Pensions and Other Postretirement Benefits

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

Pensions and other postretirement benefits

Pensions and other postretirement benefits

The Company has various retirement benefit plans under which substantially all of its employees are entitled to benefits at retirement age, generally based on compensation and length of service and/or contributions. Senior and executive management employees, subject to certain minimum service and age requirements, are also eligible for an additional retirement benefit under their Special Retirement Stipend Agreements, the Supplemental Executive Retirement Plan or the Defined Contribution Supplemental Executive Retirement Plan.

The Company also offers postretirement benefits to certain employees providing life insurance, medical benefits and, for a closed group of employees, free rail travel benefits during retirement. These postretirement benefits are funded as they become due. The information in the tables that follow pertains to all of the Company's defined benefit plans. However, the following descriptions relate solely to the Company's main pension plan, the CN Pension Plan, unless otherwise specified.

Amendments to postretirement medical benefits plans in the U.S.

In June 2022, CN approved changes affecting members participating in the Company’s postretirement medical benefits plans in the U.S. Beginning in 2023, Medicare-eligible retirees are covered by a health reimbursement arrangement, which is an employer-funded account that can be used for reimbursement of eligible medical expenses. Non-Medicare eligible retirees continue to be covered by the existing self-insured program. This change constituted a plan amendment event resulting in a $28 million reduction to the affected plans’ Accumulated projected benefit obligation, recorded in Other comprehensive income, and is composed of a prior service credit of $21 million and an actuarial gain of $7 million, substantially all due to lower expected future benefit payments and to the approximate 130 basis point increase in the end of period discount rates between December 31, 2021 and May 31, 2022, respectively.

Description of the CN Pension Plan

The CN Pension Plan is a contributory defined benefit pension plan that covers the majority of CN employees. It provides for pensions based mainly on years of service and final average pensionable earnings and is generally applicable from the first day of employment. Indexation of pensions is provided after retirement through a gain/loss sharing mechanism, subject to guaranteed minimum increases. An independent trust company is the Trustee of the Company's pension trust funds (which includes the CN Pension Trust Fund). As Trustee, the trust company performs certain duties, which include holding legal title to the assets of the CN Pension Trust Fund and ensuring that the Company, as Administrator, complies with the provisions of the CN Pension Plan and the related legislation. The Company utilizes a measurement date of December 31 for the CN Pension Plan.

Funding policy

Employee contributions to the CN Pension Plan are determined by the plan rules. Company contributions are in accordance with the requirements of the Government of Canada legislation, the Pension Benefits Standards Act, 1985, including amendments and regulations thereto, and such contributions follow minimum and maximum thresholds as determined by actuarial valuations. Actuarial valuations are generally required on an annual basis for all Canadian defined benefit pension plans, or when deemed appropriate and as required by regulations by the Office of the Superintendent of Financial Institutions. These actuarial valuations are prepared in accordance with legislative requirements and with the recommendations of the Canadian Institute of Actuaries for the valuation of pension plans. Actuarial valuations are also required annually for the Company's U.S. qualified defined benefit pension plans.

The Company's most recently filed actuarial valuations for funding purposes for its Canadian registered defined benefit pension plans conducted as at December 31, 2023 indicated a funding excess on a going concern basis of approximately $5.0 billion and a funding excess on a solvency basis of approximately $2.6 billion, calculated using the three-year average of the plans' hypothetical wind-up ratio in accordance with the Pension Benefit Standards Regulations, 1985. The federal pension legislation requires funding deficits, if any, to be paid over a number of years, as calculated under current pension regulations. Alternatively, a letter of credit can be subscribed to fulfill required solvency deficit payments.

