30) PENSION PLANS AND OTHER POST-EMPLOYMENT BENEFITS
The plans sponsored by the Company and related benefit types are as follows:
|
Plan |
|
Type |
|
Entity |
|
Sponsor |
|
|
PBS-A |
|
Defined benefit (DB) |
|
Sistel |
|
Telefônica Brasil, jointly with other telecoms resulting from privatization of the Sistema Telebrás |
|
|
PAMA / PCE |
|
Defined benefit (DB) |
|
Sistel |
|
Telefônica Brasil, jointly with other telecoms resulting from privatization of the Sistema Telebrás |
|
|
Healthcare - Law No. 9656/98 |
|
Defined benefit (DB) |
|
Telefônica Brasil |
|
Telefônica Brasil, TData, Terra Networks and TGLog |
|
|
CTB |
|
Defined benefit (DB) |
|
Telefônica Brasil |
|
Telefônica Brasil |
|
|
Telefônica BD |
|
Defined benefit (DB) |
|
VisãoPrev |
|
Telefônica Brasil |
|
|
TCOPREV |
|
Hybrid |
|
VisãoPrev |
|
Telefônica Brasil |
|
|
VISÃO |
|
Defined contribution (DC) / Hybrid |
|
VisãoPrev |
|
Telefônica Brasil, TData, Terra Networks and TGLog |
|
The actuarial valuation of the plans was made in December 2017 and 2016, based on the registration of the participants held on the following dates:
- Post-Employment Health Benefits Plans
The actuarial valuation made for the PAMA health plan used the registration of the participants with a base date of October 31, 2017, projected for December 31, 2017 and the registration of the participants with a base date of July 31, 2016, projected for 31 of December 2016.
The actuarial valuation carried out for the health plan Law No. 9,656 / 98 used the register of the participants with a base date of October 31, 2017, projected for December 31, 2017 and the registration of the participants with a base date of August 31, 2016 , projected for December 31, 2016.
- Post-employment Social Security Plans
The actuarial valuation made for the CTB pension plan used the registration of the participants with a base date of August 31, 2017, projected for December 31, 2017 and the registration of the participants with a base date of July 31, 2016, projected for 31 of December 2016.
The actuarial valuation made for all other pension plans (PBS-A, Telefônica BD, Tcoprev and Visão plans) used the register of the participants with a base date of July 31, 2017, projected for December 31, 2017 and the with a base date of July 31, 2016, projected for December 31, 2016.
The Company has participation in the decisions that directly affect the governance of the plans, with members nominated for both the Deliberative Council and the Fiscal Council of the administrators Sistel and VisãoPrev.
The defined benefit obligation is made up of different components, according to the pension characteristic of each plan, and may include the actuarial liabilities of supplementary pension liabilities, health care benefits to retirees and dependents or compensation for death or disability of members. This liability is exposed to economic and demographic risks, such as: (i) increases in medical costs that could impact the cost of health care plans; (ii) salary growth; (iii) long-term inflation rate; (iv) nominal discount rate; and (v) life expectancy of members and pensioners.
The fair value of plan assets is primarily comprised of fixed income investments (NTN’s, LFT’s, LTN’s, repurchase agreements, CDBs, debentures, letters of guarantee and FIDC shares) and equity investments (highly liquid, well regarded, large company shares and investments in market indices). Due to the concentration of fixed income and floating rate investments plan assets are mainly exposed to the risks inherent in the financial market and economic environment such as: (i) market risk in the economic sectors where variable income investments are concentrated; (ii) risk events that impact the economic environment and market indices where variable income investments are concentrated; and (iii) the long-term inflation rate that may erode the profitability of fixed-income investments at fixed rates.
The companies that administer post-employment benefits plans sponsored by the Company (VisãoPrev and Sistel) seek to meet the flows of assets and liabilities through the acquisition of fixed income securities and other long-term assets.
