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26. EMPLOYEE BENEFITS (Tables)
 12 Months Ended
Dec. 31, 2017
Employee Benefits Tables  
Actuarial employee benefit assets and liabilities

The actuarial calculations are updated at the end of each annual reporting period by outside actuaries and presented in the financial statements pursuant to IAS 19 Employee Benefits.

 

               
  12/31/2017   12/31/2016   12/31/2017   12/31/2016
  Actuarial asset   Actuarial liabilities
Pension plan benefits (Note 9 and 15)       (111,281)           (119,854)           41,937           28,004
Post-employment healthcare benefits                     866,784             691,262
            (111,281)               (119,854)             908,721             719,266
Reconciliation of employee benefits' assets and liabilities

The reconciliation of employee benefits’ assets and liabilities is as follows:

 

  12/31/2017   12/31/2016
Present value of defined benefit obligation 3,077,849   2,872,442
Fair value of plan assets (3,305,356)   (3,193,493)
Deficit (Surplus) (227,507)   (321,051)
Restriction to actuarial assets due to recovery limitation 158,163   229,201
Liabilities (Assets), net (69,344)   (91,850)
Liabilities 41,937   28,004
Assets (111,281)   (119,854)
(Assets) liabilities recognized in the balance sheet (69,344)   (91,850)
Changes in present value of the defined benefit obligation

The movement in the present value of the defined benefit obligation during 2017 is as follows:

 

  12/31/2017   12/31/2016
Present value of obligations at the beginning of the year          2,872,442            2,430,381
Cost of service             1,285               1,244
Interest cost         322,359           311,361
Benefits paid       (284,777)         (264,287)
Actuarial loss/(gain)         166,540           393,743
Present value of obligations at the end of the year          3,077,849            2,872,442
Changes in fair value of the plan assets

The movement in the fair value of the plan assets during 2017 is as follows:

   
  12/31/2017   12/31/2016
Fair value of plan assets at the beginning of the year        (3,193,493)          (2,684,736)
Interest income       (360,013)         (345,521)
Benefits paid         284,777           264,287
Expected return on plan assets (less interest income)         (36,627)         (427,523)
Fair value of plan assets at the end of the year        (3,305,356)          (3,193,493)
Employee benefits recognized in the income statement

The amounts recognized in the income statement for the year ended December 31, 2017 and 2016 are comprised as follows:

 

  12/31/2017   12/31/2016   12/31/2015
Cost of current service             1,285   1,244   1,807
Interest cost         322,359   311,361   293,533
Expected return on plan assets       (360,013)   (345,521)   (322,460)
Interest on the asset ceiling effect           26,843   22,189   18,422
            (9,526)   (10,727)   (8,698)
Total unrecognized costs (income) (*)                    6   7   4
Total (income) recognized in the income statement           (9,532)   (10,734)   (8,702)
Total (income), net (*)           (9,526)   (10,727)   (8,698)

 

(*) Effect of the limit of IAS 19 Employee Benefits.
Changes in actuarial gains and losses

The movement in the actuarial gains and losses in 2017 is as follows:

 

  12/31/2017   12/31/2016   12/31/2015
Actuarial losses and (gains)             166,540   393,743   (137,859)
Return on plan assets (less interest income)             (36,627)   (427,523)   147,728
Change in the asset’s limit (excluding the interest revenue)             (97,882)   41,796   (4,208)
                32,031   8,016   5,661
Actuarial losses and (gains) recognized in other comprehensive income               32,037   8,023   5,665
Unrecognized actuarial (gains)                      (6)   (7)   (4)
Total cost of actuarial losses and (gains) (*)               32,031   8,016   5,661

 

(*) Actuarial (gain)/loss results from the fluctuation in the investments comprised in the CBS’s asset portfolio.
Breakdown of actuarial gains or losses

Breakdown of actuarial gains or losses, required by IAS 19:

 

  12/31/2017
Loss due to change in demographic assumptions               (3,488)
Loss due to change in financial assumptions             264,638
Loss due to experience adjustments             (94,610)
Return on plan assets (less interest income)             (36,627)
Change in the asset’s limit (excluding the interest revenue)             (97,882)
Actuarial losses and (gains)               32,031
Actuarial assumptions used

