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POST-EMPLOYMENT OBLIGATIONS | 12 Months Ended
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Dec. 31, 2021
POST-EMPLOYMENT OBLIGATIONS |
| 24. | POST-EMPLOYMENT OBLIGATIONS
Forluz Pension plan (a Supplementary retirement pension plan) Company and its subsidiaries are sponsors of Forluz – Forluminas Social Security Foundation, a non-profit legal entity whose object is to provide its associates and participants and their dependents with a finance income to complement retirement and pension, in accordance with the pension plan that they are subscribed in. Forluz provides the following supplementary pension benefit plans available to its participants: Mixed Benefit Plan (‘Plan B’): This plan operates as a defined-contribution plan in the fund accumulation phase for retirement benefits for normal time of service, and as a defined-benefit plan for disability or death of participants still in active employment, and for receipt of benefits for time of contribution. The Sponsors match the basic monthly contributions of the participants. This is the only plan open for joining by new participants. The actuarial risks related to Plan B occur only as from the option for the lifetime benefit at the moment of the participant’s retirement. In this specific case the responsibility for the risk of insufficiency of reserves for coverage of the benefits (deficits) is in parity between sponsors and participants. Funded Benefit Plan (‘Plan A’): This plan includes all currently employed and assisted participants who opted to migrate from the Company’s previously sponsored defined benefit plan, and are entitled to a benefit proportional to those balances. For participants who are still working, this benefit has been deferred to the retirement date. The benefit balances of Plan A have the characteristic of lifetime payment, and the responsibility for the risk of insufficiency of reserves to cover the benefits (deficits) is exclusively of the sponsors. Company and its subsidiaries also maintain, independently of the plans made available by Forluz, payments to a health plan and a dental plan for the active employees, retired employees and dependents, administered by Cemig Saúde. Life insurance Until the end of the Collective Agreement in effect until October 2021, the Company made available coverage of 50% of the life insurance policy cost, with certain specific characteristics for retirees. However, as a result of the amendment in the Collective Work Agreement for 2021-2023, in relation to offer and payment of life insurance for the employees and former employees, the Company understood that the post-retirement benefit in question had been canceled in its entirety, and as a result wrote off the balance of the obligation, remeasured using the revised actuarial assumptions, recognized in the income statement and Shareholders’ equity, in the amounts of R$415, and R$60. On February 2, 2022 the Association of Retired Energy Workers and Pension Holders of Cemig and its Subsidiaries (‘Associação dos Eletricitários Aposentados e Pensionistas da Cemig e Subsidiárias – AEA/MG’) filed an injunction ordering the Company to comply with and maintain in full the same terms relating to coverage of the life insurance premium as were previously practiced. However, on February 11, 2022, the Regional Employment Law Appeal Court of the 3rd Region refused this application, on the grounds that this had been validly decided in the collective agreement. Actuarial obligations and recognition in the financial statements On this Note the Company discloses its obligations and expenses incurred for purposes of the Retirement Plan, Health Plan, Dental Plan and the Life Insurance Plan in accordance with the terms of IAS 19 - Employee Benefits, and the independent actuarial opinion issued as of December 31, 2021. Debt with the pension fund (Forluz) The Company has recognized an obligation for past actuarial deficits relating to the pension fund in the amount of R$385 on December 31, 2021 (R$473 on December 31, 2020). This amount has been recognized as an obligation payable by Cemig and its subsidiaries, and will be amortized until June of 2024, through monthly installments calculated by the system of constant installments (known as the ‘Price’ table), and adjusted by the IPCA (Expanded National Customer Price) inflation index (published by the Brazilian Geography and Statistics Institute – IBGE) plus 6% per year. The Company is required to pay this debt even if Forluz has a surplus, thus, the Company maintain recorded the debt in full, and record the effects of monetary updating and interest in finance income (expenses) in the statement of income. Agreement to cover the deficit on Forluz Pension Plan ‘A’ Forluz and the Company have signed a Debt Assumption Instrument to cover the deficit of Plan A for the years of 2015, 2016 and 2017. On December 31, 2021 the total amount payable by Cemig and its subsidiaries as a result of the Plan A deficits is R$539 (R$540 on December 31, 2020, referring to the Plan A deficits of 2015 and 2016). The monthly amortizations, calculated by the constant installments system (Price Table), will be paid until 2031 for the 2015 and 2016 deficits, in the amount of R$353, and up to 2033 for the 2017 deficit, in the amount of R$186. Remuneratory interest applicable to the outstanding balance is 6% p.a., plus the effect of the IPCA. If the plan reaches actuarial surplus before the full period of amortization of the debt, also Company will not be required to pay the remaining installments and the contract will be extinguished. In December 2020, in accordance with the applicable legislation, Forluz proposed to Cemig a new Debt Assumption Instrument to be signed, if approved, by Forluz, Cemig, Cemig GT and Cemig D, in accordance with the plan to cover the deficit of Plan A, that occurred in 2019. The total amount to be paid by the Company to cover the deficit is R$160, through 166 monthly installments. The remuneration interest rate over the outstanding balance is 6% per year, plus the effect of the IPCA. If the plan reaches actuarial balance before the full period of amortization of the debt, the Company will not be required to pay the remaining installments and the contract will be extinguished. The Company recognized the legal obligation in relation to the deficit of Plan A corresponding to 50% of the minimum amount, and, thus, obeying the contribution parity rule, made payments of R$7 in consignment, corresponding from April to December 2021, to remain at the disposal of Forluz to be redeemed at an account with an official bank. Due to the refusal by Forluz to receive this amount, on May 26, 2021 the Company proposed an Action of Consignment in Payment, which is in its initial pleading phase. Due to the Debt Assumption Instrument not being signed for coverage of the minimum amount proposed in the plan for solution of the Plan A actuarial deficit for 2019, and the refusal of the payments in consignment made by the Company, on April 27, 2021 Forluz filed legal action against the Company, applying for approval and confirmation of the request to ensure compliance with the contracting of the debt for coverage of the deficit of Plan A, in the amount of R$160, for the 2019 business year. The chances of loss have been assessed as ‘possible’, due to the action still being at the instruction phase, and there being no decisions on the merit. Also, the application by Forluz for emergency writ was refused. Actuarial information Schedule of consolidated actuarial information
2021 |  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Present value of obligations |  |  | 12,026 |  |  |  | 3,469 |  |  |  | 66 |  |  |  | — |  |  |  | 15,561 |
Fair value of plan assets |  |  | (9,378 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (9,378 | )
Initial net liabilities |  |  | 2,648 |  |  |  | 3,469 |  |  |  | 66 |  |  |  | — |  |  |  | 6,183 |
Adjustment to asset ceiling |  |  | 22 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 22 |
Net liabilities in the statement of financial position |  |  | 2,670 |  |  |  | 3,469 |  |  |  | 66 |  |  |  | — |  |  |  | 6,205 |
2020 |  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Present value of obligations |  |  | 13,308 |  |  |  | 3,319 |  |  |  | 64 |  |  |  | 551 |  |  |  | 17,242 |
Fair value of plan assets |  |  | (10,420 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10,420 | )
Initial net liabilities |  |  | 2,888 |  |  |  | 3,319 |  |  |  | 64 |  |  |  | 551 |  |  |  | 6,822 |
