v3.25.4
Retirement benefits
 12 Months Ended
Dec. 31, 2025
Employee Benefits [Abstract]  
Retirement benefits Retirement benefits
We maintain defined benefit and defined contribution pension plans covering most of our employees. The defined benefit plans generally do not require employee contributions and provide a guaranteed level of pension payable for life based either on length of service or on earnings and length of service, and in most cases do not increase after commencement of retirement. We also provide group life insurance, medical and extended health benefits to certain employee groups.
The defined benefit pension plans are operated in Canada and the U.S. under broadly similar regulatory frameworks. The majority are funded arrangements where benefit payments are made from plan assets that are held in trust. Responsibility for the governance of certain of the plans, including investment and contribution decisions, resides with our Retirement Committees, Human Resources & Compensation Committee of the Board of Directors, and Board of Directors. For the registered defined benefit pension plans, regulations set minimum requirements for contributions for benefit accruals and the funding of deficits.
Starting January 1, 2022, defined benefit pension plans for certain employee groups were closed to new entrants and were replaced by defined contribution plans.
Accounting policies
We record a retirement asset or liability for our employee defined benefit pension and other retirement benefit plans by netting our plan assets with our plan obligations, on a plan-by-plan basis.
The cost of defined benefit pensions and other retirement benefits earned by employees is actuarially determined using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yields from high quality corporate bonds with cash flows that approximate expected benefit payments at the balance sheet date. Plan assets are valued at fair value at each balance sheet date.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are credited or charged to equity through other comprehensive earnings in the period in which they arise.
Past service costs arising from plan amendments are recognized immediately. The finance amount on net retirement balances is included in finance income or expense in our consolidated statements of earnings.
A gain or loss on settlement is recognized in earnings, calculated as the difference between the present value of the defined benefit obligation being settled, as determined on the date of settlement, and the settlement amount.
For defined contribution plans, pension expense is the amount of contributions we are required to make in respect of services rendered by employees.
Supporting information
The actual return on plan assets for 2025 was a gain of $31 million (2024 - gain of $40 million). The total pension expense for the defined benefit pension plans was $37 million (2024 - $43 million). In 2025, we made net contributions of $2 million to our defined benefit pension plans (2024 - $18 million). We expect to make cash contributions of approximately $22 million to our defined benefit pension plans during 2026 based on the most recent valuation report for each pension plan. We also provide group life insurance, medical and extended health benefits to certain employee groups, for which we contributed $1 million in 2025 (2024 - $1 million).

In 2024, we entered into buy-out annuity purchase agreements to settle $101 million of our defined benefit obligations by purchasing annuities using our plan assets. These agreements transferred the pension obligations of retired employees under certain pension plans to financial institutions. The difference between the cost of the annuity purchases and the liabilities held for these pension plans was reflected as a settlement loss of $1 million in Other income (expense) (see note 18).
The status of the defined benefit pension plans and other retirement benefit plans, in aggregate, is as follows:
Defined benefit
pension plans
Other retirement
benefit plans
2025202420252024
Accrued benefit obligations
Benefit obligations - opening
$678 $791 $19 $17 
CPL acquisition (note 3)— 10 — 3 
Service cost
33 41 — — 
Finance cost on obligation
34 36 1 1 
Benefits paid
(27)(34)(1)(1)
Actuarial gain due to change in financial assumptions(24)(12)— — 
Actuarial loss due to demography/experience1 4 — — 
Settlement
— (101)— — 
Other2 (3)— 1 
Foreign exchange1
31 (55)1 (2)
Benefit obligations - ending
$729 $678 $19 $19 
Plan assets
Plan assets - opening
$664 $786 $— $— 
CPL acquisition (note 3)— 11 — — 
Finance income on plan assets
32 35 — — 
Actual return on plan assets, net of finance income
(2)5 — — 
Employer contributions
7 21 1 1 
Benefits paid
(27)(34)(1)(1)
Settlement
— (102)— — 
Other
— (1)— — 
Refund of excess contributions(5)(3)— — 
Foreign exchange1
30 (55)— — 
Plan assets - ending
$700 $664 $— $— 
Funded status2
Retirement assets$55 $65 $— $— 
Impact of minimum funding requirement3
(3)(3)— — 
Retirement assets (note 9)
$52 $61 $— $— 
Retirement liabilities (note 11)
(83)(78)(19)(19)
$(31)(17)$(19)$(19)
1.Foreign currency translation relates to the foreign exchange impact of translating assets and liabilities of certain plans to U.S. dollars.