With the exception of the CTB deficit plans and the healthcare plan under Law No. 9656/98, generally all benefit plans that have fund constituted, present a surplus position. The economic benefit recorded in the Company's assets or that of its subsidiaries does not reflect the total surplus determined in these plans. The economic benefit stated under assets considers only the portion of the surplus which presents a real possibility of recovery. The means of plan surplus recovery is solely through reductions in future contributions and given that not all plans currently receive enough contributions for full recovery of surpluses, the economic benefit recorded under assets is limited to the total possible recovery amount in accordance with projected future contributions.
The position of plan assets is at December 31, 2017 and 2016, respectively, and plan assets were apportioned based on the company’s actuarial liabilities in relation to the total actuarial liabilities of the plan.
The actuarial gains and losses generated in each year are immediately recognized in equity (in other comprehensive income).
The following is a summary of the pension plans and other post-employment benefits:
a) Post-retirement Health Plans
a.1) Healthcare Plan to Retirees and Special Coverage Program (PAMA and PAMA-PCE)
The Company, together with other companies of the former Telebrás System, at shared cost, sponsor health care plans (PAMA and PAMA-PCE) for retirees. These plans are managed by Fundação Sistel and are closed plans, not admitting new members.
Contributions to the plans are determined based on actuarial valuations prepared by independent actuaries, in accordance with the rules in force in Brazil. The funding procedure is the capitalization method and the sponsor’s contribution is at the fixed percentage of payroll of employees covered by the Telefônica BD plan.
a.2) Health care plan – Law No. 9656/98
The Company manages sponsor a health care plan to retired employees and former employees with fixed contributions to the plan, in accordance with Law No. 9656/98.
As provided for in articles 30 and 31 of said law, participants shall have the right to the health care plan in which they participated while they were active employees. Benefitted participants are classified as retirees and their dependents and dismissed employees and their dependents.
Retirees and dismissed employees, in order to keep their right to the benefits, must make contributions to the plan in accordance with the contribution tables by age bracket established by carriers and/or insurance companies.
b) Post-Employment Pension Plans
They include the PBS Assisted Plans (“PBS-A"), CTB, Telefônica DB, Tcoprev and Visão.
On December 9, 2016, Visão Prev obtained approvals from the National Supplementary Pension Authority ("PREVIC") for the incorporation of Vivo Prev and Visão TGestiona plans to the Visão Telefônica plan. In this way, as of January 1, 2017, all participants in Vivo Prev and Visão TGestiona plans became participants in the Visão Telefônica plan. This unification preserves all vested rights, and gives participants of the incorporated plans access to the benefits of the Visão Telefônica plan.
The main purpose of the mergers is to create greater synergy of the benefits offered to the participants, as well as to reduce administrative and operational costs of the plans, as well as to improve administrative efficiency.
The following describes the key information about post-retirement pension plans.
b.1) PBS Assisted Plan (PBS-A)
The PBS-A plan is a defined benefit private pension plan managed by Sistel and sponsored by the Company jointly with the other telecommunications companies originating in the privatization of the Telebrás system. The plan is subject to funding by sponsors in case of any asset insufficiency to ensure pension supplementation of participants in the future.
The PBS-A plan comprises assisted participants of the Sistel Benefit Plan who were already retirees on January 31, 2000, from all the participating sponsors, with joint liability of all sponsors to the plan and Sistel.
Although the PBS-A plan has assets in excess of actuarial liabilities at December 31, 2017 and 2016, such surplus was not recognized due to lack of legal provision in relation to refund thereof, in addition, since it is not a contributive plan, it is not possible to make any deduction from future contributions.
b.2) CTB Plan
Contributions to the CTB plan are determined based on actuarial valuations prepared by independent actuaries, in accordance with the rules in force in Brazil. The funding procedure is the capitalization method and the sponsor’s contribution is a fixed percentage of payroll of employees covered by the plan.