Adjustment to asset ceiling |  |  | 21 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21 |
Net liabilities in the statement of financial position |  |  | 2,909 |  |  |  | 3,319 |  |  |  | 64 |  |  |  | 551 |  |  |  | 6,843 |
The asset ceiling is the present value of any economic benefits available in the form of restitutions coming from the plan or reductions in future contributions to the plan. The present value of the liabilities of the pension plan is adjusted to the asset ceiling, which corresponds to the surplus result of Plan B, which has a specific destination allocation under the regulations of the National Private Pension Plans Council (CNPC). The changes in the present value of the defined benefit obligation are as follows: Schedule of changes in present value of defined benefit obligation
|  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Defined-benefit obligation at December 31, 2018 |  |  | 11,073 |  |  |  | 2,344 |  |  |  | 48 |  |  |  | 427 |  |  |  | 13,892 |
Cost of current service |  |  | 1 |  |  |  | 14 |  |  |  | — |  |  |  | 3 |  |  |  | 18 |
Interest on actuarial obligation |  |  | 963 |  |  |  | 208 |  |  |  | 4 |  |  |  | 38 |  |  |  | 1,213 |
Actuarial losses (gains): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due to changes in demographic assumptions |  |  | 6 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6 |
Due to changes in financial assumptions |  |  | 2,058 |  |  |  | 576 |  |  |  | 11 |  |  |  | 130 |  |  |  | 2,775 |
Due to adjustments based on experience |  |  | 83 |  |  |  | 91 |  |  |  | — |  |  |  | (14 | ) |  |  | 160 |
Due to changes and adjustments |  |  | 2,147 |  |  |  | 667 |  |  |  | 11 |  |  |  | 116 |  |  |  | 2,941 |
Benefits paid |  |  | (899 | ) |  |  | (131 | ) |  |  | (2 | ) |  |  | (10 | ) |  |  | (1,042 | )
Defined-benefit obligation at December 31, 2019 |  |  | 13,285 |  |  |  | 3,102 |  |  |  | 61 |  |  |  | 574 |  |  |  | 17,022 |
Cost of current service |  |  | 1 |  |  |  | 21 |  |  |  | 1 |  |  |  | 3 |  |  |  | 26 |
Interest on actuarial obligation |  |  | 887 |  |  |  | 215 |  |  |  | 4 |  |  |  | 41 |  |  |  | 1,147 |
Actuarial losses (gains): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due to changes in demographic assumptions |  |  | 135 |  |  |  | 395 |  |  |  | 4 |  |  |  | — |  |  |  | 534 |
Due to changes in financial assumptions |  |  | (375 | ) |  |  | (152 | ) |  |  | (4 | ) |  |  | (34 | ) |  |  | (565 | )
Due to adjustments based on experience |  |  | 289 |  |  |  | (119 | ) |  |  | 1 |  |  |  | (23 | ) |  |  | 148 |
Due to changes and adjustments |  |  | 49 |  |  |  | 124 |  |  |  | 1 |  |  |  | (57 | ) |  |  | 117 |
Benefits paid |  |  | (914 | ) |  |  | (143 | ) |  |  | (3 | ) |  |  | (10 | ) |  |  | (1,070 | )
Defined-benefit obligation at December 31, 2020 |  |  | 13,308 |  |  |  | 3,319 |  |  |  | 64 |  |  |  | 551 |  |  |  | 17,242 |
Cost of current service |  |  | 2 |  |  |  | 21 |  |  |  | 1 |  |  |  | 3 |  |  |  | 27 |
Past service cost (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (415 | ) |  |  | (415 | )
Interest on actuarial obligation |  |  | 883 |  |  |  | 232 |  |  |  | 5 |  |  |  | 39 |  |  |  | 1,159 |
Actuarial losses (gains): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due to changes in demographic assumptions |  |  | 378 |  |  |  | 122 |  |  |  | 1 |  |  |  | (15 | ) |  |  | 486 |
Due to changes in financial assumptions |  |  | (2,393 | ) |  |  | (252 | ) |  |  | (5 | ) |  |  | (127 | ) |  |  | (2,777 | )
Due to adjustments based on experience |  |  | 828 |  |  |  | 200 |  |  |  | 3 |  |  |  | (26 | ) |  |  | 1,005 |
Due to changes and adjustments |  |  | (1,187 | ) |  |  | 70 |  |  |  | (1 | ) |  |  | (168 | ) |  |  | (1,286 | )
Benefits paid |  |  | (980 | ) |  |  | (173 | ) |  |  | (3 | ) |  |  | (10 | ) |  |  | (1,166 | )
Defined-benefit obligation at December 31, 2021 |  |  | 12,026 |  |  |  | 3,469 |  |  |  | 66 |  |  |  | — |  |  |  | 15,561 |
| (1) | Due to the alterations made in the Collective Work Agreement for 2021–23, for offer and payment of life insurance for the employees and former employees, the Company understood that the post-retirement benefit in question had been entirely canceled, and as a result wrote down the balance of the obligation, remeasured using the revised actuarial assumptions.