Given the solvency ratio of certain Canadian registered defined benefit pension plans is above a specified threshold as at the last filed actuarial valuation, their next actuarial valuation for funding purposes would be required as at December 31, 2026, to be performed in 2027, although the valuation may be conducted earlier at the Company's discretion for those plans. Should the Company decide to use its discretion and file all valuations as at December 31, 2024 in 2025, they would be expected to identify a funding excess on a going concern basis of approximately $5.3 billion, while on a solvency basis a funding excess of approximately $3.5 billion is expected. Based on the anticipated results of these valuations, the CN Pension Plan is expected to remain fully funded and at a level such that the Company would continue to be prohibited from making contributions to the CN Pension Plan in 2025. As such, total cash contributions of approximately $80 million are expected to be made in 2025 for all other pension plans including defined contribution. As at February 4, 2025, the Company had contributed $2 million to its defined benefit pensions for 2025.

Plan assets

The assets of the Company's various Canadian defined benefit pension plans are primarily held in separate trust funds ("Trusts") which are diversified by asset type, geography, sector and investment strategy. Each year, the CN Board of Directors reviews and confirms or amends the Statement of Investment Policies and Procedures (SIPP) which includes the plans' long-term target asset allocation ("Policy") and related benchmark indices. This Policy is based on the long-term expectations of the economy and financial market returns and considers the dynamics of the plans' pension benefit obligations. In 2024, the Policy was amended to implement a target asset allocation change to equities and investment-related liabilities.

The CN Investment Division ("Investment Manager"), a division of the Company created to invest and administer the assets of the plan, can also implement an investment strategy ("Strategy") which can lead the plan's actual asset allocation to deviate from the Policy due to changing market risks and opportunities. The Pension and Investment Committee of the Board of Directors ("Committee") regularly compares the actual plan asset allocation to the Policy and Strategy and compares the actual performance of the Company's pension plan assets to the performance of the benchmark indices.

Actual asset allocation

			Actual plan asset allocation
	Policy		2024		2023
Cash and short-term investments	2	%	1	%	2	%
Bonds and mortgages	41	%	47	%	41	%
Emerging market debt	2	%	2	%	2	%
Private debt	3	%	5	%	6	%
Equities	27	%	30	%	25	%
Real estate	4	%	3	%	3	%
Resource and royalties	5	%	7	%	7	%
Infrastructure	4	%	4	%	4	%
Specialty portfolio	2	%	2	%	2	%
Absolute return	12	%	15	%	14	%
Investment-related liabilities	(2	%)	(16	%)	(6	%)
Total	100	%	100	%	100	%

The Committee's approval is required for all major investments in illiquid securities. The SIPP allows for the use of derivative financial instruments to implement strategies, hedge and adjust existing or anticipated exposures. The SIPP prohibits investments in securities of the Company or its subsidiaries. Investments held in the Company's pension plans consist mainly of the following:

•Cash and short-term investments consist of highly liquid securities which ensure adequate cash flows are available to cover near-term benefit payments as well as anticipated cash requirements needed to support derivative instruments or any other contractual commitment. Short-term investments are mainly obligations issued by Canadian chartered banks and by Canadian governments.

•Bonds include bond instruments, issued or guaranteed by governments and non-government entities. As at December 31, 2024, 74% (2023 - 73%) of bonds were issued or guaranteed by Canadian, U.S. or other governments. Mortgages consist of mortgage bonds, which are secured by real estate. On an exposure basis, the Plan's Policy for bonds and mortgages is 46%. This comprises a 41% allocation mainly to government and corporate bonds and a 5% allocation to derivative financial instruments related to bond exposure.

•Emerging market debt consists of units of co-mingled funds or in separate accounts managed by external managers whose mandate is to invest in debt instruments of emerging market countries.

•Private debt includes participations in private debt securities and funds focused on generating steady yields.

•Equity investments include publicly traded securities diversified by industry sector, geography and issuer and investments in private equity funds. As at December 31, 2024, the most significant allocation to an individual issuer of a publicly traded security was 8% (2023 - 6%) and the most significant allocation to an industry sector was 26% (2023 - 24%). On an exposure basis, the Plan's Policy for equities is 32%. This comprises a 27% allocation to equities and a 5% allocation to derivative financial instruments related to equity exposure.

•Real estate is a diversified portfolio of Canadian land and commercial properties and investments in global real estate private equity funds.

•Resource and royalties investments include petroleum and natural gas and mineral properties and listed and non-listed securities of resource and energy transition companies.

