Wage Indemnity Contribution Increase Effective March 2022 Block Month & Additional Administrative Changes to Application to the Plan and Continuation of Coverage
If you have ever heard the saying, “what goes around comes around” … your WAGE INDEMNITY PLAN (WIP) faces the same financial distress that it did in the mid-90s.
The Wage Indemnity Plan in the mid-90s experienced limited cash flow and high claims which equated to a debt of $8 million. To alleviate a portion of the debt the Board at the time chose to implement a dramatic change to the plan and added the 15 weeks of employment insurance, (EI) to the program. The change was not well received by the members. During the introduction of the EI program members were only able to collect the amount of money that was provided by EI (and no top-up). After several changes over time the Board was able to do a full top up to ensure members maintained 60% of their gross earnings, which is what we do today.
Since 2010, your Board of Trustees has given back to you, the members, more than $16 million in Contribution Holidays. The reason for the Contribution Holidays was an equitable disbursement of the surplus funds. The trust fund had sufficient cash flow to support contributions in and claims paid out. There were no contribution increases and the plan had a decrease in 2013 from 2.98% to 2.3% due to the plan’s financial stability. Over time our population increased as did the claims commencing in 2018. The claims exceeded the contributions, however the fund surplus compensated for the short fall. Then in 2020, we encountered something we could never have imagined, COVID.
COVID affected the world economy and took workers in every field by storm. In today’s world the pandemic has blindsided everyone and has put your WIP plan in a similar position as in the mid-90s. Over the course of the next two years, we find ourselves with an “estimated” deficit that is likely to exceed over 6,000,000.00 dollars. The number of claims over the course of 2020 and 2021 have been exorbitant and costly. Thus far in 2022, the pattern continues.
The Board of Trust monitored the WIP financials and the effects that the pandemic asserted on the plan surplus. The monthly receivables from Air Canada and the membership went from $1 million a month to $233,000. Members on claim did not decrease and the claims experience exceeded the monthly remittance from Air Canada. It became apparent that it was impossible to maintain a cash flow to cover the monthly costs due to the short fall in funds. We have essentially survived the pandemic by utilizing the surplus.
Below you find the costs associated in running the plan from 2017/2018/2019/2020 and an unaudited year for 2021. (Click HERE to view a PDF of the chart).
Claims paid versus contributions received are higher than the premiums paid to SSQ financial, our insurer, which have created ongoing deficits. These deficits became exponential as the Pandemic continued. The insurer looks at the past 10-year history to determine what the premiums will be. What this means from a financial perspective is that the last 3 years (2020-2023) will be part of the calculation that determines the monthly premium until 2033. This means the unfortunate 3 years attached to COVID-19 will affect our plan until 2033.
The Board of Trust has evaluated several cost saving administrative changes to be implemented effective April 1st. (Click HERE to view the bulletin).
Additionally, the Board of Trustees has concluded that to alleviate the deficit and create a solvent plan the contribution rates from members will increase an additional 2%.
Effective with the MARCH BLOCK MONTH, 4.3% of earnings will be deducted and paid to the Air Canada Component of CUPE WIP visible on the April 17th pay summary and going forward.
Your Board of Trustees are confident that with this increase during 2022/2023 we will establish financial stability and have the opportunity in the future to consider reducing the monthly contributions paid by you, the member.
We trust this bulletin and the attached information will help you understand the rationale for these necessary changes.
Below is a rate comparison of the current rates at 2.3%, 3.0%, 3.3% and 4.3% indicating the end balance for each scenario under the current plan for 2022 and 2023. (Click HERE to view a PDF of the chart).
On Behalf of The Board of Trust,
Patricia Eberley
Administrative Consultant
Manion, Wilkins & Associates
Plan Administration
626-21 Four Seasons Place
Etobicoke, Ontario
M9B 0A6
Switchboard: 416-234-5044
Toll Free Line: 1-800-663-7849
Fax: 416-234-0127
Contact Centre: 1-866-532-8999
Russian – Ukraine Update
The Union immediately reached out to the company late last night when news of the Russian invasion of Ukraine broke. We have received confirmation that because of this conflict being anticipated, affected airspace was already closed to commercial traffic and therefore flights have been routed around the affected region. The company is in contact with the relevant agencies including Eurocontrol, IATA and Transport Canada who are constantly monitoring the situation.
