Air Canada flight attendants automatically become members of the pension plan when they begin their employment with Air Canada. For former CAIL employees the plan was not mandatory until 2007. The AC pension plans are defined benefit plans that provide the pension plan member with a set pension benefit when they retire from the company. The amount of the benefit is based on a set formula which is contained in the pension plan text and includes such factors as age, earnings and years of pension service. The pension plan member contributes 4.5% of their earnings up to the Year’s Maximum Pensionable Earnings or YMPE (the YMPE is a figure set by the federal government and rises by a couple of percent every year; in 2009 the YMPE was $46,300) and 6% on any earnings over the YMPE. Your contributions are put into a pension trust fund which is invested by the company in stocks and bonds and other investments and is used to pay the pensions of pension plan members when they retire. The company is only required to contribute to the pension plan if there is not enough money in the pension trust fund to pay the pensions of retirees and if the pension plan is not fully funded (fully funded means if everyone retired at once there would be enough money in the pension trust fund to pay everyone 100% of the pension benefit they were owed at the time everyone retired). The pension plan currently does not provide for indexation of your pension benefit.
There are still two separate pension plans for ex CAIL and all other AC flight attendants which are identical with the following exceptions:
- The CAIL pension benefit for the period before June 2000 is based on a 1.375% formula for earnings up the Final Avg YMPE whereas the AC pension benefit is based on a 1.75% formula for earnings up to the Avg YMPE.
- The CAIL pension benefit formula for the period before June 2000 uses the Final Avg YMPE based on the last 36 months before retirement whereas the AC pension benefit formula uses the Avg YMPE based on the 36 months used to determine a member’s Avg Annual Compensation.
- The CAIL pension plan wind up provision is based on a priority distribution and gives access to a pension plan surplus to the pension plan members whereas the AC pension plan wind up treats everyone the same and gives no access to a pension plan surplus. The wind up provision would only apply if the plan was wound up or terminated.
The union and the company intend to merge the two plans but an arbitrator has first to determine how the wind up provisions will be incorporated into the merged plan.
The company can not unilaterally wind up or terminate the pension plan. Changes to the pension plan can only be made with agreement from the union. However, the plan could be terminated by the pension regulator (Office of Superintendent of Financial Institutions or OSFI) if AC defaulted on payments it was required to make to the plan if the plan was not fully funded. If the plan was wound up, any amounts in the pension trust fund would be distributed to pension plan members according to the plan wind up provisions. Creditors do not have access to these funds.
The current Memorandum of Settlement between the company and the union sets out special rules and commitments for the pension plan until 2014.