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PENSION AND OTHER POSTRETIREMENT BENEFITS
 12 Months Ended
Dec. 31, 2020
Retirement Benefits [Abstract]  
PENSION AND OTHER POSTRETIREMENT BENEFITS PENSION AND OTHER POSTRETIREMENT BENEFITS
 
PENSION PLANS
We sponsor Canadian and US contributory and non-contributory registered defined benefit and defined contribution pension plans, which provide benefits covering substantially all employees. The Canadian Plans provide defined benefit and defined contribution pension benefits to our Canadian employees. The US Plans provide defined benefit pension benefits to our US employees. We also sponsor supplemental non-contributory defined benefit pension plans, which provide non-registered benefits for certain employees in Canada and the US.

Defined Benefit Pension Plan Benefits
Benefits payable from the defined benefit pension plans are based on each plan participant’s years of service and final average remuneration. Some benefits are partially inflation-indexed after a plan participant’s retirement. Our contributions are made in accordance with independent actuarial valuations. Participant contributions to contributory defined benefit pension plans are based upon each plan participant’s current eligible remuneration.

Defined Contribution Pension Plan Benefits
Our contributions are based on each plan participant’s current eligible remuneration. Our contributions for some defined contribution pension plans are also based on age and years of service. Our defined contribution pension benefit costs are equal to the amount of contributions required to be made by us.
Benefit Obligations, Plan Assets and Funded Status
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:
 CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)    
Change in projected benefit obligation    
Projected benefit obligation at beginning of year4,446 3,997 1,230 1,214 
Service cost 148 149 44 45 
Interest cost128 139 31 41 
Participant contributions31 32 — — 
Actuarial loss1
292 423 95 106 
Benefits paid(190)(187)(128)(101)
Plan settlements2
— (99)— (1)
Transfers out— (8)— (6)
Foreign currency exchange rate changes— — (23)(63)
Other— — (6)(5)
Projected benefit obligation at end of year3
4,855 4,446 1,243 1,230 
Change in plan assets
Fair value of plan assets at beginning of year3,827 3,523 1,104 1,045 
Actual return on plan assets288 448 83 176 
Employer contributions121 114 27 46 
Participant contributions31 32 — — 
Benefits paid(190)(187)(128)(101)
Plan settlements2
— (99)— (1)
Transfers out— (4)— — 
Foreign currency exchange rate changes— — (18)(56)
Other— — (6)(5)
Fair value of plan assets at end of year4
4,077 3,827 1,062 1,104 
Underfunded status at end of year(778)(619)(181)(126)
Presented as follows:
Deferred amounts and other assets35 35 — — 
Accounts payable and other(9)(9)(3)(4)
Other long-term liabilities (804)(645)(178)(122)
 (778)(619)(181)(126)
1Primarily due to decrease in the discount rate used to measure the benefit obligations.
2Plan settlements for the Canadian Plans are related to the disposition of our federally regulated BC Field Services business.
3The accumulated benefit obligation for our Canadian pension plans was $4.5 billion and $4.0 billion as at December 31, 2020 and 2019, respectively. The accumulated benefit obligation for our US pension plans was $1.2 billion as at December 31, 2020 and 2019.
4Assets in the amount of $11 million (2019 - $10 million) and $59 million (2019 - $51 million), related to our Canadian and US 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.
Certain of our pension plans have projected and accumulated benefit obligations in excess of the fair value of plan assets. For these plans, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were as follows:
 CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)
Projected benefit obligation4,434 1,481 1,243 103 
Accumulated benefit obligation4,094 1,361 1,207 98 
Fair value of plan assets3,621 1,087 1,062 — 

Amount Recognized in Accumulated Other Comprehensive Income
The amount of pre-tax AOCI relating to our pension plans are as follows:
 CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)    
Net actuarial loss542 445 233 134 
Prior service credit— — (1)(2)
Total amount recognized in AOCI1
542 445 232 132 
1 Excludes amounts related to cumulative translation adjustment.

