Post-employee benefit plans (Tables)

12 Months Ended

Dec. 31, 2020

Components of post-employment benefit plans service cost

COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS SERVICE COST


FOR THE YEAR ENDED DECEMBER 31		2020	2019
DB pension		(219)	(193)
DC pension		(113)	(109)
OPEBs		(2)	(3)
Less:
	Capitalized benefit plans cost	65	59


Total post-employment benefit plans service cost		(269)	(246)

Components of post-employment benefit plans financing cost

COMPONENTS OF POST-EMPLOYMENT BENEFIT PLANS FINANCING COST


FOR THE YEAR ENDED DECEMBER 31	2020	2019
DB pension	(10)	(19)
OPEBs	(36)	(44)
Total interest on post-employment benefit obligations	(46)	(63)

Defined benefit plans recognized in comprehensive income

The statements of comprehensive income include the following amounts before income taxes.


		2020	2019
Cumulative losses recognized directly in equity, January 1		(2,701)	(2,892)
	Actuarial gains in other comprehensive income from continuing operations(1)	732	191
	Increase in the effect of the asset limit in other comprehensive income from continuing operations (2)	(45)	—
Cumulative losses recognized directly in equity, December 31		(2,014)	(2,701)

(1)The cumulative actuarial losses recognized in the statements of comprehensive income are $2,215 million in 2020.

(2)The cumulative decrease in the effect of the asset limit recognized in the statements of comprehensive income is $201 million in 2020.

Components of post-employment benefit (obligations) assets

The following table shows the change in post-employment benefit obligations and the fair value of plan assets.


		DB PENSION PLANS		OPEB PLANS		TOTAL
		2020	2019	2020	2019	2020	2019
Post-employment benefit obligations, January 1		(25,650)	(23,404)	(1,529)	(1,469)	(27,179)	(24,873)
	Current service cost	(219)	(193)	(2)	(3)	(221)	(196)
	Interest on obligations	(782)	(872)	(46)	(55)	(828)	(927)
	Actuarial losses(1)	(1,830)	(2,498)	(90)	(80)	(1,920)	(2,578)

	Benefit payments	1,342	1,326	67	77	1,409	1,403
	Employee contributions	(10)	(10)	—	—	(10)	(10)

	Other	—	1	—	1	—	2
Post-employment benefit obligations, December 31		(27,149)	(25,650)	(1,600)	(1,529)	(28,749)	(27,179)
Fair value of plan assets, January 1		25,530	23,071	320	287	25,850	23,358
	Expected return on plan assets(2)	772	853	10	11	782	864
	Actuarial gains(1)	2,632	2,742	20	27	2,652	2,769
	Benefit payments	(1,342)	(1,326)	(67)	(77)	(1,409)	(1,403)
	Employer contributions	183	180	61	72	244	252
	Employee contributions	10	10	—	—	10	10

Fair value of plan assets, December 31		27,785	25,530	344	320	28,129	25,850
Plan asset (deficit)		636	(120)	(1,256)	(1,209)	(620)	(1,329)
Effect of asset limit		(65)	(20)	—	—	(65)	(20)
Post-employment benefit asset (liability), December 31		571	(140)	(1,256)	(1,209)	(685)	(1,349)
Post-employment benefit assets		1,277	558	—	—	1,277	558
Post-employment benefit obligations		(706)	(698)	(1,256)	(1,209)	(1,962)	(1,907)

(1)Actuarial gains (losses) include experience gains of $2,613 million in 2020 and $2,525 million in 2019.

(2)The actual return on plan assets was $3,434 million or 13.7% in 2020 and $3,633 million or 16.0% in 2019.

Funded status of post-employment benefit plans cost

The following table shows the funded status of our post-employment benefit obligations.


	FUNDED		PARTIALLY FUNDED(1)		UNFUNDED(2)		TOTAL
FOR THE YEAR ENDED DECEMBER 31	2020	2019	2020	2019	2020	2019	2020	2019
Present value of post-employment benefit obligations	(26,421)	(24,961)	(2,011)	(1,918)	(317)	(300)	(28,749)	(27,179)
Fair value of plan assets	27,727	25,474	402	376	—	—	28,129	25,850
Plan surplus (deficit)	1,306	513	(1,609)	(1,542)	(317)	(300)	(620)	(1,329)

(1)The partially funded plans consist of supplementary executive retirement plans (SERPs) for eligible employees and certain OPEBs. The company partially funds the SERPs through letters of credit and a retirement compensation arrangement account with Canada Revenue Agency. Certain paid-up life insurance benefits are funded through life insurance contracts.

