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POST-EMPLOYMENT BENEFITS | 12 Months Ended
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Dec. 31, 2017
Employee Benefits [Abstract] |
POST-EMPLOYMENT BENEFITS | POST-EMPLOYMENT BENEFITS ACCOUNTING POLICY Post-employment benefits - defined benefit pension plans We offer contributory and non-contributory defined benefit pension plans that provide employees with a lifetime monthly pension on retirement. We separately calculate our net obligation for each defined benefit pension plan by estimating the amount of future benefits employees have earned in return for their service in the current and prior years and discounting those benefits to determine their present value. We accrue our pension plan obligations as employees provide the services necessary to earn the pension. We use a discount rate based on market yields on high-quality corporate bonds at the measurement date to calculate the accrued pension benefit obligation. Remeasurements of the accrued pension benefit obligation are determined at the end of the year and include actuarial gains and losses, returns on plan assets, and any change in the effect of the asset ceiling. These are recognized in other comprehensive income and retained earnings. The cost of pensions is actuarially determined and takes into account the following assumptions and methods for pension accounting related to our defined benefit pension plans:
• | expected rates of salary increases for calculating increases in future benefits;
• | mortality rates for calculating the life expectancy of plan members; and
• | past service costs from plan amendments are immediately expensed in net income.
We recognize our net pension expense for our defined benefit pension plans and contributions to defined contribution plans as an employee benefit expense in operating costs on the Consolidated Statements of Income in the periods the employees provide the related services. Post-employment benefits - Defined Contribution Pension Plan On July 1, 2016, we closed the defined benefit pension plans to new members and introduced a Defined Contribution Pension Plan. This change did not impact current members; any employee enrolled in any of the defined benefit pension plans continues to earn pension benefits and credited service in their respective plan. We recognize a pension expense in relation to our contributions to the Defined Contribution Pension Plan when the employee provides service to the Company. Termination benefits We recognize termination benefits as an expense when we are committed to a formal detailed plan to terminate employment before the normal retirement date and it is not realistic that we will withdraw it. USE OF ESTIMATES AND JUDGMENTS ESTIMATES Detailed below are the significant assumptions used in the actuarial calculations used to determine the amount of the defined benefit pension obligation and related expense. Significant estimates are involved in determining pension-related balances. Actuarial estimates are based on projections of employees' compensation levels at the time of retirement. Maximum retirement benefits are primarily based on career average earnings, subject to certain adjustments. The most recent actuarial valuations were completed as at January 1, 2017. Principal actuarial assumptions
| 2017 |  | 2016 |
Weighted average of significant assumptions: |  |
Defined benefit obligation |  |
Discount rate | 3.7 | % | 4.1 | %
Rate of compensation increase | 3.0 | % | 3.0 | %
Mortality rate | CIA Private with CPM B Scale |  | CIA Private with CPM B Scale |
Pension expense |  |
Discount rate | 4.1 | % | 4.3 | %
Rate of compensation increase | 3.0 | % | 3.0 | %
Mortality rate | CIA Private with CPM B Scale |  | CIA Private with CPM B Scale |
Sensitivity of key assumptions In the sensitivity analysis shown below, we determine the defined benefit obligation for our funded plans using the same method used to calculate the defined benefit obligation we recognize on the Consolidated Statements of Financial Position. We calculate sensitivity by changing one assumption while holding the others constant. This leads to limitations in the analysis as the actual change in defined benefit obligation will likely be different from that shown in the table, since it is likely that more than one assumption will change at a time, and that some assumptions are correlated.
