ECOPETROL S.A. | CIK:0001444406 | 3

  • Filed: 4/26/2018
  • Entity registrant name: ECOPETROL S.A. (CIK: 0001444406)
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    • ifrs-full:DisclosureOfEmployeeBenefitsExplanatory

    22.
    Provisions for employees benefits
     
    The following are the balances of provisions for employee benefits as of December 31, 2017 and 2016:
     
     
     
    2017
     
    2016
     
    Post-employment benefits
     
     
     
     
     
     
     
    Healthcare
     
     
    5,367,005
     
     
    4,475,540
     
    Pension
     
     
    1,327,859
     
     
    76,695
     
    Education
     
     
    502,260
     
     
    333,379
     
    Bonds
     
     
    348,442
     
     
    263,563
     
    Other plans
     
     
    77,636
     
     
    67,945
     
    Termination benefits - Voluntary retirement plan
     
     
    155,286
     
     
    161,796
     
     
     
     
    7,778,488
     
     
    5,378,918
     
    Social benefits and salaries
     
     
    485,939
     
     
    423,360
     
    Other employee benefits
     
     
    67,867
     
     
    73,300
     
     
     
     
    8,332,294
     
     
    5,875,578
     
    Current
     
     
    1,829,819
     
     
    1,974,496
     
    Non-current
     
     
    6,502,475
     
     
    3,901,082
     
     
     
     
    8,332,294
     
     
    5,875,578
     
     
    22.1
    Post-employment benefits liability (asset)
     
    The following table shows the movement in liabilities and assets, net of post-employment benefits and termination benefits, as of December 31, 2017 and 2016:
     
     
     
    Pension and bonds (1)
     
    Other
     
    Total
     
     
     
    2017
     
    2016
     
    2017
     
    2016
     
    2017
     
    2016
     
    Liabilities for employee benefits
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Opening balance
     
     
    12,463,433
     
     
    10,435,546
     
     
    5,041,133
     
     
    4,170,047
     
     
    17,504,566
     
     
    14,605,593
     
    Current service cost
     
     
    -
     
     
    -
     
     
    52,164
     
     
    53,771
     
     
    52,164
     
     
    53,771
     
    Past service cost
     
     
    -
     
     
    -
     
     
    -
     
     
    164,271
     
     
    -
     
     
    164,271
     
    Interest expense
     
     
    872,524
     
     
    876,076
     
     
    350,060
     
     
    333,894
     
     
    1,222,584
     
     
    1,209,970
     
    Actuarial losses (gains)
     
     
    1,621,184
     
     
    1,915,767
     
     
    1,012,205
     
     
    616,834
     
     
    2,633,389
     
     
    2,532,601
     
    Benefits paid
     
     
    (809,677)
     
     
    (763,956)
     
     
    (350,130)
     
     
    (297,684)
     
     
    (1,159,807)
     
     
    (1,061,640)
     
    Closing balance
     
     
    14,147,464
     
     
    12,463,433
     
     
    6,105,432
     
     
    5,041,133
     
     
    20,252,896
     
     
    17,504,566
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Plan assets
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Opening balance
     
     
    12,123,175
     
     
    11,181,604
     
     
    2,473
     
     
    -
     
     
    12,125,648
     
     
    11,181,604
     
    Return on assets
     
     
    848,677
     
     
    950,704
     
     
    385
     
     
    -
     
     
    849,062
     
     
    950,704
     
    Contributions to funds
     
     
    -
     
     
    -
     
     
    22,465
     
     
    -
     
     
    22,465
     
     
    -
     
    Variation in the ceiling of assets
     
     
    -
     
     
    379,884
     
     
    -
     
     
    -
     
     
    -
     
     
    379,884
     
    Benefits paid
     
     
    (809,677)
     
     
    (771,528)
     
     
    (22,078)
     
     
    2,406
     
     
    (831,755)
     
     
    (769,122)
     
    Actuarial gains (losses)
     
     
    308,988
     
     
    382,511
     
     
    -
     
     
    67
     
     
    308,988
     
     
    382,578
     
    Closing balance
     
     
    12,471,163
     
     
    12,123,175
     
     
    3,245
     
     
    2,473
     
     
    12,474,408
     
     
    12,125,648
     
    Net post-employment benefits liability
     
     
    1,676,301
     
     
    340,258
     
     
    6,102,187
     
     
    5,038,660
     
     
    7,778,488
     
     
    5,378,918
     
     
    (1)
    There is no cost for the pension and pension plans service, due to the fact that the beneficiaries were retired as of July 31, 2010.
     
