v3.25.4
Pension and Other Post-Retirement Benefit Obligations
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Pension and Other Post-Retirement Benefit Obligations

Note 12. Pension and Other Post-Retirement Benefit Obligations

Defined Benefit Plans

Pension benefits are based on employees’ earnings and years of service. The defined benefit plans are funded by contributions from the Company based on actuarial estimates and statutory requirements. Information about the Celgar and Peace River defined benefit plans, in aggregate for the year ended December 31, 2025 was as follows:

 

 

2025

 

 

 

Pension

 

 

Other Post-
Retirement
Benefits

 

 

Total

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

Benefit obligation, December 31, 2024

 

$

82,382

 

 

$

9,254

 

 

$

91,636

 

Service cost

 

 

2,658

 

 

 

140

 

 

 

2,798

 

Interest cost

 

 

4,023

 

 

 

442

 

 

 

4,465

 

Benefit payments

 

 

(4,123

)

 

 

(514

)

 

 

(4,637

)

Actuarial gains

 

 

(4,564

)

 

 

(1,206

)

 

 

(5,770

)

Foreign currency exchange rate changes

 

 

4,065

 

 

 

438

 

 

 

4,503

 

Benefit obligation, December 31, 2025

 

 

84,441

 

 

 

8,554

 

 

 

92,995

 

 

 

 

 

 

 

 

 

 

Reconciliation of fair value of plan assets

 

 

 

 

 

 

 

 

 

Fair value of plan assets, December 31, 2024

 

 

89,148

 

 

 

—

 

 

 

89,148

 

Actual returns

 

 

8,295

 

 

 

—

 

 

 

8,295

 

Surplus refund

 

 

(3,025

)

 

 

—

 

 

 

(3,025

)

Benefit payments

 

 

(4,049

)

 

 

—

 

 

 

(4,049

)

Foreign currency exchange rate changes

 

 

4,464

 

 

 

—

 

 

 

4,464

 

Fair value of plan assets, December 31, 2025

 

 

94,833

 

 

 

—

 

 

 

94,833

 

Funded status, December 31, 2025

 

$

10,392

 

 

$

(8,554

)

 

$

1,838

 

 

 

 

 

 

 

 

 

 

 

Components of the net benefit cost recognized

 

 

 

 

 

 

 

 

 

Service cost

 

$

2,658

 

 

$

140

 

 

$

2,798

 

Interest cost

 

 

4,023

 

 

 

442

 

 

 

4,465

 

Expected return on plan assets

 

 

(5,504

)

 

 

—

 

 

 

(5,504

)

Amortization of unrecognized items

 

 

(324

)

 

 

(743

)

 

 

(1,067

)

Net benefit cost

 

$

853

 

 

$

(161

)

 

$

692

 

 

Information about the Celgar and Peace River defined benefit plans, in aggregate for the year ended December 31, 2024 was as follows:

 

 

2024

 

 

 

Pension

 

 

Other Post-
Retirement
Benefits

 

 

Total

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

Benefit obligation, December 31, 2023

 

$

85,988

 

 

$

10,516

 

 

$

96,504

 

Service cost

 

 

2,745

 

 

 

125

 

 

 

2,870

 

Interest cost

 

 

3,861

 

 

 

461

 

 

 

4,322

 

Benefit payments

 

 

(3,059

)

 

 

(550

)

 

 

(3,609

)

Actuarial losses (gains)

 

 

27

 

 

 

(469

)

 

 

(442

)

Foreign currency exchange rate changes

 

 

(7,180

)

 

 

(829

)

 

 

(8,009

)

Benefit obligation, December 31, 2024

 

 

82,382

 

 

 

9,254

 

 

 

91,636

 

 

 

 

 

 

 

 

 

 

Reconciliation of fair value of plan assets

 

 

 

 

 

 

 

 

 

Fair value of plan assets, December 31, 2023

 

 

88,783

 

 

 

—

 

 

 

88,783

 

Actual returns

 

 

10,242

 

 

 

—

 

 

 

10,242

 

Contributions

 

 

675

 

 

 

—

 

 

 

675

 

Benefit payments

 

 

(2,996

)

 

 

—

 

 

 

(2,996

)

Foreign currency exchange rate changes

 

 

(7,556

)

 

 

—

 

 

 

