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RETIREMENT AND POSTRETIREMENT BENEFITS (Tables)
 12 Months Ended
Dec. 31, 2013
RETIREMENT AND POSTRETIREMENT BENEFITS  
Schedule of effective dates of the most recent actuarial valuations and the next required actuarial valuations for the basic plans

 

 

 

 

Effective Date of Most Recently
Filed Actuarial Valuation

 

Effective Date of Next Required
Actuarial Valuation

Canadian Plans

 

 

 

 

Liquids Pipelines

 

December 31, 2012

 

December 31, 2013

Gas Distribution

 

September 1, 2013

 

September 1, 2016

United States Plan

 

January 1, 2013

 

January 1, 2014

 
Schedule of changes in the benefit obligation, the fair value of plan assets and the recorded asset or liability

 

 

 

 

Pension

 

OPEB

December 31,

 

2013

 

2012

 

2013

 

2012

(millions of Canadian dollars)

 

 

 

 

 

 

 

 

Change in accrued benefit obligation

 

 

 

 

 

 

 

 

Benefit obligation at beginning of year

 

1,879

 

1,686

 

261

 

243

Service cost

 

103

 

84

 

9

 

8

Interest cost

 

79

 

74

 

11

 

10

Employees’ contributions

 

-

 

-

 

1

 

1

Actuarial (gains)/loss

 

(110)

 

106

 

(40)

 

14

Benefits paid

 

(75)

 

(64)

 

(7)

 

(8)

Effect of foreign exchange rate changes

 

19

 

(5)

 

6

 

(2)

Other

 

8

 

(2)

 

(1)

 

(5)

Benefit obligation at end of year

 

1,903

 

1,879

 

240

 

261

Change in plan assets

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

1,500

 

1,355

 

62

 

54

Actual return on plan assets

 

200

 

117

 

8

 

5

Employer’s contributions

 

155

 

97

 

12

 

13

Employees’ contributions

 

-

 

-

 

1

 

1

Benefits paid

 

(75)

 

(64)

 

(7)

 

(8)

Effect of foreign exchange rate changes

 

13

 

(3)

 

5

 

(1)

Other

 

6

 

(2)

 

-

 

(2)

Fair value of plan assets at end of year1

 

1,799

 

1,500

 

81

 

62

Underfunded status at end of year

 

(104)

 

(379)

 

(159)

 

(199)

Presented as follows:

 

 

 

 

 

 

 

 

Deferred amounts and other assets

 

6

 

-

 

-

 

-

Accounts payable and other

 

-

 

-

 

(5)

 

(5)

Other long-term liabilities (Note 18)

 

(110)

 

(379)

 

(154)

 

(194)

 

 

(104)

 

(379)

 

(159)

 

(199)

 

1             Assets of $27 million (2012 - $19 million) are held by the Company in trust accounts that back non-registered supplemental pension plans benefittingUnited States plan participants. Due to United States tax regulations, these assets are not restricted from creditors and therefore the Company is unable to include these balances in plan assets for accounting purposes. However, these assets are committed for the future settlement of non-registered supplemental pension plan obligations included in the underfunded status as at the end of the year.

 
Schedule of weighted average assumptions made in the measurement of the projected benefit obligations of the pension plans and OPEB

 

 

 

 

Pension

 

OPEB

Year ended December 31,

 

2013

 

2012

 

2011

 

2013

 

2012

 

2011

Discount rate

 

5.0%

 

4.2%

 

4.5%

 

4.9%

 

4.0%

 

4.4%

Average rate of salary increases

 

3.7%

 

3.7%

 

3.5%

 

 

 

 

 

 

 
Schedule of net benefit costs recognized

 

 

 

 

Pension

 

OPEB

Year ended December 31,

 

2013

 

2012

 

2011

 

2013

 

2012

 

2011

(millions of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Benefits earned during the year

 

103

 

84

 

61

 

9

 

8

 

6

Interest cost on projected benefit obligations

 

79

 

74

 

73

 

11

 

10

 

11

Expected return on plan assets

 

(103)

 

(93)

 

(92)

 

(4)

 

(3)

 

(3)

Amortization of prior service costs

 

1

 

2

 

2

 

-

 

-

 

1

Amortization of actuarial loss

 

52

 

51

 

25

 

2

 

2

 

1

Net defined benefit costs on an accrual basis

 

132

 

118

 

69

 

18

 

17

 

16

Defined contribution benefit costs

 

4

 

4

 

4

 

-

 

-

 

-

Net benefit cost recognized in the Consolidated Statements of Earnings

 

136

 

122

 

73

 

18

 

17

 

16

Amount recognized in OCI:

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial (gains)/loss1

 

(158)

 

42

 

172

 

(45)

 

10

 

29

Net prior service cost/(credit)2

 

-

 

-

 

-

 

2

 

-

 

(1)

Total amount recognized in OCI

 

(158)

 

42

 

172

 

(43)

 

10

 

28

Total amount recognized in Comprehensive income

 

(22)

 

164

 

245

 

(25)

 

27

 

44

 

1            Unamortized actuarial losses included in AOCI, before tax, were $246 million (2012 - $388 million) relating to the pension plans and $11 million (2012 - $60 million) relating to OPEB at December 31, 2013.

2            Unamortized prior service costs included in AOCI, before tax, were $6 million (2012 - $4 million) relating to OPEB at December 31, 2013.