In Solidarity,
Wesley Lesosky
President, Air Canada Component of CUPE
Air Canada Component Trustees’ Audit Report & Secretary-Treasurer’s Response for the Audit Period February 1, 2015 to June 30, 2015
Every year, two audits must be conducted on the Component’s financial books. One audit is done by professional auditors, who ensure accounting procedures are properly followed. For this period, chartered accountants Resnick & Company were the auditors. (Please see attached Independent Auditors Report)
The other audit is done by Component Trustees. The role of Component Trustees is to make sure the Component Secretary-Treasurer is complying with the rules and responsibilities set out by the CUPE Constitution, the Airline Division Bylaws and the Component Bylaws. To be more specific, the most important duty of any Secretary-Treasurer is to ensure all income owed to the local(s) or component is collected and that the local(s) or component’s funds are properly spent.
This means ensuring that:
∙ Funds are spent the way the members intended.
∙ Financial mismanagement can be detected and reported.
Everyone who is an Air Canada/Rouge CUPE member pays union dues. There are no exceptions.
Air Canada deducts our union dues (1.5% of gross income) every month from our pay, and hands over the funds to the Component. In 2015, the year we are auditing, $4,535,871 million was collected in union dues. The Component Finance Administrator divides these funds into three parts. Each local with more than 2,000 members receives $8.00 for every member plus $600.00 base amount every month. For the smaller locals, those with less than 2000 members, receive $8.00 for every member plus $3,250.00 base amount every month. The Component shall also remit an additional $3,000 a month for locals with less than 500 members. As per the Component Bylaws: Section (8.4.1).
CUPE National receives $18.09625 from every member and the remainder stays at the Component. To illustrate this: if $60.00 is deducted in union dues from a member, $8.00 would go to their local, $18.09625 would go to CUPE National, and the remainder, approximately $33.91, stays at Component. Please note there was a ratified referendum in the late summer of 2014, that took effect in the fall to increase the per member monthly budget amount from $6.00 to $8.00, as well there was an additional budget added for bases with less than 500 members who would receive $3,000.00.
The Component also sends $0.10 cents for every member to the Airline Division of CUPE.
Our role as Trustees is to make sure that each local and CUPE National gets their portion of funds, and the dues used by the Component are spent by the guiding rules of the CUPE Constitution, the Component Bylaws and by you, the membership.
This report is made so all members can know and understand if their dues are properly spent and if any improvements are needed.
The previous Component Trustees, Yvette Nakamoto, Pam Sarkissian and Marc Roumy (current Trustee) began working on completing the second portion of the 2014-2015 fiscal year on January 20th-23rd and the 27th, 2020. This entailed auditing the period of February 1st, 2015, to June 30th, 2015. The audit was not completed due to the resignation of Component Trustee, Pam Sarkissian. The Trustee audits were already late at that point. We are now 6 years behind in the Component Trustee audits largely due to the pandemic and restrictions. Another Trustee, Yvette Nakamoto, had also resigned. We will provide more detail on the impact of the late completion of Component Trustee audits in our Report.
We would like to thank Pam and Yvette for their work and effort as Trustees.
We met February 7th to the 11th, 2022 to complete this audit.
Due to the lateness of the audits, and a high turn over of union officers, and in order to avoid confusion and provide greater clarity, we will state names when needed.
In the year we are auditing, we are reviewing the work of the former Component Secretary-Treasurer, Antonius Lam.
We noticed some committees had gone over budget, and this was due to Bargaining. As an example, the Mobilization committee went over budget by almost 400%. Approximately, $46,000 was spent on pins, pens and lanyards for mobilizing the membership.
We have made some recommendations which we hope ACCEX (Air Canada Component of CUPE Executive) will consider and adopt.
We have made some recommendations, but we recognize that many practices have changed and improved since 2015. For example, since March 2018, the new bookkeeping company, Rankin Spence Group, began using QuickBooks, which is far superior and more user-friendly than the accounting system used in 2015, called NewViews.
Both Air Canada and Rouge CUPE members will receive this report and we hope that all members will take some time to read it. We are available to answer any questions regarding this report at any ACCEX or local meeting, if invited as Component Trustees.
Regards,
Choying Dolkar Benjamin Paneghel Marc Roumy
jasmine@accomponent.ca benjamin@acccomponent.ca marc@accomponent.ca
Air Canada Component Trustees
Click HERE to view the Trustees’ Report.
Click HERE to view the Secretary-Treasurer’s Response.