•Infrastructure investments include participations in private infrastructure funds, term loans and notes of infrastructure companies.

•Specialty portfolio consists of mainly private equities in addition to private debt, resource and royalties investments and absolute return investments.

•Absolute return investments are primarily a portfolio of units of externally managed hedge funds, which are invested in various long/short and derivatives strategies within multi-strategy, fixed income, commodity, equity, global macro funds and downside protection. Managers are monitored on a continuous basis through investment and operational due diligence.

•Investment-related liabilities reflect a certain level of financing associated with securities sold under repurchase agreements and other assets. The Policy allows for bond and equity exposures to be funded through derivative instruments or through repurchase agreements. In 2024, there was a decrease in the use of derivative instruments offset by an increased use of securities sold under repurchase agreements. While investment-related liabilities at the end of 2024 exceeded the negative 2% limit set in the Policy, they remain within permitted deviations.

The plans' Investment Manager monitors market events and risk exposures to foreign currencies, interest rates, market risks, credit risks and liquidity risks daily. When investing in foreign securities, the plans are exposed to foreign currency risk that may be adjusted or hedged; the effect of which is included in the valuation of the foreign securities. Net of the adjusted or hedged amount, the plans were 59% exposed to the Canadian dollar, 27% to the US dollar, 8% to European currencies, 1% to the Japanese Yen and 5% to various other currencies as at December 31, 2024. Interest rate risk represents the risk that the fair value of the investments will fluctuate due to changes in market interest rates. Sensitivity to interest rates is a function of the timing and amount of cash flows of the interest-bearing assets and liabilities of the plans. Derivatives are contractual agreements whose value is derived from interest rates, foreign currencies, commodities, or equities, among other fluctuating inputs and factors. They may include forwards, futures, options and swaps. Derivatives are included in the investment asset classes based on their underlying exposure and are used from time to time to synthetically replace any investment activity that would otherwise be accomplished through a direct investment in any investment asset class. When derivatives are used for hedging purposes, the gains or losses on the derivatives are offset by a corresponding change in the value of the hedged assets. To manage counterparty credit risk, established policies require dealing with counterparties considered to be of high credit quality. Adequate liquidity is maintained to cover cash flows by monitoring factors such as fair value, collateral pledged and received, repurchase agreements and securities lending agreements.

Overall return in the capital markets and the level of interest rates affect the funded status of the Company's pension plans, particularly the Company's main Canadian pension plan. Adverse changes with respect to pension plan returns and the level of interest rates from the date of the last actuarial valuations may have a material adverse effect on the funded status of the plans and on the Company's results of operations.

Fair value of plan assets by asset class

	Fair value measurements at December 31, 2024
In millions	Total		Level 1		Level 2		Level 3		NAV
Cash and short-term investments (1)	$	186	$	61	$	125	$	—	$	—
Bonds (2)
Canada, U.S. and supranational	78		—		78		—		—
Provinces of Canada and municipalities	6,336		—		6,336		—		—
Corporate	2,286		—		2,286		—		—
Emerging market debt (3)	380		—		380		—		—
Private debt (5)	951		—		1		—		950
Public equities (6)
Canadian	239		245		(6)		—		—
U.S.	2,472		2,581		(109)		—		—
International	2,334		2,334		—		—		—
Private equities (7)	735		—		(3)		—		738
Real estate (8)	519		—		—		238		281
Resource and royalties (9)	1,318		311		60		947		—
Infrastructure (10)	655		—		2		—		653
Absolute return funds (11)
Multi-strategy	1,357		—		1		—		1,356
Fixed income	76		—		4		—		72
Commodity	(1)		—		(1)		—		—
Equity	511		—		—		—		511
Global macro	858		—		—		—		858
Downside protection	12		12		—		—		—
Total investments (12)	$	21,302	$	5,544	$	9,154	$	1,185	$	5,419
Investment-related liabilities (13)	(2,960)
Other (14)	93
Total plan assets	$	18,435

Level 1: Fair value based on quoted prices in active markets for identical assets.

Level 2: Fair value based on other significant observable inputs.

