| Other employee benefits [Text Block] |
20. Other employee benefits
Hudbay sponsors both other long-term employee benefit plans and non-pension post-employment benefits plans and uses a December 31 measurement date. These obligations relate mainly to commitments for post-retirement health benefits. Information about Hudbay's post-employment and other long-term employee benefits is as follows:
Movements in the present value of the defined benefit obligation in the current and previous years were:
| |
|
Year ended |
|
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Opening defined benefit obligation |
$ |
129,616 |
|
$ |
116,696 |
|
| Current service cost1 |
|
3,861 |
|
|
4,140 |
|
| Past service cost |
|
134 |
|
|
- |
|
| Interest cost |
|
3,531 |
|
|
3,478 |
|
| Effects of movements in exchange rates |
|
639 |
|
|
2,423 |
|
| Remeasurement actuarial losses/(gains): |
|
|
|
|
|
|
| Arising from changes in demographic assumptions |
|
2,601 |
|
|
(4,460 |
) |
| Arising from changes in financial assumptions |
|
(7,309 |
) |
|
10,043 |
|
| Arising from experience adjustments |
|
(1,034 |
) |
|
(489 |
) |
| Benefits paid |
|
(3,196 |
) |
|
(2,215 |
) |
| Closing defined benefit obligation |
$ |
128,843 |
|
$ |
129,616 |
|
1 Includes remeasurement of other long term employee benefits
The defined benefit obligation closing balance, by group member, is as follows:
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Active members |
$ |
57,775 |
|
$ |
68,983 |
|
| Inactive members |
|
71,068 |
|
|
60,633 |
|
| Closing defined benefit obligation |
$ |
128,843 |
|
$ |
129,616 |
|
Movements in the fair value of defined benefit amounts in the current and previous years were as follows:
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Employer contributions |
$ |
3,196 |
|
$ |
2,215 |
|
| Benefits paid |
|
(3,196 |
) |
|
(2,215 |
) |
| Closing fair value of assets |
$ |
- |
|
$ |
- |
|
The non-pension employee benefit plan obligations are unfunded.
Reconciliation of assets and liabilities recognized in the consolidated balance sheets:
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Unfunded benefit obligation |
$ |
128,843 |
|
$ |
129,616 |
|
| Vacation accrual and other - non-current |
|
3,275 |
|
|
3,046 |
|
| Net liability |
$ |
132,118 |
|
$ |
132,662 |
|
Reflected in the consolidated balance sheets as follows:
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Other employee benefits liability - current (note 13) |
$ |
3,530 |
|
$ |
3,154 |
|
| Other employee benefits liability - non-current |
|
128,588 |
|
|
129,508 |
|
| Net liability |
$ |
132,118 |
|
$ |
132,662 |
|
Other employee future benefit expense includes the following:
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Current service cost 1 |
$ |
3,995 |
|
$ |
4,140 |
|
| Net interest cost |
|
3,531 |
|
|
3,478 |
|
| Components recognized in consolidated income statements |
$ |
7,526 |
|
$ |
7,618 |
|
1 Includes remeasurement of other long term employee benefit
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Remeasurement on the net defined benefit liability: |
|
|
|
|
|
|
| Actuarial losses/(gains) arising from changes in demographic assumptions |
$ |
2,601 |
|
$ |
(4,460 |
) |
| Actuarial (gains)/losses arising from changes in financial assumptions |
|
(7,309 |
) |
|
10,043 |
|
| Actuarial gains arising from changes experience adjustments |
|
(1,034 |
) |
|
(489 |
) |
| Components recognized in statements of comprehensive income |
$ |
(5,742 |
) |
$ |
5,094 |
|
| Total other employee future benefit cost |
$ |
1,784 |
|
$ |
12,712 |
|
Other employee benefit amounts recognized include those directly related to production of inventory; such amounts are recognized initially as costs of inventory and are expensed in the consolidated income statements within cost of sales upon sale of the inventory.
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Defined benefit cost: |
|
|
|
|
|
|
| Discount rate |
|
2.76% |
|
|
3.17% |
|
| Initial weighted average health care trend rate |
|
5.66% |
|
|
5.68% |
|
| Ultimate weighted average health care trend rate |
|
4.00% |
|
|
4.00% |
|
| Average longevity at retirement age for current pensioners (years)1 : |
|
|
|
|
|
|
| Males |
|
20.3 |
|
|
21.2 |
|
| Females |
|
23.7 |
|
|
23.9 |
|
| |
|
|
|
|
|
|
| |
|
Dec. 31, 2021 |
|
|
Dec. 31, 2020 |
|
| Defined benefit obligation: |
|
|
|
|
|
|
| Discount rate |
|
3.30% |
|
|
2.76% |
|
| Initial weighted average health care trend rate |
|
6.00% |
|
|
5.66% |
|
| Ultimate weighted average health care trend rate |
|
4.00% |
|
|
4.00% |
|
| Average longevity at retirement age for current pensioners (years)1 : |
|
|
|
|
|
|
| Males |
|
20.4 |
|
|
20.3 |
|
| Females |
|
23.7 |
|
|
23.7 |
|
| Average longevity at retirement age for current employees (future pensioners) (years)1 : |
|
|
|
|
|
|
| Males |
|
22.3 |
|
|
22.2 |
|
| Females |
|
25.4 |
|
|
25.4 |
|
1 CPM2014 Priv with CPM-B projection scale
Hudbay reviews the assumptions used to measure other employee benefit costs (including the discount rate) on an annual basis.
The other employee benefit costs typically expose Hudbay to actuarial risks such as: interest rate risk, health care cost inflation risk and longevity risk.
| Interest risk |
A decrease in the bond interest rate will increase the plan liabilities. |
| Health care cost inflation risk |
The majority of the plan's benefit obligations are linked to health care cost inflation and higher inflation will lead to higher liabilities. |
| Longevity risk |
The majority of the plans' benefit liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans liabilities. This is particularly significant for benefits subject to health care cost inflation where increases in inflation result in higher sensitivity to changes in life expectancy. |
The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding other assumptions constant:
- If the discount rate is 50 basis points higher (lower), the defined benefit obligation would decrease by $11,124 (increase by $12,821).
- If the health care cost assumption increases (decreases) by 1%, the defined benefit obligation would increase by $25,894 (decrease by $19,987).
- If the life expectancy increases (decreases) by one year for both men and women, the defined benefit obligations would increase by $5,088 (decrease by $5,147).
The average duration of the non-pension post-employment obligation at December 31, 2021 is 18.6 years (2020: 19.4 years).
This number can be broken down as follows:
- Active members: 25.4 years (2020: 24.6 years)
- Inactive members: 13.2 years (2020: 13.6 years)
|