PENSION PLAN



As at December 31
($ millions)	2019	2018
Registered defined benefit net obligation	19	19
Supplemental defined benefit net obligation	16	12
Net employee benefit obligations	35	31

Pembina maintains defined contribution plans and non-contributory defined benefit pension plans covering its employees. On April 1, 2018, Pembina exercised its option to assume an additional interest in the Younger extraction and fractionation facilities ("Younger Facilities"). Accordingly, Pembina also assumed the Bargaining Unit Pension Plan for Employees at the Younger Plant ("Younger Plan") with the net obligation of $6 million. Pembina contributes five to 10 percent of an employee's earnings to the defined contribution plan until the employee's age plus years of service equals 50, at which time they become eligible for the defined benefit plans. Pembina recognized $11 million in expense for the defined contribution plan during the year (2018: $8 million). The defined benefit plans include a funded registered plan for all eligible employees and an unfunded supplemental retirement plan for those employees affected by the Canada Revenue Agency maximum pension limits. The defined benefit plans are administered by separate pension funds that are legally separated from Pembina. Benefits under the plans are based on the length of service and the annual average best three years of earnings during the last 10 years of service of the employee. Benefits paid out of the plans are not indexed. Pembina measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31 of each year. The most recent actuarial valuation was at December 31, 2018. The defined benefit plans expose Pembina to actuarial risks such as longevity risk, interest rate risk, and market (investment) risk.

Defined Benefit Obligations



As at December 31 ($ millions)	2019				2018
As at December 31 ($ millions)	Registered Plans		Supplemental Plan		Registered Plan		Supplemental Plan
Present value of unfunded obligations	—		16		—		12
Present value of funded obligations	250		—		212		—
Total present value of obligations	250		16		212		12
Fair value of plan assets	231		—		193		—
Recognized liability for defined benefit obligations	(19	)	(16	)	(19	)	(12	)

Pembina funds the defined benefit obligation plans in accordance with government regulations by contributing to trust funds administered by an independent trustee. The funds are invested primarily in equities and bonds. Defined benefit plan contributions totalled $20 million for the year ended December 31, 2019 (2018: $19 million).

Pembina has determined that, in accordance with the terms and conditions of the defined benefit plans, and in accordance with statutory requirements of the plans, the present value of refunds or reductions in future contributions is not lower than the balance of the total fair value of the plan assets less the total present value of obligations. As such, no decrease in the defined benefit asset is necessary at December 31, 2019 (2018: nil).

Registered Defined Benefit Pension Plan Assets Comprise



As at December 31
(Percent)	2019	2018
Equity securities	62	61
Debt	38	39
	100	100

Movement in the Present Value of the Defined Benefit Pension Obligation



	2019			2018
($ millions)	Registered Plans		Supplemental Plan	Registered Plan		Supplemental Plan
Defined benefits obligations at January 1	212		12	192		11
Benefits paid by the plan	(12	)	—	(12	)	—
Current service costs	15		1	14		1
Interest expense	8		—	7		—
Transfer from Younger	—		—	16		—
Actuarial losses (gains) in other comprehensive income	27		3	(5	)	—
Defined benefit obligations at December 31	250		16	212		12

Movement in the Present Value of Registered Defined Benefit Pension Plan Assets



($ millions)	2019		2018
Fair value of plan assets at January 1	193		182
Contributions paid into the plan	20		19
Benefits paid by the plan	(12	)	(12	)
Return on plan assets	22		(13	)
Transfer from Younger	—		10
Interest income	8		7
Fair value of registered plan assets at December 31	231		193

Expense Recognition in Earnings



For the years ended December 31
($ millions)	2019		2018
Registered Plan
Current service costs	15		14
Interest on obligation	8		8
Expected return on plan assets	(8	)	(7	)
	15		15

The expense is recognized in the following line items in the consolidated statement of comprehensive income:



For the years ended December 31
($ millions)	2019	2018
Registered Plan
Operating expenses	7	8
General and administrative expense	8	7
	15	15

Expense recognized for the Supplemental Plan was less than $2 million for each of the years ended December 31, 2019 and 2018.

Actuarial Gains and Losses Recognized in Other Comprehensive Income



	2019						2018
($ millions)	Registered Plans		Supplemental Plan		Total		Registered Plan		Supplemental Plan		Total
Balance at January 1	(28	)	(1	)	(29	)	(22	)	(1	)	(23	)
Remeasurements:					—
Financial assumptions	(21	)	(1	)	(22	)	3		—		3
Experience adjustments	—		—		—		—		—		—
Return on plan assets excluding interest income	16		—		16		(9	)	—		(9	)
Recognized loss during the period after tax	(5	)	(1	)	(6	)	(6	)	—		(6	)
Balance at December 31	(33	)	(2	)	(35	)	(28	)	(1	)	(29	)

Principal actuarial assumptions used:



As at December 31
(weighted average percent)	2019		2018
Discount rate	3.1	%	3.8	%
Future pension earning increases	4.0	%	4.0	%

Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the values of the liabilities in the defined plans are as follows:



As at December 31
(years)	2019	2018
Longevity at age 65 for current pensioners
Males	21.8	21.7
Females	24.2	24.1
Longevity at age 65 for current member aged 45
Males	22.8	22.8
Females	25.1	25.1

The calculation of the defined benefit obligation is sensitive to the discount rate, compensation increases, retirements and termination rates as set out above. An increase or decrease of the estimated discount rate of 3.1 percent by 100 basis points at December 31, 2019 is considered reasonably possible in the next financial year but would not have a material impact on the obligation.

Pembina expects to contribute $21 million to the defined benefit plans in 2020.