Changes in the fair values of the plan assets are as follows: Schedule of changes in the fair value of plan assets
|  | Pension plans and retirement supplement plans
Fair value of the plan assets at December 31, 2018 |  |  | 9,063 |
Return on investments |  |  | 2,003 |
Contributions from employer |  |  | 199 |
Benefits paid |  |  | (899 | )
Fair value of the plan assets at December 31, 2019 |  |  | 10,366 |
Return on investments |  |  | 757 |
Contributions from employer |  |  | 211 |
Benefits paid |  |  | (914 | )
Fair value of the plan assets at December 31, 2020 |  |  | 10,420 |
Return on investments |  |  | (298 | )
Contributions from employer |  |  | 236 |
Benefits paid |  |  | (980 | )
Fair value of the plan assets at December 31, 2021 |  |  | 9,378 |
The amounts recognized in 2021, 2020 and 2019 statement of income are as follows: Schedule of defined benefit plans expense recognised in income statement
2021 |  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Current service cost |  |  | 2 |  |  |  | 21 |  |  |  | 1 |  |  |  | 3 |  |  |  | 27 |
Past service cost (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (415 | ) |  |  | (415 | )
Interest on the actuarial obligation |  |  | 883 |  |  |  | 232 |  |  |  | 5 |  |  |  | 39 |  |  |  | 1,159 |
Expected return on the assets of the Plan |  |  | (685 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (685 | )
Expense in 2021 according to actuarial calculation |  |  | 200 |  |  |  | 253 |  |  |  | 6 |  |  |  | (373 | ) |  |  | 86 |
2020 |  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Current service cost |  |  | 1 |  |  |  | 21 |  |  |  | 1 |  |  |  | 3 |  |  |  | 26 |
Interest on the actuarial obligation |  |  | 887 |  |  |  | 215 |  |  |  | 4 |  |  |  | 41 |  |  |  | 1,147 |
Expected return on the assets of the Plan |  |  | (682 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (682 | )
Expense in 2020 according to actuarial calculation |  |  | 206 |  |  |  | 236 |  |  |  | 5 |  |  |  | 44 |  |  |  | 491 |
2019 |  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Current service cost |  |  | 1 |  |  |  | 14 |  |  |  | — |  |  |  | 2 |  |  |  | 17 |
Interest on the actuarial obligation |  |  | 963 |  |  |  | 208 |  |  |  | 5 |  |  |  | 38 |  |  |  | 1,214 |
Expected return on the assets of the Plan |  |  | (767 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (767 | )
Expense in 2019 according to actuarial calculation |  |  | 197 |  |  |  | 222 |  |  |  | 5 |  |  |  | 40 |  |  |  | 464 |
Changes in net liabilities were as follows: Schedule of changes in net liabilities
|  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Net liabilities at December 31, 2018 |  |  | 2,170 |  |  |  | 2,344 |  |  |  | 48 |  |  |  | 427 |  |  |  | 4,989 |
Expense recognized in Statement of income |  |  | 197 |  |  |  | 222 |  |  |  | 5 |  |  |  | 40 |  |  |  | 464 |
Contributions paid |  |  | (200 | ) |  |  | (131 | ) |  |  | (2 | ) |  |  | (10 | ) |  |  | (343 | )
Actuarial gains (losses) |  |  | 805 |  |  |  | 667 |  |  |  | 10 |  |  |  | 117 |  |  |  | 1,599 |
Net liabilities at December 31, 2019 |  |  | 2,972 |  |  |  | 3,102 |  |  |  | 61 |  |  |  | 574 |  |  |  | 6,709 |
Expense recognized in Statement of income |  |  | 206 |  |  |  | 236 |  |  |  | 5 |  |  |  | 44 |  |  |  | 491 |
Contributions paid |  |  | (211 | ) |  |  | (143 | ) |  |  | (3 | ) |  |  | (10 | ) |  |  | (367 | )
Actuarial gains (losses) |  |  | (58 | ) |  |  | 124 |  |  |  | 1 |  |  |  | (57 | ) |  |  | 10 |
Net liabilities at December 31, 2020 |  |  | 2,909 |  |  |  | 3,319 |  |  |  | 64 |  |  |  | 551 |  |  |  | 6,843 |
Expense recognized in Statement of income |  |  | 200 |  |  |  | 253 |  |  |  | 6 |  |  |  | 42 |  |  |  | 501 |
Past service cost (1) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (415 | ) |  |  | (415 | )
Contributions paid |  |  | (236 | ) |  |  | (173 | ) |  |  | (3 | ) |  |  | (10 | ) |  |  | (422 | )
Actuarial gains (losses) |  |  | (203 | ) |  |  | 70 |  |  |  | (1 | ) |  |  | (168 | ) |  |  | (302 | )
Net liabilities at December 31, 2021 |  |  | 2,670 |  |  |  | 3,469 |  |  |  | 66 |  |  |  | — |  |  |  | 6,205 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2021 |  |  |  | 2020 |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 347 |  |  |  | 305 |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 5,858 |  |  |  | 6,538 |