Net Periodic Benefit Cost and Other Amounts Recognized in Comprehensive Income
The components of net periodic benefit cost and other amounts recognized in pre-tax Comprehensive income related to our pension plans are as follows:
CanadaUS
Year ended December 31, 202020192018202020192018
(millions of Canadian dollars)
Service cost148 149 149 44 45 45 
Interest cost1
128 139 130 31 41 38 
Expected return on plan assets1
(260)(245)(245)(88)(78)(88)
Amortization/settlement of net actuarial loss1
42 41 25 1 2 7 
Amortization/curtailment of prior service (credit)/
   cost1
— — — (1)(1)3 
Net periodic benefit cost58 84 59 (13)9 5 
Defined contribution benefit cost6 8 11 — — — 
Net pension cost recognized in Earnings 64 92 70 (13)9 5 
Amount recognized in OCI:
Effect of plan combination— — — — (6)— 
 Amortization/settlement of net actuarial loss(21)(26)(11)(1)(2)(7)
Amortization/curtailment of prior service credit/(cost)
— — — 1 1 (3)
Net actuarial loss arising during the year118 115 112 100 8 28 
Total amount recognized in OCI97 89 101 100 1 18 
Total amount recognized in Comprehensive income161 181 171 87 10 23 
1 Reported within Other income/(expense) in the Consolidated Statements of Earnings.
Actuarial Assumptions
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:
 CanadaUS
202020192018202020192018
Projected benefit obligation
Discount rate2.6 %3.0 %3.8 %2.2 %3.0 %3.9 %
Rate of salary increase2.3 %3.2 %3.2 %2.7 %2.9 %2.8 %
Cash balance interest credit rateN/AN/AN/A4.3 %4.5 %4.5 %
Net periodic benefit cost
Discount rate3.0 %3.8 %3.6 %3.0 %3.9 %3.4 %
Rate of return on plan assets6.8 %7.0 %6.8 %7.9 %8.0 %7.4 %
Rate of salary increase3.2 %3.2 %3.2 %2.9 %2.9 %2.9 %
Cash balance interest credit rateN/AN/AN/A4.5 %4.5 %4.5 %

OTHER POSTRETIREMENT BENEFIT PLANS
We sponsor funded and unfunded defined benefit OPEB Plans, which provide non-contributory supplemental health, dental, life and health spending account benefit coverage for certain qualifying retired employees.
Benefit Obligations, Plan Assets and Funded Status
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:
 CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)    
Change in accumulated postretirement benefit obligation
    
Accumulated postretirement benefit obligation at beginning of year
293 282 288 305 
Service cost 5 5 2 2 
Interest cost8 10 7 10 
Participant contributions— — 4 5 
Actuarial loss1
21 15 17 7 
Benefits paid(6)(6)(28)(28)
Plan amendments — — (33)— 
Foreign currency exchange rate changes— — (4)(15)
Other— (13)1 2 
Accumulated postretirement benefit obligation at end of year
321 293 254 288 
Change in plan assets
Fair value of plan assets at beginning of year— — 188 181 
Actual return on plan assets— — 14 27 
Employer contributions6 6 12 10 
Participant contributions— — 4 5 
Benefits paid(6)(6)(28)(28)
Foreign currency exchange rate changes— — (3)(9)
Other— — 1 2 
Fair value of plan assets at end of year— — 188 188 
Underfunded status at end of year(321)(293)(66)(100)
Presented as follows:
Deferred amounts and other assets— — 19 — 
Accounts payable and other(13)(12)(6)(8)
Other long-term liabilities (308)(281)(79)(92)
 (321)(293)(66)(100)
1 Primarily due to decrease in the discount rate used to measure the benefit obligations.