(2)Our unfunded plans consist of certain OPEBs, which are paid as claims are incurred.

Disclosure of significant assumptions

We used the following key assumptions to measure the post-employment benefit obligations and the net benefit plans cost for the DB pension plans and OPEB plans. These assumptions are long-term, which is consistent with the nature of post-employment benefit plans.


		DB PENSION PLANS AND OPEB PLANS
FOR THE YEAR ENDED DECEMBER 31		2020		2019

Post-employment benefit obligations
	Discount rate	2.6	%	3.1	%
	Rate of compensation increase	2.25	%	2.25	%
	Cost of living indexation rate(1)	1.6	%	1.6	%
	Life expectancy at age 65 (years)	23.2		23.2

(1)Cost of living indexation rate is only applicable to DB pension plans.


		DB PENSION PLANS AND OPEB PLANS
FOR THE YEAR ENDED DECEMBER 31		2020		2019

Net post-employment benefit plans cost
	Discount rate	3.2	%	4.0	%
	Rate of compensation increase	2.25	%	2.25	%
	Cost of living indexation rate(1)	1.6	%	1.6	%
	Life expectancy at age 65 (years)	23.2		23.1

(1)Cost of living indexation rate is only applicable to DB pension plans.

Healthcare cost trend rates and sensitivity analysis

The following table shows the effect of a 1% change in the assumed trend rates in healthcare costs.


EFFECT ON POST-EMPLOYMENT BENEFITS – INCREASE/(DECREASE)	1% INCREASE	1% DECREASE
Total service and interest cost	3	(3)
Post-employment benefit obligations	110	(95)

The following table shows a sensitivity analysis of key assumptions used to measure the net post-employment benefit obligations and the net post-employment benefit plans cost for our DB pension plans and OPEB plans.


			IMPACT ON NET POST-EMPLOYMENT BENEFIT PLANS COST FOR 2020 – INCREASE/(DECREASE)		IMPACT ON POST-EMPLOYMENT BENEFIT OBLIGATIONS AT DECEMBER 31, 2020 – INCREASE/(DECREASE)
	CHANGE IN ASSUMPTION		INCREASE IN ASSUMPTION	DECREASE IN ASSUMPTION	INCREASE IN ASSUMPTION	DECREASE IN ASSUMPTION
Discount rate	0.5	%	(76)	64	(1,897)	2,127
Life expectancy at age 65	1 year		38	(38)	1,092	(1,092)

Post-employment benefit plan assets

The following table shows the target allocations for 2020 and the allocation of our post-employment benefit plan assets at December 31, 2020 and 2019.


	WEIGHTED AVERAGE TARGET ALLOCATION	TOTAL PLAN ASSETS FAIR VALUE
ASSET CATEGORY	2020	December 31, 2020		December 31, 2019
Equity securities	0%-40%	23	%	22	%
Debt securities	60%-100%	60	%	62	%
Alternative investments	0%-50%	17	%	16	%
Total		100	%	100	%

The following table shows the fair value of the DB pension plan assets for each category.


FOR THE YEAR ENDED DECEMBER 31			2020	2019
Observable markets data
	Equity securities
		Canadian	1,027	1,017
		Foreign	5,242	4,534
	Debt securities
		Canadian	13,361	13,216
		Foreign	2,913	2,385
		Money market	369	219
Non-observable markets inputs
	Alternative investments
		Private equities	2,564	2,119
		Hedge funds	1,200	1,001
		Real estate	1,033	948
		Other	76	91
Total			27,785	25,530

Disclosure of contributions to post-employment benefit plans

The following table shows the amounts we contributed to the DB and DC pension plans and the payments made to beneficiaries under OPEB plans.


	DB PLANS		DC PLANS		OPEB PLANS
FOR THE YEAR ENDED DECEMBER 31	2020	2019	2020	2019	2020	2019
Contributions/payments	(183)	(180)	(114)	(110)	(61)	(72)