Amounts recorded as current liabilities refer to contributions to be made by Cemig and its subsidiaries in the next 12 months for the amortization of the actuarial liabilities. The amounts reported as ‘Expense recognized in the Statement of income’ refer to the costs of post-employment obligations, that include the past service cost arising from the cancellation of the post-retirement life insurance obligation, totaling R$16 in 2021 (R$438 in 2020 and R$408 in 2019), plus the finance expenses and monetary updating on the debt with Forluz, in the amounts of R$70 in 2021 (R$53 in 2020 and R$56 in 2019). The independent actuary’s estimation for the expense to be recognized for 2022 is as follows: Schedule of independent actuaries estimate for the expense amount
|  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Current service cost |  |  | 2 |  |  |  | 16 |  |  |  | — |  |  |  | — |  |  |  | 18 |
Interest on the actuarial obligation |  |  | 1,224 |  |  |  | 363 |  |  |  | 7 |  |  |  | — |  |  |  | 1,594 |
Expected return on the assets of the Plan |  |  | (941 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (941 | )
Estimated total expense in 2022 as per actuarial report |  |  | 285 |  |  |  | 379 |  |  |  | 7 |  |  |  | — |  |  |  | 671 |
The expectation for payment of benefits for 2022 is as follows: Schedule of expectation for payment of benefits
|  | Pension plans and retirement supplement plans – Forluz |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Estimated payment of benefits |  |  | 1,064 |  |  |  | 208 |  |  |  | 4 |  |  |  | — |  |  |  | 1,276 |
The Company have expectation of making contributions to the pension plan in 2022 of R$246 for amortization of the deficit of Plan A, and R$86 for the Defined Contribution Plan (recorded directly in the Statement of income for the year). The average maturity periods of the obligations of the benefit plans, in years, are as follows: Schedule of average periods of the obligations under the benefit plans
Pension plans and retirement supplement plans |  |  |  |  |  |  |  |  |  |  |  |  |
Plan A |  |  | Plan B |  |  |  | Health plan |  |  |  | Dental plan |  |  |  | Life insurance |
10.04 |  |  | 12.86 |  |  |  | 14.44 |  |  |  | 15.47 |  |  |  | — |
The main categories plan’s assets, as a percentage of total plan’s assets are as follows: Schedule of principal categories percentage of plan assets
|  | 2021 |  | 2020
Shares |  |  | 7.77 | % |  |  | 9.25 | %
Fixed income securities |  |  | 73.95 | % |  |  | 72.17 | %
Real estate property |  |  | 5.04 | % |  |  | 3.71 | %
Others |  |  | 13.24 | % |  |  | 14.87 | %
Total |  |  | 100.00 | % |  |  | 100.00 | %
The following assets of the pension plan, measured at fair value, are related to the Company:
|  | 2021 |  | 2020
Non-convertible debentures issued by the Company |  |  | 302 |  |  |  | 338 |
Shares issued by the Company |  |  | 277 |  |  |  | 4 |
Real estate properties of the Foundation, occupied by the Company |  |  | — |  |  |  | 285 |
|  |  | 579 |  |  |  | 627 |
This table provides the main actuarial assumptions: Schedule of actuarial assumptions
|  |  |  |  |  |  |  |  |  |  | 2021
|  |  | Pension plans and retirement supplement plans |  |  |  | Health plan and Dental plan |  |  |  | Life insurance |
Annual discount rate for present value of the actuarial obligation |  |  | 10.60 | % |  |  | 10.75 | % |  |  | 10.73 | %
Annual expected return on plan assets |  |  | 10.60 | % |  |  | Not applicable |  |  |  | Not applicable |
Long-term annual inflation rate |  |  | 5.03 | % |  |  | 5.03 | % |  |  | 5.03 | %
Estimated future annual salary increases |  |  | 5.03 | % |  |  | Not applicable |  |  |  | 6.29 | %
General mortality table |  |  | AT-2000 S10% by sex |  |  |  | AT-2000 M&F S10% D20% |  |  |  | AT-2000 M&F S10% D20% |
Disability table |  |  | Not applicable |  |  |  | Tasa 1927 100% |  |  |  | Tasa 1927 100% |
Disabled mortality table |  |  | AT-83 IAM Male |  |  |  | MI-85 Female |  |  |  | MI-85 Female |
Real growth of contributions above inflation (1) |  |  | — |  |  |  | 1 | % |  |  | — |
| (1) | Starting in 2018, Company adopted the assumption of real growth of the contributions above inflation at the rate of 1% p.a.
