Eligible U.S. employees who were employed by the Company as of December 31, 1995 are covered under the Company-sponsored defined benefit retirement plan. In 1997, the plan was amended to freeze all plan benefits as of December 31, 1996. Benefits for the defined benefit retirement plan are based primarily on age of employees at date of retirement, years of creditable service and the average of the highest 60 months of pay during the 15 years prior to the plan freeze date. The Company also has defined benefit pension plans for eligible employees outside of the U.S., as well as an unfunded nonqualified supplemental defined benefit plan for certain U.S. executives.

On May 23, 2018, the Company’s Board of Directors approved the termination of its frozen U.S. defined benefit pension plan (“Plan”). During the first quarter of 2020, the Company offered the option of receiving a lump sum payment to certain participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments. Approximately 1,300 participants elected to receive the settlement, and lump sum payments of approximately $49 million were made from plan assets to these participants in June 2019. The benefit obligation settled approximated payments to plan participants and a pre-tax settlement charge of $17 million ($12 million after-tax) was recorded during the first quarter of 2020. During the second quarter of 2020, the Company transferred the remainder of the Plan’s pension obligation to a third-party insurance provider by purchasing annuity contracts for approximately $280 million which was fully funded directly by plan assets. The third-party insurance provider assumed the obligation to pay future pension benefits and provide administrative services on November 1, 2019. As a result, the remaining previously recorded unrecognized losses in accumulated other comprehensive loss for this Plan were recognized as expense and a pre-tax settlement charge of approximately $105 million ($78 million after-tax) was recorded in other income (expense), net, in the Company’s consolidated statements of operations during the second quarter of 2020. As of March 31, 2020 and 2019, this defined benefit pension plan had an accumulated comprehensive loss of approximately nil and $121 million.

During the third quarter of 2020, a cash payment of $114 million was made to settle a participant’s liability from the executive benefit retirement plan. As a result, a majority of the remaining recorded unrecognized losses in accumulated other comprehensive loss for this Plan were recognized as expense and a pre-tax settlement charge of approximately $11 million ($8 million after-tax) was recorded in other income (expense), net, in the Company’s consolidated statements of operations. As of March 31, 2020 and 2019, this plan had an accumulated comprehensive loss of approximately $1 million and $12 million.

The Company’s non-U.S. defined benefit pension plans cover eligible employees located predominantly in Norway, the United Kingdom, Germany, and Canada. Benefits for these plans are based primarily on each employee’s final salary, with annual adjustments for inflation. The obligations in Norway are largely related to the state-regulated pension plan which is managed by the Norwegian Public Service Pension Fund (“SPK”). According to the terms of the SPK, the plan assets of state regulated plans in Norway must correspond very closely to the pension obligation calculated using the principles codified in Norwegian law. In the U.K., the Company has subsidiaries that participate in a joint pension plan. The pension obligation in Germany is unfunded with the exception of the contractual trust arrangement used to fund pensions of McKesson Europe’s Management Board.



	U.S. Plans									Non-U.S. Plans
	Years Ended March 31,									Years Ended March 31,
(In millions)	2020			2019			2018			2020			2019			2018
Service cost - benefits earned during the year	$	—		$	—		$	3		$	16		$	15		$	15
Interest cost on projected benefit obligation	6			14			14			19			21			22
Expected return on assets	(4		)	(16		)	(19		)	(22		)	(23		)	(26		)
Amortization of unrecognized actuarial loss and prior service costs	2			5			6			6			4			5
Curtailment/settlement loss	127			4			2			—			1			1
Net periodic pension expense	$	131		$	7		$	6		$	19		$	18		$	17

The projected unit credit method is utilized in measuring net periodic pension expense over the employees’ service life for the pension plans. Unrecognized actuarial losses exceeding 10% of the greater of the projected benefit obligation or the market value of assets are amortized straight-line over the average remaining future service period of active employees.