Level 3: Fair value based on significant unobservable inputs.

NAV: Investments measured at net asset value as a practical expedient.                 

Footnotes to the tables follow on the following page.

	Fair value measurements at December 31, 2023
In millions	Total		Level 1		Level 2		Level 3		NAV
Cash and short-term investments (1)	$	367	$	117	$	250	$	—	$	—
Bonds (2)
Canada, U.S. and supranational	38		—		38		—		—
Provinces of Canada and municipalities	5,209		—		5,209		—		—
Corporate	1,903		—		1,903		—		—
Emerging market debt (3)	352		—		352		—		—
Mortgages (4)	1		—		1		—		—
Private debt (5)	1,021		—		1		—		1,020
Public equities (6)
Canadian	181		180		1		—		—
U.S.	1,828		1,736		92		—		—
International	2,170		2,170		—		—		—
Private equities (7)	616		—		(3)		—		619
Real estate (8)	439		—		—		252		187
Resource and royalties (9)	1,272		312		45		915		—
Infrastructure (10)	660		—		14		—		646
Absolute return funds (11)
Multi-strategy	1,192		—		—		—		1,192
Fixed income	6		—		4		—		2
Equity	385		—		—		—		385
Global macro	774		—		—		—		774
Downside protection	15		13		2		—		—
Total investments (12)	$	18,429	$	4,528	$	7,909	$	1,167	$	4,825
Investment-related liabilities (13)	(868)
Other (14)	(28)
Total plan assets	$	17,533

Level 1: Fair value based on quoted prices in active markets for identical assets.

Level 2: Fair value based on other significant observable inputs.

Level 3: Fair value based on significant unobservable inputs.

NAV: Investments measured at net asset value as a practical expedient.                 

Footnotes to the tables follow on the following page.                        

Fair value of investments classified as Level 3

	Fair value measurements based on significant unobservable inputs (Level 3)
In millions	Real estate (8)		Resource and royalties (9)		Total
Balance at December 31, 2022	$	249	$	841	$	1,090
Actual return relating to assets still held at the reporting date	10		81		91
Purchases	2		2		4
Disbursements	(9)		(9)		(18)
Balance at December 31, 2023	252		915		1,167
Actual return relating to assets still held at the reporting date	7		53		60
Purchases	1		69		70
Sales	(6)		—		(6)
Disbursements	(16)		(90)		(106)
Balance at December 31, 2024	$	238	$	947	$	1,185

(1)Cash and short-term investments with related accrued interest are valued at cost, which approximates fair value, and are categorized as Level 1 and Level 2 respectively.

(2)Bonds are valued using mid-market prices obtained from independent pricing data suppliers. When prices are not available from independent sources, the fair value is based on the present value of future net cash flows using current market yields for comparable instruments.

(3)Emerging market debt funds are valued based on the net asset value which is readily available and published by each fund's independent administrator.

(4)Mortgages are valued using mid-market prices obtained from independent pricing data suppliers. When prices are not available from independent sources, the fair value is based on the present value of future net cash flows using current market yields for comparable instruments.

(5)Private debt investments are valued based on the net asset value as reported by each fund's manager, generally based on the present value of future net cash flows using current market yields for comparable instruments. In 2024, $45 million (2023 - $47 million) of private debt investments are included as part of the specialty portfolio strategy.

(6)The fair value of public equity investments is based on quoted prices in active markets.

(7)Private equity investments are valued based on the net asset value as reported by each fund's manager, generally using discounted cash flow analysis or earnings multiples. In 2024, $338 million (2023 - $273 million) of private equity investments are included as part of the specialty portfolio strategy.

(8)The fair value of real estate investments categorized as Level 3 includes immovable properties. Land is valued based on the fair value of comparable assets, and income producing properties are valued based on the present value of estimated future net cash flows or the fair value of comparable assets. Independent valuations of all immovable properties are performed triennially on a rotational basis. The fair value of real estate investments categorized as NAV consists mainly of investments in real estate private equity funds and is based on the net asset value as reported by each fund's manager, generally using a discounted cash flow analysis or earnings multiples.

