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Retirement Benefits
 12 Months Ended
Jun. 30, 2024
Retirement Benefits [Abstract]  
Retirement Benefits Retirement Benefits
Pensions - The Company has noncontributory defined benefit pension plans covering eligible employees, including certain employees in foreign countries. Our largest plans are generally closed to new participants. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat-dollar amounts and years of service. We also have arrangements for certain key employees, which provide for supplemental retirement benefits. In general, the Company's policy is to fund these plans based on legal requirements, tax considerations, local practices and investment opportunities. We also sponsor defined contribution plans and participate in government-sponsored programs in certain foreign countries. During 2023, we acquired several U.S. and Non-U.S. defined benefit pension plans in connection with the Acquisition.
A summary of the Company's defined benefit pension plans follows:
U.S. Pension BenefitsNon-U.S. Pension Benefits
202420232022202420232022
Benefit cost
Service cost$29,303 $34,705 $48,382 $22,033 $22,713 $28,256 
Interest cost189,505 165,074 92,475 79,489 60,394 17,775 
Expected return on plan assets(257,531)(237,704)(227,302)(95,147)(73,441)(40,586)
Amortization of prior service cost907 536 3,500 369 395 603 
Amortization of unrecognized actuarial loss1,605 8,316 140,735 6,389 8,862 16,553 
Amortization of transition obligation— — — — — 8 
One-time charges related to divestitures— — — — (2,480)— 
Net periodic benefit cost$(36,211)$(29,073)$57,790 $13,133 $16,443 $22,609 

Components of net pension benefit cost, other than service cost, are included in other (income) expense, net in the Consolidated Statement of Income.
U.S. Pension BenefitsNon-U.S. Pension Benefits
2024202320242023
Change in benefit obligation
Benefit obligation at beginning of year$4,007,740 $3,939,482 $1,827,951 $1,019,837 
Service cost29,303 34,705 22,033 22,713 
Interest cost189,505 165,074 79,489 60,394 
Acquisition— 320,401 — 860,738 
Plan amendments16,656 2,521 — — 
Divestiture— — — (1,779)
Actuarial gain(105,971)(210,414)(5,863)(139,062)
Benefits paid(414,054)(244,029)(81,028)(68,729)
Foreign currency translation and other— — (26,060)73,839 
Benefit obligation at end of year$3,723,179 $4,007,740 $1,816,522 $1,827,951 
Change in plan assets
Fair value of plan assets at beginning of year$3,548,112 $3,353,420 1,907,183 1,008,733 
Actual gain (loss) on plan assets179,145 161,568 97,737 (130,169)
Acquisition— 263,927 — 876,780 
Employer contributions49,888 13,226 105,273 139,812 
Benefits paid(414,054)(244,029)(81,028)(68,729)
Foreign currency translation and other— — (26,149)80,756 
Fair value of plan assets at end of year$3,363,091 $3,548,112 $2,003,016 $1,907,183 
Funded status$(360,088)$(459,628)$186,494 $79,232 
U.S. Pension BenefitsNon-U.S. Pension Benefits
2024202320242023
Amounts recognized on the Consolidated Balance Sheet1
Investments and other assets$— $— $243,783 $145,809 
Other accrued liabilities(62,967)(57,023)(832)(760)
Pensions and other postretirement benefits(297,121)(402,605)(56,457)(65,817)
Net amount recognized$(360,088)$(459,628)$186,494 $79,232 
Amounts recognized in Accumulated Other Comprehensive (Loss)1
Net actuarial loss$315,206 $344,395 $232,967 $249,542 
Prior service cost20,259 4,511 1,619 1,978 
Net amount recognized$335,465 $348,906 $234,586 $251,520 

1The presentation of the amounts recognized on the Consolidated Balance Sheet and in accumulated other comprehensive (loss) is on a debit (credit) basis and excludes the effect of income taxes.

As of the date of the Acquisition, the Meggitt plans were remeasured at fair value using accounting policies consistent with Parker plans.

