22.

Pension Benefits

a)	Defined Contribution Pension Plans

With the exception of certain of the Company’s employees in Australia and Norway, the Company’s employees are generally eligible to participate in defined contribution plans. These plans allow for the employees to contribute a certain percentage of their base salaries into the plans. The Company matches all or a portion of the employees’ contributions, depending on how much each employee contributes. During the years ended December 31, 2015, 2014, and 2013, the amount of cost recognized for the Company’s defined contribution pension plans was $15.2 million, $13.9 million and $14.8 million, respectively.

b)	Defined Benefit Pension Plans

The Company has a number of defined benefit pension plans (or the Benefit Plans) which primarily cover its employees in Norway and certain employees in Australia. As at December 31, 2015, approximately 71% of the defined benefit pension assets were held by the Norwegian plans and approximately 29% were held by the Australian plan. The pension assets in the Norwegian plans have been guaranteed a minimum rate of return by the provider, thus reducing potential exposure to the Company to the extent the counterparty honors its obligations. Potential exposure to the Company has also been reduced, particularly for the Australian plans, as a result of certain of its time-charter and management contracts that allow the Company, under certain conditions, to recover pension plan costs from its customers.

The following table provides information about changes in the benefit obligation and the fair value of the Benefit Plans assets, a statement of the funded status, and amounts recognized on the Company’s balance sheets:


	Year Ended			Year Ended
	December 31, 2015			December 31, 2014
	$			$
Change in benefit obligation:
Beginning balance		121,604			150,996
Service cost		7,726			8,800
Interest cost		2,532			4,975
Contributions by plan participants		365			292
Actuarial (gain) loss		(9,165	)		15,982
Benefits paid		(9,651	)		(5,476	)
Plan settlements and amendments		(14,891	)		(21,235	)
Benefit obligations assumed on acquisition		—			1,083
Foreign currency exchange rate changes		(16,001	)		(33,680	)
Other		(104	)		(133	)

Ending balance		82,415			121,604

Change in fair value of plan assets:
Beginning balance		97,158			138,876
Actual return on plan assets		2,221			2,849
Contributions by the employer		7,858			12,283
Contributions by plan participants		365			292
Benefits paid		(9,646	)		(5,456	)
Plan settlements and amendments		(11,420	)		(22,405	)
Plan assets assumed on acquisition		203			998
Foreign currency exchange rate changes		(13,096	)		(29,721	)
Other		(568	)		(558	)

Ending balance		73,075			97,158

Funded status deficiency		(9,340	)		(24,446	)

Amounts recognized in the balance sheets:
Other long-term liabilities		9,340			24,446
Accumulated other comprehensive loss:
Net actuarial losses		(17,374	)		(32,060	)

(1)	As at December 31, 2015, the estimated amount that will be amortized from accumulated other comprehensive (loss) income into net periodic benefit cost in 2016 is $(0.6) million.

As of December 31, 2015 and 2014, the accumulated benefit obligations for the Benefit Plans were $67.1 million and $95.7 million, respectively. The following table provides information for those pension plans with a benefit obligation in excess of plan assets and those pension plans with an accumulated benefit obligation in excess of plan assets:


	December 31, 2015		December 31, 2014
	$		$
Benefit obligation		61,124		90,042
Fair value of plan assets		50,517		64,631

Accumulated benefit obligation		1,821		60,828
Fair value of plan assets		925		55,095

The components of net periodic pension cost relating to the Benefit Plans for the years ended December 31, 2015, 2014 and 2013 consisted of the following:


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2015			2014			2013
	$			$			$
Net periodic pension cost:
Service cost		7,726			8,800			9,768
Interest cost		2,532			4,975			4,974
Expected return on plan assets		(2,895	)		(5,333	)		(5,688	)
Amortization of net actuarial loss		1,538			7,148			1,484
Plan settlement		(140	)		(3,332	)		973
Other		568			557			425

Net cost		9,329			12,815			11,936

The components of other comprehensive income (loss) relating to the Plans for the years ended December 31, 2015, 2014 and 2013 consisted of the following:


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2015			2014			2013
	$			$			$
Other comprehensive income (loss):
Net gain (loss) arising during the period		13,288			(14,954	)		(3,930	)
Amortization of net actuarial loss		1,538			7,148			1,484
Plan settlement		(140	)		(3,332	)		973

Total income (loss)		14,686			(11,138	)		(1,473	)

The Company estimates that it will make contributions into the Benefit Plans of $4.9 million during 2016. The following table provides the estimated future benefit payments, which reflect expected future service, to be paid by the Benefit Plans:


	Pension Benefit
	Payments
Year	$
2016		3,567
2017		3,111
2018		2,791
2019		2,834
2020		2,748
2021 – 2025		17,706

Total		32,757

The fair value of the plan assets, by category, as of December 31, 2015 and 2014 were as follows:


	December 31, 2015		December 31, 2014
Pooled Funds ⁽¹⁾		52,150		66,563
Mutual Funds ⁽²⁾
Equity investments		11,089		7,343
Debt securities		2,512		6,119
Real estate		2,929		1,530
Cash and money market		1,674		12,238
Other		2,720		3,365

Total		73,075		97,158

(1)

The Company does not control the investment mix or strategy of the pooled funds. The pooled funds guarantee a minimum rate of return. If actual investment returns are less than the guarantee minimum rate, then the provider’s statutory reserves are used to top up the shortfall. The pooled funds primarily invest in hold to maturity bonds, real estate and other fixed income investments, which are expected to provide a stable rate of return.

(2)	The mutual funds primary aim is to provide investors with an exposure to a diversified mix of predominantly growth oriented assets (70%) with moderate to high volatility and some defensive assets (30%).

The investment strategy for all plan assets is generally to actively manage a portfolio that is diversified among asset classes, markets and regions. Certain of the investment funds do not invest in companies that do not meet certain socially responsible investment criteria. In addition to diversification, other risk management strategies employed by the investment funds include gradual implementation of portfolio adjustments and hedging currency risks.

The Company’s plan assets are primarily invested in commingled funds holding equity and debt securities, which are valued using the net asset value (or NAV) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares or units outstanding. Commingled funds are classified within Level 2 of the fair value hierarchy as the NAVs are not publicly available.

The Company has a pension committee that is comprised of various members of senior management. Among other things, the Company’s pension committee oversees the investment and management of the plan assets, with a view to ensuring the prudent and effective management of such plans. In addition, the pension committee reviews investment manager performance results annually and approves changes to the investment managers.

The weighted average assumptions used to determine benefit obligations at December 31, 2015 and 2014 were as follows:


	December 31, 2015	December 31, 2014
Discount rates	3.0%	2.9%
Rate of compensation increase	3.4%	4.2%

The weighted average assumptions used to determine net pension expense for the years ended December 31, 2015, 2014 and 2013 were as follows:


	Year Ended December 31, 2015 $	Year Ended December 31, 2014 $	Year Ended December 31, 2013 $
Discount rates	3.0%	2.9%	3.9%
Rate of compensation increase	3.4%	4.2%	4.7%
Expected long-term rates of return ⁽¹⁾	4.0%	4.0%	4.8%

(1)

To the extent the expected return on plan assets varies from the actual return, an actuarial gain or loss results. The expected long-term rates of return on plan assets are based on the estimated weighted-average long-term returns of major asset classes. In determining asset class returns, the Company takes into account long-term returns of major asset classes, historical performance of plan assets, as well as the current interest rate environment. The asset class returns are weighted based on the target asset allocations.