Cogeco 2014 Annual Report Download - page 91

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90 COGECO CABLE INC. 2014 Consolidated financial statements
Years ended August 31, 2014 2013
(In thousands of Canadian dollars) $$
(restated, Note 3)
Defined benefit costs recognized in profit or loss
Current service cost 2,206 1,967
Past service cost 555 —
Net interest 284 456
Administrative expense 146 140
3,191 2,563
Defined benefit costs recognized in other comprehensive income
Actuarial losses (gains) arising from:
Experience adjustments (132)394
Change in demographic assumptions 318 1,461
Change in financial assumptions 2,541 (3,181)
Return on plan assets, except amounts included in interest income (3,033)(2,173)
(306)(3,499)
The expected employer contributions to the Corporation's defined benefit plans will be $4,812,000 in 2015.
Plan assets consist of:
At August 31, 2014 2013
%%
Equity securities 62 64
Debt securities 31 29
Other 77
Total 100 100
The significant weighted average assumptions used in measuring the Corporation's defined benefit obligation and defined benefit costs are
as follows:
At August 31, 2014 2013
%%
Defined benefit obligation
Discount rate 4.00 4.50
Rate of compensation increase 3.00 3.00
Indexation rate of pension paid 3.00 3.00
Mortality table UP 94 (AA) UP 94 (AA)
Defined benefit costs
Discount rate 4.50 3.90
Rate of compensation increase 3.00 3.00
Indexation rate of pension paid 3.00 3.00
Mortality table UP 94 (AA) UP 94 (AA)
A) EXPOSURE TO ACTUARIAL RISKS
The Corporation is exposed to the following actuarial risks:
Investment risk
The investment strategy of the plans is to diversify the nature of the returns on assets. Given the long-term nature of the defined benefit
obligation, a portion of the assets are invested in equity securities in order to maximize return. Since equity securities are inherently volatile
and risky, the Corporation sets investment goals, both in terms of asset mix percentage and target return, which is monitored monthly and
adjusted as needed.
Interest rate risk
A decrease in the interest rate on investment-grade fixed-rate Corporate bonds, which would reduce the discount rate used, will increase
the present value of the defined benefit obligation. However, this increase would be partly offset by an increase in the value of plan investments
in debt securities.