| Increase (decrease) in accrued benefit obligation |  | Increase (decrease) in pension expense |
(In millions of dollars) | 2017 |  | 2016 |  | 2017 |  | 2016 |
Discount rate |  |  |  |
Impact of 0.5% increase | (207 | ) | (174 | ) | (25 | ) | (21 | )
Impact of 0.5% decrease | 237 |  | 199 |  | 27 |  | 23 |
Rate of future compensation increase |  |  |  |
Impact of 0.25% increase | 21 |  | 18 |  | 4 |  | 4 |
Impact of 0.25% decrease | (21 | ) | (18 | ) | (4 | ) | (4 | )
Mortality rate |  |  |  |
Impact of 1 year increase | 49 |  | 48 |  | 6 |  | 5 |
Impact of 1 year decrease | (52 | ) | (49 | ) | (6 | ) | (5 | )
EXPLANATORY INFORMATION We sponsor a number of contributory and non-contributory pension arrangements for employees, including defined benefit and defined contributions plans. We do not provide any non-pension post-retirement benefits. We also provide unfunded supplemental pension benefits to certain executives. The Rogers Defined Benefit Pension Plan provides a defined pension based on years of service and earnings, with no increases in retirement for inflation. The plan was closed to new members on July 1, 2016. Participation in the plan was voluntary and enrolled employees are required to make regular contributions into the plan. In 2009 and 2011, we purchased group annuities for our then-retirees. Accordingly, the current plan members are primarily active Rogers employees as opposed to retirees. An unfunded supplemental pension plan is provided to certain senior executives to provide benefits in excess of amounts that can be provided from the defined benefit pension plan under the Income Tax Act (Canada)’s maximum pension limits. We also sponsor smaller defined benefit pension plans in addition to the Rogers Defined Benefit Pension Plan. The Pension Plan for Employees of Rogers Communications Inc. and the Rogers Pension Plan for Selkirk Employees are closed legacy defined benefit pension plans. The Pension Plan for Certain Federally Regulated Employees of Rogers Cable Communications Inc. is similar to the main pension plan but only federally regulated employees from the Cable business were eligible to participate; this plan was closed to new members on July 1, 2016. In addition to the defined benefit pension plans, we also provide various defined contribution plans to certain groups of employees of the Company and to employees hired after March 31, 2016 who choose to join. Additionally, we provide other tax-deferred savings arrangements, including a Group RRSP and a Group TFSA program, which are accounted for as deferred contribution arrangements. The Pension Committee of the Board oversees the administration of our registered pension plans, which includes the following principal areas:
• | overseeing the funding, administration, communication, and investment management of the plans;
• | selecting and monitoring the performance of all third parties performing duties in respect of the plans, including audit, actuarial, and investment management services;
• | proposing, considering, and approving amendments;
• | proposing, considering, and approving amendments to the Statement of Investment Policies and Procedures;
• | reviewing management and actuarial reports prepared in respect of the administration of the pension plans; and
• | reviewing and approving the audited financial statements of the pension plan funds.
The assets of the defined benefit pension plans are held in segregated accounts that are isolated from our assets. They are invested and managed following all applicable regulations and the Statement of Investment Policies and Procedures with the objective of having adequate funds to pay the benefits promised by the plan. Investment and market return risk is managed by:
• | contracting professional investment managers to execute the investment strategy following the Statement of Investment Policies and Procedures and regulatory requirements;
• | specifying the kinds of investments that can be held in the plans and monitoring compliance;
• | using asset allocation and diversification strategies; and
• | purchasing annuities from time to time.
The funded pension plans are registered with the Office of the Superintendent of Financial Institutions and are subject to the Federal Pension Benefits Standards Act. Two of the defined contribution plans are registered with the Financial Services Commission of Ontario, subject to the Ontario Pension Benefits Act. The plans are also registered with the Canada Revenue Agency and are subject to the Income Tax Act (Canada). The benefits provided under the plans and the contributions to the plans are funded and administered in accordance with all applicable legislation and regulations. The defined benefit pension plans are subject to certain risks related to contribution increases, inadequate plan surplus, unfunded obligations, and market rates of return, which we mitigate through the governance described above. Any significant changes to these items may affect our future cash flows. Below is a summary of the estimated present value of accrued plan benefits and the estimated market value of the net assets available to provide these benefits for our funded plans.
| As at December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Plan assets, at fair value | 1,890 |  | 1,619 |
Accrued benefit obligations | (2,342 | ) | (2,006 | )
Net deferred pension liability | (452 | ) | (387 | )
Consists of: |  |
Deferred pension asset | 8 |  | 17 |
Deferred pension liability | (460 | ) | (404 | )
Net deferred pension liability | (452 | ) | (387 | )
Below is a summary of our pension fund assets.
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Plan assets, beginning of year | 1,619 |  | 1,432 |
Interest income | 72 |  | 68 |
Remeasurements, return on plan assets recognized in other comprehensive income (loss) and equity | 92 |  | 32 |
Contributions by employees | 42 |  | 35 |
Contributions by employer | 145 |  | 125 |
Benefits paid | (76 | ) | (70 | )
Administrative expenses paid from plan assets | (4 | ) | (3 | )
Plan assets, end of year | 1,890 |  | 1,619 |
Below is a summary of the accrued benefit obligations arising from funded obligations.