The main actuarial assumptions used were as follows:

 

  12/31/2017   12/31/2016
Actuarial financing method Projected unit credit   Projected unit credit
Functional currency Real (R$)   Real (R$)
Recognition of plan assets Fair value   Fair value
       
Nominal discount rate Milênnium Plan : 10.42% Plan 35%: 10.30% and Supplementation: 10.32%  

Milenium Plan: 11.68%,

Plan 35% and Suplementation: 11.72%

Inflation rate 5.00%   5.50%
Nominal salary increase rate 6.05%   6.56%
Nominal benefit increase rate 5.00%   5.50%
Rate of return on investments Milênnium Plan: 10.42% Plan 35% :10.30% and Supplementation: 10.32%  

Milenium Plan: 11.68%,

Plan 35% and Suplementation: 11.72%

General mortality table 35% and Average Salary Supplementation  Plans :  AT 2000 segregated by gender (10% smoothed)   Milenium Plan, 35% and Average Salary Supplementation Plans: AT 2000 segregated by gender (10% smoothed)
Disability table Plan 35% and Supplementation: Light Média Millênnium Plan: Prudential ( retirement)   Light Median
Disability mortality table Winklevoss - 1%   Winklevoss - 1%
Turnover table Millennium plan 5% p.a., nil for DB plans   Millennium plan 5% p.a., nil for DB plans
Retirement age 100% on the first date he/she becomes eligible for programmed retirement benefit under the plan   100% on the first date he/she becomes eligible for programmed retirement benefit under the plan
Household of active participants 95% will be married at the time of retirement, with the wife being 4 years younger than the husband   95% will be married at the time of retirement, with the wife being 4 years younger than the husband
Average life expectancy

These tables represent an average life expectancy in years of employees who retire at the age of 65, as shown below:

 

  12/31/2017   12/31/2016
  BD Plan (*)   Milênio Plan (*)   BD Plan (*)   Milênio Plan (*)
Longevity at age of 65 for current participants              
Male 20.45   19.55   20.45   19.55
Female 23.02   22.17   23.02   22.17
               
Longevity at age of 65 for current participants who are 40              
Male 42.69   41.59   42.69   41.59
Female 46.29   45.30   46.29   45.30

 

(*) The BD Plan is part of the 35% and Average Salary Supplementation Plan and the Milênio Plan is part of the Mixed Supplementary Benefit Plan.
Allocation of plan assets

Allocation of plan assets:

      12/31/2017       12/31/2016
Variable income             50,966   1.54%               62,904   1.97%
Fixed income        3,085,783   93.36%          2,966,272   92.88%
Real estate             44,083   1.33%               42,383   1.33%
Others           124,524   3.77%             121,934   3.82%
Total        3,305,356   100.00%          3,193,493   100.00%
Quantitative sensitivity analysis regarding the significant assumptions for the pension plans

The quantitative sensitivity analysis regarding the significant assumptions for the pension plans as of December 31, 2017 is as follows:

 

12/31/2017

  Plan covering 35% of the average salary   Average salary supplementation plan   Mixed supplementary benefit plan (Milênio Plan)
Assumption: Discount rate                
Sensitivity level 0.5% -0.5%   0.5% -0.5%   0.5% -0.5%
Effect on current service cost and on interest on actuarial obligations 246 (320)   879 (919)   (656) 491
Effect on present value of obligations (15,691) 15,342   (75,107) 82,773   (46,256) 49,545
                 
Assumption: Salary growth                
Sensitivity level 0.5% -0.5%   0.5% -0.5%   0.5% -0.5%
Effect on current service cost and on interest on actuarial obligations             330 (283)
Effect on present value of obligations             2,588 (2,221)
                 
Assumption: Mortality table                
Sensitivity level 0.5% -0.5%   0.5% -0.5%   0.5% -0.5%
Effect on current service cost and on interest on actuarial obligations 1,799 (1,646)   8,896 (8,120)   5,555 (4,993)
Effect on present value of obligations 17,563 (16,073)   86,537 (79,006)   53,031 (47,660)
                 