	U.S. Plans						Non-U.S. Plans
	Years Ended March 31,						Years Ended March 31,
(In millions)	2020			2019			2020			2019
Change in benefit obligations
Benefit obligation at beginning of period ⁽¹⁾	$	439		$	485		$	990		$	1,035
Service cost	—			—			16			15
Interest cost	6			14			19			21
Actuarial loss (gain)	20			4			(36		)	35
Benefits paid	(179		)	(64		)	(43		)	(36		)
Annuity Premium Transfer	(276		)	—			—			—
Expenses paid	—			—			—			(1		)
Acquisitions	—			—			2			1
Foreign exchange impact and other	—			—			(52		)	(80		)
Benefit obligation at end of period ⁽¹⁾	$	10		$	439		$	896		$	990

Change in plan assets
Fair value of plan assets at beginning of period	$	322		$	335		$	642		$	687
Actual return on plan assets	27			12			3			18
Employer and participant contributions	116			39			28			23
Benefits paid	(179		)	(64		)	(43		)	(36		)
Annuity Premium Transfer	(276		)	—			—			—
Expenses paid	—			—			(1		)	(1		)
Foreign exchange impact and other	(10		)	—			(35		)	(49		)
Fair value of plan assets at end of period	$	—		$	322		$	594		$	642

Funded status at end of period	$	(10	)	$	(117	)	$	(302	)	$	(348	)

Amounts recognized on the balance sheet
Assets	$	—		$	7		$	49		$	20
Current liabilities ⁽²⁾	(1		)	(115		)	(162		)	(13		)
Long-term liabilities	(9		)	(9		)	(189		)	(355		)
Total	$	(10	)	$	(117	)	$	(302	)	$	(348	)



	U.S. Plans									Non-U.S. Plans
	Years Ended March 31,									Years Ended March 31,
(In millions)	2020			2019			2018			2020			2019			2018
Net actuarial loss (gain)	$	(3	)	$	8		$	(15	)	$	(24	)	$	42		$	(11	)
Prior service credit	—			—			—			—			—			(2		)
Amortization of:
Net actuarial loss	(129		)	(9		)	(8		)	(6		)	(5		)	(6		)
Prior service credit (cost)	—			—			—			—			—			—
Foreign exchange impact and other	—			—			—			(6		)	(12		)	19
Total recognized in other comprehensive loss (income)	$	(132	)	$	(1	)	$	(23	)	$	(36	)	$	25		$	—

The Company expects to amortize $5 million of actuarial loss for the pension plans from stockholders’ equity to pension expense in 2021. The comparable 2020 amount was $8 million of actuarial loss. In addition, the Company recognized $127 million in actuarial losses for the pension plans to stockholders’ equity in 2020 as a result of $116 million from the termination of the U.S. defined benefit pension plan and $11 million from the settlement from the executive benefit retirement plan for a recently retired executive.

Projected benefit obligations related to the Company’s unfunded U.S. plans were $10 million and $124 million at March 31, 2020 and 2019. Pension obligations for its unfunded plans are based on the recommendations of independent actuaries. Projected benefit obligations relating to the Company’s unfunded non-U.S. plans were $298 million and $293 million at March 31, 2020 and 2019. Funding obligations for its non-U.S. plans vary based on the laws of each non-U.S. jurisdiction.

Expected benefit payments for the Company’s pension plans are as follows: $36 million, $35 million, $36 million, $36 million and $38 million for 2021 to 2025 and $208 million for 2026 through 2030. Expected benefit payments are based on the same assumptions used to measure the benefit obligations and include estimated future employee service. Expected contributions to be made for the Company’s pension plans are $33 million for 2021.



	U.S. Plans			Non-U.S. Plans
	Years Ended March 31,			Years Ended March 31,
	2020	2019	2018	2020	2019	2018
Net periodic pension expense
Discount rates	3.66%	3.83%	3.55%	2.03%	2.35%	2.34%
Rate of increase in compensation	N/A ⁽¹⁾	N/A ⁽¹⁾	4.00	2.93	3.13	2.72
Expected long-term rate of return on plan assets	4.00	5.25	6.25	3.01	3.71	4.03
Benefit obligation
Discount rates	3.08%	3.65%	3.69%	2.03%	2.13%	2.35%
Rate of increase in compensation	N/A⁽¹⁾	N/A⁽¹⁾	N/A⁽¹⁾	2.93	3.18	2.59

The Company’s defined benefit pension plan liabilities are valued using a discount rate based on a yield curve developed from a portfolio of high quality corporate bonds rated AA or better whose maturities are aligned with the expected benefit payments of its plans. For March 31, 2020, the Company’s U.S. defined benefit liabilities are valued using a weighted average discount rate of 3.08%, which represents a decrease of 57 basis points from its 2019 weighted-average discount rate of 3.65%. The Company’s non-U.S. defined benefit pension plan liabilities are valued using a weighted-average discount rate of 2.03%, which represents a decrease of 10 basis points from its 2019 weighted average discount rate of 2.13%.

