All Mainline and Air Canada Rouge members contribute into a Defined Benefit pension plan.

But contribution rates and retirement benefits are not the same between DB and Hybrid members.

In our previous bulletin, we briefly explained our membership is split between members under a pure Defined Benefit (DB) pension plan and members under a Hybrid plan.  We also gave a general explanation about the differences between Defined Benefit (DB) and Defined Contribution (DC) pension plans.  Click HERE to read the bulletin.

Even though we are all contributing into a Defined Benefit pension plan, there is a difference between the pure DB pension plan and the DB component of the Hybrid plan, in terms of contribution rates and the formula used in determining pension benefits.

The following is to explain this difference.

(IMPORTANT REMINDER: The DB component represents 50% of the Hybrid plan.  The other 50% is the DC component that is managed by Manulife.)

Contributions

DB pension plan:
Under the DB pension plan, members contribute 4.5% up to the YMPE* and 6% above the YMPE.  Pension contributions stop after 35 years of continuous service.

*YMPE: is the Yearly Maximum Pensionable Earnings.  This is set by the government every year.  For 2023, the YMPE is $66,600.

Hybrid plan:
For the DB component of the Hybrid plan, contribution rates vary depending on one’s years of continuous service.  Contribution rates increase with an increase of continuous service.  It is not a fixed rate compared to the pure DB pension plan and it is also a lower percentage contribution rate.

Members contribute:

2% with less than 5 years of continuous service.

2.5% for members between 5 and less than 15 years of continuous service.

3% for members with 15 up to 35 years of continuous service.

Retirement benefits

DB pension plan:
A formula is used to determine an annual pension benefit.  The percentage used is higher than the one for the DB component in the Hybrid plan.

1.75% is multiplied with the AAC** up to the average YMPE.

And 2% multiplied with the AAC above the average YMPE.

**AAC: Annual Average Compensation, is the average earnings based on one’s best 36 consecutive months.  Which is also known as one’s best three years.

Hybrid plan:
For the DB component of the Hybrid plan, the percentage rate to determine a member’s annual pension benefits, is almost half compared to the percentage rate in the pure DB pension plan.

0.595% is multiplied with the AAC up to the average YMPE.

And 1% is multiplied with the AAC above the average YMPE.

Summary

Every member in our membership contributes to a Defined Benefit pension plan; currently, almost half are on a pure DB pension plan and the other half are on a Hybrid plan.  (Members hired on or after November 7, 2011, are on a Hybrid plan.)

Even though we all contribute into a DB pension plan, the percentage used to determine contribution rates and retirement benefits are not the same.

Members in a pure DB pension plan contribute more into the DB pension plan and have a higher (almost double) percentage rate amount to determine pension benefits.

For more information regarding your pension plan, please refer to the Employee Pension booklet found on the Alight/HR Connex website.

For Air Canada Rouge employees, your employee pension booklet can be found on ACAeronet by following these steps: ACAeronet > Rouge > Human Resources > Human Resources Tools & Forms > Category: Rouge Pension CUPE > Rouge Pension CUPE.pdf

New phone numbers to contact Alight and Manulife

For questions about your DB pension plan, call:

Alight (English): 1-855-354-6944
Alight (French): 1-855-354-6943

For questions about your DC investment plan or to speak to a financial advisor, call:

Manulife (English): 1-888-727-7766
Manulife (French): 1-888-388-3288

For Air Canada Rouge members***:

Contact the Air Canada Rouge Pension Services at 1-855-538-7799.

***Note: Air Canada Rouge members who flow through to Mainline, remain on the Air Canada Rouge Hybrid Pension plan.

Are you a member of the Hybrid plan?  If yes, then take advantage to boost your contributions!
Members under the Hybrid pension plan can increase their contributions for the Defined Contribution (DC) component of their pension plan.

A new member who contributes $100 into their Defined Contribution plan, are matched at 100%.  Therefore, a member who contributes $100 will have $200 in their DC account.

By taking advantage of this matching, members benefit by compounding their money.  The more money one puts in early in one’s career, the greater the benefit over time.

For more information about increasing your DC pension contributions at Manulife, click HERE.

Safe travels,

Your Component Pension Committee:

Marc Roumy (Chairperson)
Henly Larden (Member)
Caroline Lozeau Gelinas (Member)
Stefanie Falotico (Rouge Member)

pensions@accomponent.ca

Did you know?
Air Canada has 31,442 pensioners and survivors in receipt of a monthly pension and pension amounts totaling $891,933,000 were paid to them in 2022.

Defined Benefit vs Defined Contribution.
What’s the difference?

Our membership both at Mainline and Rouge, are contributing into a Defined Benefit (DB) pension plan.

That said members that were hired on or after November 7th, 2011, are part of the Hybrid plan.  Members in the Hybrid plan contribute 50% into a Defined Benefit (DB) pension plan and 50% into a Defined Contribution (DC) pension plan.