(9)Resource and royalties investments categorized as Level 1 are valued based on quoted prices in active markets. Resource and royalties participations traded on a secondary market are valued based on the most recent transaction price and are categorized as Level 2, of which $10 million in 2024 (2023 - $10 million) are included as part of the specialty portfolio strategy. Investments in resource and royalties categorized as Level 3 consist of operating resource and royalties properties and the fair value is based on estimated future net cash flows that are discounted using prevailing market rates for transactions in similar assets. Estimated future net cash flows are based on forecasted oil, gas or other commodity prices and future projected annual production and costs.

(10)The fair value of infrastructure investments categorized as Level 2 is based on the present value of future net cash flows using current market yields for comparable instruments. The fair value of infrastructure funds categorized as NAV is based on the net asset value as reported by each fund's manager, generally using a discounted cash flow analysis or earnings multiples.

(11)Absolute return investments are valued using the net asset value as reported by each fund's independent administrator. All absolute return investments have contractual redemption frequencies, ranging from monthly to annually, and redemption notice periods varying from 5 to 90 days. In 2024, $nil (2023 - $1 million) of absolute return investments are included as part of the specialty portfolio strategy.

Footnotes to the table continue on the following page.

(12)Derivative financial instruments, which are included in total investments, are valued using quoted market prices when available and are categorized as Level 1, or based on valuation techniques using market data when quoted market prices are not available and are categorized as Level 2. The remaining derivatives included within Other are valued at mark-to-market. Derivatives are included in the investment asset categories based on their underlying exposure. The following table presents the fair value asset/unrealized gain or liability/unrealized loss positions and notional values as at December 31, 2024 and 2023:

	Year ended December 31, 2024						Year ended December 31, 2023
	Notional value		Fair value				Notional value		Fair value
In millions			Asset/unrealized gain		Liability/unrealized loss				Asset/unrealized gain		Liability/unrealized loss
Cash and short-term investments
Foreign exchange forwards	$	—	$	—	$	—	$	20	$	—	$	—
Bonds
Bond forwards	51		2		(2)		1,101		162		(4)
Foreign exchange forwards	456		9		(9)		71		1		(1)
Options	482		9		(5)		118		2		(2)
Credit default swaps	288		—		(6)		99		—		(2)
Swaps	353		11		(1)		378		198		(205)
Emerging market debt
Swaps	—		—		—		19		2		—
Private debt
Foreign exchange forwards	149		1		—		101		1		—
Public equities
Foreign exchange forwards	1,879		18		(124)		1,434		75		(14)
Swaps	2,062		14		(23)		2,172		40		(9)
Private equities
Foreign exchange forwards	893		2		(5)		568		1		(4)
Real estate
Foreign exchange forwards	7		—		—		11		—		—
Resource and royalties
Commodity swaps	37		—		(6)		99		1		(16)
Infrastructure
Foreign exchange forwards	292		2		—		190		2		—
Absolute return funds
Foreign exchange forwards	1,218		5		(1)		689		4		—
Swaps	144		1		(1)		463		2		—
Options	48		12		—		36		13		—
Total derivatives included in investments	$	8,359	$	86	$	(183)	$	7,569	$	504	$	(257)
Other (14)
Interest rate futures	320		—		—		381		—		—
Foreign currency futures	30		—		—		—		—		—
Equity futures	166		1		—		348		1		—
Total derivatives included in plan assets	$	8,875	$	87	$	(183)	$	8,298	$	505	$	(257)

(13)Investment-related liabilities include securities sold under repurchase agreements. The securities sold under repurchase agreements do not meet the conditions to be removed from the assets and are therefore maintained on the books with an offsetting liability recorded to represent the financing nature of this transaction. These agreements are recorded at cost which together with accrued interest approximates fair value due to their short-term nature.

(14)Other consists of operating assets of $164 million (2023 - $143 million) and liabilities of $71 million (2023 - $171 million) required to administer the Trusts' investment assets and the plans' benefits and funding activities. Such assets and liabilities are valued at cost, except for the interest rate, foreign currency and equity futures margins in Other which are valued at mark-to-market and have not been assigned to a fair value category.

