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) unfunded defined benefit pension plans in Germany; (2) 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 other Plans other than Canadian Plans) postretirement benefit plan disclosures because our domestic benefit obligation is not significant as compared to our total benefit obligation, as our foreign benefit obligation is 95% of the total benefit obligation, and the assumptions used to value domestic and foreign plans were not significantly different.

During fiscal year 2015 and as a result of the sale of our North America foil operations, $11 million of benefits were transferred out of the pension plan along with a corresponding amount of plan assets resulting in settlement accounting. Various other pension plans recognized settlements totaling $3 million as a result of restructuring initiatives and other factors. The settlements resulted in an insignificant impact to the statement of operations.

In October 2014, the Society of Actuaries published an updated mortality table and mortality improvement scale for U.S. plans. We recognized an increase of $33 million to our benefit obligation and net actuarial loss as a result of updating mortality assumptions applicable to our U.S. plans. These deferred costs will be amortized on a straight-line basis to net periodic benefit costs in future years.

In June 2014, the Company amended its U.S. non-union retiree medical plan to extend retirees' option to participate in a Retiree Health Access Exchange (RHA). For calendar years 2014 through 2017, the Company will subsidize a portion of the retiree medical premium rates of the RHA. The Company will not provide a subsidy beginning in calendar year 2018. The amendment to the plan resulted in a plan remeasurement and recognition of prior service costs of approximately $11 million which is being amortized on a straight-line basis through December 31, 2017, subject to an annual remeasurement adjustment.

In August 2013, the Company amended its U.S. non-union retiree medical plan. Beginning January 2014, the health care benefits provided by the Company to retirees' was discontinued and replaced with the retirees' option to participate in a new Retiree Health Access Exchange. For calendar year 2014 and 2015, the Company will subsidize a portion of the retiree medical premium rates of the RHA. The amendment resulted in the Company no longer providing a subsidy beginning in calendar year 2016. The amendments to the plan resulted in a plan remeasurement and recognition of a negative plan amendment, which reduced our obligation by $97 million as of August 31, 2013. The negative plan amendment, net of unrecognized actuarial losses resulted in a credit balance of $70 million recorded in AOCI as of August 31, 2013. The $70 million is being amortized, on a straight-line basis, as a reduction to net periodic benefit cost from September 1, 2013 through December 31, 2015, subject to an annual remeasurement adjustment.

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., U.K., Canada, Germany, Italy, Switzerland and Brazil. We contributed the following amounts (in millions) to all plans.



	Year Ended March 31,
	2017		2016		2015
Funded pension plans	$	26	$	28	$	28
Unfunded pension plans	15		12		13
Savings and defined contribution pension plans	25		24		18
Total contributions	$	66	$	64	$	59

During fiscal year 2018, we expect to contribute $29 million to our funded pension plans, $16 million to our unfunded pension plans and $25 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 following tables present the change in benefit obligation, change in fair value of plan assets and the funded status for pension and other benefits (in millions).



	Pension Benefits						Other Benefits
	Year Ended March 31,						Year Ended March 31,
	2017			2016			2017			2016
Benefit obligation at beginning of period	$	1,868		$	1,863		$	151		$	139
Service cost	45			47			6			5
Interest cost	59			59			6			5
Members’ contributions	4			5			—			—
Benefits paid	(74		)	(65		)	(8		)	(10		)
Amendments	2			—			—			—
Curtailments, settlements and special termination benefits	(4		)	(1		)	—			—
Actuarial losses (gains)	35			(43		)	(3		)	11
Other	(4		)	(1		)	—			—
Currency (gains) losses	(66		)	4			1			1
Benefit obligation at end of period	$	1,865		$	1,868		$	153		$	151
Benefit obligation of funded plans	$	1,594		$	1,578		$	—		$	—
Benefit obligation of unfunded plans	271			290			153			151
Benefit obligation at end of period	$	1,865		$	1,868		$	153		$	151