Assumption: Benefit adjustment                
Sensitivity level 1.0% -1.0%   1.0% -1.0%   1.0% -1.0%
Effect on current service cost and on interest on actuarial obligations (1,045) 1,041   (4,623) 4,564   (894) 904
Effect on present value of obligations (10,158) 10,116   (44,773) 44,205   (9,417) 9,425
Forecast benefit payments of the defined benefit plans

The forecast benefit payments of the defined benefit plans for future years are as follows:

 

Forecast benefit payments     2017
Year 1               276,660
Year 2               285,841
Year 3               294,923
Year 4               303,858
Year 5               312,591
Next 5 years            1,682,216
Total forecast payments            3,156,089
Post-employment health care plan amounts

The amounts recognized in the balance sheet were determined as follows:

  12/31/2017   12/31/2016
Present value of obligations           866,784             691,262
Liabilities       866,784         691,262
Reconciliation of the healthcare liabilities

The reconciliation of the healthcare liabilities is as follows:

  12/31/2017   12/31/2016
Actuarial liability at the beginning of the year 691,262   489,074
Expenses recognized in income for the year 77,269   62,342
Sponsor's contributions transferred in prior year (72,192)   (70,411)
Recognition of loss/(gain) for the year 170,445   210,257
Actuarial liability at the end of the year 866,784   691,262
Actuarial gains and losses recognized in shareholders' equity

The actuarial gains and losses recognized in shareholders' equity are as follows:

  12/31/2017   12/31/2016   12/31/2015
  Actuarial gain (loss) on obligation             170,445   210,257   (97,501)
  Gain (loss) recognized in shareholders' equity             170,445   210,257   (97,501)
Weighted average life expectancy

The weighted average life expectancy based on the mortality table used to determined actuarial obligations is as follows:

  12/31/2017   12/31/2016
Longevity at age of 65 for current participants      
Male               19.55                 19.55
Female               22.17                 22.17
       
Longevity at age of 65 for current participants who are 40      
Male               41.59                 41.59
Female               45.30                 45.30
Actuarial assumptions used for calculating postemployment healthcare benefits

The actuarial assumptions used for calculating postemployment healthcare benefits were:

 

  12/31/2017   12/31/2016
Biometrics      
General mortality table AT 2000 segregated by gender   AT 2000 segregated by gender
Disability moratality table Winklevoss with death probabilities reduced by 1% in all ages   Winklevoss with death probabilities reduced by 1% in all ages
Financial      
Actuarial nominal discount rate 10.34%   11.73%
Inflation 5.00%   5.50%
Nominal increase in medical cost based on age 0.5% - 3.00%real a.a   0.5% - 3.00%real a.a
Nominal medical costs growth rate 8.41%   8.93%
Average medical cost 1,001.69   698,57
Quantitative sensitivity analysis regarding the significant assumptions for the postemployment healthcare plans

The quantitative sensitivity analysis regarding the significant assumptions for the postemployment healthcare plans as of December 31, 2017 is as follows:

 

      12/31/2017
    Healthcare Plan
    Assumption: Discount rate
Sensitivity level   0.5% -0.5%
Effect on current service cost and on interest on actuarial obligations 248                        660
Effect on present value of obligations                   (33,996)                   36,985
       
    Assumption: Medical Inflation
Sensitivity level   1.0% -1.0%
Effect on current service cost and on interest on actuarial obligations                       8,150                   (6,698)
Effect on present value of obligations                     78,813                 (67,670)
       
    Assumption: Mortality table
Sensitivity level   1.0% -1.0%
Effect on current service cost and on interest on actuarial obligations                     (2,059)                     2,040
Effect on present value of obligations                   (19,906)                   19,728
Forecast benefit payments of the postemployment healthcare plans

The forecast benefit payments of the postemployment healthcare plans for future years are as follows:

 

Forecast benefit payments   2017
Year 1                     75,009
Year 2                     78,161
Year 3                     81,121
Year 4                     83,850
Year 5                     86,296
Next 5 years                   456,301

 

Total forecast payments                   860,738