The Company also individually manages and sponsors the CTB Plan, originally provided to former employees of Companhia Telefônica Brasileira (“CTB”) who were in the Company in 1977, with whom an individual retirement concession agreement was executed to encourage their resignation. This is an informal pension supplementation benefit paid to former employees directly by the Company. These plans are closed, and no other members are admitted.
b.3) Telefônica DB Plan
The Company individually sponsor defined benefit retirement plan, the Telefônica DB Plan.
In order to improve allocation of Telefôncia DB plan assets and analyze the coverage ratio of plan obligations in future years, a stochastic ALM study was prepared by Visão Prev and Willis Towers Watson. This ALM study aimed at projecting the ratio between coverage of liabilities (solvency ratio) and the risk of mismatching measured by the standard deviation of the solvency ratio. The study concluded that the plan present sustainable projection of their coverage ratio with the current investments portfolio.
At the time of the concession, a benefit is calculated, which will be paid in a lifelong form and updated by inflation. This plan is not open to new accessions.
The contributions are defined according to the costing plan, which is calculated considering financial, demographic and economic hypotheses in order to accumulate enough resources to pay the benefit to the participants who are already receiving and to the new pensions.
b.4) Tcoprev Plan
The Company sponsors, individually, the Tcoprev Plan, a hybrid plan for defined benefits and defined contribution of pension benefits, managed by Visão Prev.
The contributions to the Tcoprev plan are: (i) basic contribution, with contributions made by the participant and sponsor; and (ii) voluntary and sporadic contributions, with contribution made only by the participant. In addition to these contributions, the sponsor can make the variable contribution, of an eventual character, being apportioned proportionally to the basic contribution of the participant.
In order to improve allocation of Tcoprev plan assets and analyze the coverage ratio of plan obligations in future years, a stochastic ALM study was prepared by Visão Prev and Willis Towers Watson. This ALM study aimed at projecting the ratio between coverage of liabilities (solvency ratio) and the risk of mismatching measured by the standard deviation of the solvency ratio. The study concluded that the Tcoprev plan present sustainable projection of its coverage ratio with the current investments portfolio.
b.5) VISÃO Plans
The Visão Telefôncia and Visão Multi plans will hereinafter be shown jointly under the name VISÃO, due to their similarity.
The Company sponsor defined contribution pension plans with defined benefit components (hybrid plans), i.e. the VISÃO Plans, managed by Visão Prev. The contribution is attributed to each subsidiary in the economic and demographic proportion of its respective obligation to the plan.
The contributions made by the Company related to defined contribution plans totaled R$43,702 at December 31, 2017 (R$37,879 at December 31, 2016).
The contributions to the Visão Telefôncia and Visão Multi plans are: (i) basic and additional contribution, with contributions made by the participant and sponsor; and (ii) additional, sporadic and specific contribution, with contribution made only by the participant.
In addition, the participant has the possibility to choose one of the five investment profiles to apply their balance, they are: Super Conservative, Conservative, Moderate, Aggressive and Aggressive Fixed Income Long Term.
