension plan weighted-average asset allocations at the measurement dates of March 31, 2021 and 2020 were as follows:

  
March 31, 2021
    
March 31, 2020
  
   
Target allocation
    
Plan assets
    
Target allocation
    
Plan assets
  
Equity securities
    
76
%
    
73
%
    
65
%
    
60
%
Debt securities
    
18
%
    
17
%
    
21
%
    
22
%
Real estate investments
    
5
%
    
9
%
    
13
%
    
16
%
Cash and cash equivalents
    
1
%
    
1
%
    
1
%
    
2
%
     
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.  As of March 31, 2021 and 2020, the Company’s pension plans did not directly own shares of Modine common stock.


The Company employs a total return investment approach, whereby a mix of investments are used to maximize the long-term growth of principal, while avoiding excessive risk.  The Company has established pension plan guidelines based upon an evaluation of market conditions, 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.

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 2021, 2020, and 2019 U.S. pension plan expense, the expected rate of return on plan assets was 7.5 percent.  For fiscal 2022 U.S. pension plan expense, the Company has assumed a rate of return on plan assets of 7.5 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 $13.0 million to its U.S. plans during fiscal 2022.

Estimated pension benefit payments, excluding payments for pension liabilities held for sale, for the next ten fiscal years are as follows:

Fiscal Year
  
Estimated Pension
Benefit Payments
  
2022
  
$
15.2
  
2023
    
15.5
  
2024
    
15.6
  
2025
    
15.6
  
2026
    
15.5
  
2027-2031
    
74.6