(7,556

)

Fair value of plan assets, December 31, 2024

 

 

89,148

 

 

 

—

 

 

 

89,148

 

Funded status, December 31, 2024

 

$

6,766

 

 

$

(9,254

)

 

$

(2,488

)

 

 

 

 

 

 

 

 

 

 

Components of the net benefit cost recognized

 

 

 

 

 

 

 

 

 

Service cost

 

$

2,745

 

 

$

125

 

 

$

2,870

 

Interest cost

 

 

3,861

 

 

 

461

 

 

 

4,322

 

Expected return on plan assets

 

 

(5,160

)

 

 

—

 

 

 

(5,160

)

Amortization of unrecognized items

 

 

55

 

 

 

(815

)

 

 

(760

)

Net benefit cost

 

$

1,501

 

 

$

(229

)

 

$

1,272

 

The components of the net benefit cost other than service cost are recognized in “Other income” in the Consolidated Statements of Operations. The amortization of unrecognized items relates to net actuarial losses (gains) and prior service costs.

The Company anticipates that it will make contributions to the defined benefit plans of approximately $nil in 2026. Estimated future benefit payments under these plans as of December 31, 2025 were as follows:

 

 

 

Pension

 

 

Other Post-Retirement
Benefits

 

2026

 

$

4,002

 

 

$

505

 

2027

 

$

4,251

 

 

$

518

 

2028

 

$

4,490

 

 

$

531

 

2029

 

$

4,742

 

 

$

541

 

2030

 

$

4,968

 

 

$

549

 

2031-2035

 

$

27,627

 

 

$

2,870

 

 

Weighted Average Assumptions

The weighted-average assumptions used to determine the benefit obligations at the measurement dates and the net benefit costs for the years ended December 31, 2025, 2024 and 2023 were as follows for Celgar’s defined benefit plan:

 

 

For the Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Benefit obligations

 

 

 

 

 

 

 

 

 

Discount rate

 

 

5.10

%

 

 

4.70

%

 

 

4.60

%

Rate of compensation increase

 

 

2.50

%

 

 

2.50

%

 

 

2.50

%

Net benefit cost for year ended

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.70

%

 

 

4.60

%

 

 

5.00

%

Rate of compensation increase

 

 

2.50

%

 

 

2.50

%

 

 

2.50

%

Expected rate of return on plan assets

 

 

5.50

%

 

 

5.45

%

 

 

5.45

%

The weighted-average assumptions used to determine the benefit obligations at the measurement dates and the net benefit costs for the years ended December 31, 2025, 2024 and 2023 were as follows for Peace River’s defined benefit plan:

 

 

For the Year Ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

Benefit obligations

 

 

 

 

 

 

 

 

 

Discount rate

 

 

5.10

%

 

 

4.70

%

 

 

4.60

%

Rate of compensation increase

 

 

2.75

%

 

 

2.75

%

 

 

2.75

%

Net benefit cost for year ended

 

 

 

 

 

 

 

 

 

Discount rate

 

 

4.70

%

 

 

4.60

%

 

 

5.00

%

Rate of compensation increase

 

 

2.75

%

 

 

2.75

%

 

 

2.75

%

Expected rate of return on plan assets

 

 

6.23

%

 

 

6.18

%

 

 

6.18

%

The discount rate assumption is adjusted annually to reflect the rates available on high-quality debt instruments, with a duration that is expected to match the timing and amount of expected pension and other post-retirement benefit payments. High-quality debt instruments are corporate bonds with a rating of “AA” or better.

The expected rate of return on plan assets is a management estimate based on, among other factors, historical long-term returns, expected asset mix and an active management premium.

The expected rate of compensation increase is a management estimate based on, among other factors, historical compensation increases and promotions, while considering current industry conditions, the terms of collective bargaining agreements with employees and the outlook for the industry.

The assumed health care cost trend rates used to determine the other post-retirement benefit obligations as of December 31, 2025 and December 31, 2024 were as follows:

 

 

December 31,

 

2025

 

2024

Health care cost trend rate assumed for next year

 

4.25%

 

4.50%

Rate to which the cost trend is assumed to decline (ultimate trend rate)

 

3.50%

 

3.50%

Year that the rate reaches the ultimate trend rate

 

2029

 

2029

The expected health care cost trend rates are based on historical trends for these costs, as well as recently enacted health care legislation. The Company also compares health care cost trend rates to those of the industry.