c) Consolidated Information on Pension Plans and Other Post-Employment Benefits
c.1) Reconciliation of assets and liabilities:
|
|
|
Net liabilities (assets) at 12.31.17 |
|
Net liabilities (assets) at 12.31.16 |
||||||||
|
|
|
Post-retirement |
|
Post-retirement |
|
|
|
Post-retirement |
|
Post-retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Present value of DB plan obligations |
|
1,861,651 |
|
1,050,576 |
|
2,912,227 |
|
1,763,866 |
|
767,642 |
|
2,531,508 |
|
Fair value of plan assets |
|
2,585,679 |
|
726,060 |
|
3,311,739 |
|
2,703,593 |
|
667,993 |
|
3,371,586 |
|
Net liabilities (assets) |
|
(724,028) |
|
324,516 |
|
(399,512) |
|
(939,727) |
|
99,649 |
|
(840,078) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset limitation |
|
791,177 |
|
130,440 |
|
921,617 |
|
993,754 |
|
164,953 |
|
1,158,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent assets |
|
(9,833) |
|
— |
|
(9,833) |
|
(9,041) |
|
— |
|
(9,041) |
|
Current liabilities |
|
7,914 |
|
9,021 |
|
16,935 |
|
6,826 |
|
4,162 |
|
10,988 |
|
Noncurrent liabilities |
|
69,068 |
|
445,935 |
|
515,003 |
|
56,242 |
|
260,440 |
|
316,682 |
c.2) Total expenses recognized in the income statement:
|
|
|
2017 |
|
2016 |
|
2015 |
||||||||||||
|
|
|
Post- |
|
Post- |
|
|
|
Post- |
|
Post- |
|
|
|
Post- |
|
Post- |
|
|
|
|
|
retirement |
|
retirement |
|
|
|
retirement |
|
retirement |
|
|
|
retirement |
|
retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Current service cost |
|
3,044 |
|
7,606 |
|
10,650 |
|
2,811 |
|
2,761 |
|
5,572 |
|
2,682 |
|
5,720 |
|
8,402 |
|
Net interest on net actuarial assets/liabilities |
|
5,258 |
|
29,325 |
|
34,583 |
|
5,278 |
|
2,986 |
|
8,264 |
|
4,525 |
|
36,763 |
|
41,288 |
|
Total |
|
8,302 |
|
36,931 |
|
45,233 |
|
8,089 |
|
5,747 |
|
13,836 |
|
7,207 |
|
42,483 |
|
49,690 |
c.3) Amounts recognized in other comprehensive income (loss)
|
|
|
2017 |
|
2016 |
|
2015 |
||||||||||||
|
|
|
Post- |
|
Post- |
|
|
|
Post- |
|
Post- |
|
|
|
Post- |
|
Post- |
|
|
|
|
|
retirement |
|
retirement |
|
|
|
retirement |
|
retirement |
|
|
|
retirement |
|
retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Actuarial (gains) losses |
|
325,292 |
|
208,195 |
|
533,487 |
|
(174,496) |
|
240,072 |
|
65,576 |
|
(87,306) |
|
76,868 |
|
(10,438) |
|
Asset limitation effect |
|
(309,780) |
|
(52,411) |
|
(362,191) |
|
182,088 |
|
(10,897) |
|
171,191 |
|
(541,596) |
|
150,541 |
|
(391,055) |
|
Total |
|
15,512 |
|
155,784 |
|
171,296 |
|
7,592 |
|
229,175 |
|
236,767 |
|
(628,902) |
|
227,409 |
|
(401,493) |
c.4) Changes in amount net of liability (asset) of defined benefit, net
|
|
|
12.31.17 |
|
12.31.16 |
||||||||
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Net interest on net defined benefit liability (asset) at the beginning of the year |
|
54,026 |
|
264,603 |
|
318,629 |
|
46,907 |
|
29,712 |
|
76,619 |
|
Business combinations |
|
(12) |
|
680 |
|
668 |
|
— |
|
— |
|
— |
|
Expenses |
|
8,302 |
|
36,931 |
|
45,233 |
|
8,089 |
|
5,747 |
|
13,836 |
|
Sponsor contributions |
|
(10,680) |
|
(3,041) |
|
(13,721) |
|
(8,562) |
|
(31) |
|
(8,593) |
|
Amounts recognized in OCI |