	Pension Benefits
	Year Ended March 31,
	2017			2016
Change in fair value of plan assets
Fair value of plan assets at beginning of period	$	1,177		$	1,233
Actual return on plan assets	106			(21		)
Members’ contributions	4			5
Benefits paid	(74		)	(65		)
Company contributions	37			39
Settlements	(4		)	(1		)
Other	(3		)	(1		)
Currency	(43		)	(12		)
Fair value of plan assets at end of period	$	1,200		$	1,177



	March 31,
	2017						2016
	Pension Benefits			Other Benefits			Pension Benefits			Other Benefits
Funded status
Funded status at end of period:
Assets less the benefit obligation of funded plans	$	(394	)	$	—		$	(401	)	$	—
Benefit obligation of unfunded plans	(271		)	(153		)	(290		)	(151		)
	$	(665	)	$	(153	)	$	(691	)	$	(151	)
As included in our consolidated balance sheets within Total assets / (Total liabilities)
Other non- current assets	$	2		$	—		$	—		$	—
Accrued expenses and other current liabilities	(12		)	(10		)	(13		)	(9		)
Accrued postretirement benefits	(655		)	(143		)	(678		)	(142		)
	$	(665	)	$	(153	)	$	(691	)	$	(151	)

The postretirement amounts recognized in “Accumulated other comprehensive loss,” before tax effects, are presented in the table below (in millions), and includes 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,
	2017						2016
	Pension Benefits			Other Benefits			Pension Benefits			Other Benefits
Net actuarial losses	$	(375	)	$	(16	)	$	(444	)	$	(22	)
Prior service credit	4			7			9			6
Total postretirement amounts recognized in Accumulated other comprehensive (loss) income	$	(371	)	$	(9	)	$	(435	)	$	(16	)

The estimated amounts that will be amortized from “Accumulated other comprehensive loss” into net periodic benefit costs in fiscal year 2018 (exclusive of equity method investments) are $34 million for pension benefit costs related to net actuarial losses of $35 million partially offset by prior service credits of less than $1 million, and $2 million for other postretirement benefits, related to amortization of prior service costs of less than $1 million and net actuarial losses of $1 million.

The postretirement changes recognized in “Accumulated other comprehensive loss,” before tax effects, are presented in the table below (in millions), and include the impact related to our equity method investments.



	March 31,
	2017						2016
	Pension Benefits			Other Benefits			Pension Benefits			Other Benefits
Beginning balance in Accumulated other comprehensive (loss) income	$	(435	)	$	(16	)	$	(439	)	$	18
Curtailments, settlements, and special termination benefits	1			—			—			—
Net actuarial gain (loss)	11			2			(25		)	(11		)
Prior service cost	(2		)	—			—			—
Amortization of:
Prior service credits	(2		)	1			(2		)	(27		)
Actuarial losses (gains)	43			4			41			4
Effect of currency exchange	13			—			(10		)	—
Total postretirement amounts recognized in Accumulated other comprehensive (loss) income	$	(371	)	$	(9	)	$	(435	)	$	(16	)

Pension Plan Obligations

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets are presented in the table below (in millions).



	March 31,
	2017		2016
The projected benefit obligation and accumulated benefit obligation for all defined benefit pension plans:
Projected benefit obligation	$	1,865	$	1,868
Accumulated benefit obligation	$	1,711	$	1,692
Pension plans with projected benefit obligations in excess of plan assets:
Projected benefit obligation	$	1,769	$	1,868
Fair value of plan assets	$	1,103	$	1,177
Pension plans with accumulated benefit obligations in excess of plan assets:
Accumulated benefit obligation	$	1,581	$	1,567
Fair value of plan assets	$	1,049	$	1,039
Pension plans with projected benefit obligations less than plan assets:
Projected benefit obligation	$	96	$	—
Fair value of plan assets	$	97	$	—

Future Benefit Payments

Expected benefit payments to be made during the next ten fiscal years are listed in the table below (in millions).



	Pension Benefits		Other Benefits
2018	$	67	$	6
2019	71		6
2020	76		7
2021	79		8
2022	84		9
2023 through 2027	481		52
Total	$	858	$	88

Components of Net Periodic Benefit Cost

The components of net periodic benefit cost for the respective periods are listed in the table below (in millions).