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Accrued benefit obligations, beginning of year | 2,006 |  | 1,713 |
Service cost | 137 |  | 119 |
Interest cost | 81 |  | 75 |
Benefits paid | (76 | ) | (70 | )
Contributions by employees | 42 |  | 35 |
Remeasurements, recognized in other comprehensive income and equity | 152 |  | 134 |
Accrued benefit obligations, end of year | 2,342 |  | 2,006 |
Below is a summary of the effect of the asset ceiling.
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Asset ceiling, beginning of year | — |  | (3 | )
Interest | — |  | — |
Remeasurements, change in asset ceiling (excluding interest income) | — |  | 3 |
Asset ceiling, end of year | — |  | — |
Plan assets are comprised mainly of pooled funds that invest in common stocks and bonds that are traded in an active market. Below is a summary of the fair value of the total pension plan assets by major category.
| As at December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Equity securities | 1,134 |  | 990 |
Debt securities | 742 |  | 625 |
Other - cash | 14 |  | 4 |
Total fair value of plan assets | 1,890 |  | 1,619 |
Below is a summary of our net pension expense. Net interest cost is included in finance costs; other pension expenses are included in salaries and benefits expense in operating costs on the Consolidated Statements of Income.
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Plan cost: |  |
Service cost | 137 |  | 119 |
Net interest cost | 9 |  | 7 |
Net pension expense | 146 |  | 126 |
Administrative expense | 4 |  | 3 |
Total pension cost recognized in net income | 150 |  | 129 |
Net interest cost, a component of the plan cost above, is included in finance costs and is outlined as follows:
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Interest income on plan assets | (72 | ) | (68 | )
Interest cost on plan obligation | 81 |  | 75 |
Net interest cost recognized in finance costs | 9 |  | 7 |
The remeasurement recognized in the Consolidated Statements of Comprehensive Income is determined as follows:
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Return on plan assets (excluding interest income) | 92 |  | 32 |
Change in financial assumptions | (168 | ) | (69 | )
Effect of experience adjustments | 16 |  | (65 | )
Change in asset ceiling | — |  | 3 |
Remeasurement loss recognized in other comprehensive loss and equity | (60 | ) | (99 | )
We also provide supplemental unfunded pension benefits to certain executives. Below is a summary of our accrued benefit obligations, pension expense included in employee salaries and benefits, net interest cost, and other comprehensive income.
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Accrued benefit obligation, beginning of year | 62 |  | 56 |
Pension expense included in employee salaries and benefits expense | 2 |  | 5 |
Net interest cost recognized in finance costs | 3 |  | 2 |
Remeasurement loss recognized in other comprehensive income | 2 |  | 2 |
Benefits paid | (3 | ) | (3 | )
Accrued benefit obligation, end of year | 66 |  | 62 |
We also have defined contribution plans with total pension expense of $6 million in 2017 (2016 - $3 million), which is included in employee salaries and benefits expense. ALLOCATION OF PLAN ASSETS
| Allocation of plan assets | Target asset allocation percentage
| 2017 |  | 2016 |
Equity securities: |  |  |
Domestic | 11.8 | % | 12.4 | % | 7% to 17%
International | 48.1 | % | 48.8 | % | 33% to 63%
Debt securities | 39.3 | % | 38.5 | % | 30% to 50%
Other - cash | 0.8 | % | 0.3 | % | 0% to 2%
Total | 100.0 | % | 100.0 | % |
Plan assets consist primarily of pooled funds that invest in common stocks and bonds. The pooled funds have investments in our equity securities and corporate bonds. As a result, approximately $7 million (2016 - $2 million) of plan assets are indirectly invested in our own securities under our defined benefit plans. We make contributions to the plans to secure the benefits of plan members and invest in permitted investments using the target ranges established by our Pension Committee, which reviews actuarial assumptions on an annual basis. Below is a summary of the actual contributions to the plans.
| Years ended December 31 |
(In millions of dollars) | 2017 |  | 2016 |
Employer contribution | 145 |  | 125 |
Employee contribution | 42 |  | 35 |
Total contribution | 187 |  | 160 |
We estimate our 2018 employer contributions to our funded plans to be $141 million. The actual value will depend on the results of the 2018 actuarial funding valuations. The average duration of the defined benefit obligation as at December 31, 2017 is 19 years (2016 - 19 years). Actual net return on plan assets was $160 million in 2017 (2016 - $97 million). We have recognized a cumulative loss in other comprehensive income and retained earnings of $425 million as at December 31, 2017 (2016 - $380 million).

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