v3.25.4
Employee retirement benefits
 12 Months Ended
Dec. 31, 2025
Retirement Benefits [Abstract]  
Employee retirement benefits Employee retirement benefits
Retirement benefits, which cover almost all retired employees and their surviving spouses, include pension income and certain health care and life insurance benefits. They are met through funded registered retirement plans and through unfunded supplementary benefits that are paid directly to recipients.
Pension income benefits consist mainly of company-paid defined benefit plans that are based on years of service and final average earnings. The company shares in the cost of health care and life insurance benefits. The company’s benefit obligations are based on the projected benefit method of valuation that includes employee service to date and present compensation levels, as well as a projection of salaries to retirement.
The expense and obligations for both funded and unfunded benefits are determined in accordance with accepted actuarial practices and U.S. GAAP. The process for determining retirement-income expense and related obligations includes making certain long-term assumptions regarding the discount rate, rate of return on plan assets and rate of compensation increases. The obligation and pension expense can vary significantly with changes in the assumptions used to estimate the obligation and the expected return on plan assets.

The benefit obligations and plan assets associated with the company’s defined benefit plans are measured on December 31.
 
            Pension benefits
        Other postretirement
benefits
 2025 2024 2025 2024 
Assumptions used to determine benefit obligations at December 31 (percent)
    
Discount rate4.90 4.70 4.90 4.70 
Long-term rate of compensation increase4.00 4.00 4.00 4.00 
 
millions of Canadian dollars
Change in benefit obligation    
Benefit obligation at January 18,131 8,154 476 581 
Service cost186 186 4 13 
Interest cost369 365 22 25 
Actuarial loss (gain) (a)
(247)(88)(43)(29)
Amendments and other19 — 1 (78)
Benefits paid (b)
(502)(486)5 (36)
Benefit obligation at December 317,956 8,131 465 476 
 
 Accumulated benefit obligation at December 317,225 7,385   
(a)Actuarial loss (gain) primarily driven by changes in the year-end discount rate.
(b)Benefit payments for funded and unfunded plans.
The discount rate for the purpose of calculating year-end postretirement benefits plan obligation is determined by using the Canadian Institute of Actuaries recommended spot yield curve for high-quality, long-term Canadian corporate bonds with an average maturity (or duration) approximating that of the liabilities. For the measurement of the accumulated postretirement benefit obligation, the assumed health care cost trend rates start with 6.14 percent in 2026 and gradually decline to 3.57 percent by 2038 and beyond.
 
            Pension benefits
        Other postretirement
benefits
millions of Canadian dollars2025 2024 2025 2024 
Change in plan assets    
Fair value at January 18,553 8,054 
Actual return (loss) gain345 805 
Company contributions148 150 
Benefits paid (a)
(459)(452)
Other(5)(4)
Fair value at December 318,582 8,553 
 
Plan assets in excess of (less than) projected benefit obligation at December 31    
Funded plans1,035 853 
Unfunded plans(409)(431)(465)(476)
Total (b)
626 422 (465)(476)
(a)Benefit payments for funded plans only.
(b)Fair value of assets less projected benefit obligation shown above.
Funding of registered retirement plans complies with federal and provincial pension regulations, and the company makes contributions to the plans based on an independent actuarial valuation. In accordance with authoritative guidance relating to the accounting for defined pension and other postretirement benefits plans, the overfunded or underfunded status of the company’s defined benefit postretirement plans was recorded as an asset or liability in the Consolidated balance sheet, and the changes in that funded status in the year in which the changes occurred was recognized through other comprehensive income.
 
            Pension benefits
        Other postretirement
benefits
millions of Canadian dollars2025 2024 2025 2024 
Amounts recorded in the Consolidated balance sheet
consist of:
    
Other assets, including intangibles - net1,035 853 — — 
Current liabilities(34)(33)(29)(28)
Other long-term obligations(375)(398)(436)(448)
Total recorded626 422 (465)(476)
 
Amounts recorded in accumulated other comprehensive income consist of:    
Net actuarial loss (gain)29 237 (145)(110)
Prior service cost346 373 (73)(78)
Total recorded in accumulated other
       comprehensive income, before-tax		375 610 (218)(188)
The company establishes the long-term expected rate of return on plan assets by developing a forward-looking long-term return assumption for each asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation percentages and the long-term return assumption for each asset class. The 2025 long-term expected return of 4.4 percent used in the calculations of pension expense compares to an actual rate of return of 4.5 percent and 5.6 percent over the last 10- and 20-year periods respectively, ending December 31, 2025.
       Pension benefits
Other postretirement benefits
 2025 2024 2023 2025 2024 2023 
Assumptions used to determine net periodic
benefit cost for years ended December 31 (percent)
      