|
15,512 |
|
155,784 |
|
171,296 |
|
7,592 |
|
229,175 |
|
236,767 |
|
Net interest on net defined benefit liability (asset) at the end of the year |
|
67,148 |
|
454,957 |
|
522,105 |
|
54,026 |
|
264,603 |
|
318,629 |
|
Actuarial assets per balance sheet |
|
(9,833) |
|
— |
|
(9,833) |
|
(9,041) |
|
— |
|
(9,041) |
|
Actuarial liabilities per balance sheet |
|
76,982 |
|
454,956 |
|
531,938 |
|
63,068 |
|
264,602 |
|
327,670 |
c.5) Changes in defined benefit liability
|
|
|
12.31.17 |
|
12.31.16 |
||||||||
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Defined benefit liability at the beginning of the year |
|
1,763,866 |
|
767,642 |
|
2,531,508 |
|
1,503,966 |
|
402,927 |
|
1,906,893 |
|
Liability assumed after acquisition of company |
|
249 |
|
680 |
|
929 |
|
— |
|
— |
|
— |
|
Current service costs |
|
3,044 |
|
7,606 |
|
10,650 |
|
2,811 |
|
2,761 |
|
5,572 |
|
Interest on actuarial liabilities |
|
181,208 |
|
82,488 |
|
263,696 |
|
179,496 |
|
48,420 |
|
227,916 |
|
Benefits paid |
|
(168,856) |
|
(30,777) |
|
(199,633) |
|
(156,056) |
|
(24,229) |
|
(180,285) |
|
Member contributions paid |
|
220 |
|
— |
|
220 |
|
174 |
|
— |
|
174 |
|
Actuarial losses (gains) adjusted by experience |
|
(23,613) |
|
128,469 |
|
104,856 |
|
78,373 |
|
298,403 |
|
376,776 |
|
Actuarial losses (gains) adjusted by demographic assumptions |
|
(3,320) |
|
(1,543) |
|
(4,863) |
|
— |
|
(81,144) |
|
(81,144) |
|
Actuarial losses (gains) adjusted by financial assumptions |
|
108,853 |
|
96,011 |
|
204,864 |
|
155,102 |
|
120,504 |
|
275,606 |
|
Defined benefit liability at the end of the year |
|
1,861,651 |
|
1,050,576 |
|
2,912,227 |
|
1,763,866 |
|
767,642 |
|
2,531,508 |
c.6) Changes in the fair value of plan assets
|
|
|
12.31.17 |
|
12.31.16 |
||||||||
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Fair value of plan assets at the beginning of the year |
|
2,703,593 |
|
667,993 |
|
3,371,586 |
|
2,178,182 |
|
529,485 |
|
2,707,667 |
|
Asset acquired on acquisition of company |
|
323 |
|
— |
|
323 |
|
— |
|
— |
|
— |
|
Benefits paid |
|
(160,370) |
|
(27,767) |
|
(188,137) |
|
(149,521) |
|
(24,229) |
|
(173,750) |
|
Participants contributions paid |
|
220 |
|
— |
|
220 |
|
174 |
|
— |
|
174 |
|
Sponsor contributions paid |
|
2,195 |
|
31 |
|
2,226 |
|
2,027 |
|
31 |
|
2,058 |
|
Interest income on plan assets |
|
283,090 |
|
71,061 |
|
354,151 |
|
264,761 |
|
65,015 |
|
329,776 |
|
Return on plan assets excluding interest income |
|
(243,372) |
|
14,742 |
|
(228,630) |
|
407,970 |
|
97,691 |
|
505,661 |
|
Fair value of plan assets at the end of the year |
|
2,585,679 |
|
726,060 |
|
3,311,739 |
|
2,703,593 |
|
667,993 |
|
3,371,586 |
c.7) Changes in assets limitation
|
|
|
12.31.17 |
|
12.31.16 |
||||||||
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
pension plans |
|
health plans |
|
Total |
|
Asset Limitation at the beginning of the year |
|
993,754 |
|
164,953 |
|
1,158,707 |
|
721,123 |
|
156,270 |
|
877,393 |
|
Interest on the asset limitation |
|
107,140 |
|
17,898 |
|
125,038 |
|
90,543 |
|
19,580 |
|
110,123 |
|
Changes in the assets limitation, except interest |