At June 30, 2024, the U.S. benefit obligation decreased primarily due to higher discount rates. The Non-U.S. benefit obligation decreased slightly at June 30, 2024, primarily due to benefit payments and foreign currency translation, partially offset by service cost and interest cost related increases. At June 30, 2023, both the U.S. and Non-U.S. benefit obligations increased primarily due to plans acquired with the Acquisition, partially offset by increased discount rates.
In 2024, the predominant drivers of the decrease in U.S. plan assets are lump sum benefit payments and lower than expected actual return on assets. Contributions are the largest factor explaining the increase in Non-U.S. plan assets during 2024. The plans acquired with the Acquisition are the primary contributing factor for the increase in U.S. and Non-U.S. plan assets fair value during 2023.
The accumulated benefit obligation for all defined benefit plans was $5.4 billion and $5.7 billion at June 30, 2024 and 2023, respectively.
Information for pension plans with accumulated benefit obligations in excess of plan assets:
20242023
Accumulated benefit obligation
$3,778,330 $4,352,952 
Fair value of plan assets
3,502,313 3,955,284 
Information for pension plans with projected benefit obligations in excess of plan assets:
20242023
Projected benefit obligation
$4,211,478 $4,545,650 
Fair value of plan assets
3,794,100 4,019,445 
We expect to make cash contributions of approximately $141 million to our defined benefit pension plans in 2025, of which $63 million and $78 million relate to U.S. and non-U.S. plans, respectively.
The following benefit payments are expected to be paid during each respective year:
Estimated U.S.
Benefit Payments		Estimated Non-U.S.
Benefit Payments
2025$320,196 $90,611 
2026271,372 94,139 
2027275,091 96,586 
2028275,915 98,000 
2029285,845 101,622 
2030 - 20341,401,115 531,742 
The assumptions used to measure net periodic benefit cost for the Company's defined benefit plans are:
202420232022
U.S. defined benefit plan
Discount rate4.88 %4.36 %2.55 %
Average increase in compensation3.81 %3.35 %3.05 %
Expected return on plan assets7.00 %6.50 %6.50 %
Non-U.S. defined benefit plans
Discount rate
0.90% to 5.20%
0.60% to 5.06%
0.25% to 2.95%
Average increase in compensation
2.00% to 4.40%
1.75% to 4.00%
1.75% to 4.50%
Expected return on plan assets
0.30% to 6.80%
1.00% to 5.10%
1.00% to 4.50%
The assumptions used to measure the benefit obligation for the Company's defined benefit plans are:
20242023
U.S. defined benefit plan
Discount rate5.27 %4.88 %
Average increase in compensation3.76 %3.81 %
Non-U.S. defined benefit plans
Discount rate
1.46% to 5.23%
0.90% to 5.20%
Average increase in compensation
2.00% to 4.50%
2.00% to 4.40%

The discount rate assumption is based on current rates of high-quality, long-term corporate bonds over the same estimated time period that benefit payments will be required to be made. The expected return on plan assets assumption is based on the weighted-average expected return of the various asset classes in the plans' portfolio. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.