Obligations and funded status for defined benefit pension and other postretirement benefit plans

		Pensions				Other postretirement benefits
In millions	Year ended December 31,	2024		2023		2024		2023
Change in benefit obligation
Projected benefit obligation at beginning of year		$	14,755	$	13,909	$	145	$	147
Amendments		—		—		—		—
Interest cost		669		703		7		7
Actuarial loss (gain) on projected benefit obligation (1)		(319)		1,035		(2)		2
Current service cost		91		83		1		1
Plan participants' contributions		63		64		—		—
Foreign currency changes		20		(6)		3		(1)
Benefit payments, settlements and transfers		(1,035)		(1,033)		(11)		(11)
Projected benefit obligation at the end of the year (2)		$	14,244	$	14,755	$	143	$	145
Component representing future salary increases		(71)		(13)		—		—
Accumulated benefit obligation at end of year		$	14,173	$	14,742	$	143	$	145
Change in plan assets
Fair value of plan assets at beginning of year		$	17,533	$	16,589	$	—	$	—
Employer contributions		25		25		—		—
Plan participants' contributions		63		64		—		—
Foreign currency changes		15		(4)		—		—
Actual return on plan assets		1,834		1,892		—		—
Benefit payments, settlements and transfers		(1,035)		(1,033)		—		—
Fair value of plan assets at end of year (2)		$	18,435	$	17,533	$	—	$	—
Funded status - Excess (deficiency) of fair value of plan assets over projected benefit obligation at end of year		$	4,191	$	2,778	$	(143)	$	(145)

(1)The pensions' actuarial gain for the year ended December 31, 2024 is mostly due to changes in certain demographic-related assumptions including mortality following an experience study conducted during the year. Substantially all of the pensions’ actuarial loss for the year ended December 31, 2023 is the result of a 62 basis point decrease in the end of year discount rate.

(2)For the CN Pension Plan, as at December 31, 2024, the projected benefit obligation was $13,241 million (2023 - $13,711 million) and the fair value of plan assets was $17,642 million (2023 - $16,762 million). The measurement date of all plans is December 31.

Amounts recognized in the Consolidated Balance Sheets

		Pensions				Other postretirement benefits
In millions	As at December 31,	2024		2023		2024		2023
Noncurrent assets - Pension asset		$	4,541	$	3,140	$	—	$	—
Current liabilities (Note 14)		—		—		(10)		(12)
Noncurrent liabilities - Pension and other postretirement benefits		(350)		(362)		(133)		(133)
Total amount recognized		$	4,191	$	2,778	$	(143)	$	(145)

Amounts recognized in Accumulated other comprehensive loss (Note 20)

		Pensions				Other postretirement benefits
In millions	As at December 31,	2024		2023		2024		2023
Net actuarial gain (loss)		$	(2,019)	$	(3,052)	$	26	$	30
Prior service credit (cost)		$	—	$	—	$	15	$	19

Information for defined benefit pension plans with an accumulated benefit obligation in excess of plan assets

		Pensions
In millions	As at December 31,	2024		2023
Accumulated benefit obligation (1)		$	456	$	562
Fair value of plan assets (1)		$	106	$	203

(1)    All of the Company's other postretirement benefit pension plans have an accumulated benefit obligation in excess of plan assets.

Information for defined benefit pension plans with a projected benefit obligation in excess of plan assets

		Pensions
In millions	As at December 31,	2024		2023
Projected benefit obligation		$	456	$	565
Fair value of plan assets		$	106	$	203

Components of net periodic benefit cost (income) for defined benefit pension and other postretirement benefit plans

		Pensions						Other postretirement benefits
In millions	Year ended December 31,	2024		2023		2022		2024		2023		2022
Current service cost		$	91	$	83	$	157	$	1	$	1	$	2
Other components of net periodic benefit cost (income)
Interest cost		669		703		468		7		7		5
Settlement loss		—		—		1		—		—		—
Expected return on plan assets		(1,182)		(1,186)		(1,132)		—		—		—
Amortization of prior service cost (credit)		—		—		—		(4)		(3)		(2)
Amortization of net actuarial loss (gain)		62		7		166		(6)		(7)		(4)
Total Other components of net periodic benefit cost (income)		$	(451)	$	(476)	$	(497)	$	(3)	$	(3)	$	(1)
Net periodic benefit cost (income)		$	(360)	$	(393)	$	(340)	$	(2)	$	(2)	$	1