|
(309,779) |
|
(52,411) |
|
(362,190) |
|
182,088 |
|
(10,897) |
|
171,191 |
|
Effect generated by company acquisition |
|
62 |
|
— |
|
62 |
|
— |
|
— |
|
— |
|
Asset Limitation at the end of the year |
|
791,177 |
|
130,440 |
|
921,617 |
|
993,754 |
|
164,953 |
|
1,158,707 |
c.8) Results projected for 2018
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
Current service cost |
|
2,931 |
|
13,722 |
|
16,653 |
|
Net interest on net defined benefit liability/asset |
|
6,074 |
|
45,892 |
|
51,966 |
|
Total |
|
9,005 |
|
59,614 |
|
68,619 |
c.9) Sponsoring company contributions projected for 2018
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
Sponsor contributions |
|
2,499 |
|
33 |
|
2,532 |
|
Benefits paid directly by the sponsor |
|
7,914 |
|
9,026 |
|
16,940 |
|
Total |
|
10,413 |
|
9,059 |
|
19,472 |
c.10) Average weighted duration of defined benefit liability
|
|
|
Post‑retirement |
|
Post‑retirement |
|
|
|
|
pension plans |
|
health plans |
|
|
In 2017 |
|
8.5 |
years |
18.7 |
years |
|
In 2016 |
|
8.9 |
years |
12.7 |
years |
c.11) Actuarial assumptions
|
|
|
12.31.17 |
||
|
|
|
Post-retirement pension plans |
|
Post-retirement health plans |
|
Discount rate to present value of defined benefit liability |
|
Visão: 9.5% |
|
9.9% |
|
Future salary growth rate |
|
PBS-A: N/A Visão, CTB, Telefônica BD and Tcoprev: 5.9% |
|
N/A |
|
Medical expense growth rate |
|
N/A |
|
7.4% |
|
Nominal annual adjustment rate of pension benefits |
|
4.3% |
|
N/A |
|
Medical service eligibility age |
|
N/A |
|
Eligibility on retirement 100% to 57 years |
|
Estimated retirement age |
|
PBS-A, CTB and Telefônica BD: 57 years Visão and Tcoprev: 60 years |
|
57 years |
|
Mortality table for nondisabled individuals |
|
PBS-A, CTB and Telefônica BD: AT-2000 Basic segregated by gender, down-rated by 10% Visão: AT-2000 Basic segregated by gender, down-rated by 50% |
|
AT-2000 Basic segregated by gender, down-rated by 10% |
|
Mortality table for disabled individuals |
|
PBS-A, CTB and Telefônica BD: RP-2000 Disabled Female, down-rated by 40% Visão: N/A |
|
RP-2000 Disabled Female, down-rated by 40% |
|
Disability table |
|
PBS-A, CTB, Telefônica BD and Tcoprev: Light-Forte Visão: Light-Fraca, down rated by 30% |
|
Light-Forte |
|
Turnover |
|
PBS-A, CTB, Telefônica BD and Tcoprev: N/A Visão: Turnover experience in VISÃO plans (2015 to 2017) |
|
PAMA and PCE: N/A Law No. 9656/98: Turnover experience in VISÃO plans (2015 to 2017) |
Further to the assumptions stated above, other assumptions common to all plans were adopted in 2017 as follows:
|
(i) |
Long-term inflation rate 4.3%; and |
|
(ii) |
Annual increase in the use of medical services according to age: 4.0%. |
|
|
|
12.31.16 |
||
|
|
|
Post-retirement pension plans |
|
Post-retirement health plans |
|
Discount rate to present value of defined benefit liability |
|
Vivoprev and Visão: 10.9% |
|
10.9% |
|
Future salary growth rate |
|
PBS-A: N/A CTB, Telefônica BD, Prev and Visão: 6.2% |
|
N/A |
|
Medical expense growth rate |
|
N/A |
|
7.6% |
|
Nominal annual adjustment rate of pension benefits |
|
4.5% |
|