2.Plans in a surplus position are presented as assets and plans in a deficit position are presented as liabilities on our consolidated balance sheets.
3.Certain of our plans have a surplus that is not recognized on the basis that future economic benefits may not be available to us in the form of a reduction in future contributions or a cash refund.
Defined benefit
pension plans
Other retirement
benefit plans
2025202420252024
Expense
Service cost$33 $41 $— $— 
Administration fees
2 2 — — 
Settlement loss— 1 — — 
Curtailment gain related to disposal of pulp mills— (2)— — 
Finance expense, net2 1 1 1 
$37 $43 $1 $1 
Assumptions and sensitivities
At December 31, 2025, the weighted average duration of the defined benefit pension obligations is 17 years (December 31, 2024 - 18 years). At December 31, 2025, the projected future benefit payments for the defined benefit pension plans, to be made from plan assets, are as follows:
202620272028 to 2030ThereafterTotal
Defined benefit pension plans
$29$31$100$1,716$1,876
Key assumptions used in determining defined benefit pension and other retirement pension benefit obligations include assumed rates of increase for future employee compensation and discount rates. These estimates are determined with the assistance of independent actuarial specialists.
The significant actuarial assumptions used to determine our balance sheet date retirement assets and liabilities and our retirement benefit plan expenses are as follows:
Defined benefit
pension plans		Other retirement
benefit plans
2025202420252024
Benefit obligations:
Discount rate
5.01%4.83%4.99%4.78%
Future compensation rate increase
3.67%3.66%n/an/a
Benefit expense:
Discount rate - beginning of year4.83%4.69%4.78%4.69%
Future compensation rate increase3.66%3.62%n/an/a
Health-care benefit costs, shown under other retirement benefit plans, are funded on a pay-as-you-go basis.
The impact of a change in these assumptions on our retirement obligations as at December 31, 2025 is as follows:
IncreaseDecrease
Discount rate - 0.50% change
$(58)$70 
Compensation rate - 0.50% change
$15 $(11)
The sensitivities have been calculated on the basis that all other variables remain constant. When calculating the sensitivity of the defined benefit obligation, the same methodology is applied as was used to determine the retirement assets and liabilities.
Plan assets
The assets of the defined benefit pension plans are invested predominantly in a diversified range of equities, pooled funds and bonds. The weighted average asset allocations of the defined benefit plans at December 31, by asset category, are as follows:
Target range20252024
Canadian equities
2% - 15%
6 %5 %
Global equities
10% - 44%
19 %16 %
Fixed income investments
30% - 75%
46 %49 %
Alternative investments
0% - 57%
25 %25 %
Cash and cash equivalents
N/A
4 %5 %
100 %100 %
Risk management practices
We are exposed to various risks related to our defined benefit pension and other retirement benefit plans:
•Uncertainty in benefit payments: The value of the liability for retirement benefits will ultimately depend on the amount of benefits paid and this in turn will depend on the level of future compensation increase and life expectancy.
•Volatility in asset value: We are exposed to changes in the market value of pension plan investments which are required to fund future benefit payments.
•Uncertainty in cash funding: Movement in the value of the assets and obligations may result in increased levels of cash funding, although changes in the level of cash funding required can be spread over several years. We are also exposed to changes in pension regulation and legislation.
Our Retirement Committees manage these risks in accordance with a Statement of Investment Policies and Procedures for each pension plan or group of plans administered under master trust agreements. The following are some specific risk management practices employed:
•Retaining and monitoring professional advisors including an outsourced chief investment officer (“OCIO”).
•Monitoring our OCIO’s adherence to asset allocation guidelines and permitted categories of investments.
•Monitoring investment decisions and performance of the OCIO and asset performance against benchmarks.
Defined contribution plans
The total pension expense and funding contributions for the defined contribution pension plans for 2025 was $37 million (2024 - $35 million).