Investment Objective and Asset Allocation

The investment objective for the defined benefit pension plans is to sufficiently diversify invested plan assets to maintain a reasonable level of risk without imprudently sacrificing the return on the invested funds, and ultimately to achieve a long-term total rate of return, net of fees and expenses, at least equal to the long-term interest rate assumptions used for funding actuarial valuations. To achieve this objective, the Company’s overall investment strategy is to maintain an investment allocation mix of long-term growth investments (equities) and fixed income investments (debt securities). Investment allocation targets have been established by asset class after considering the nature of the liabilities, long-term return expectations, the risks associated with key asset classes, funded position, inflation and interest rates and related management fees and expenses. In addition, the defined benefit pension plan’s investment strategy seeks to minimize risk beyond legislated requirements by constraining the investment managers’ investment options. There are a number of specific constraints based on investment type, but they all have the general purpose of ensuring that the investments are fully diversified and that risk is appropriately managed. For example, there are constraints on the book value of assets that can be invested in any one entity or group, and all equity holdings must be listed on a public exchange. Reviews of the investment objectives, key assumptions and the independent investment managers are performed periodically.

Concentrations of Risk in the Defined Benefit Pension Plans’ Assets

The Company has reviewed the defined benefit pension plans’ equity investments and determined that they are allocated based on the specific investment managers’ stated investment strategies with only slight over- or under-weightings within any specific category, and that those investments are within the constraints that have been set by the Company. Those constraints include a limitation on the value that can be invested in any one entity or investment category. The Company has concluded that there are no significant concentrations of risk.

The following table presents the Celgar and Peace River defined benefit pension plans’ assets fair value measurements as of December 31, 2025 under the fair value hierarchy:

 

 

Fair value measurements as of December 31, 2025 using:

 

Asset Category

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Equity securities

 

$

—

 

 

$

58,286

 

 

$

—

 

 

$

58,286

 

Debt securities

 

 

—

 

 

 

33,655

 

 

 

—

 

 

 

33,655

 

Other

 

 

—

 

 

 

2,892

 

 

 

—

 

 

 

2,892

 

Total assets

 

$

—

 

 

$

94,833

 

 

$

—

 

 

$

94,833

 

The following table presents the Celgar and Peace River defined benefit pension plans’ assets fair value measurements as of December 31, 2024 under the fair value hierarchy:

 

 

Fair value measurements as of December 31, 2024 using:

 

Asset Category

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Equity securities

 

$

—

 

 

$

57,338

 

 

$

—

 

 

$

57,338

 

Debt securities

 

 

—

 

 

 

29,621

 

 

 

—

 

 

 

29,621

 

Other

 

 

—

 

 

 

2,189

 

 

 

—

 

 

 

2,189

 

Total assets

 

$

—

 

 

$

89,148

 

 

$

—

 

 

$

89,148

 

 

Defined Contribution Plans

Effective December 31, 2008, the defined benefit plans at the Celgar mill were closed to new members. In addition, the related defined benefit service accrual ceased on December 31, 2008, and members began to receive pension benefits, at a fixed contractual rate, under a defined contribution plan effective January 1, 2009. The Company’s head office employees also participate in a defined contribution plan. During the year ended December 31, 2025, the Company made contributions of $2,752 to these plans (2024 – $2,634; 2023 – $2,477).

Multiemployer Plan

The Company participates in a multiemployer plan for the hourly-paid employees at the Celgar mill. The contributions to the plan are determined based on a percentage of pensionable earnings pursuant to a collective bargaining agreement. The Company has no current or future contribution obligations in excess of the contractual contributions. During the year ended December 31, 2025, the Company made contributions of $2,253 to this plan (2024 – $2,128; 2023 – $2,193).

Plan details for the years ended December 31, 2025, 2024 and 2023 were as follows:

 

 

Provincially Registered Plan

 

Expiration Date of Collective Bargaining

 

Are the Company's Contributions Greater Than 5% of Total Contributions

Legal name

 

Number

 

Agreement

 

2025

 

2024

 

2023

The Pulp and Paper Industry Pension Plan

 

P085324

 

April 30, 2029

 

Yes

 

Yes

 

Yes