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Employment Benefits
 12 Months Ended
Dec. 31, 2017
Employment Benefits [Abstract]  
Employment Benefits
25. Employment Benefits

 

(1) Employment benefit obligations as of December 31, 2016 and 2017 are as follows:

 

            2016      2017  
            In millions of won  

Net defined benefit obligations

    ￦        1,678,470        1,476,201  

Other long-term employee benefit obligations

         7,788        6,868  
     

 

 

     

 

 

  
   ￦        1,686,258        1,483,069  
     

 

 

     

 

 

  

 

(2) Principal assumptions on actuarial valuation as of December 31, 2016 and 2017 are as follows:

 

     2016      2017  

Discount rate

      2.45%~2.64%        2.75%~2.90%  

Future salary and benefit levels

      5.23%        4.88%  

Weighted average duration

      13.34 years        13.40 years  

 

(3) Details of expense relating to defined benefit plans for the years ended December 31, 2016 and 2017 are as follows:

 

            2015      2016      2017  
           

In millions of won

  

Current service cost

    ￦        315,811        378,930        392,820  

Interest cost

         63,808        67,104        79,524  

Expected return on plan assets

         (22,557 )       (23,612 )       (31,307 ) 

Loss from settlement

         (641 )       (706 )       (1,055 ) 
     

 

 

     

 

 

     

 

 

  
   ￦        356,421        421,716        439,982  
     

 

 

     

 

 

     

 

 

  

Expenses as described above are recognized in those items below in the financial statements.

 

            2015      2016      2017  
           

In millions of won

  

Cost of sales

    ￦        262,760        312,391        332,249  

Selling and administrative expenses

         51,932        61,362        59,111  

Others (Construction-in-progress and others)

         41,729        47,963        48,622  
     

 

 

     

 

 

     

 

 

  
   ￦        356,421        421,716        439,982  
     

 

 

     

 

 

     

 

 

  

In addition, for the years ended December 31, 2015, 2016 and 2017, employee benefit obligations expenses of ￦57,940 million, ￦62,435 million and ￦65,603 million, respectively, are recognized as cost of sales, and ￦9,971 million, ￦11,450 million and ￦11,983 million, respectively, are recognized as selling and administrative expenses, and ￦14,195 million, ￦14,024 million and ￦13,332 million, respectively, are recognized as construction-in-progress and others, relates to the Company’s defined contribution plans.

 

(4) Details of defined benefit obligations as of December 31, 2016 and 2017 are as follows:

 

          2016     2017  
          In millions of won  

Present value of defined benefit obligation from funded plans

   ￦       2,867,377       2,951,842  

Fair value of plan assets

       (1,188,907 )      (1,475,641 ) 
   

 

 

    

 

 

  
      1,678,470       1,476,201  

Present value of defined benefit obligation from unfunded plans

       —         —    
   

 

 

    

 

 

  

Net liabilities incurred from defined benefit plans

   ￦       1,678,470       1,476,201  
   

 

 

    

 

 

  

 

(5) Changes in the present value of defined benefit obligations for the years ended December 31, 2016 and 2017 are as follows:

 

           2016      2017  
           In millions of won  

Beginning balance

    ￦       2,426,414        2,867,377  

Current service cost

        378,930        392,820  

Interest cost(*)

        67,104        79,524  

Remeasurement component

        120,993        (258,223 ) 

Loss from settlement

        (707 )       (1,055 ) 

Actual payments

        (125,233 )       (128,707 ) 

Others

        (124 )       106  
    

 

 

     

 

 

  

Ending balance

    ￦       2,867,377        2,951,842  
    

 

 

     

 

 

  

 

  (*) Corporate bond (AAA rated) yield at year-end is applied to measure the interest cost on employee benefit obligations.

 

(6) Changes in the fair value of plan assets for the years ended December 31, 2016 and 2017 are as follows:

 

           2016      2017  
           In millions of won  

Beginning balance

    ￦       930,632        1,188,907  

Expected return

        23,612        31,307  

Remeasurement component

        (5,706 )       (10,435 ) 

Contributions by the employers

        312,125        325,080  

Actual payments

        (71,756 )       (59,218 ) 
    

 

 

     

 

 

  

Ending balance

    ￦       1,188,907        1,475,641  
    

 

 

     

 

 

  

In addition, loss on accumulated remeasurement component amounting to ￦222,997 million and ￦43,513 million has been recognized as other comprehensive income or loss for the years ended December 31, 2016 and 2017, respectively.

 

(7) Details of the fair value of plan assets as of December 31, 2016 and 2017 are as follows:

 

           2016      2017  
           In millions of won  

Equity instruments

    ￦       86,054        79,204  

Debt instruments

        383,654        517,040  

Bank deposit

        305,670        293,477  

Others

        413,529        585,920  
    

 

 

     

 

 

  
   ￦       1,188,907        1,475,641  
    

 

 

     

 

 

  

For the years ended December 31, 2016 and 2017, actual returns on plan assets amounted to ￦17,906 million and ￦20,872 million, respectively.

 

(8) Remeasurement component recognized in other comprehensive income (loss) for the years ended December 31, 2016 and 2017 are as follows:

 

            2016      2017  
            In millions of won  

Actuarial gain from changes in financial assumptions

    ￦        (27,792 )       (300,058 ) 

Experience adjustments

         148,785        41,835  

Expected return

         5,706        10,435  
     

 

 

     

 

 

  
   ￦        126,699        (247,788 ) 
     

 

 

     

 

 

  

Remeasurement component recognized as other comprehensive income or loss is recorded in retained earnings.