| 21. | Employee Benefits |
(a) Defined contribution plans
The expenses related to post-employment benefit plans under defined contribution plans for the years ended December 31, 2015, 2016 and 2017 were as follows:
| 2015 | 2016 | 2017 | ||||||||||
| (in millions of Won) | ||||||||||||
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Expense related to post-employment benefit plans under defined contribution plans |
￦ | 25,224 | 30,344 | 35,538 | ||||||||
(b) Defined benefit plans
1) The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of December 31, 2016 and 2017 are as follows:
| 2016 | 2017 | |||||||
| (in millions of Won) | ||||||||
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Present value of funded obligations |
￦ | 1,715,583 | 1,826,907 | |||||
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Fair value of plan assets (*1) |
(1,693,118 | ) | (1,714,166 | ) | ||||
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Present value of non-funded obligations |
17,437 | 16,228 | ||||||
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Net defined benefit liabilities |
￦ | 39,902 | 128,969 | |||||
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| (*1) | As of December 31, 2016 and 2017, the Company recognized net defined benefit assets amounting to ￦83,702 million and ￦8,224 million, respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations. |
2) Changes in present value of defined benefit obligations for the years ended December 31, 2016 and 2017 were as follows:
| 2016 | 2017 | |||||||
| (in millions of Won) | ||||||||
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Defined benefit obligations at the beginning of period |
￦ | 1,714,115 | 1,733,020 | |||||
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Current service costs |
285,706 | 209,612 | ||||||
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Interest costs |
39,286 | 35,830 | ||||||
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Remeasurements: |
(32,927 | ) | 51,994 | |||||
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— Gain from change in financial assumptions |
(72,910 | ) | (50,218 | ) | ||||
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— Loss (gain) from change in demographic assumptions |
(4,140 | ) | 15,952 | |||||
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— Others |
44,123 | 86,260 | ||||||
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Benefits paid |
(278,278 | ) | (185,220 | ) | ||||
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Others |
5,118 | (2,101 | ) | |||||
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Defined benefit obligations at the end of period |
￦ | 1,733,020 | 1,843,135 | |||||
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3) Changes in fair value of plan assets for the years ended December 31, 2016 and 2017 were as follows:
| 2016 | 2017 | |||||||
| (in millions of Won) | ||||||||
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Fair value of plan assets at the beginning of period |
￦ | 1,532,090 | 1,693,118 | |||||
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Interest on plan assets |
37,385 | 45,516 | ||||||
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Remeasurement of plan assets |
(6,963 | ) | (17,190 | ) | ||||
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Contributions to plan assets |
328,671 | 164,828 | ||||||
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Benefits paid |
(189,817 | ) | (168,643 | ) | ||||
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Others |
(8,248 | ) | (3,463 | ) | ||||
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Fair value of plan assets at the end of period |
￦ | 1,693,118 | 1,714,166 | |||||
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The Company expects to make an estimated contribution of ￦164,865 million to the defined benefit plan assets in 2018.
4) 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 |
￦ | 56,187 | 41,218 | |||||
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Debt instruments |
411,726 | 367,027 | ||||||
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Deposits |
1,167,475 | 1,254,571 | ||||||
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Others |
57,730 | 51,350 | ||||||
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| ￦ | 1,693,118 | 1,714,166 | ||||||
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5) The amounts recognized in consolidated statements of comprehensive income for the years ended December 31, 2015, 2016 and 2017 were as follows:
| 2015 | 2016 | 2017 | ||||||||||
| (in millions of Won) | ||||||||||||
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Current service costs |
￦ | 239,508 | 285,706 | 209,612 | ||||||||
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Net interest costs (*1) |
5,894 | 1,901 | (9,686 | ) | ||||||||
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| ￦ | 245,402 | 287,607 | 199,926 | |||||||||
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| (*1) | The actual return on plan assets amounted to ￦32,630 million, ￦30,422 million and ￦28,326 million for the years ended December 31, 2015, 2016 and 2017, respectively. |
The above expenses by function were as follows:
| 2015 | 2016 | 2017 | ||||||||||
| (in millions of Won) | ||||||||||||
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Cost of sales |
￦ | 170,334 | 161,810 | 131,724 | ||||||||
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Selling and administrative expenses |
74,210 | 124,994 | 67,424 | |||||||||
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Others |
858 | 803 | 778 | |||||||||
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| ￦ | 245,402 | 287,607 | 199,926 | |||||||||
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6) Accumulated actuarial gains (losses), net of tax recognized in other comprehensive income for the years ended December 31, 2015, 2016 and 2017 were as follows:
| 2015 | 2016 | 2017 | ||||||||||
| (in millions of Won) | ||||||||||||
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Beginning |
￦ | (314,106 | ) | (272,152 | ) | (251,612 | ) | |||||
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Current actuarial gains (losses) |
41,954 | 20,540 | (47,543 | ) | ||||||||
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Ending |
￦ | (272,152 | ) | (251,612 | ) | (299,155 | ) | |||||
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7) The principal actuarial assumptions as of December 31, 2016 and 2017 are as follows:
| 2016 | 2017 | |||||||
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Discount rate |
2.15~8.59 | 2.70~7.75 | ||||||
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Expected future increase in salaries (*1) |
1.00~10.00 | 1.04~10.00 | ||||||
| (*1) | The expected future increase in salaries is based on the average salary increase rate for the past three years. |
All assumptions are reviewed at the end of the reporting period. Additionally, the total estimated defined benefit obligation includes actuarial assumptions associated with the long-term characteristics of the defined benefit plan.
8) Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:
| 1% Increase | 1% Decrease | |||||||||||||||
| Amount | Percentage (%) | Amount | Percentage (%) | |||||||||||||
| (in millions of Won) | ||||||||||||||||
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Discount rate |
￦ | (123,568 | ) | (6.7 | ) | 138,196 | 7.5 | |||||||||
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Expected future increase in salaries |
136,385 | 7.4 | (124,400 | ) | (6.7 | ) | ||||||||||
9) As of December 31, 2017 the maturity of the expected benefit payments are as follows:
| Within 1 year |
1 year - 5 years |
5 years - 10 years |
10 years - 20 years |
After 20 years |
Total | |||||||||||||||||||
| (in millions of Won) | ||||||||||||||||||||||||
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Benefits paid |
￦ | 109,212 | 613,786 | 792,792 | 655,599 | 347,280 | 2,518,669 | |||||||||||||||||
The maturity analysis of the defined benefit obligation was nominal amounts of defined benefit obligations using expected remaining period of service of employees.