Certain of our OPEB plans have an accumulated benefit obligation in excess of the fair value of plan assets. For these plans, the accumulated benefit obligation and fair value of plan assets were as follows:
 CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)
Accumulated benefit obligation321 293 191 288 
Fair value of plan assets— — 106 188 
Amount Recognized in Accumulated Other Comprehensive Income
The amount of pre-tax AOCI relating to our OPEB plans are as follows:
 CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)    
Net actuarial (gain)/loss15 (7)(7)(23)
Prior service credit(1)(1)(44)(13)
Total amount recognized in AOCI1
14 (8)(51)(36)
1 Excludes amounts related to cumulative translation adjustment.

Net Periodic Benefit Cost and Other Amounts Recognized in Comprehensive Income
The components of net periodic benefit cost and other amounts recognized in pre-tax Comprehensive income related to our OPEB plans are as follows:
 CanadaUS
Year ended December 31,202020192018202020192018
(millions of Canadian dollars)      
Service cost5 5 8 2 2 3 
Interest cost1
8 10 10 7 10 10 
Expected return on plan assets1
— — — (12)(12)(12)
Amortization/settlement of net actuarial gain1
(1)(7)— (1)— (1)
Amortization/curtailment of prior service credit1
— (1)— (2)(2)(4)
Net periodic benefit cost recognized in Earnings 12 7 18 (6)(2)(4)
Amount recognized in OCI:
Amortization/settlement of net actuarial gain1 7 — 1 — 1 
Amortization/curtailment of prior service credit
— 1 — 2 2 4 
Net actuarial (gain)/loss arising during the year
21 15 (46)15 (8)(1)
Prior service credit— — — (33)— (8)
Total amount recognized in OCI22 23 (46)(15)(6)(4)
Total amount recognized in Comprehensive income34 30 (28)(21)(8)(8)
1 Reported within Other income/(expense) in the Consolidated Statements of Earnings.

Actuarial Assumptions
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:
 CanadaUS
202020192018202020192018
Accumulated postretirement benefit obligation
Discount rate2.6 %3.1 %3.8 %2.0 %2.8 %4.0 %
Net periodic benefit cost
Discount rate3.1 %3.8 %3.6 %2.8 %4.0 %3.3 %
Rate of return on plan assetsN/AN/AN/A6.7 %6.7 %5.7 %
Assumed Health Care Cost Trend Rates
The assumed rates for the next year used to measure the expected cost of benefits are as follows:
CanadaUS
2020201920202019
Health care cost trend rate assumed for next year4.0 %4.0 %6.8 %7.2 %
Rate to which the cost trend is assumed to decline (ultimate trend rate)
4.0 %4.0 %4.5 %4.5 %
Year that the rate reaches the ultimate trend rateN/AN/A20372037

PLAN ASSETS
We manage the investment risk of our pension funds by setting a long-term asset mix policy for each plan after consideration of: (i) the nature of pension plan liabilities; (ii) the investment horizon of the plan; (iii) the going concern and solvency funded status and cash flow requirements of the plan; (iv) our operating environment and financial situation and our ability to withstand fluctuations in pension contributions; and (v) the future economic and capital markets outlook with respect to investment returns, volatility of returns and correlation between assets.

The overall expected rate of return on plan assets is based on the asset allocation targets with estimates for returns based on long-term expectations.