Discount rate4.70 4.60 5.10 4.70 4.60 5.10 
Long-term rate of return on funded assets4.40 5.60 4.80 — — — 
Long-term rate of compensation increase4.00 4.00 4.00 4.00 4.00 4.00 
 
millions of Canadian dollars      
Components of net periodic benefit cost      
Service cost186 186 162 4 13 12 
Interest cost369 365 373 22 25 28 
Expected return on plan assets(395)(454)(373)— — — 
Amortization of prior service cost27 27 19 (5)— — 
Amortization of actuarial loss (gain)11 48 44 (8)(8)(9)
Net pension and other post retirement benefit enhancement19 — — 1 — — 
Net periodic benefit cost217 172 225 14 30 31 
 
Changes in amounts recorded in accumulated other comprehensive income      
Net actuarial loss (gain)(197)(439)102 (43)(29)(14)
Amortization of net actuarial (loss) gain included in
       net periodic benefit cost		(11)(48)(44)8 8 9 
Prior service cost— — 184 — (78)— 
Amortization of prior service cost included in net
       periodic benefit cost		(27)(27)(19)5 — — 
Total recorded in other comprehensive income(235)(514)223 (30)(99)(5)
Total recorded in net periodic benefit cost and
       other comprehensive income, before-tax		(18)(342)448 (16)(69)26 
Costs for defined contribution plans, primarily the employee savings plan, were $47 million in 2025 (2024 - $47 million, 2023 - $44 million).
A summary of the change in accumulated other comprehensive income is shown in the table below:
 
Total pension and other
postretirement benefits
millions of Canadian dollars2025 2024 2023 
(Charge) credit to other comprehensive income, before-tax265 613 (218)
Deferred income tax (charge) credit (note 17)
(65)(150)53 
(Charge) credit to other comprehensive income, after-tax200 463 (165)
The company’s investment strategy for pension plan assets reflects a long-term view, a careful assessment of the risks inherent in plan assets and liabilities and broad diversification to reduce the risk of the portfolio. The pension plan assets are primarily invested in passive global equity and domestic fixed income index funds to diversify risk while minimizing costs. The fixed income funds are largely invested in investment-grade corporate and government debt securities with interest rate sensitivity designed to approximate the interest rate sensitivity of plan liabilities. The target asset allocation for the pension plan is reviewed periodically and set based on considerations such as risk, diversification, liquidity, and funding level. The target asset allocation for equity securities is 15 percent with the remainder in fixed-income securities.
The fair value measurement levels are accounting terms that refer to different methods of valuing assets. The terms do not represent the relative risk or credit quality of an investment.
The 2025 fair value of the pension plan assets, including the level within the fair value hierarchy, is shown in the table below:
 
Fair value measurements at December 31, 2025, using:
millions of Canadian dollarsTotalLevel 1Level 2Level 3Net Asset
Value
Asset class   
Equity securities   
Canadian— — 
Non-Canadian1,466 1,466 
Debt securities - Canadian  
Corporate1,693 1,693 
Government4,950 4,950 
Asset backed4 4 
Other45 45 
Equities – Venture capital167 167 
Real Estate207 207 
Cash50 18 32 
Total plan assets at fair value8,582 18   8,564 

The 2024 fair value of the pension plan assets, including the level within the fair value hierarchy, is shown in the table below:
  
Fair value measurements at December 31, 2024, using:
millions of Canadian dollarsTotalLevel 1Level 2Level 3Net Asset
Value
Asset class     
Equity securities     
Canadian— — 
Non-Canadian2,584 2,584 
Debt securities - Canadian    
Corporate1,220 1,220 
Government4,400 4,400 
Asset backed4 4 
Other18 18 
Equities – Venture capital134 134 
Real Estate154 154 
Cash39 3 36 
Total plan assets at fair value8,553 3   8,550 
A summary of pension plans with accumulated benefit obligation and projected benefit obligation in excess of plan assets is shown in the table below:
                   Pension benefits
millions of Canadian dollars2025 2024 
For unfunded pension plans covered by book reserves:  
Projected benefit obligation409 431 
Accumulated benefit obligation368 386 
(a)In 2025 and 2024, the fair value of plan assets exceeded the projected benefit obligation for both the company sponsored plan and its proportionate share of a joint venture sponsored plan.
Cash flows
Benefit payments expected in:
millions of Canadian dollarsPension benefitsOther postretirement
benefits
2026490 30 
2027490 30 
2028490 32 
2029490 32 
2030490 32 
2031 - 2035
2,450 154 
In 2026, the company expects to make cash contributions of about $151 million to its pension plans.