The weighted-average allocation of the majority of the assets related to the defined benefit plans is as follows:
20242023
Equity securities26 %30 %
Debt securities49 %45 %
Other investments25 %25 %
100 %100 %
The weighted-average target asset allocation as of June 30, 2024 is 36 percent equity securities, 48 percent debt securities and 16 percent other investments. The investment strategy for the Company's worldwide defined benefit pension plan assets focuses on achieving prudent actuarial funding ratios while maintaining acceptable levels of risk in order to provide adequate liquidity to meet immediate and future benefit requirements. This strategy requires investment portfolios that are broadly diversified across various asset classes and external investment managers. Assets held in the U.S. and U.K. defined benefit plans account for 63 percent and 24 percent, respectively, of our total defined benefit plan assets. The overall investment strategy with respect to our U.S. defined benefit plan is to use a funding strategy more heavily weighted toward liability-hedging assets as the funded status improves. Over time, we will continue to add long duration fixed income investments to the portfolio. These securities are highly correlated with our pension liabilities and will be managed in a liability framework. For the U.K. defined benefit plans, the overall investment strategy is primarily to utilize growth assets to achieve a return in excess of the risk-free rate and to utilize fixed income investments to achieve a rate of return that is at least commensurate with the changes in the cost of providing fixed and index-linked annuities.
The fair values of pension plan assets at June 30, 2024 and at June 30, 2023, by asset class, are as follows:
June 30, 2024Quoted Prices In
 Active Markets
 (Level 1)		Significant Other
 Observable Inputs
 (Level 2)		Significant
 Unobservable
 Inputs
 (Level 3)
Cash and cash equivalents$454,659 $448,510 $6,149 $— 
Equity securities
U.S. based companies679,972 679,972 — — 
Non-U.S. based companies144,760 85,692 59,068 — 
Fixed income securities
Corporate debt securities933,191 28,790 904,401 — 
Government issued securities809,892 556,599 253,293 — 
Mutual funds
Equity funds12,494 12,494 — — 
Mutual funds measured at net asset value331,215 
Common/Collective trusts measured at net asset value1,561,752 
Limited Partnerships measured at net asset value125,695 
Other financial instruments312,477 12,717 299,760 — 
Total at June 30, 2024$5,366,107 $1,824,774 $1,522,671 $— 
June 30, 2023Quoted Prices In
 Active Markets
 (Level 1)		Significant Other
 Observable Inputs
 (Level 2)		Significant
 Unobservable
 Inputs
 (Level 3)
Cash and cash equivalents$341,812 $333,978 $7,834 $— 
Equity securities
U.S. based companies538,118 523,649 14,469 — 
Non-U.S. based companies152,354 76,173 76,181 — 
Fixed income securities
Corporate debt securities464,056 118,536 345,520 — 
Government issued securities610,326 570,368 39,958 — 
Mutual funds
Equity funds11,406 11,406 — — 
Fixed income funds357 357 — — 
Mutual funds measured at net asset value264,346 
Common/Collective trusts measured at net asset value2,626,832 
Limited Partnerships measured at net asset value137,077 
Other financial instruments308,610 — 308,610 — 
Total at June 30, 2023$5,455,294 $1,634,467 $792,572 $— 
Cash and cash equivalents are valued at cost, which approximates fair value. The U.S. defined benefit plan uses a liability-hedging initiative that requires the plan to maintain a certain cash balance. At June 30, 2024, this required cash balance totaled approximately $51 million.
Equity securities are valued at the closing price reported on the active market on which the individual securities are traded. U.S. based companies include Parker stock with a fair value of $672 million and $519 million as of June 30, 2024 and 2023, respectively.
Fixed income securities are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded.
Mutual funds are valued using the closing market price reported on the active market on which the fund is traded or at net asset value per share and primarily consist of equity and fixed income funds. The equity funds primarily provide exposure to U.S. and international equities, real estate and commodities. The fixed income funds primarily provide exposure to high-yield securities and emerging market fixed income instruments. Mutual funds measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are presented in the tables above to permit reconciliation of the fair value hierarchy to total pension plan assets. Redemption of a certain mutual fund is subject to a lock-up period, lasting throughout its duration, scheduled to terminate July 2026. However, this mutual fund may extend its duration up to an additional two years under certain conditions.
Common/Collective trusts primarily consist of equity, fixed income and real estate funds and are valued using the closing market price reported on the active market on which the fund is traded or at net asset value per share. Common/Collective trust investments can be redeemed without restriction after giving appropriate notice to the issuer. Generally, redemption of the entire investment balance of all common/collective trusts requires no more than a 90-day notice period. The equity funds provide exposure to large, mid and small cap U.S. equities, international large and small cap equities and emerging market equities. The fixed income funds provide exposure to U.S., international and emerging market debt securities. Common/Collective trusts measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are presented in the tables above to permit reconciliation of the fair value hierarchy to total pension plan assets.
Limited Partnerships' interest in venture capital investments are measured at fair value based on net asset value as determined by the respective fund investment. A certain limited partnership investment is restricted to a maximum redemption of 20 percent of its account balance every six months upon a 90-day notification period. Limited Partnerships measured at fair value using the net asset value per share practical expedient have not been categorized in the fair value hierarchy and are presented in the tables above to permit reconciliation of the fair value hierarchy to total pension plan assets.
Other financial instruments primarily include insurance contracts within the Non-U.S. pension plans' asset portfolio, as well as derivative instruments associated with our liability hedging strategies. Insurance contracts are valued at the present value of future cash flows promised under the terms of the insurance contracts. Derivative instruments are valued based on the closing prices of contracts or market observable inputs. Other financial instruments also include net payables for securities purchased but not settled associated with the U.S. pension plan asset portfolio.
The primary investment objective of equity securities and equity funds, within both the mutual fund and common/collective trust asset class, is to obtain capital appreciation in an amount that at least equals various market-based benchmarks. The primary investment objective of fixed income securities and fixed income funds, within both the mutual fund and common/collective trust asset class, is to provide for a constant stream of income while preserving capital. The primary investment objective of limited partnerships is to achieve capital appreciation through an investment program focused on specialized investment strategies. The primary investment objective of the investments in the other financial instruments category is to provide a stable rate of return over a specified period of time and execute the liability hedging strategies.

