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Employee Benefit Plans (Tables) | 12 Months Ended
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Dec. 31, 2020
21. Employee Benefit Plans |
Changes in benefit obligation and plan assets, and the funded status for all plans |
For the | Year ended December 31
millions of Canadian dollars | 2020 | 2019
Change in Projected Benefit Obligation ("PBO") and Accumulated Post-retirement Benefit Obligation ("APBO") | Defined benefit pension plans | Non-pension benefit plans | Defined benefit pension plans | Non-pension benefit plans
Balance, January 1 | $ | 2,822 | $ | 353 | $ | 2,650 | $ | 350
Service cost |  | 46 |  | 5 |  | 47 |  | 4
Plan participant contributions |  | 7 |  | 5 |  | 8 |  | 5
Interest cost |  | 84 |  | 10 |  | 102 |  | 14
Benefits paid |  | (135) |  | (27) |  | (130) |  | (23)
Actuarial losses |  | 189 |  | 52 |  | 231 |  | 19
Settlements and curtailments |  | (229) |  | (52) |  | (20) |  | -
Foreign currency translation adjustment |  | (25) |  | (7) |  | (66) |  | (16)
Balance, December 31 |  | 2,759 |  | 339 |  | 2,822 |  | 353
Change in plan assets |  |  |  |  |  |  |  |
Balance, January 1 |  | 2,593 |  | 56 |  | 2,300 |  | 49
Employer contributions |  | 41 |  | 21 |  | 52 |  | 19
Plan participant contributions |  | 7 |  | 5 |  | 8 |  | 5
Benefits paid |  | (135) |  | (27) |  | (130) |  | (23)
Actual return on assets, net of expenses |  | 310 |  | 5 |  | 424 |  | 7
Settlements and curtailments |  | (191) |  | (7) |  | (7) |  | -
Foreign currency translation adjustment |  | (20) |  | (1) |  | (54) |  | (1)
Balance, December 31 |  | 2,605 |  | 52 |  | 2,593 |  | 56
Funded status, end of year | $ | (154) | $ | (287) | $ | (229) | $ | (297)
Plans with PBO/APBO in Excess of Plan Assets and Plans with Accumulated Benefit Obligation ("ABO") in Excess of Plan Assets |
millions of Canadian dollars |  |  | 2020 | 2019
| Defined benefit pension plans | Non-pension benefit plans | Defined benefit pension plans | Non-pension benefit plans
PBO/APBO | $ | 2,736 | $ | 308 | $ | 2,797 | $ | 323
Fair value of plan assets |  | 2,568 |  | - |  | 2,557 |  | 7
Funded status | $ | (168) | $ | (308) | $ | (240) | $ | (316)
millions of Canadian dollars | 2020 | 2019
| Defined benefit pension plans | Defined benefit pension plans
ABO | $ | 1,519 | $ | 2,665
Fair value of plan assets |  | 1,419 |  | 2,557
Funded status | $ | (100) | $ | (108)
Amounts recognized in the Consolidated Balance Sheets |
As at |  | December 31 |  | December 31
millions of Canadian dollars | 2020 | 2019
| Defined benefit pension plans | Non-pension benefit plans | Defined benefit pension plans | Non-pension benefit plans
Other current liabilities | $ | (4) | $ | (19) | $ | (4) | $ | (18)
Long-term liabilities |  | (163) |  | (290) |  | (206) |  | (254)
Long-term liabilities associated with assets held for sale (1) |  | - |  | - |  | (30) |  | (44)
Other long-term assets |  | 13 |  | 20 |  | 11 |  | 19
Amount included in deferred income tax |  | (4) |  | (1) |  | (7) |  | 1
AOCI and regulatory assets, net of tax |  | 443 |  | 107 |  | 524 |  | 72
Net amount recognized | $ | 285 | $ | (183) | $ | 288 | $ | (224)
(1) On March 24, 2020, Emera sold Emera Maine, refer to note 4 for further details. As at December 31, 2019, Emera Maine's assets and liabilities were classified as held for sale.
