Pension plan

12 Months Ended

Jun. 28, 2025

Pension and retirement plan

Pension and retirement plans

10. Pension and retirement plans

Pension Plan

The Company has a noncontributory defined benefit pension plan that covers substantially all current or former U.S. Employees (the “Plan”).

The Plan meets the definition of a defined benefit plan and, as a result, the Company applies ASC 715 pension accounting to the Plan. 

The following table outlines changes in benefit obligations, plan assets, and the funded status of the Plan as of the end of fiscal 2025 and 2024:

	June 28,		June 29,
	2025		2024
	(Thousands)
Changes in benefit obligations:
Benefit obligations at beginning of year	$	470,843	$	471,401
Service cost		11,480		10,252
Interest cost		24,732		24,579
Actuarial loss		11,292		1,202
Benefits paid		(44,367)		(36,591)
Benefit obligations at end of year	$	473,980	$	470,843
Changes in plan assets:
Fair value of plan assets at beginning of year	$	480,705	$	504,348
Actual return on plan assets		33,220		4,948
Benefits paid		(44,367)		(36,591)
Contributions		8,000		8,000
Fair value of plan assets at end of year	$	477,558	$	480,705
Funded status of the plan recognized as a non-current asset	$	3,578	$	9,862
Amounts recognized in accumulated other comprehensive loss:
Unrecognized net actuarial losses	$	199,856	$	185,284
Unamortized prior service cost		16		20
	$	199,872	$	185,304
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial loss	$	17,584	$	36,195
Amortization of net actuarial losses		(5,222)		(222)
Amortization of prior service costs		(4)		(4)
	$	12,358	$	35,969

Included in “Accumulated other comprehensive loss” at June 28, 2025, is $199.9 million of net actuarial losses that have not yet been recognized in net periodic pension cost, of which $11.4 million is expected to be recognized as a component of net periodic pension cost during fiscal 2026.

Assumptions used to calculate actuarial present values of benefit obligations are as follows:

	2025		2024
Discount rate	5.5	%	5.5	%

The discount rate selected by the Company for the Plan reflects the current rate at which the underlying liability could be settled at the measurement date as of June 28, 2025. The estimated discount rate in fiscal 2025 and fiscal 2024 was based on the spot yield curve approach, which applies the individual spot rates from a highly rated bond yield curve to each future year’s estimated cash flows.

The weighted-average assumptions used to determine net benefit costs are as follows:

	2025		2024
Discount rate	5.5	%	5.4	%
Expected return on plan assets	7.5	%	7.0	%
Rate of compensation increase	3.5	%	3.5	%
Interest crediting rate	4.3	%	4.0	%

Components of net periodic pension cost for the Plan during the last three fiscal years are as follows:

	Years Ended
	June 28,		June 29,		July 1,
	2025		2024		2023
	(Thousands)
Service cost within selling, general and administrative expenses	$	11,480	$	10,252	$	12,015
Interest cost		24,732		24,579		26,730
Expected return on plan assets		(41,721)		(39,941)		(48,860)
Recognized net actuarial loss and other		5,226		227		2,473
Net loss recognized due to benefit obligation settlement		—		—		37,350
Total net periodic pension benefit within other expense, net		(11,763)		(15,135)		17,693
Net periodic pension (benefit) cost	$	(283)	$	(4,883)	$	29,708

The Company made $8.0 million of contributions in fiscal 2025 and fiscal 2024 and expects to make approximately $8.0 million of contributions in fiscal 2026.

Benefit payments are expected to be paid to Plan participants as follows for the next five fiscal years and the aggregate for the five years thereafter (in thousands):

2026	$	48,424
2027		37,071
2028		39,736
2029		40,566
2030		40,752
2031 through 2035		206,028

The Plan’s assets are held in trust and were invested as follows as of the measurement date at the end of fiscal 2025 and 2024:

	2025		2024
Equity securities	64	%	69	%
Fixed income debt securities	32	%	29	%
Cash and cash equivalents	4	%	2	%

The general investment objectives of the Plan are to maximize returns through a diversified investment portfolio to earn annualized returns that exceed the long-term cost of funding the Plan’s pension obligations while maintaining reasonable and prudent levels of risk. The expected return on the Plan’s assets in fiscal 2026 is currently 8.0%, which is

the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the benefit obligation based upon the targeted investment allocations. In making this assumption, the Company evaluated expectations regarding future rates of return for the investment portfolio, along with the historical and expected distribution of investments by asset class and the historical rates of return for each of those asset classes. The mix of return seeking and fixed income investments is typically diversified. The Plan’s assets do not include any investments in Avnet common stock. As of June 28, 2025, the Company’s target allocation for the Plan’s investment portfolio is for return seeking investments to represent approximately 65% of the investment portfolio. The majority of the remaining investment portfolio is invested in fixed income investments, which typically have lower risks, but also lower returns.

The following table sets forth the fair value of the Plan’s investments as of June 28, 2025:

	Level 1		Level 2		Level 3		Net Asset Value		Total
	(Thousands)
Cash and cash equivalents	$	17,880	$	—	$	—	$	—	$	17,880
Return Seeking Investments:
Common stocks		—		—		—		147,890		147,890
Real estate		—		—		—		74,747		74,747
High yield credit and bonds		—		—		—		84,857		84,857
Fixed Income Investments:
U.S. government		—		—		—		113,401		113,401
Corporate		—		—		—		38,783		38,783
Total	$	17,880	$	—	$	—	$	459,678	$	477,558

Certain investments included in the table above are measured at fair value using the net asset value per share (or its equivalent) practical expedient and are not included in the three levels of the fair value hierarchy.

The following table sets forth the fair value of the Plan’s investments as of June 29, 2024:

	Level 1		Level 2		Level 3		Net Asset Value		Total
	(Thousands)
Cash and cash equivalents	$	8,586	$	—	$	—	$	—	$	8,586
Return Seeking Investments:
Common stocks		—		—		—		151,936		151,936
Real estate		—		—		—		95,974		95,974
High yield credit and bonds		—		—		—		85,064		85,064
Fixed Income Investments:
U.S. government		—		—		—		102,542		102,542
Corporate		—		—		—		36,603		36,603
Total	$	8,586	$	—	$	—	$	472,119	$	480,705

Each of these investments may be redeemed without restrictions in the normal course of business and there were no material unfunded commitments as of June 28, 2025.