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POST-EMPLOYMENT BENEFITS (Tables)
 12 Months Ended
Dec. 31, 2019
Employee Benefits [Abstract]  
Disclosure of defined benefit plans actuarial assumptions and contributions
Below is a summary of the actual contributions to the plans.
 
Years ended December 31
 
(In millions of dollars)
2019

2018

 
 
 
Employer contribution
179

148

Employee contribution
36

39

 
 
 
Total contribution
215

187


Principal actuarial assumptions
 
2019

2018

Weighted average of significant assumptions:
 
 
 
 
 
Defined benefit obligation
 
 
Discount rate
3.2
%
3.9
%
Rate of compensation increase
1.0% to 4.5%, based on employee age

1.0% to 4.5%, based on employee age

Mortality rate
CIA Private with CPM B Scale

CIA Private with CPM B scale

Pension expense
 
 
Discount rate
3.9
%
3.7
%
Rate of compensation increase
1.0% to 4.5%, based on employee age

3.0
%
Mortality rate
CIA Private with CPM B Scale

CIA Private with CPM B scale


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)
Note

2019

2018

 
 
 
 
Plan assets, at fair value
 
2,449

1,965

Accrued benefit obligations
 
(2,900
)
(2,330
)
 
 
 
 
Net deferred pension liability
 
(451
)
(365
)
 
 
 
 
Consists of:
 
 
 
Deferred pension asset
 
14

8

Deferred pension liability
22

(465
)
(373
)
 
 
 
 
Net deferred pension liability
 
(451
)
(365
)
Disclosure of sensitivity of key assumptions
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
 
(In millions of dollars)
2019

2018

 
 
 
Discount rate
 
 
Impact of 0.5% increase
(233
)
(196
)
Impact of 0.5% decrease
266

224

 
 
 
Rate of future compensation increase
 
 
Impact of 0.25% increase
17

16

Impact of 0.25% decrease
(17
)
(16
)
 
 
 
Mortality rate
 
 
Impact of 1 year increase
61

47

Impact of 1 year decrease
(64
)
(50
)
Disclosure of net defined benefit liability (asset)
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)
2019

2018

 
 
 
Plan cost:
 
 
Current service cost
121

143

Past service recovery
(21
)
(43
)
Net interest cost
8

12

 
 
 
Net pension expense
108

112

Administrative expense
4

4

 
 
 
Total pension cost recognized in net income
112

116


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)
2019

2018

 
 
 
Interest income on plan assets
(81
)
(73
)
Interest cost on plan obligation
89

85

 
 
 
Net interest cost, recognized in finance costs
8

12


The remeasurement recognized in the Consolidated Statements of Comprehensive Income is determined as follows:
 
Years ended December 31
 
(In millions of dollars)
2019

2018

 
 
 
Return (loss) on plan assets (excluding interest income)
277

(114
)
Change in financial assumptions
(401
)
158

Change in demographic assumptions
—

(10
)
Effect of experience adjustments
(30
)
20

 
 
 
Remeasurement (loss) gain, recognized in other comprehensive income and equity
(154
)
54



We also provide supplemental unfunded defined benefit pensions to certain executives. Below is a summary of our accrued benefit obligations, pension expense included in employee salaries and benefits, net interest cost, remeasurements, and benefits paid.
 
Years ended December 31
 
(In millions of dollars)
2019

2018

 
 
 
Accrued benefit obligation, beginning of year
67

66

Pension expense, recognized in employee salaries and benefits expense
2

2

Net interest cost, recognized in finance costs
3

2

Remeasurements, recognized in other comprehensive income
5

1

Benefits paid
(4
)
(4
)
 
 
 
Accrued benefit obligation, end of year
73

67


Below is a summary of our pension fund assets.
 
Years ended December 31
 
(In millions of dollars)
2019

2018

 
 
 
Plan assets, beginning of year
1,965

1,890

Interest income
81

73

Remeasurements, recognized in other comprehensive income and equity
277

(114
)
Contributions by employees
36

39

Contributions by employer
179

148

Benefits paid
(86
)
(68
)
Administrative expenses paid from plan assets
(3
)
(3
)
 
 
 
Plan assets, end of year
2,449

1,965


Below is a summary of the accrued benefit obligations arising from funded obligations.
 
Years ended December 31
 
(In millions of dollars)
2019

2018

 
 
 
Accrued benefit obligations, beginning of year
2,330

2,342

Current service cost
121

143

Past service recovery
(21
)
(43
)
Interest cost
89

85

Benefits paid
(86
)
(68
)
Contributions by employees
36

39

Remeasurements, recognized in other comprehensive income and equity
431

(168
)
 
 
 
Accrued benefit obligations, end of year
2,900

2,330
Disclosure of fair value of plan assets
ALLOCATION OF PLAN ASSETS
 
Allocation of plan assets
Target asset allocation percentage
 
2019

2018

 
 
 
 
Equity securities:
 
 
 
Domestic
12.0
%
11.8
%
8% to 18%
International
48.1
%
46.7
%
37% to 67%
Debt securities
39.5
%
41.2
%
25% to 45%
Other - cash
0.4
%
0.3
%
0% to 2%
 
 
 
 
Total
100.0
%
100.0
%
 

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)
2019

2018

 
 
 
Equity securities
1,472

1,149

Debt securities
967

810

Other - cash
10

6

 
 
 
Total fair value of plan assets
2,449

1,965