Amounts Recognized in AOCI and Regulatory Assets |
| Regulatory assets | Actuarial (gains) losses | Past service (gains) costs
millions of Canadian dollars
Defined Benefit Pension Plans |  |  |  |  |  |
Balance, January 1, 2020 | $ | 358 | $ | 160 | $ | (1)
Amortized in current period |  | (25) |  | (15) |  | 1
Current year addition to AOCI or regulatory assets |  | (12) |  | 14 |  | -
Change in current year related to sale of Emera Maine |  | (39) |  | - |  | -
Change in foreign exchange rate |  | (3) |  | 1 |  | -
Balance, December 31, 2020 | $ | 279 | $ | 160 | $ | -
Non-pension benefits plans |  |  |  |  |  |
Balance, January 1, 2020 | $ | 78 | $ | (5) | $ | -
Amortized in current period |  | - |  | - |  | -
Current year addition to AOCI or regulatory assets |  | 48 |  | 2 |  | -
Change in current year related to sale of Emera Maine |  | (13) |  | - |  | -
Change in foreign exchange rate |  | (3) |  | (1) |  | -
Balance, December 31, 2020 | $ | 110 | $ | (4) | $ | -
| 2020 | 2019
| Defined benefit pension plans | Non-pension benefit plans | Defined benefit pension plans | Non-pension benefit plans
Actuarial losses (gains) | $ | 160 | $ | (4) | $ | 160 | $ | (5)
Past service (gains) costs |  | - |  | - |  | (1) |  | -
Regulatory assets |  | 279 |  | 110 |  | 358 |  | 78
Total AOCI and regulatory assets before deferred income taxes |  | 439 |  | 106 |  | 517 |  | 73
Amount included in deferred income tax assets |  | 4 |  | 1 |  | 7 |  | (1)
Net amount in AOCI and regulatory assets | $ | 443 | $ | 107 | $ | 524 | $ | 72
Benefit Cost Components |
As at |  |  |  |  |  | Year ended December 31
millions of Canadian dollars | 2020 | 2019
| Defined benefit pension plans | Non-pension benefit plans | Defined benefit pension plans | Non-pension benefit plans
Service cost | $ | 46 | $ | 5 | $ | 47 | $ | 4
Interest cost |  | 84 |  | 10 |  | 102 |  | 14
Expected return on plan assets |  | (141) |  | (1) |  | (147) |  | (2)
Current year amortization of: |  |  |  |  |  |  |  |
Actuarial losses (gains) |  | 15 |  | - |  | 16 |  | -
Past service costs (gains) |  | (1) |  | - |  | (1) |  | -
Regulatory assets (liability) |  | 25 |  | - |  | 20 |  | (5)
Settlement, curtailments |  | - |  | - |  | 1 |  | -
Total | $ | 28 | $ | 14 | $ | 38 | $ | 11
Pension Plan Asset Allocations |
Canadian Pension Plans |  |  |  |
Asset Class | Target Range at Market
Short-term securities |  | 0% | to | 5%
Fixed income |  | 35% | to | 50%
Equities: |  |  |  |
Canadian |  | 12% | to | 22%
Non-Canadian |  | 30% | to | 55%
Non-Canadian Pension Plans |  |  |  |
Asset Class | Target Range at Market Weighted average
Fixed income |  | 30% | to | 50%
Equities |  | 50% | to | 70%
Cassification of the methodology used by the Company to fair value its investments |
millions of Canadian dollars | NAV | Level 1 | Level 2 | Total |  | Percentage
|  |  |  |  | December 31, 2020 |
Cash and cash equivalents | $ | - | $ | 68 | $ | - | $ | 68 |  | 3 | %
Net in-transits |  | - |  | (99) |  | - |  | (99) |  | (4) | %
Equity Securities: |  |  |  |  |  |  |  |  |  |  |
Canadian equity |  | - |  | 154 |  | - |  | 154 |  | 6 | %
US equity |  | - |  | 380 |  | - |  | 380 |  | 15 | %
Other equity |  | - |  | 243 |  | - |  | 243 |  | 9 | %
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |
Government |  | - |  | - |  | 119 |  | 119 |  | 5 | %
Corporate |  | - |  | - |  | 141 |  | 141 |  | 5 | %
Other |  | - |  | 10 |  | 3 |  | 13 |  | - | %
Mutual funds |  | - |  | 88 |  | - |  | 88 |  | 3 | %
Other |  | - |  | (3) |  | (4) |  | (7) |  | - | %
Open-ended investments measured at NAV (1) |  | 801 |  | - |  | - |  | 801 |  | 31 | %
Common collective trusts measured at NAV (2) |  | 704 |  | - |  | - |  | 704 |  | 27 | %