N/A |
|
Medical service eligibility age |
|
N/A |
|
PAMA and PCE: 5% when reaching 52 years and 10 years of contribution; 3% each subsequent year; 100% eligibility on retirement Law No. 9656/98: 100% to 57 years |
|
Estimated retirement age |
|
PBS-A and CTB: N/A Telefônica BD: 57 years Prev and Visão: 60 years |
|
PAMA and PCE: 60 years Law No. 9656/98: 57 yeras |
|
Mortality table for nondisabled individuals |
|
PBS-A, CTB, Telefônica BD and Tcoprev: AT-2000 Basic segregated by gender, down-rated by 10% Vivoprev and Visão: AT-2000 Basic segregated by gender, down-rated by 50% |
|
AT-2000 Basic segregated by gender, down-rated by 10% |
|
Mortality table for disabled individuals |
|
PBS-A, CTB, Telefônica BD and PBS: RP-2000 Disabled Female, down-rated by 40% Vivoprev and Visão: N/A |
|
PAMA and PCE: RP-2000 Disabled Male Law No. 9656/98: AT-2000 Basic segregated by gender, down-rated by 10% |
|
Disability table |
|
PBS-A, CTB and Telefônica BD: Mercer Disability Prev and Visão: Light-Fraca, down rated by 30% |
|
Mercer Disability |
|
Turnover |
|
PBS-A, CTB and Telefônica BD: N/A Prev and Visão: Turnover experience in VISÃO plans (2008 to 2011) |
|
PAMA and PCE: N/A Law No. 9656/98: Turnover experience in VISÃO plans (2008 to 2011) |
Further to the assumptions stated above, other assumptions common to all plans were adopted in 2016 as follows: (i) Long-term inflation rate 4.5%; and (ii) Annual increase in the use of medical services according to age: 4.0%.
c.12) Changes in actuarial assumptions in relation to the prior year
In order to adjust some actuarial assumptions to the economic and demographic reality, a study was conducted for the plans administered by Visão Prev and Sistel, which adopted the definition of the assumptions in their Deliberative Councils.
The main economic and financial assumptions that have changed in relation to the previous fiscal year and that interfere with the defined benefit liability are: (i) rates for discount to present value of the defined benefit liability; (ii) long-term inflation rate; (iii) rate of future wage growth; (iv) rate of growth of medical costs; and (v) annual nominal index of adjustment of social security benefits.
The impacts on the plans’ defined benefit liabilities due to the new definition of the actuarial assumptions are as follows:
|
|
|
Post-retirement |
|
Post-retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
Defined benefit liability, based on current actuarial assumptions |
|
1,861,651 |
|
1,050,576 |
|
2,912,227 |
|
Defined benefit liability, based on prior-year actuarial assumptions |
|
1,756,118 |
|
956,108 |
|
2,712,226 |
|
Difference from change in actuarial assumptions |
|
105,533 |
|
94,468 |
|
200,001 |
c.13) Sensitivity analysis for actuarial assumptions
The Company believes that the significant actuarial assumptions with reasonable likelihood of variation due to financial and economic scenarios, which could significantly change the amount of the defined benefit obligation, are the discount rate used to adjust the defined benefit liability to present value and the rate of growth of medical costs.