Employee Savings Plan - We sponsor an employee stock ownership plan ("ESOP") as part of our legacy savings and investment 401(k) plan. The ESOP is available to eligible domestic employees. Effective January 1, 2022, the Company matching contributions were increased, up to a maximum of five percent of eligible compensation from the previous maximum of four percent of eligible compensation. These contributions are recorded as compensation expense. Participants may direct company matching contributions to any investment option within the savings and investment 401(k) plan.
202420232022
Shares held by ESOP3,422,781 3,779,985 4,125,214 
Company matching contributions$116,867 $104,237 $87,554 
In addition to shares within the ESOP, as of June 30, 2024, employees have elected to invest in 1,081,148 shares of common stock within a company stock fund of the savings and investment 401(k) plan.
The Company has a retirement income account ("RIA") within our legacy savings and investment 401(k) plan. We make a cash contribution to the participant's RIA each year. Most participants receive a flat three percent annual contribution of eligible compensation, with some grandfathered participants receiving annual contributions calculated at a higher percent of eligible compensation. No participant receives less than the flat three percent contribution. Participants do not contribute to the RIA. The Company recognized $77 million, $63 million and $57 million in expense related to the RIA in 2024, 2023 and 2022, respectively.
In September 2022, we acquired several defined contribution plans relating to the Meggitt acquisition, which were comprised of similar company matching contributions and RIA features as our legacy plan. During 2023, we recorded additional company matching expense of $9 million and additional RIA type expense of $11 million for the acquired plans. These plans were merged into our legacy savings and investment 401(k) plan during 2024.
Other Postretirement Benefits - The Company provides postretirement medical and life insurance benefits to certain retirees and eligible dependents. Most plans are contributory, with retiree contributions adjusted annually. The plans are unfunded and pay stated percentages of covered medically necessary expenses incurred by retirees after subtracting payments by Medicare or other providers and after stated deductibles have been met. For most plans, the Company has established cost maximums to more effectively control future medical costs. We have reserved the right to change these benefit plans. During 2023, we acquired postretirement medical and life insurance plans in connection with the Acquisition.
The Company recognized $2 million, $2 million and $1 million in expense related to other postretirement benefits in 2024, 2023 and 2022, respectively. Components of net other postretirement benefit cost, other than service cost, are included in other (income) expense, net in the Consolidated Statement of Income.
20242023
Change in benefit obligation
Benefit obligation at beginning of year$78,567 $48,876 
Service cost279 330 
Interest cost3,571 3,004 
Acquisition— 39,112 
Actuarial gain(3,952)(4,403)
Benefits paid(7,057)(8,352)
Benefit obligation at end of year$71,408 $78,567 
Funded status$(71,408)$(78,567)
Amounts recognized on the Consolidated Balance Sheet1
Other accrued liabilities$(7,173)$(7,831)
Pensions and other postretirement benefits(64,235)(70,736)
Net amount recognized$(71,408)$(78,567)
Amounts recognized in Accumulated Other Comprehensive (Loss)1
Net actuarial gain$(20,155)$(17,952)
1The presentation of the amounts recognized on the Consolidated Balance Sheet and in accumulated other comprehensive (loss) is on a debit (credit) basis and is before the effect of income taxes.
As of the date of the Acquisition, the Meggitt plans were remeasured at fair value using accounting policies consistent with Parker plans.
The decrease in the benefit obligation in 2024 is due to higher discount rates, partially offset by a loss from updated medical rate trends. The increase in the benefit obligation in 2023 is due to the Acquisition.
The assumptions used to measure the net periodic benefit cost for postretirement benefit obligations are:
202420232022
Discount rate4.86 %4.26 %2.36 %
Current medical cost trend rate (Pre-65 participants)7.85 %6.73 %6.45 %
Current medical cost trend rate (Post-65 participants)8.18 %6.81 %6.72 %
Ultimate medical cost trend rate 4.50 %4.50 %4.50 %
Medical cost trend rate decreases to ultimate in year203320312029
The discount rate assumption used to measure the benefit obligation was 5.23 percent and 4.86 percent in 2024 and 2023, respectively.
Estimated future benefit payments for other postretirement benefits are as follows:
2025$7,173 
20266,942 
20276,740 
20286,495 
20296,223 
2030 - 203427,418 
Other - The Company has established nonqualified deferred compensation programs, which permit officers, directors and certain management employees to annually elect to defer a portion of their compensation, on a pre-tax basis, until their retirement. The retirement benefit to be provided is based on the amount of compensation deferred, company matching contributions and earnings on the deferrals. In addition, we maintain a defined contribution nonqualified supplemental executive pension plan in which the Company is the only contributor. During 2024, 2023 and 2022, we recorded expense (income) relating to these programs of $23 million, $20 million and $(21) million, respectively.
The Company has invested in corporate-owned life insurance policies to assist in meeting the obligations under these programs. The policies are held in a rabbi trust and are recorded as assets of the Company.