The following is a general explanation of the difference between a DB and DC pension pertaining to pension payment benefits, contributions and who is liable for pension deficits.

Pension Payment Benefits When Retiring:

Defined Benefit (DB):
Members know the exact pension payments they are to receive, no matter what happens in the financial markets or if there is a deficit in the pension plan.  That is why a DB plan is called Defined Benefit: the benefit is defined.

Defined Contribution (DC):
In a DC plan, the pension payments are dependent on market conditions.  Therefore, pension payments are hard to project ahead of time.  If the financial markets are high, the value of the funds in the DC plan will be higher. If the financial markets drop, then the value of the investments in a DC plan would drop as well and thus would lower the amount one would receive once retired.

Contribution Amounts:

DB: The contribution amounts are set and cannot be changed by the member.

DC: Each member can choose their contribution amounts.  That is why a DC plan is called Defined Contribution: the contribution amount is defined by the member.

Who Is Liable When There Is a Deficit?

DB: the employer is liable for any pension deficits.

DC: the employee is liable for any deficits in their Manulife plan.

One Is a Pension Plan (DB), The Other Is a Saving Plan (DC):

DB: is a pension plan.  Our DB pension is a managed by an Air Canada subsidiary called Trans-Canada Capital “TCC”.  Contributions are pooled together; therefore, members do not choose how or what their money is invested in.

DC: is a savings plan.  It is currently managed by Manulife.  Members are responsible in choosing what to invest with their contributions.  Advisors are available through Manulife for those who are unfamiliar and are seeking assistance or clarification with their investment choices.

This briefly summarizes the difference between a DB and DC pension plan.

For more information about your pension plan please refer to your Pension Employee Booklet that can be found on the Alight website.

Are you a member of the Hybrid plan? If yes, then take advantage to boost your contributions!

Members under the Hybrid pension plan can increase their contributions for the Defined Contribution (DC) component of their pension plan.

Reminder: Members of the Defined Benefit pension plan are unable to change their contribution amounts.

A new member who contributes $100 into their Defined Contribution plan, are matched at 100%.  Therefore, a member who contributes $100 will have $200 in their DC account.

By taking advantage of this matching, members benefit by compounding their money.  The more money one puts in early in one’s career, the greater the benefit over time.

For more information about increasing your DC pension contributions at Manulife, click HERE.

Safe travels,

Your Component Pension Committee:

Marc Roumy (Chairperson)
Henly Larden (Member)
Caroline Lozeau Gelinas (Member)
Stefanie Falotico (Rouge Member)

pensions@accomponent.ca

Did you know?
Currently, 65% of Hybrid members are not contributing the maximum in their DC plan at Manulife.  A year ago, it was at 73%.

This is a small but positive improvement; 8% more members have maximized their contributions in their DC plan within a year.

Increase your best 3 years of earnings (AAC)

Even though members are no longer required or allowed to contribute to the pension plan after 35 years of allowable service, they can still increase their Average Annual Compensation (AAC), which is the average of their best consecutive 36 months of pensionable earnings.

How does one continue increasing their best 36 consecutive months?  By simply choosing to work more hours; to increase one’s pensionable earnings.

This can be done up until one retires or turns 71 years of age.  (Active members begin receiving pension payments in the year they turn 71 years of age.)

Pension details and information are in the Employee Booklet, which can be found on the Alight website by following these links: HR Connex > Retirement > HR Connex Pension > Quick Links > Plan Information.

If you require further information regarding the Defined Benefit (DB) pension plan, an Alight representative is there to help you, by simply calling 1-855-538-7799.

Are you a member of the Hybrid pension plan? 

If yes, then take advantage to boost your contributions!

Members of the Hybrid pension plan, (i.e. all members at Mainline and Rouge hired after November 7, 2011), can increase their pension contributions in the Defined Contribution (DC) component of their pension plan.  The maximum contribution rate depends on your years of service.  Members cannot increase pension contributions in their Defined Benefit (DB) component.

A member who contributes $100 into their DC component, are matched at 100% by the company.  Therefore, a member who contributes $100 will have a total contribution of $200 deposited into their DC account at Manulife.

By taking advantage of this matching, members benefit by compounding their money.  The more money one puts early in one’s career, the greater the benefit over time.

For more information about increasing your DC pension contributions at Manulife, click HERE.

Safe travels.

Your Component Pension Committee:

Marc Roumy (Chairperson)
Henly Larden (Member)
Caroline Lozeau Gelinas (Member)
Vacant (Rouge Member)

pensions@accomponent.ca

Did you know?
As stated above, Hybrid members with 2 years or less of service will see their DC pension contributions matched at 100% by the company.  This increases to 137.5% for members between 2 and 5 years of service and 175% for members over 5 years of service.

Something worth noting as an interesting fact is that the amount the company matches in the DC component comes from the surplus of the DB component of the pension plan.