Sensitivity analysis of the defined benefit liability for scenarios involving a 0.5% increase and a 0.5% decrease in the discount rate used to discount the defined benefit liability to present value is as follows:
|
|
|
Post-retirement |
|
Post-retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
Defined benefit liability, discounted to present value at current rate |
|
1,861,651 |
|
1,050,576 |
|
2,912,227 |
|
Defined benefit liability, discounted to present value considering a rate increased by 0.5% |
|
1,784,735 |
|
977,286 |
|
2,762,021 |
|
Defined benefit liability, discounted to present value considering a rate decreased by 0.5% |
|
1,944,833 |
|
1,132,896 |
|
3,077,729 |
The following is a sensitivity analysis on the defined benefit obligation for scenarios of 1% increase and 1% reduction in the rate of growth of medical costs:
|
|
|
Post-retirement |
|
Post-retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
Defined benefit liability, Projected by the current medical cost growth rate |
|
1,861,651 |
|
1,050,576 |
|
2,912,227 |
|
Defined benefit liability, discounted to present value considering a rate increased by 1% |
|
1,861,651 |
|
1,223,724 |
|
3,085,375 |
|
Defined benefit liability, discounted to present value considering a rate decreased by 1% |
|
1,861,651 |
|
911,270 |
|
2,772,921 |
c.14) Allocation of plan assets
|
|
|
12.31.17 |
12.31.16 |
|||||
|
|
|
Post-retirement |
|
Post-retirement |
|
Post-retirement |
|
Post-retirement |
|
|
|
pension plans |
|
health plans |
|
pension plans |
|
health plans |
|
Investments with market value quoted in active market: |
|
|
|
|
|
|
|
|
|
Fixed income investments |
|
|
|
|
|
|
|
|
|
National Treasury Note (NTN) |
|
1,998,931 |
|
670,516 |
|
1,769,606 |
|
553,515 |
|
Treasury Financial Letter |
|
199,135 |
|
55,544 |
|
30,588 |
|
— |
|
Repurchase operations |
|
142,228 |
|
— |
|
134,863 |
|
— |
|
Debentures |
|
13,209 |
|
— |
|
12,843 |
|
— |
|
Treasury Financial Letter (LFT) |
|
4,567 |
|
— |
|
229,793 |
|
114,478 |
|
FIDC shares / Others |
|
3,694 |
|
— |
|
6,449 |
|
— |
|
National Treasury Notes (LTN) |
|
2,165 |
|
— |
|
1,895 |
|
— |
|
Bank Deposit Certificates (CDB) |
|
1,317 |
|
— |
|
36,744 |
|
— |
|
Variable income investments |
|
|
|
|
|
|
|
|
|
Investments in energy sector |
|
57,781 |
|
— |
|
246,400 |
|
— |
|
Investments in food and beverage industry |
|
32,337 |
|
— |
|
45,054 |
|
— |
|
Investments in aerospace sector |
|
— |
|
— |
|
28,947 |
|
— |
|
Investments in mining sector |
|
1,197 |
|
— |
|
2,581 |
|
— |
|
Investments in other sectors (1) |
|
7,124 |
|
— |
|
9,207 |
|
— |
|
Real estate investments |
|
96,525 |
|
— |
|
121,176 |
|
— |
|
Loans to participants |
|
18,346 |
|
— |
|
23,562 |
|
— |
|
Structured investments |
|
3,753 |
|
— |
|
224 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Investments with market value not quoted in active market: |
|
|
|
|
|
|
|
|
|
Loans to participants |
|
1,590 |
|
— |
|
1,850 |
|
— |
|
Structured investments |
|
1,780 |
|
— |
|
1,811 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
2,585,679 |
|
726,060 |
|
2,703,593 |
|
667,993 |
|
(1) |
Investments in variable income in the following industries: oil, gas and biofuel; telephony; steel and metals; construction and engineering; sales and distribution; transportation; wood and paper; education; financial services and banks; real estate, among; others. |
c.15) Maturity of future benefit payments
|
|
|
Post-retirement |
|
Post-retirement |
|
|
|
|
|
pension plans |
|
health plans |
|
Total |
|
2018 |
|
162,546 |
|
38,839 |
|
201,385 |
|
2019 |
|
166,989 |
|
42,679 |
|
209,668 |
|
2020 |
|
171,275 |
|
47,023 |
|
218,298 |
|
2021 |
|
176,423 |
|
51,987 |
|
228,410 |
|
2022 |
|
180,505 |
|
57,309 |
|
237,814 |
|
2023 onwards |
|
5,326,440 |
|
22,761,339 |
|
28,087,779 |
|
Total |
|
6,184,178 |
|
22,999,176 |
|
29,183,354 |