The asset allocation targets and major categories of plan assets are as follows:
 CanadaUS
TargetDecember 31,TargetDecember 31,
Asset CategoryAllocation20202019Allocation20202019
Equity securities43.5 %47.2 %46.4 %45.0 %55.6 %55.2 %
Fixed income securities30.0 %29.6 %31.0 %20.0 %17.2 %19.8 %
Alternatives1
26.5 %23.2 %22.6 %35.0 %27.2 %25.0 %
1Alternatives include investments in private debt, private equity, infrastructure and real estate funds.
Pension Plans
The following table summarizes the fair value of plan assets for our pension plans recorded at each fair value hierarchy level:
 CanadaUS
Level 11
Level 22
Level 33
Total
Level 11
Level 22
Level 33
Total
(millions of Canadian dollars)        
December 31, 2020
Cash and cash equivalents213 — — 213 5 — — 5 
Equity securities
Canada178 188 — 366 — — — — 
US2 — — 2 — — — — 
Global— 1,556 — 1,556 — 590 — 590 
Fixed income securities
Government207 378 — 585 — 75 — 75 
Corporate— 410 — 410 — 103 — 103 
Alternatives4
— — 912 912 — — 289 289 
Forward currency contracts— 33 — 33 — — — — 
Total pension plan assets at fair value
600 2,565 912 4,077 5 768 289 1,062 
December 31, 2019
Cash and cash equivalents184 — — 184 14 — — 14 
Equity securities
Canada165 183 — 348 — — — — 
US— — — — — 93 — 93 
Global— 1,429 — 1,429 — 516 — 516 
Fixed income securities
Government196 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 
1Level 1 assets include assets with quoted prices in active markets for identical assets.
2Level 2 assets include assets with significant observable inputs.
3Level 3 assets include assets with significant unobservable inputs.
4Alternatives include investments in private debt, private equity, infrastructure and real estate funds. Fund values are based on the NAV of the funds that invest directly in the aforementioned underlying investments. The values of the investments have been estimated using the capital accounts representing the plan's ownership interest in the funds.

Changes in the net fair value of pension plan assets classified as Level 3 in the fair value hierarchy were as follows:
CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)   
Balance at beginning of year852 562 276 130 
Unrealized and realized gains/(losses)(27)10 7 13 
Purchases and settlements, net87 280 6 133 
Balance at end of year912 852 289 276 
OPEB Plans
The following table summarizes the fair value of plan assets for our OPEB plans recorded at each fair value hierarchy level:
 CanadaUS
Level 11
Level 22
Level 33
Total
Level 11
Level 22
Level 33
Total
(millions of Canadian dollars)        
December 31, 2020
Equity securities
US— — — — — 35 — 35 
Global— — — — — 79 — 79 
Fixed income securities
Government— — — — 38 6 — 44 
Corporate— — — — — 8 — 8 
Alternatives4
— — — — — — 22 22 
Total OPEB plan assets at fair value
— — — — 38 128 22 188 
December 31, 2019
Cash and cash equivalents— — — — 2 — — 2 
Equity securities
US— — — — — 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 
1Level 1 assets include assets with quoted prices in active markets for identical assets.
2Level 2 assets include assets with significant observable inputs.
3Level 3 assets include assets with significant unobservable inputs.
4Alternatives includes investments in private debt, private equity, infrastructure and real estate.

Changes in the net fair value of OPEB plan assets classified as Level 3 in the fair value hierarchy were as follows:
CanadaUS
December 31,2020201920202019
(millions of Canadian dollars)
Balance at beginning of year— — 18 5 
Unrealized and realized gains— — 1 1 
Purchases and settlements, net— — 3 12 
Balance at end of year— — 22 18 

EXPECTED BENEFIT PAYMENTS
Year ending December 31,202120222023202420252026-2030
(millions of Canadian dollars)      
Pension
Canada
185 189 194 198 203 1,078 
US139 76 75 75 74 353 
OPEB
Canada
12 13 13 13 13 71 
US19 18 17 16 15 66 
 
EXPECTED EMPLOYER CONTRIBUTIONS
In 2021, we expect to contribute approximately $102 million and $49 million to the Canadian and US pension plans, respectively, and $12 million and $7 million to the Canadian and US OPEB plans, respectively.
RETIREMENT SAVINGS PLANS
In addition to the pension and OPEB plans discussed above, we also have defined contribution employee savings plans available to both Canadian and US employees. Employees may participate in a matching contribution where we match a certain percentage of before-tax employee contributions of up to 2.5% and 6.0% of eligible pay per pay period for Canadian and US employees, respectively. For the years ended December 31, 2020, 2019 and 2018, pre-tax employer matching contribution costs were nil, $4 million and $13 million, respectively, for Canadian employees and $27 million each year for US employees.