Investment Strategy: The overall objective for U. S. pension plan assets was to generate long-term investment returns consistent with capital preservation and prudent investment practices, with a diversification of asset types and investment strategies. Periodic adjustments were made to provide liquidity for benefit payments and to rebalance plan assets to their target allocations.

In September 2018, a new investment allocation strategy was put in place to protect the funded status of the U.S. plan assets subsequent to Board approval of U.S. pension plan termination. As of March 31, 2020, no assets remained related to the U.S. pension plan. The target allocation for U.S. plan assets at March 31, 2019 was 100% fixed income investments including cash and cash equivalents. Fixed income investments include corporate bonds, government securities, mortgage-backed securities, asset-backed securities, other directly held fixed income investments, and fixed income commingled funds. The real estate investments were in a commingled real estate fund.

For non-U.S. plan assets, the investment strategies are subject to local regulations and the asset/liability profiles of the plans in each individual country. Plan assets of the non-U.S. plans are broadly invested in a manner appropriate to the nature and duration of the expected future retirement benefits payable under the plans. Plan assets are primarily invested in high-quality corporate and government bond funds and equity securities. Assets are properly diversified to avoid excessive reliance on any particular asset, issuer or group of undertakings so as to avoid accumulations of risk in the portfolio as a whole.

The Company develops the expected long-term rate of return assumption based on the projected performance of the asset classes in which plan assets are invested. The target asset allocation was determined based on the liability and risk tolerance characteristics of the plans and at times may be adjusted to achieve overall investment objectives.

Fair Value Measurements: The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on unadjusted quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. The following tables represent the Company’s pension plan assets as of March 31, 2020 and 2019, using the fair value hierarchy by asset class:



	U.S. Plans								Non-U.S. Plans
	March 31, 2020								March 31, 2020
(In millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	13	$	—	$	—	$	13
Equity securities:
Common and preferred stock	—		—		—		—		—		—		—		—
Equity commingled funds	—		—		—		—		53		75		—		128
Fixed income securities:
Government securities	—		—		—		—		6		139		—		145
Corporate bonds	—		—		—		—		14		17		—		31
Mortgage-backed securities	—		—		—		—		—		—		—		—
Asset-backed securities and other	—		—		—		—		—		—		—		—
Fixed income commingled funds	—		—		—		—		107		101		—		208
Other:
Real estate funds	—		—		—		—		3		2		3		8
Other	—		—		—		—		19		—		—		19
Total	$	—	$	—	$	—	$	—	$	215	$	334	$	3	$	552
Assets held at NAV practical expedient ⁽¹⁾
Equity commingled funds							—								8
Fixed income commingled funds							—								—
Real estate funds							—								—
Other							—								34
Total plan assets							$	—							$	594



	U.S. Plans								Non-U.S. Plans
	March 31, 2019								March 31, 2019
(In millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	11	$	—	$	—	$	11	$	6	$	—	$	—	$	6
Equity securities:
Common and preferred stock	—		—		—		—		—		—		—		—
Equity commingled funds	—		—		—		—		62		82		—		144
Fixed income securities:
Government securities	—		33		—		33		4		135		—		139
Corporate bonds	—		273		—		273		8		18		—		26
Mortgage-backed securities	—		—		—		—		—		—		—		—
Asset-backed securities and other	—		5		—		5		—		—		—		—
Fixed income commingled funds	—		—		—		—		125		110		6		241
Other:
Real estate funds	—		—		—		—		2		3		—		5
Other	—		—		—		—		21		—		3		24
Total	$	11	$	311	$	—	$	322	$	228	$	348	$	9	$	585
Assets held at NAV practical expedient ⁽¹⁾
Equity commingled funds							—								8
Fixed income commingled funds							—								—
Real estate funds							—								—
Other							—								49
Total plan assets							$	322							$	642