Weighted-average assumptions used in accounting for defined benefit pension and other postretirement benefit plans

		Pensions						Other postretirement benefits
	As at December 31,	2024		2023		2022		2024		2023		2022
To determine projected benefit obligation
Discount rate (1)		4.65	%	4.64	%	5.26	%	4.85	%	4.71	%	5.23	%
Rate of compensation increase (2)		2.75	%	2.75	%	2.75	%	2.75	%	2.75	%	2.75	%
To determine net periodic benefit cost (income)
Rate to determine current service cost (3)		4.62	%	5.25	%	3.40	%	4.73	%	5.17	%	3.43	%
Rate to determine interest cost (3)		4.61	%	5.21	%	2.67	%	4.68	%	5.23	%	2.74	%
Rate of compensation increase (2)		2.75	%	2.75	%	2.75	%	2.75	%	2.75	%	2.75	%
Expected return on plan assets (4)		7.30	%	7.60	%	7.00	%	N/A		N/A		N/A

(1)    The Company's discount rate assumption, which is set annually at the end of each year, is determined by management with the aid of third-party actuaries. The discount rate is used to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments with a rating of AA or better, would provide the necessary cash flows to pay for pension benefits as they become due. For the Canadian pension and other postretirement benefit plans, future expected benefit payments are discounted using spot rates based on a derived AA corporate bond yield curve for each maturity year.

(2)    The rate of compensation increase is determined by the Company based upon its long-term plans for such increases.

(3)    The Company uses the spot rate approach to measure current service cost and interest cost for all defined benefit pension and other postretirement benefit plans. Under the spot rate approach, individual spot discount rates along the same yield curve used in the determination of the projected benefit obligation are applied to the relevant projected cash flows at the relevant maturity.

(4)    The expected long-term rate of return is determined based on expected future performance for each asset class and is weighted based on the investment policy. For 2024, the Company used a long-term rate of return assumption of 7.30% on the market-related value of plan assets to compute net periodic benefit cost (income). The Company has elected to use a market-related value of assets whereby realized and unrealized gains/losses and appreciation/depreciation in the value of investments are recognized over a period of five years, while investment income is recognized immediately. The market-related value is also subject to a corridor approach to not exceed 110% or be less than 90% of the fair value and any amount causing the market-related value to be outside the 10% corridor is recognized immediately in the market-related value of assets. In 2025, the Company will decrease the expected long-term rate of return on plan assets by 20 basis points to 7.10% to reflect management's current view of long-term investment returns.

Expected future benefit payments

In millions	Pensions		Other postretirement benefits
2025	$	1,044	$	11
2026	$	1,035	$	11
2027	$	1,024	$	11
2028	$	1,010	$	10
2029	$	997	$	10
Years 2030 to 2033	$	4,768	$	48

Defined contribution and other plans

The Company maintains defined contribution pension plans for certain salaried employees as well as certain employees covered by collective bargaining agreements. The Company also maintains other plans including a Section 401(k) savings plan for U.S. based employees. The Company's contributions under these plans were expensed as incurred and, in 2024, amounted to $44 million (2023 - $26 million; 2022 - $23 million).

Contributions to multi-employer plan

Under collective bargaining agreements, the Company participates in a multi-employer benefit plan named the Railroad Employees National Early Retirement Major Medical Benefit Plan which provides certain postretirement health care benefits to certain retirees. The Company's contributions under this plan were expensed as incurred and amounted to $4 million in 2024 (2023 - $6 million; 2022 - $7 million). The annual contribution rate for the plan was $67.05 per month per active employee for 2024 (2023 - $89.00). The plan covered 148 retirees in 2024 (2023 - 183 retirees).