    The following table shows the movement in profit and loss and in other comprehensive income as of December 31, 2017 and 2016:
     
     
     
    2017
     
    2016
     
    Recognized in profit or loss
     
     
     
     
     
     
     
    Current service cost
     
     
    52,164
     
     
    53,771
     
    Past service cost
     
     
    -
     
     
    164,271
     
    Interest expense, net
     
     
    373,522
     
     
    259,266
     
    Remedies
     
     
    13,889
     
     
    -
     
     
     
     
    439,575
     
     
    477,308
     
    Recognized in other comprehensive income
     
     
     
     
     
     
     
    Healthcare
     
     
    (794,535)
     
     
    (792,093)
     
    Pension and pension bonds
     
     
    (1,312,195)
     
     
    (1,533,256)
     
    Education and severance
     
     
    (203,779)
     
     
    175,259
     
    Termination benefits - Voluntary retirement plan
     
     
    (3)
     
     
    67
     
    Change in the effect of the asset ceiling
     
     
    -
     
     
    379,884
     
     
     
     
    (2,310,512)
     
     
    (1,770,139)
     
    Deferred tax
     
     
    762,469
     
     
    616,697
     
    Other comprehensive income, net of taxes
     
     
    (1,548,043)
     
     
    (1,153,442)
     
     
    22.2
    Plan assets
     
    Plan assets are resources held by pension trusts, for payment of pension obligations. Payments for health and education post-employment benefits is Ecopetrol’s responsibility. The destination of trust resources and its yields cannot be changed or returned to the Group until all pension obligations have been fulfilled.
     
    The following is the composition of the plan assets of pension and pension bonds by type of investment as of December 31, 2017 and 2016:
     
     
     
    2017
     
    2016
     
    Bonds issued by the national government
     
     
    4,349,400
     
     
    4,410,326
     
    Bonds of private entities
     
     
    2,967,030
     
     
    2,880,958
     
    Other local currency
     
     
    2,337,580
     
     
    2,910,083
     
    Other public bonds
     
     
    1,149,200
     
     
    693,061
     
    Variable yield
     
     
    605,380
     
     
    305,052
     
    Bonds of foreign entities
     
     
    558,920
     
     
    622,817
     
    Other foreign currency
     
     
    503,653
     
     
    300,878
     
     
     
     
    12,471,163
     
     
    12,123,175
     
     
    46.0% of plan assets are classified as level 1 in the fair value hierarchy, where prices for the assets are directly observable on actively traded markets, and 54.0% are classified as level 2.
     
    The fair value of level 2 plan assets is calculated using prices quoted in the assets’ market. The Group obtains these prices through reliable financial data providers recognized in Colombia or abroad depending on the investment.
     
    For the securities issued in local currency, the fair value of plan assets is calculated using information published by Infovalmer, a price supplier authorized by the Financial Superintendence of Colombia. According to its methodology, prices are calculated based on market information on the valuation date or estimated from historical inputs according to the criteria established for the calculation of each of the prices.
     
    The average price is calculated based on the most representative market of the transactions carried out through electronic platforms approved and supervised by the regulator.
     
    On the other hand, the estimated price is calculated for investments that do not reflect enough information to estimate an average market price, replicating the quoted prices for similar assets or prices obtained through quotes from brokers. This estimated price is also given by Infovalmer as a result of the application of robust methodologies approved by the financial regulator and widely used by the financial sector.
     
    The following table reflects the credit quality of the issuers and counterparties in assets held by the autonomous pension funds:
     
    Rating
     
    2017
     
    2016
     
    AAA
     
     
    4,870,932
     
     
    4,467,642
     
    Nation
     
     
    4,471,274
     
     
    4,610,251
     
    AA+
     
     
    690,391
     
     
    470,944
     
    BAA2
     
     
    371,972
     
     
    141,940
     
    BBB
     
     
    246,795
     
     
    150,808
     
    F1+
     
     
    230,321
     
     
    416,439
     
    BBB-
     
     
    192,636
     
     
    23,237
     
    BBB+
     
     
    159,103
     
     
    193,835
     
    BRC 1+
     
     
    118,008
     
     
    309,282
     
    AA
     
     
    58,234
     
     
    79,750
     
    BAA3
     
     
    45,699
     
     
    131,993
     
    A
     
     
    39,048
     
     
    4,175
     
    A3
     
     
    29,098
     
     
    61,325
     
    AA3
     
     
    27,051
     
     
    14,385
     
    AA-
     
     
    18,770
     
     
    34,197
     
    VRR1 +
     
     
    14,112
     
     
    55,821
     
    BAA1
     
     
    5,296
     
     
    5,274
     
    Other qualifications
     
     
    9,621
     
     
    66,470
     
    No rating available
     
     
    872,802
     
     
    885,407
     
     
     
     
    12,471,163
     
     
    12,123,175
     
     
    See credit risk policy in Note 30.3.
     
