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Pension and other post-retirement benefits
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Pension and other post-retirement benefits Pension and other post-employment benefits
The Company provides defined contribution pension plans to substantially all of its employees. The Company’s contributions for 2021 were $10,836 (2020 - $9,672).
The Company provides a defined benefit cash balance pension plan under which employees are credited with a percentage of base pay plus a prescribed interest rate credit. In conjunction with the utility acquisitions, the Company also assumes defined benefit pension, SERP and OPEB plans for qualifying employees in the related acquired businesses. The legacy plans are non-contributory defined pension plans covering substantially all employees of the acquired businesses. Benefits are based on each employee’s years of service and compensation. The Company permanently freezes the accrual of benefits for participants in legacy plans. Thereafter, employees accrue benefits under the Company’s cash balance plan. The OPEB plans provide health care and life insurance coverage to eligible retired employees. Eligibility is based on age and length of service requirements and, in most cases, retirees must cover a portion of the cost of their coverage.
10.Pension and other post-employment benefits (continued)
(a)Net pension and OPEB obligation
The following table sets forth the projected benefit obligations, fair value of plan assets, and funded status of the Company’s plans as of December 31:
 Pension benefitsOPEB
 2021202020212020
Change in projected benefit obligation
Projected benefit obligation, beginning of year$834,913 $564,970 $306,524 $219,217 
Projected benefit obligation assumed from business combination— 195,231 — 44,950 
Plan Settlements(1,294)— — — 
Service cost14,673 15,450 7,307 6,175 
Interest cost20,676 19,281 8,048 7,695 
Actuarial loss (gain)(36,597)76,618 (18,977)34,507 
Contributions from retirees— 171 2,040 2,037 
Plan amendments237 (191)310 — 
Medicare Part D — — 373 377 
Benefits paid(66,800)(37,020)(12,979)(8,434)
Foreign exchange(190)403 — — 
Projected benefit obligation, end of year$765,618 $834,913 $292,646 $306,524 
Change in plan assets
Fair value of plan assets, beginning of year629,157 407,074 176,616 158,873 
Plan assets acquired in business combination— 179,600 — — 
Actual return on plan assets58,721 52,876 15,200 21,219 
Employer contributions29,058 26,099 11,178 2,583 
Plan Settlements(1,294)— — — 
Contributions from retirees— 171 1,988 1,998 
Medicare Part D subsidy receipts— — 372 377 
Benefits paid(66,800)(37,020)(12,979)(8,434)
Foreign exchange22 357 — — 
Fair value of plan assets, end of year$648,864 $629,157 $192,375 $176,616 
Unfunded status$(116,754)$(205,756)$(100,271)$(129,908)
Amounts recognized in the consolidated balance sheets consist of:
Non-current assets (note 11)84 488 11,879 10,174 
Current liabilities(1,902)(1,989)(699)(2,835)
Non-current liabilities(114,936)(204,255)(111,451)(137,247)
Net amount recognized
$(116,754)$(205,756)$(100,271)$(129,908)
The accumulated benefit obligation for the pension plans was $1,008,754 and $1,080,685 as of December 31, 2021 and 2020, respectively.
10.Pension and other post-employment benefits (continued)
(a)Net pension and OPEB obligation (continued)
Information for pension and OPEB plans with an accumulated benefit obligation in excess of plan assets:
PensionOPEB
2021202020212020
Accumulated benefit obligation$489,043 $727,981 $274,649 $288,594 
Fair value of plan assets$396,679 $578,143 $162,592 $148,496 

Information for pension and OPEB plans with a projected benefit obligation in excess of plan assets:
PensionOPEB
2021202020212020
Projected benefit obligation$580,841 $833,846 $274,649 $288,594 
Fair value of plan assets$452,333 $627,601 $162,592 $148,496 