|  |  |  |  |  |  |  |  | 2020
|  |  | Pension plans and retirement supplement plans |  |  | Health plan and Dental plan |  |  | Life insurance |
Annual discount rate for present value of the actuarial obligation |  |  | 6.83 | % |  | 7.14% |  |  | 7.25 | %
Annual expected return on plan assets |  |  | 6.83 | % |  | Not applicable |  |  | Not applicable |
Long-term annual inflation rate |  |  | 3.32 | % |  | 3.32% |  |  | 3.32 | %
Estimated future annual salary increases |  |  | 3.32 | % |  | Not applicable |  |  | 4.56 | %
General mortality table |  |  | AT-2000 M S10% D10% |  |  | AT-2000 M S10% D20% |  |  | AT-2000 M S10% D20% |
Disability table |  |  | Not applicable |  |  | Álvaro Vindas D30% |  |  | Álvaro Vindas D30% |
Disabled mortality table |  |  | AT-49 M |  |  | MI-85 F |  |  | MI-85 F |
Real growth of contributions above inflation (1) |  |  | — |  |  | 1% |  |  | — |
| (1) | Starting in 2018, Company adopted the assumption of real growth of the contributions above inflation at the rate of 1% p.a.
|  |  |  |  |  |  |  |  | 2019
|  |  | Pension plans and retirement supplement plans |  |  | Health plan and Dental plan |  |  | Life insurance |
Annual discount rate for present value of the actuarial obligation |  |  | 6.87 | % |  | 7.09% |  |  | 7.19 | %
Annual expected return on plan assets |  |  | 6.87 | % |  | Not applicable |  |  | Not applicable |
Long-term annual inflation rate |  |  | 3.61 | % |  | 3.61% |  |  | 3.61 | %
Estimated future annual salary increases |  |  | 3.61 | % |  | Not applicable |  |  | 4.85 | %
General mortality table |  |  | AT-2000 M S10% D10% |  |  | AT-2000 M S10% D20% |  |  | AT-2000 M S10% D20% |
Disability table |  |  | Not applicable |  |  | Álvaro Vindas D30% |  |  | Álvaro Vindas D30% |
Disabled mortality table |  |  | AT-49 M |  |  | MI-85 F |  |  | MI-85 F |
Real growth of contributions above inflation (1) |  |  | — |  |  | 1% |  |  | — |
| (1) | Starting in 2018, Company adopted the assumption of real growth of the contributions above inflation at the rate of 1% p.a.
The sensitivity analysis of the effects of changes in the main actuarial assumptions used to determine the defined-benefit obligation at December 31, 2021 is shown below: Schedule of sensitivity analysis of the effects of changes in the principal actuarial assumptions used to determine the defined-benefit obligation
Effects on the defined-benefit obligation |  | Pension plans and retirement supplement plans |  | Health plan |  | Dental plan |  | Life insurance |  | Total
Reduction of one year in the mortality table |  |  | 264 |  |  |  | 59 |  |  |  | (1 | ) |  |  | — |  |  |  | 322 |
Increase of one year in the mortality table |  |  | (269 | ) |  |  | (60 | ) |  |  | 1 |  |  |  | — |  |  |  | (328 | )
Reduction of 1% in the discount rate |  |  | 1,120 |  |  |  | 476 |  |  |  | 9 |  |  |  | — |  |  |  | 1,605 |
In the presentation of the sensitivity analysis, the present value of the defined-benefit obligation was calculated using the Unit Projected Credit method, the same method used to calculate the defined-benefit obligation recognized in the Statement of financial position. The Company has not made changes in the methods used to calculate its post-employment obligations for the years ended December 31, 2021 and 2020.

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- Definition The disclosure of defined benefit plans. [Refer: Defined benefit plans [member]] + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 19 -IssueDate 2021-01-01 -Paragraph 138 -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=19&code=ifrs-tx-2021-en-r&anchor=para_138&doctype=Standard -URIDate 2021-03-24 + Details
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