    22.3
    Actuarial assumptions
     
    The following are the actuarial assumptions used in determining the present value of defined employee benefit obligations used for the actuarial calculations as of December 31, 2017 and 2016:
     
    2017
     
    Pension
     
    Bonds
     
    Health
     
    Education
     
    Other benefits
    (1)
    Discount rate
     
     
    6.50
    %
     
    6.25
    %
     
    6.50
    %
     
    5.50
    %
     
    5.51%
    Salary growth rate
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    4.75% / 4.25%
    Expected inflation rate
     
     
    3.00
    %
     
    3.00
    %
     
    3.00
    %
     
    3.00
    %
     
    3.00%
    Pension growth rate
     
     
    3.00
    %
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    N/A
    Cost trend
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Short-term rate
     
     
    N/A
     
     
    N/A
     
     
    6.00
    %
     
    4.00
    %
     
    N/A
    Long-term rate
     
     
    N/A
     
     
    N/A
     
     
    4.00
    %
     
    4.00
    %
     
    N/A
     
    2016
     
    Pension
     
    Bonds
     
    Health
     
    Education
     
    Other benefits
    (1)
    Discount rate
     
     
    7.25
    %
     
    7.00
    %
     
    7.25
    %
     
    6.50
    %
     
    6.67%
    Salary growth rate
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    4.25%
    Expected inflation rate
     
     
    3.00
    %
     
    3.00
    %
     
    3.00
    %
     
    3.00
    %
     
    3.00%
    Pension growth rate
     
     
    3.00
    %
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    N/A
    Cost trend
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Short-term rate
     
     
    N/A
     
     
    N/A
     
     
    3.00
    %
     
    4.00
    %
     
    N/A
    Long term rate
     
     
    N/A
     
     
    N/A
     
     
    4.00
    %
     
    4.00
    %
     
    N/A
     
    N/A: Not applicable for this benefit.
    (1)
    Weighted average discount rate.
     
    The cost trend is the projected increase for the initial year, which includes the expected inflation rate.
     
    The mortality table used for the calculations was that of ‘Valid Annuitant’ for men and women based on the experience gained for the period 2005-2008 of the Colombian Social Security Institute.
     
    22.4
    Maturity of benefit obligation
     
    The cash flows required for payment of post-employment obligations are the following:
     
    Period
     
    Pension
    and bonds
     
    Other
    benefits
     
    Total
     
    2018
     
     
    880,298
     
     
    374,315
     
     
    1,254,613
     
    2019
     
     
    877,165
     
     
    355,241
     
     
    1,232,406
     
    2020
     
     
    899,128
     
     
    358,292
     
     
    1,257,420
     
    2021
     
     
    921,333
     
     
    361,655
     
     
    1,282,988
     
    2022
     
     
    952,531
     
     
    362,998
     
     
    1,315,529
     
    2023-2026
     
     
    5,201,619
     
     
    1,824,756
     
     
    7,026,375
     
     
    22.5
    Sensitivity analysis
     
    The following sensitivity analysis shows the effect of such possible changes on the obligation for defined benefits, while keeping the other assumptions constant, as of December 31, 2017:
     
     
     
    Pension
     
    Bonds
     
    Health
     
    Education
     
    Other
    benefits
     
    Discount rate
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    -50 basis points
     
     
    13,948,863
     
     
    1,032,967
     
     
    5,775,492
     
     
    527,839
     
     
    242,117
     
    +50 basis points
     
     
    12,440,607
     
     
    948,129
     
     
    4,962,688
     
     
    480,224
     
     
    230,501
     
    Inflation rate
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    -50 basis points
     
     
    12,386,975
     
     
    946,675
     
     
    N/A
     
     
    N/A
     
     
    156,021
     
    +50 basis points
     
     
    14,003,214
     
     
    1,033,715
     
     
    N/A
     
     
    N/A
     
     
    161,094
     
    Salary growth rate
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    -50 basis points
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    76,336
     
    +50 basis points
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    N/A
     
     
    79,150
     
    Cost trend
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    -50 basis points
     
     
    N/A
     
     
    N/A
     
     
    4,982,874
     
     
    479,829
     
     
    N/A
     
    +50 basis points
     
     
    N/A
     
     
    N/A
     
     
    5,797,753
     
     
    528,104
     
     
    N/A
     
     
    22.6
    Voluntary retirement plan
     
    In August 2016, the Group offered a voluntary retirement plan to 200 employees who met certain criteria. As of December 31, 2017 and 2016, 137 employees were part of plan, with a corresponding cost of COP$155,286 (2016 - COP$161,796). This plan includes benefits such as monthly income, education and health benefits until the date on which the employee is granted their retirement pension.