| 25. | Employment Benefits |
| (1) | Employment benefit obligations as of December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||||||
| In millions of won | ||||||||||||
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Net defined benefit obligations |
￦ | 1,678,470 | 1,476,201 | |||||||||
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Other long-term employee benefit obligations |
7,788 | 6,868 | ||||||||||
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| ￦ | 1,686,258 | 1,483,069 | ||||||||||
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| (2) | Principal assumptions on actuarial valuation as of December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||
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Discount rate |
2.45%~2.64% | 2.75%~2.90% | ||||||
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Future salary and benefit levels |
5.23% | 4.88% | ||||||
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Weighted average duration |
13.34 years | 13.40 years | ||||||
| (3) | Details of expense relating to defined benefit plans for the years ended December 31, 2016 and 2017 are as follows: |
| 2015 | 2016 | 2017 | ||||||||||||||
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In millions of won |
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Current service cost |
￦ | 315,811 | 378,930 | 392,820 | ||||||||||||
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Interest cost |
63,808 | 67,104 | 79,524 | |||||||||||||
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Expected return on plan assets |
(22,557 | ) | (23,612 | ) | (31,307 | ) | ||||||||||
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Loss from settlement |
(641 | ) | (706 | ) | (1,055 | ) | ||||||||||
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| ￦ | 356,421 | 421,716 | 439,982 | |||||||||||||
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Expenses as described above are recognized in those items below in the financial statements.
| 2015 | 2016 | 2017 | ||||||||||||||
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In millions of won |
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Cost of sales |
￦ | 262,760 | 312,391 | 332,249 | ||||||||||||
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Selling and administrative expenses |
51,932 | 61,362 | 59,111 | |||||||||||||
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Others (Construction-in-progress and others) |
41,729 | 47,963 | 48,622 | |||||||||||||
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| ￦ | 356,421 | 421,716 | 439,982 | |||||||||||||
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In addition, for the years ended December 31, 2015, 2016 and 2017, employee benefit obligations expenses of ￦57,940 million, ￦62,435 million and ￦65,603 million, respectively, are recognized as cost of sales, and ￦9,971 million, ￦11,450 million and ￦11,983 million, respectively, are recognized as selling and administrative expenses, and ￦14,195 million, ￦14,024 million and ￦13,332 million, respectively, are recognized as construction-in-progress and others, relates to the Company’s defined contribution plans.
| (4) | Details of defined benefit obligations as of December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||||||
| In millions of won | ||||||||||||
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Present value of defined benefit obligation from funded plans |
￦ | 2,867,377 | 2,951,842 | |||||||||
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Fair value of plan assets |
(1,188,907 | ) | (1,475,641 | ) | ||||||||
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| 1,678,470 | 1,476,201 | |||||||||||
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Present value of defined benefit obligation from unfunded plans |
— | — | ||||||||||
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Net liabilities incurred from defined benefit plans |
￦ | 1,678,470 | 1,476,201 | |||||||||
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| (5) | Changes in the present value of defined benefit obligations for the years ended December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||||||
| In millions of won | ||||||||||||
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Beginning balance |
￦ | 2,426,414 | 2,867,377 | |||||||||
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Current service cost |
378,930 | 392,820 | ||||||||||
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Interest cost(*) |
67,104 | 79,524 | ||||||||||
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Remeasurement component |
120,993 | (258,223 | ) | |||||||||
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Loss from settlement |
(707 | ) | (1,055 | ) | ||||||||
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Actual payments |
(125,233 | ) | (128,707 | ) | ||||||||
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Others |
(124 | ) | 106 | |||||||||
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Ending balance |
￦ | 2,867,377 | 2,951,842 | |||||||||
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| (*) | Corporate bond (AAA rated) yield at year-end is applied to measure the interest cost on employee benefit obligations. |
| (6) | Changes in the fair value of plan assets for the years ended December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||||||
| In millions of won | ||||||||||||
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Beginning balance |
￦ | 930,632 | 1,188,907 | |||||||||
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Expected return |
23,612 | 31,307 | ||||||||||
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Remeasurement component |
(5,706 | ) | (10,435 | ) | ||||||||
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Contributions by the employers |
312,125 | 325,080 | ||||||||||
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Actual payments |
(71,756 | ) | (59,218 | ) | ||||||||
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Ending balance |
￦ | 1,188,907 | 1,475,641 | |||||||||
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In addition, loss on accumulated remeasurement component amounting to ￦222,997 million and ￦43,513 million has been recognized as other comprehensive income or loss for the years ended December 31, 2016 and 2017, respectively.
| (7) | Details of the fair value of plan assets as of December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||||||
| In millions of won | ||||||||||||
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Equity instruments |
￦ | 86,054 | 79,204 | |||||||||
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Debt instruments |
383,654 | 517,040 | ||||||||||
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Bank deposit |
305,670 | 293,477 | ||||||||||
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Others |
413,529 | 585,920 | ||||||||||
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| ￦ | 1,188,907 | 1,475,641 | ||||||||||
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For the years ended December 31, 2016 and 2017, actual returns on plan assets amounted to ￦17,906 million and ￦20,872 million, respectively.
| (8) | Remeasurement component recognized in other comprehensive income (loss) for the years ended December 31, 2016 and 2017 are as follows: |
| 2016 | 2017 | |||||||||||
| In millions of won | ||||||||||||
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Actuarial gain from changes in financial assumptions |
￦ | (27,792 | ) | (300,058 | ) | |||||||
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Experience adjustments |
148,785 | 41,835 | ||||||||||
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Expected return |
5,706 | 10,435 | ||||||||||
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| ￦ | 126,699 | (247,788 | ) | |||||||||
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Remeasurement component recognized as other comprehensive income or loss is recorded in retained earnings.