PENSION AND OTHER POSTRETIREMENT BENEFITS (Tables)

12 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Schedule of Changes in Projected Benefit Obligation, Plan Assets and Funded Status

For these plans, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were as follows:

	Canada		United States
December 31,	2019	2018	2019	2018
(millions of Canadian dollars)
Projected benefit obligation	1,481	1,422	103	1,214
Accumulated benefit obligation	1,361	1,299	98	1,179
Fair value of plan assets	1,087	1,064	—	1,045

The following table details the changes in the projected benefit obligation, the fair value of plan assets and the recorded assets or liabilities for our defined benefit pension plans:

	Canada				United States
December 31,	2019		2018		2019		2018
(millions of Canadian dollars)
Change in projected benefit obligation
Projected benefit obligation at beginning of year	3,997		4,033		1,214		1,279
Service cost	149		149		45		45
Interest cost	139		130		41		38
Participant contributions	32		25		—		—
Actuarial (gain)/loss	423		(146	)	106		(103	)
Benefits paid	(187	)	(184	)	(101	)	(60	)
Plan settlements1	(99	)	—		(1	)	(65	)
Transfers out	(8	)	(10	)	(6	)	—
Foreign currency exchange rate changes	—		—		(63	)	105
Other	—		—		(5	)	(25	)
Projected benefit obligation at end of year2	4,446		3,997		1,230		1,214
Change in plan assets
Fair value of plan assets at beginning of year	3,523		3,619		1,045		1,097
Actual return/(loss) on plan assets	448		(42	)	176		(48	)
Employer contributions	114		113		46		40
Participant contributions	32		25		—		—
Benefits paid	(187	)	(184	)	(101	)	(60	)
Plan settlements1	(99	)	—		(1	)	(65	)
Transfers out	(4	)	(8	)	—		—
Foreign currency exchange rate changes	—		—		(56	)	91
Other	—		—		(5	)	(10	)
Fair value of plan assets at end of year3	3,827		3,523		1,104		1,045
Underfunded status at end of year	(619	)	(474	)	(126	)	(169	)
Presented as follows:
Deferred amounts and other assets	35		29		—		—
Accounts payable and other	(9	)	(9	)	(4	)	(4	)
Other long-term liabilities	(645	)	(494	)	(122	)	(165	)
	(619	)	(474	)	(126	)	(169	)

1 Plan settlements for the Canadian Plans are related to the disposition of our federally regulated BC Field Services business.

2 The accumulated benefit obligation for our Canadian pension plans was $4.0 billion and $3.7 billion as at December 31, 2019 and 2018, respectively. The accumulated benefit obligation for our United States pension plans was $1.2 billion as at December 31, 2019 and 2018.

3

Assets in the amount of $10 million (2018 - $7 million) and $51 million (2018 - $39 million), related to our Canadian and United States non-registered supplemental pension plan obligations, are held in Grantor Trusts and Rabbi Trusts that, in accordance with federal tax regulations, are not restricted from creditors. These assets are committed for the future settlement of benefit obligations included in the underfunded status as at the end of the year, however they are excluded from plan assets for accounting purposes.

Schedule of Amount Recognized in Accumulated Other Comprehensive Income

The amount of pre-tax AOCI relating to our pension plans are as follows:

	Canada		United States
December 31,	2019	2018	2019		2018
(millions of Canadian dollars)
Net actuarial loss	445	435	134		133
Prior service credit	—	—	(2	)	(3	)
Total amount recognized in AOCI1	445	435	132		130

1 Excludes amounts related to cumulative translation adjustment.

The amount of pre-tax AOCI relating to our OPEB plans are as follows:

	Canada				United States
December 31,	2019		2018		2019		2018
(millions of Canadian dollars)
Net actuarial gain	(7	)	(29	)	(23	)	(15	)
Prior service credit	(1	)	(2	)	(13	)	(15	)
Total amount recognized in AOCI1	(8	)	(31	)	(36	)	(30	)

1 Excludes amounts related to cumulative translation adjustment.

Schedule of Net Benefit Costs Recognized

The components of net periodic benefit cost and other amounts recognized in pre-tax Comprehensive income related to our OPEB plans are as follows:

	Canada						United States
Year ended December 31,	2019		2018		2017		2019		2018		2017
(millions of Canadian dollars)
Service cost	5		8		7		2		3		5
Interest cost	10		10		10		10		10		10
Expected return on plan assets	—		—		—		(12	)	(12	)	(10	)
Amortization/settlement of net actuarial gain	(7	)	—		—		—		(1	)	—
Amortization/curtailment of prior service (credit)/cost	(1	)	—		1		(2	)	(4	)	—
Net periodic benefit cost recognized in Earnings	7		18		18		(2	)	(4	)	5
Amount recognized in OCI:
Amortization/settlement of net actuarial gain/(loss)	7		—		(1	)	—		1		1
Amortization/curtailment of prior service credit	1		—		—		2		4		—
Net actuarial (gain)/loss arising during the year	15		(46	)	(8	)	(8	)	(1	)	(42	)
Prior service (credit)/cost	—		—		(3	)	—		(8	)	1
Total amount recognized in OCI	23		(46	)	(12	)	(6	)	(4	)	(40	)
Total amount recognized in Comprehensive income	30		(28	)	6		(8	)	(8	)	(35	)