Cash and cash equivalents - Cash and cash equivalents include short-term investment funds that maintain daily liquidity and aim to have constant unit values of $1.00. The funds invest in short-term fixed income securities and other securities with debt-like characteristics emphasizing short-term maturities and high credit quality. Directly held cash and cash equivalents are classified as Level 1 investments. Cash and cash equivalents include money market funds and other commingled funds, which have daily net asset values derived from the underlying securities; these are classified as Level 1 investments.

Common and preferred stock - This investment class consists of common and preferred shares issued by U.S. and non-U.S. corporations. Common shares are traded actively on exchanges and price quotes are readily available. Preferred shares may not be actively traded. Holdings of common shares are generally classified as Level 1 investments.

Fixed income securities - Government securities consist of bonds and debentures issued by central governments or federal agencies; corporate bonds consist of bonds and debentures issued by corporations; mortgage-backed securities consist of debt obligations secured by a mortgage or pool of mortgages; and asset-backed securities primarily consist of debt obligations secured by an asset or pool of assets other than mortgages. Inputs to the valuation methodology include quoted prices for similar assets in active markets, and inputs that are observable for the asset, either directly or indirectly, for substantially the full term of the asset. Multiple prices and price types are obtained from pricing vendors whenever possible, enabling cross-provider price validations. Fixed income securities are generally classified as Level 1 or Level 2 investments.

Real estate funds - The value of the real estate funds is reported by the fund manager and is based on a valuation of the underlying properties. Inputs used in the valuation include items such as cost, discounted future cash flows, independent appraisals and market based comparable data. The real estate funds are classified as Level 1, 2, or 3 investments.

Other - At March 31, 2020 and 2019, this includes $29 million and $35 million of plan asset value relating to the SPK. In principle, the SPK is organized as a pay-as-you-go system guaranteed by the Norwegian government as it holds no Company-owned assets to back the pension liabilities. The Company pays a pension premium used to fund the plan, which is paid directly to the Norwegian government who establishes an account for each participating employer to keep track of the financial status of the plan, including managing the contributions and the payments. Further, the investment return credited to this account is determined annually by the SPK based on the performance of long-term government bonds.

The Company contributes to a number of multiemployer pension plans under the terms of collective-bargaining agreements that cover union-represented employees in the U.S. In 2017, it also contributed to the Pensjonsordningen for Apoteketaten (“POA”), a mandatory multiemployer pension scheme for its pharmacy employees in Norway, managed by the association of Norwegian Pharmacies.

The risks of participating in these multiemployer plans are different from single-employer pension plans in the following aspects: (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Actions taken by other participating employers may lead to adverse changes in the financial condition of a multiemployer benefit plan and the Company’s withdrawal liability and contributions may increase.

Contributions and amounts accrued for U.S. Plans were not material for the years ended March 31, 2020, 2019, and 2018. Contributions to the POA for non-U.S. Plans exceeding 5% of total plan contributions were $17 million, $27 million and $16 million in 2020, 2019 and 2018. Based on actuarial calculations, the Company estimates the funded status for its non-U.S. Plans to be approximately 76% as of March 31, 2020. No amounts were accrued for liability associated with the POA as the Company has no intention to withdraw from the plan.

The Company has a contributory retirement savings plan (“RSP”) for U.S. eligible employees. Eligible employees may contribute to the RSP up to 75% of their eligible compensation on a pre-tax or post-tax basis not to exceed IRS limits. The Company makes matching contributions in an amount equal to 100% of the employee’s first 3% of pay contributed and 50% for the next 2% of pay contributed. The Company also may make an additional annual matching contribution for each plan year to enable participants to receive a full match based on their annual contribution. The Company also contributed to non-U.S. plans that are available in certain countries. Contribution expenses for the RSP and non-U.S. plans were $102 million, $92 million and $82 million for the years ended March 31, 2020, 2019, and 2018.