 
Schedule of weighted average assumptions made in the measurement of the cost of the pension plans and OPEB

 

 

 

 

 

Pension

 

OPEB

Year ended December 31,

 

2013

 

2012

 

2011

 

2013

 

2012

 

2011

Discount rate

 

4.2%

 

4.5%

 

5.6%

 

4.0%

 

4.4%

 

5.6%

Average rate of return on pension plan assets

 

6.7%

 

7.1%

 

7.3%

 

6.0%

 

6.0%

 

6.0%

Average rate of salary increases

 

3.7%

 

3.5%

 

3.5%

 

 

 

 

 

 
Schedule of assumed rates for medical costs for the next year used to measure the expected cost of benefits

 

 

 

 

Medical Cost Trend
Rate Assumption
for Next Fiscal Year

 

Ultimate Medical
Cost Trend Rate
Assumption

 

Year in which Ultimate
Medical Cost Trend Rate
Assumption is Achieved

Canadian Plans

 

 

 

 

 

 

Drugs

 

8.3%

 

4.5%

 

2029

Other Medical

 

4.5%

 

-

 

-

United States Plan

 

7.4%

 

4.5%

 

2030

 
Schedule of expected rate of return on plan assets

 

 

 

 

Pension

 

OPEB

Year ended December 31,

 

2013

 

2012

 

2013

 

2012

Canadian Plans

 

6.6%

 

6.9%

 

 

 

 

United States Plan

 

7.2%

 

7.3%

 

6.0%

 

6.0%

 
Schedule of target mix for plan assets

 

 

 

 

 

Canadian Plans

 

 

 

 

Liquids Pipelines
Plan

 

Gas Distribution
Plan

 

United States
Plan

Equity securities

 

62.5%

 

53.5%

 

62.5%

Fixed income securities

 

30.0%

 

40.0%

 

30.0%

Other

 

7.5%

 

6.5%

 

7.5%

 
Schedule of pension financial instruments at fair value

 

 

 

 

2013

 

2012

December 31,

 

Level 11

 

Level 22

 

Level 33

 

Total

 

Level 11

 

Level 22

 

Level 33

 

Total

(millions of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

42

 

-

 

-

 

42

 

44

 

-

 

-

 

44

Fixed income securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canadian government bonds

 

99

 

-

 

-

 

99

 

87

 

-

 

-

 

87

Corporate bonds and debentures

 

3

 

4

 

-

 

7

 

-

 

4

 

-

 

4

Canadian corporate bond index fund

 

216

 

-

 

-

 

216

 

196

 

-

 

-

 

196

Canadian government bond index fund

 

167

 

-

 

-

 

167

 

152

 

-

 

-

 

152

United States debt index fund

 

69

 

-

 

-

 

69

 

45

 

2

 

-

 

47

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canadian equity securities

 

128

 

-

 

-

 

128

 

190

 

-

 

-

 

190

United States equity securities

 

32

 

-

 

-

 

32

 

24

 

-

 

-

 

24

Global equity securities

 

11

 

-

 

-

 

11

 

9

 

-

 

-

 

9

Canadian equity funds

 

216

 

-

 

-

 

216

 

64

 

39

 

-

 

103

United States equity funds

 

152

 

33

 

-

 

185

 

60

 

26

 

-

 

86

Global equity funds

 

310

 

111

 

-

 

421

 

255

 

159

 

-

 

414

Infrastructure4

 

-

 

-

 

50

 

50

 

-

 

-

 

61

 

61

Real estate5

 

-

 

-

 

76

 

76

 

-

 

-

 

24

 

24

Forward currency contracts

 

-

 

(6)

 

-

 

(6)

 

-

 

(2)

 

-

 

(2)

OPEB

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

2

 

-

 

-

 

2

 

4

 

-

 

-

 

4

Fixed income securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States government and government agency bonds

 

31

 

-

 

-

 

31

 

22

 

-

 

-

 

22

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States equity funds

 

24

 

-

 

-

 

24

 

17

 

19

 

-

 

36

Global equity funds

 

24

 

-

 

-

 

24

 

-

 

-

 

-

 

-

 

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            The fair value of the investment in United States Limited Partnership - Global Infrastructure Fund is established through the use of valuation models.

5            The fair value of the investments in Bentall Kennedy Prime Canadian Property Fund Ltd and AEW Core Property Trust are established through the use of valuation models.

 
Schedule of changes in the net fair value of plan assets classified as Level 3 in the fair value hierarchy

 

 

 

 

2013

 

2012

(millions of Canadian dollars)

 

 

 

 

Balance at beginning of year

 

85

 

68

Unrealized and realized gains

 

7

 

11

Purchases and settlements, net

 

34

 

6

Balance at end of year

 

126

 

85

 
Schedule of plan contributions by the Company

 

 

 

 

Pension

 

OPEB

Year ended December 31,

 

2013

 

2012

 

2013

 

2012

(millions of Canadian dollars)

 

 

 

 

 

 

 

 

Total contributions

 

155

 

97

 

12

 

13

Contributions expected to be paid in 2014

 

152

 

 

 

11

 

 

 
Schedule of benefits expected to be paid by the Company

 

 

Year ended December 31,

 

2014

 

2015

 

2016

 

2017

 

2018

 

2019-2023

(millions of Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

Expected future benefit payments

 

80

 

85

 

90

 

95

 

101

 

591