		Canada						United States
Year ended December 31,		2019		2018		2017		2019		2018		2017
(millions of Canadian dollars)
Service cost		149		149		156		45		45		48
Interest cost		139		130		116		41		38		35
Expected return on plan assets		(245	)	(245	)	(201	)	(78	)	(88	)	(57	)
Amortization/settlement of net actuarial loss		41		25		29		2		7		10
Amortization/curtailment of prior service (credit)/cost		—		—		—		(1	)	3		—
Net periodic benefit cost		84		59		100		9		5		36
Defined contribution benefit cost		8		11		11		—		—		—
Net pension cost recognized in Earnings		92		70		111		9		5		36
Amount recognized in OCI:
	Effect of plan combination	—		—		—		(6	)	—		—
	Amortization/settlement of net actuarial loss	(26	)	(11	)	(14	)	(2	)	(7	)	(9	)
	Amortization/curtailment of prior service credit/(cost)	—		—		—		1		(3	)	—
	Net actuarial loss arising during the year	115		112		38		8		28		—
Total amount recognized in OCI		89		101		24		1		18		(9	)
Total amount recognized in Comprehensive income		181		171		135		10		23		27

Schedule of Actuarial Assumptions Used

The weighted average assumptions made in the measurement of the accumulated postretirement benefit obligation and net periodic benefit cost of our OPEB plans are as follows:

	Canada						United States
	2019		2018		2017		2019		2018		2017
Accumulated postretirement benefit obligation
Discount rate	3.1	%	3.8	%	3.6	%	2.8	%	4.0	%	3.5	%
Net periodic benefit cost
Discount rate	3.8	%	3.6	%	4.0	%	4.0	%	3.3	%	4.0	%
Rate of return on plan assets	N/A		N/A		N/A		6.7	%	5.7	%	6.0	%

The weighted average assumptions made in the measurement of the projected benefit obligation and net periodic benefit cost of our pension plans are as follows:

	Canada						United States
	2019		2018		2017		2019		2018		2017
Projected benefit obligation
Discount rate	3.0	%	3.8	%	3.6	%	3.0	%	3.9	%	3.5	%
Rate of salary increase	3.2	%	3.2	%	3.2	%	2.9	%	2.8	%	3.1	%
Net periodic benefit cost
Discount rate	3.8	%	3.6	%	4.0	%	3.9	%	3.4	%	4.0	%
Expected rate of return on plan assets	7.0	%	6.8	%	6.5	%	8.0	%	7.4	%	7.2	%
Rate of salary increase	3.2	%	3.2	%	3.7	%	2.9	%	2.9	%	3.3	%

Schedule of Other Postretirement Benefits

The following table details the changes in the accumulated postretirement benefit obligation, the fair value of plan assets and the recorded assets or liabilities for our defined benefit OPEB plans:

	Canada				United States
December 31,	2019		2018		2019		2018
(millions of Canadian dollars)
Change in accumulated postretirement benefit obligation
Accumulated postretirement benefit obligation at beginning of year	282		321		305		337
Service cost	5		8		2		3
Interest cost	10		10		10		10
Participant contributions	—		—		5		6
Actuarial (gain)/loss	15		(45	)	7		(25	)
Benefits paid	(6	)	(11	)	(28	)	(29	)
Plan amendments	—		—		—		(8	)
Foreign currency exchange rate changes	—		—		(15	)	27
Other	(13	)	(1	)	2		(16	)
Accumulated postretirement benefit obligation at end of year	293		282		288		305
Change in plan assets
Fair value of plan assets at beginning of year	—		—		181		213
Actual return/(loss) on plan assets	—		—		27		(13	)
Employer contributions	6		11		10		8
Participant contributions	—		—		5		6
Benefits paid	(6	)	(11	)	(28	)	(29	)
Foreign currency exchange rate changes	—		—		(9	)	16
Other	—		—		2		(20	)
Fair value of plan assets at end of year	—		—		188		181
Underfunded status at end of year	(293	)	(282	)	(100	)	(124	)
Presented as follows:
Deferred amounts and other assets	—		—		—		2
Accounts payable and other	(12	)	(12	)	(8	)	(7	)
Other long-term liabilities	(281	)	(270	)	(92	)	(119	)
	(293	)	(282	)	(100	)	(124	)

Schedule of Assumed Health Care Cost Trend Rates

The assumed rates for the next year used to measure the expected cost of benefits are as follows:

	Canada				United States
	2019		2018		2019		2018
Health care cost trend rate assumed for next year	4.0	%	5.6	%	7.2	%	7.4	%
Rate to which the cost trend is assumed to decline (ultimate trend rate)	4.0	%	4.4	%	4.5	%	4.5	%
Year that the rate reaches the ultimate trend rate	N/A		2034		2037		2037

Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates

A 1% change in the assumed health care cost trend rate would have the following effects for the year ended and as at December 31, 2019:

