Bank of Montreal 2015 Annual Report Download - page 173

Notes
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our other employee future benefit plans in Canada and the United States are either partially funded or unfunded. Benefit payments related to
these plans are either paid through the respective plan or paid directly by us.
We measure the fair value of plan assets for our plans in Canada and the United States as at October 31. In addition to actuarial valuations for
accounting purposes, we are required to prepare valuations for determining our minimum funding requirements for our pension arrangements in
accordance with the relevant statutory framework (our “funding valuation”). An annual funding valuation is performed for our plans in Canada and
the United States. The most recent funding valuation for our primary Canadian plan was performed as at October 31, 2015 and the most recent
funding valuation for our primary U.S. plan was performed as at January 1, 2015. Benefit payments for fiscal 2016 are estimated to be $402 million.
A summary of plan information for the past three years is as follows:
(Canadian $ in millions) Pension benefit plans Other employee future benefit plans
2015 2014 2013 2015 2014 2013
Defined benefit obligation 7,934 7,504 6,181 1,323 1,317 1,174
Fair value of plan assets 8,072 7,536 6,267 131 113 95
Surplus (deficit) and net defined benefit asset (liability) 138 32 86 (1,192) (1,204) (1,079)
Surplus (deficit) is comprised of:
Funded or partially funded plans 362 197 192 (32) (12) (9)
Unfunded plans (224) (165) (106) (1,160) (1,192) (1,070)
Surplus (deficit) and net defined benefit asset (liability) 138 32 86 (1,192) (1,204) (1,079)
Pension and Other Employee Future Benefit Expenses
Pension and other employee future benefit expenses are determined as follows:
(Canadian $ in millions) Pension benefit plans Other employee future benefit plans
2015 2014 2013 2015 2014 2013
Annual benefits expense
Benefits earned by employees 286 241 234 29 25 27
Net interest (income) expense on net defined benefit (asset) liability (5) (11) 4 50 50 48
Gain on settlement (13) –––––
Administrative expenses 455 –––
Remeasurement of other long-term benefits –––4(5) (1)
Benefits expense 272 235 243 83 70 74
Canada and Quebec pension plan expense 73 68 69 –––
Defined contribution expense 86 66 57 –––
Total annual pension and other employee future benefit expenses recognized in
the Consolidated Statement of Income 431 369 369 83 70 74
Certain comparative figures have been reclassified to conform with the current year’s presentation.
Weighted-average assumptions used to determine benefit expenses
Pension benefit plans Other employee future benefit plans
2015 2014 2013 2015 2014 2013
Discount rate at beginning of year 4.1% 4.6% 4.2% 4.2% 4.7% 4.4%
Rate of compensation increase 2.9% 2.9% 2.9% 2.6% 2.7% 3.2%
Assumed overall health care cost trend rate na na na 5.5% (1) 5.4% (1) 5.4% (1)
(1) Trending to 4.5% in 2030 and remaining at that level thereafter.
na – not applicable
Assumptions regarding future mortality are based on published statistics and mortality tables calibrated to plan experience, when applicable. The
current life expectancies underlying the amounts of the defined benefit obligations for our primary plans are as follows:
(Years) Canada United States
2015 2014 2015 2014
Life expectancy for those currently age 65
Males 23.5 23.4 22.2 21.3
Females 23.9 23.8 23.7 23.4
Life expectancy at age 65 for those currently age 45
Males 24.5 24.4 23.3 23.3
Females 24.9 24.8 24.9 25.2
186 BMO Financial Group 198th Annual Report 2015