Are you getting the most out of your pension plan?

*** This bulletin is directed to those hired after November 7, 2011 ***

Employees hired after November 7, 2011 at both Air Canada Mainline and Air Canada Rouge are enrolled in a Hybrid Pension Plan. The Hybrid Plan is a combination plan, which contains a Defined Benefit (DB) portion and a Defined Contribution (DC) portion.

For the DB portion you contribute 2.0%, 2.5% or 3.0%, depending on your years of continuous service. The Company contributes the amounts necessary to ensure that the funding of the plan meets the requirements of the Pension Benefits Standards Act and its regulations at all times. You earn DB retirement benefits based on a pre-determined formula using your allowable service and compensation. There are no investment decisions to make on this portion as the employer is responsible for any investment risk.

The DC portion is based on a combination of employee and employer contributions. This is where a decision is necessary on your part. Depending on your years of service, you get to set your level of pension contribution between 1.5% to 3% and the employer matches this between 100% to 175%, also depended on years of service.  In order to maximize your DC portion, you should be contributing the maximum you can since the employer matches your contributions and if you’re contributing less, you’re losing out on money.

Let’s take a member with 5 years of service earning $40,000 per year. This employee has the option of contributing 1.5%, 2%, or 2.5%. The employer at this stage matches contributions at 175%. The below table outlines the DC Investment at each contribution level.

 Contribution Level  1.5%  2.0%  2.5%
Employee Contribution   $600  $800  $1,000
Employer Contribution   $1,050  $1,400  $1,750
 Total DC Investment  $1,650  $2,200  $2,750

As outlined in the above scenario, the member could be losing up to $700 per year in employer contributions if they are not maxing out their contribution. In order to update or check your DC contribution level, login to your Manulife account, under the “My Account” heading select “View/Change My Payroll Deduction Amount”.

In Solidarity,

Your Component Pension Committee

Pension links

CPP  Canadian Pension Plan: https://www.hrsdc.gc.ca/eng/isp/cpp/cpptoc.shtml OAS Old Age Security: https://www.servicecanada.gc.ca/eng/sc/oas/pension/oldagesecurity.shtml RRQ: Régie des rentes du Quebec: https://www.rrq.gouv.qc.ca/fr Other Website and Info Equifax Canada – Consumer Information Center If you would like to obtain a copy of your credit report immediately, for a fee, you can receive real-time on-line access to your personal credit report, credit […]

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