Total | $ | 1,505 | $ | 841 | $ | 259 | $ | 2,605 |  | 100 | %
|  |  |  | December 31, 2019 |
Cash and cash equivalents | $ | - | $ | 44 | $ | - | $ | 44 |  | 2 | %
Net in-transits |  | - |  | (48) |  | - |  | (48) |  | (2) | %
Equity securities: |  |  |  |  |  |  |  |  |  |  |
Canadian equity |  | - |  | 210 |  | - |  | 210 |  | 8 | %
US equity |  | - |  | 388 |  | - |  | 388 |  | 15 | %
Other equity |  | - |  | 176 |  | - |  | 176 |  | 7 | %
Fixed Income securities: |  |  |  |  |  |  |  |  |  |  |
Government |  | - |  | - |  | 93 |  | 93 |  | 3 | %
Corporate |  | - |  | - |  | 126 |  | 126 |  | 5 | %
Other |  | - |  | 5 |  | 9 |  | 14 |  | - |
Mutual funds |  | - |  | 199 |  | - |  | 199 |  | 8 | %
Other |  | - |  | (5) |  | 1 |  | (4) |  | - | %
Open-ended investments measured at NAV (1) |  | 860 |  | - |  | - |  | 860 |  | 33 | %
Common collective trusts measured at NAV (2) |  | 535 |  | - |  | - |  | 535 |  | 21 | %
Total | $ | 1,395 | $ | 969 | $ | 229 | $ | 2,593 |  | 100 | %
(1) NAV investments are open-ended registered and non-registered mutual funds, collective investment trusts, or pooled funds. NAV’s are calculated daily and the funds honor subscription and redemption activity regularly. |
(2) The common collective trusts are private funds valued at NAV. The NAVs are calculated based on bid prices of the underlying securities. Since the prices are not published to external sources, NAV is used as a practical expedient. Certain funds invest primarily in equity securities of domestic and foreign issuers while others invest in long duration U.S. investment grade fixed income assets and seeks to increase return through active management of interest rate and credit risks. The funds honor subscription and redemption activity regularly. |
Expected cash flows for defined benefit pension and other post-retirement benefit plans |
millions of Canadian dollars | Defined benefit pension plans | Non-pension benefit plans
Expected employer contributions |  |  |  |
2021 | $ | 41 | $ | 19
Expected benefit payments |  |  |  |
2021 |  | 140 |  | 21
2022 |  | 154 |  | 22
2023 |  | 154 |  | 22
2024 |  | 162 |  | 22
2025 |  | 170 |  | 22
2026 – 2030 |  | 914 |  | 105
Assumptions that have been used in accounting for defined benefit pension and other post-retirement benefit plans |
Assumptions |  |  |  |  |  |  |  |
The following table shows the assumptions that have been used in accounting for defined benefit pension and other post-retirement benefit plans: |
| 2020 | 2019
(weighted average assumptions) | Defined benefit pension plans | Non-pension benefit plans | Defined benefit pension plans | Non-pension benefit plans
Benefit obligation – December 31: |  |  |  |  |  |  |  |
Discount rate - past service | 2.49 | % | 2.48 | % | 3.17 | % | 3.27 | %
Discount rate - future service | 2.64 | % | 2.51 | % | 3.21 | % | 3.28 | %
Rate of compensation increase | 2.89 | % | 3.04 | % | 3.32 | % | 3.70 | %
Health care trend - initial (next year) | - |  | 5.64 | % | - |  | 6.15 | %
- ultimate | - |  | 4.35 | % | - |  | 4.38 | %
- year ultimate reached |  |  | 2038 |  |  |  | 2038 |
Benefit cost for year ended December 31: |  |  |  |  |  |  |  |
Discount rate - past service | 3.17 | % | 3.28 | % | 4.05 | % | 4.30 | %
Discount rate - future service | 3.21 | % | 3.28 | % | 4.05 | % | 4.30 | %
Expected long-term return on plan assets | 6.29 | % | 3.25 | % | 6.50 | % | 2.81 | %
Rate of compensation increase | 3.34 | % | 3.70 | % | 3.30 | % | 3.67 | %
Health care trend - initial (current year) | - |  | 5.91 | % | - |  | 6.39 | %
- ultimate | - |  | 4.37 | % | - |  | 4.45 | %
- year ultimate reached |  |  | 2038 |  |  |  | 2035 |
Actual assumptions used differ by plan.

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