(b)Pension and post-employment actuarial changes
Change in AOCI (before tax)PensionOPEB
 Actuarial losses (gains)Past service gainsActuarial losses (gains)Past service gains
Balance, January 1, 2020$38,510 $(6,180)$(9,146)$— 
Additions to AOCI50,026 (191)22,036 — 
Amortization in current period(5,430)1,609 (509)— 
Reclassification to regulatory accounts(25,875)(544)(16,680)— 
Balance, December 31, 2020$57,231 $(5,306)$(4,299)$— 
Additions to AOCI(59,754)237 (24,126)24 
Amortization in current period(13,130)1,626 (2,021)310 
Amortization pursuant to plan settlements(210)— — — 
Reclassification to regulatory accounts31,670 (752)14,816 — 
Balance, December 31, 2021$15,807 $(4,195)$(15,630)$334 
The movements in AOCI for Empire Electric and Gas Systems' and St. Lawrence Gas System's pension and OPEB plans are reclassified to regulatory accounts since it is probable the unfunded amount of these plans will be afforded rate recovery (note 7(c)).
10.Pension and other post-employment benefits (continued)
(c)Assumptions
Weighted average assumptions used to determine net benefit obligation for 2021 and 2020 were as follows: 
 Pension benefitsOPEB
 2021202020212020
Discount rate2.94 %2.49 %2.92 %2.58 %
Interest crediting rate (for cash balance plans)4.00 %4.15 %N/AN/A
Rate of compensation increase4.00 %4.00 %N/AN/A
Health care cost trend rate
Before age 655.875 %6.00 %
Age 65 and after5.875 %6.00 %
Assumed ultimate medical inflation rate4.75 %4.75 %
Year in which ultimate rate is reached20312031
The mortality assumption for December 31, 2021 uses the Pri-2012 mortality table and the projected generationally scale MP-2021, adjusted to reflect the ultimate improvement rates in the 2021 Social Security Administration intermediate assumptions for plans in the United States. The mortality assumption for the Bermuda plan as of December 31, 2021 uses the 2014 Canadian Pensioners' Mortality Table combined with mortality improvement scale CPM-B.
In selecting an assumed discount rate, the Company uses a modeling process that involves selecting a portfolio of high-quality corporate debt issuances (AA- or better) whose cash flows (via coupons or maturities) match the timing and amount of the Company’s expected future benefit payments. The Company considers the results of this modeling process, as well as overall rates of return on high-quality corporate bonds and changes in such rates over time, to determine its assumed discount rate.
The rate of return assumptions are based on projected long-term market returns for the various asset classes in which the plans are invested, weighted by the target asset allocations.
Weighted average assumptions used to determine net benefit cost for 2021 and 2020 were as follows: 
 Pension benefitsOPEB
 2021202020212020
Discount rate2.49 %3.19 %2.58 %3.29 %
Expected return on assets6.20 %6.85 %4.79 %5.57 %
Rate of compensation increase3.99 %3.96 %n/an/a
Health care cost trend rate
Before Age 655.122 %6.125 %
Age 65 and after5.122 %6.125 %
Assumed ultimate medical inflation rate4.05 %4.75 %
Year in which ultimate rate is reached20312031
10.Pension and other post-employment benefits (continued)
(d)Benefit costs
The following table lists the components of net benefit cost for the pension and OPEB plans. Service cost is recorded as part of operating expenses and non-service costs are recorded as part of other net losses in the consolidated statements of operations. The employee benefit costs related to businesses acquired are recorded in the consolidated statements of operations from the date of acquisition.
 Pension benefitsOPEB
 2021202020212020
Service cost$14,673 $15,450 $7,307 $6,175 
Non-service costs
Interest cost20,676 19,281 8,048 7,695 
Expected return on plan assets(35,972)(26,285)(10,052)(8,748)
Amortization of net actuarial loss13,126 5,430 2,021 509 
Amortization of prior service credits(1,626)(1,609)11 — 
Settlement Loss Recognized198 — — — 
Amortization of regulatory accounts19,665 16,272 218 1,527 
$16,067 $13,089 $246 $983 
Net benefit cost$30,740 $28,539 $7,553 $7,158 
(e)Plan assets
The Company’s investment strategy for its pension and post-employment plan assets is to maintain a diversified portfolio of assets with the primary goal of meeting long-term cash requirements as they become due.
The Company’s target asset allocation is as follows:
Asset classTarget (%)Range (%)
Equity securities48 %
30% -100%
Debt securities43 %
20% - 60%
Other9 %
0% - 20%
100 %

The fair values of investments as of December 31, 2021, by asset category, are as follows:
Asset class2021Percentage
Equity securities$429,147 51 %
Debt securities350,834 42 %
Other61,259 7 %
$841,240 100 %
As of December 31, 2021, the plan assets do not include any material investments in AQN. 
10.Pension and other post-employment benefits (continued)
(e)Plan assets (continued)
All investments as of December 31, 2021 were valued using level 1 inputs except for 17,314 of institutional private equity investments using level 3 fair value measurement. These private equity funds invest in the private equity secondary market and in the credit markets. These funds are not traded in the open market, and are valued based on the underlying securities within the funds. The underlying securities are valued at fair value by the fund managers by using securities exchange quotations, pricing services, obtaining broker-dealer quotations, reflecting valuations provided in the most recent financial reports, or at a good faith estimate using fair market value principles.
The following table summarizes the changes fair value of these level 3 assets as of December 31:
Level 3
Balance, January 1, 2021$7,745 
Contributions into funds6,233 
Unrealized gains4,257 
Distributions(921)
Balance, December 31, 2021$17,314 
(f)Cash flows
The Company expects to contribute $21,305 to its pension plans and $12,208 to its post-employment benefit plans in 2021.
The expected benefit payments over the next ten years are as follows: 
202220232024202520262027-2031
Pension plan$47,802 $43,760 $44,478 $46,318 $47,554 $238,011 
OPEB10,465 11,064 11,646 12,060 12,543 68,454