	Pension Benefits									Other Benefits
	Year Ended March 31,									Year Ended March 31,
	2017			2016			2015			2017		2016			2015
Net periodic benefit costs
Service cost	$	45		$	47		$	43		$	6	$	5		$	5
Interest cost	59			59			66			6		5			5
Expected return on assets	(61		)	(67		)	(69		)	—		—			—
Amortization — losses	40			37			22			4		4			5
Amortization — prior service credit	(2		)	(2		)	(2		)	2		(27		)	(37		)
Curtailment, settlement, and special termination losses (gains)	1			—			1			—		—			(1		)
Net periodic benefit cost (income)	$	82		$	74		$	61		$	18	$	(13	)	$	(23	)
Proportionate share of non-consolidated affiliates’ pension costs	8			9			7			—		—			—
Total net periodic benefit costs (income) recognized	$	90		$	83		$	68		$	18	$	(13	)	$	(23	)

Actuarial Assumptions and Sensitivity Analysis

The weighted average assumptions used to determine benefit obligations and net periodic benefit costs for the respective periods are listed in the table below.



	Pension Benefits						Other Benefits
	Year Ended March 31,						Year Ended March 31,
	2017		2016		2015		2017		2016		2015
Weighted average assumptions used to determine benefit obligations
Discount rate	3.2	%	3.3	%	3.1	%	4.1	%	4.0	%	3.6	%
Average compensation growth	3.1	%	3.1	%	3.1	%	3.5	%	3.5	%	3.5	%
Weighted average assumptions used to determine net periodic benefit cost
Discount rate	3.3	%	3.1	%	4.0	%	4.0	%	3.6	%	4.1	%
Average compensation growth	3.1	%	3.1	%	3.1	%	3.5	%	3.5	%	3.5	%
Expected return on plan assets	5.4	%	5.6	%	6.1	%	—	%	—	%	—	%

In selecting the appropriate discount rate for each plan, for pension and other postretirement plans in Canada, the U.S., U.K., and other Euro zone 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 5.0% in fiscal 2018.

We provide unfunded health care and life insurance benefits to our retired employees in Canada, the U.S. and Brazil, for which we paid $8 million, $10 million, and $10 million in fiscal 2017, 2016 and 2015, respectively. The assumed health care cost trend used for measurement purposes is 7.0% for fiscal 2018, decreasing gradually to 5% in 2026 and remaining at that level thereafter.

A change of one percentage point in the assumed health care cost trend rates would have the following effects on our other benefits (in millions).



	1% Increase		1% Decrease
Sensitivity Analysis
Effect on service and interest costs	$	2	$	(2	)
Effect on benefit obligation	$	15	$	(13	)

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 No. 712, Compensation — Retirement Benefits. “Other long-term liabilities” and "Accrued expenses and other current liabilities" on our consolidated balance sheets include $9 million and $4 million, respectively, as of March 31, 2017, for these benefits. Comparatively, “Other long-term liabilities” and "Accrued expenses and other current liabilities" on our consolidated balance sheets include $12 million and $5 million, respectively, as of March 31, 2016.

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 Category	Target Allocation Ranges	Allocation in Aggregate as of March 31,
Asset Category	Target Allocation Ranges	2017	2016
Equity	15-55%	32%	32%
Fixed income	45-77%	49%	62%
Real estate	0-15%	3%	2%
Other	0-16%	17%	5%

Fair Value of Plan Assets

The following pension plan assets are measured and recognized at fair value on a recurring basis (in millions). Please 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 classified in Level 2, 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, 2017 Fair Value Measurements Using								March 31, 2016 Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Equity	—		—		—		—		—		—		—		—
Fixed income	136		54		—		190		131		44		—		175
Real estate	—		—		—		—		—		—		—		—
Cash and cash equivalents	8		—		—		8		9		—		—		9
Other	—		—		—		—		—		—		—		—
Investments measured at net asset value (A)	—		—		—		1,002		—		—		—		993
Total	$	144	$	54	$	—	$	1,200	$	140	$	44	$	—	$	1,177

(A) 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 statement of financial position.