	Canada			United States
	1% Increase	1% Decrease		1% Increase	1% Decrease
(millions of Canadian dollars)
Total service and interest costs	1	(1	)	1	(1	)
Accumulated postretirement benefit obligation	21	(17	)	19	(17	)

Schedule of Allocation of Plan Assets

The asset allocation targets and major categories of plan assets are as follows:

	Canada						United States
	Target		December 31,				Target		December 31,
Asset Category	Allocation		2019		2018		Allocation		2019		2018
Equity securities	43.4	%	46.4	%	45.8	%	45.0	%	55.2	%	52.7	%
Fixed income securities	30.3	%	31.0	%	38.8	%	20.0	%	19.8	%	34.9	%
Alternatives1	26.3	%	22.6	%	15.4	%	35.0	%	25.0	%	12.4	%

1 Alternatives include investments in private debt, private equity, infrastructure and real estate funds.

Schedule of Changes in Fair Value of Plan Assets

Changes in the net fair value of OPEB plan assets classified as Level 3 in the fair value hierarchy were as follows:

	Canada		United States
December 31,	2019	2018	2019	2018
(millions of Canadian dollars)
Balance at beginning of year	—	—	5	—
Unrealized and realized gains	—	—	1	—
Purchases and settlements, net	—	—	12	5
Balance at end of year	—	—	18	5

The following table summarizes the fair value of plan assets for our pension plans recorded at each fair value hierarchy level:

	Canada						United States
	Level 11	Level 22		Level 33	Total		Level 11	Level 22	Level 33	Total
(millions of Canadian dollars)
December 31, 2019
Cash and cash equivalents	184	—		—	184		14	—	—	14
Equity securities
Canada	165	183		—	348		—	—	—	—
United States	—	—		—	—		—	93	—	93
Global	—	1,429		—	1,429		—	516	—	516
Fixed income securities
Government	196	418		—	614		—	164	—	164
Corporate	—	388		—	388		—	41	—	41
Alternatives4	—	—		852	852		—	—	276	276
Forward currency contracts	—	12		—	12		—	—	—	—
Total pension plan assets at fair value	545	2,430		852	3,827		14	814	276	1,104
December 31, 2018
Cash and cash equivalents	240	—		—	240		56	—	—	56
Equity securities
Canada	138	481		—	619		—	—	—	—
United States	—	—		—	—		—	110	—	110
Global	—	992		—	992		—	440	—	440
Fixed income securities
Government	218	453		—	671		—	265	—	265
Corporate	—	457		—	457		—	44	—	44
Alternatives4	—	—		562	562		—	—	130	130
Forward currency contracts	—	(18	)	—	(18	)	—	—	—	—
Total pension plan assets at fair value	596	2,365		562	3,523		56	859	130	1,045

1 Level 1 assets include assets with quoted prices in active markets for identical assets.

2 Level 2 assets include assets with significant observable inputs.

3 Level 3 assets include assets with significant unobservable inputs.

4 Alternatives include investments in private debt, private equity, infrastructure and real estate funds.

Changes in the net fair value of pension plan assets classified as Level 3 in the fair value hierarchy were as follows:

	Canada		United States
December 31,	2019	2018	2019	2018
(millions of Canadian dollars)
Balance at beginning of year	562	340	130	56
Unrealized and realized gains	10	77	13	9
Purchases and settlements, net	280	145	133	65
Balance at end of year	852	562	276	130

OPEB Plans

The following table summarizes the fair value of plan assets for our OPEB plans recorded at each fair value hierarchy level:

	Canada				United States
	Level 11	Level 22	Level 33	Total	Level 11	Level 22	Level 33	Total
(millions of Canadian dollars)
December 31, 2019
Cash and cash equivalents	—	—	—	—	2	—	—	2
Equity securities
United States	—	—	—	—	—	75	—	75
Global	—	—	—	—	—	38	—	38
Fixed income securities
Government	—	—	—	—	40	15	—	55
Alternatives4	—	—	—	—	—	—	18	18
Total OPEB plan assets at fair value	—	—	—	—	42	128	18	188
December 31, 2018
Cash and cash equivalents	—	—	—	—	7	—	—	7
Equity securities
United States	—	—	—	—	—	68	—	68
Global	—	—	—	—	—	30	—	30
Fixed income securities
Government	—	—	—	—	43	28	—	71
Corporate	—	—	—	—	—	—	—	—
Alternatives4	—	—	—	—	—	—	5	5
Total OPEB plan assets at fair value	—	—	—	—	50	126	5	181

1 Level 1 assets include assets with quoted prices in active markets for identical assets.

2 Level 2 assets include assets with significant observable inputs.

3 Level 3 assets include assets with significant unobservable inputs.

4

Alternatives includes investments in private debt, private equity, infrastructure and real estate.

Schedule of Expected Benefit Payments and Employer Contributions

Year ending December 31,	2020	2021	2022	2023	2024	2025-2029
(millions of Canadian dollars)
Pension
Canada	180	186	192	198	204	1,105
United States	87	90	91	89	91	402
OPEB
Canada	12	12	12	13	13	69
United States	23	22	21	20	19	82