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RBP Pension Bulletin – August 2020

Lisa Raymond on August 24, 2020

(This applies to Air Canada Mainline only)

Pension information regarding the 8 month Reduced Block Program as per LOU 25:
Bidding for the reduced block program offered yearly as per LOU 25 of the Collective Agreement opens on August 19, 2020, at 8:00 EDT and closes on September 2, 2020, at 8:00 EDT. Award results will be available on September 11, 2020, at 17:00 EDT.

For your convenience, a copy of the relevant article, as well as important pension buy-back information, is posted on acaeronet and is available via the globe Information System under Tools & References > Crew Scheduling & Planning > Reduced Block Program Information > Reduced Block Program Under LOU 25/2020-2021 Reduced Block Pension Buy Back Formula (respectively). Please note that an updated document has been posted.

Members applying for the Reduced Block Program are required to select Option 1 or Option 2 regarding their pension for the duration of the program. The following information and definitions are provided to assist you with understanding and assessing the pension options that are part of this program.

You are considered to be working 60% of a regular block when you are on an RBP. Qualifying Pension Service credit is not prorated but Allowable Pension Service credited is prorated based on 60% unless you do the top up (buy back).
Note: The pension department rounds up Allowable Pension Service for the RBP period to the next full month (explained below).

Qualifying Service; is the service used to determine eligibility criteria for pension milestones (such as 25 years or 80 and 85 points), it will not be affected by this program. You will receive 8 months of Qualifying Service for the 8 month RBP program and 12 months of Qualifying Service if you are on an RBP for 12 months (i.e.: if you were also on the 4 month RBP from June – September as well), regardless of whether you select Option 1 or Option 2.

Allowable Service; is the amount of service used in your pension formula to determine the pension you will receive and it is affected by this program. Applicants must choose Option 1 or Option 2 (discussed below) to determine if you receive 60% or 100% of the month for Allowable Pension Service time.

If you choose Option 1 (no top up) you will receive a total of 5 months of Allowable Pension Service for the 8 month RBP period and 8 months of Allowable Pension Service for the 12 month RBP period.

If you choose Option 2 you will receive 8 months of Allowable Pension Service for the 8 month RBP and 12 months of Allowable Pension Service for the 12 month RBP.

Note: If you have already achieved your 35 years of Allowable Service, no pension contributions will be deducted, and you will not be credited with any additional Allowable Service. However, you still have to select an Option when submitting your RBP Bid.

Allowable Service Credit and required contributions:

Option 1 – If you choose Option 1 you contribute on your actual (reduced block) earnings and your allowable service (used to calculate your pension) is reduced accordingly. The contribution rate is 4.5% for earnings up to the YMPE and 6.0% for earnings over the YMPE. The 2020 YMPE is $58,700. The Year’s Maximum Pensionable Earnings (YMPE) number is set by the government. It is a measure of the average national wage as determined by statistics Canada and reported each fall by the Canada Customs and Revenue Agency.

If you elect Option 1, you will NOT be allowed to buy-back this Allowable Service at a later date. However as mentioned above your Qualifying Service is not affected.

If you choose Option 1, you receive Allowable Service credit for 60% of the length of time of the Reduced Block. For the 8 month RBP program you will receive 5 months allowable service credit (60% X 8 = 4.8) and for the 12 month RBP program you will receive 8 months of allowable service credit (60% X 12 = 7.2), as the calculation is rounded up to the next completed month.

Option 2 – If you choose Option 2 you have decided to top-up (buy back), and you will receive full credit for your Allowable Service in the pension plan. You must contribute 1) the employer portion of the cost to the pension plan for the period you are not working and 2) your regular contributions as if you were receiving your full salary. If you choose Option 2 you receive Allowable Service credit for the full period of the 8 or 12 month reduced block.

What does Option 2 top-up (buy back) cost and what is the benefit?
If you participate in Option 2 you are basically buying 3 months of Allowable Service if you are participating in the 8 month program and 4 months of Allowable Service if you are participating in the 12 month program. For the period of the RBP you will receive 8 months or 12 months of Allowable Service credit depending on the program you are awarded. If you do not do the Option 2 top-up (buy back) for the period of the RBP you will receive 5 months of Allowable Service credit if participating in the 8 month RBP and 8 months of Allowable Service credit if participating in the 12 month RBP.

If you are planning to work past the point in time when you would achieve 35 years (420 months) of Allowable Service credit (35 years, 420 months is the maximum amount of allowable pension service you can accrue based on our pension plan provisions) then the buy back may not be necessary in order for you to achieve a full pension of 35 years Allowable Service. If you choose Option 1 and not Option 2 (the buy back) and if for some reason at a later date you decide you want to buy back this time, it will not be possible under the current rules. The cost of the top-up (buy back) varies according to your age. The older you are the more expensive it is. As referenced above in paragraph two, you can review the 2020-21 Reduced Block Pension Buy Back Formula bulletin on acaeronet/globe to determine your cost of the buy back, based on your age and expected earnings. For your information the 2020 YMPE figure is $58,700.

To estimate the value for you of doing the RBP buy back (provided the pension milestones are the same for both dates) you could do a pension estimate projection for the date you intend to retire and compare it to one that is 3 months earlier for the 8 month RBP or 4 months earlier for the 12 month RBP (i.e.: with 3 or 4 months less Allowable Service). The difference would be an estimate of the value of the top up (buy back) for you.

You may want to consider whether you may eventually achieve 35 years of Allowable Service without doing the buy back. If you work more than 3 months past the point in time for the 8 month RBP or 4 months past the point in time for the 12 month RBP, when you would have achieved 35 years of Allowable Service with the top up (buy back), then you may eventually be able to earn and be credited with this Allowable Service without doing the top up (buy back) and paying the Company portion.

Annualized Earnings for the Reduced Block Program:
If the reduced block period is not part of your best 3 years (best consecutive 36 months) then the reduced block has no impact on the Average Annual Compensation figure used in calculating your pension. If the reduced block period is part of the member’s best 36 months earnings, a formula will be used to determine the annualized earnings that will be entered as the member’s monthly earnings and used in their pension calculations. For example; if you flew the maximum of 45 hours allowed during a reduced block month, based on the annualized earnings formula, 75 hours pay would be the annualized earnings that would be used as your monthly pensionable earnings for that month and entered in your pension file. For both Option 1 and Option 2 the earnings used for your Average Annual Compensation earnings (pensionable earnings) will be annualized.

For members who have already contributed to the 35 year maximum this annualized amount is entered as pensionable earnings for this time period. Even if Allowable Service is not being credited due to the 35 year limit, the member’s earnings after 35 years are still recognized in determining their best consecutive 36 months. The best 36 months used for determining the Average Annual Compensation (which is used in the pension formula) is based on whenever these earnings occur after the date the members joined the pension plan.

Conclusion: For any questions or if you require further clarification please call AC ECT (Employee Care Team), 1-833-847-3675 or HR Connex Pension at 1-855-354-6944 (select the options for DB pensions).

In Solidarity,

Your Component Pension Committee

Vacation Bidding and Retirement

Lisa Raymond on February 6, 2020

**This applies to Mainline Only**

As of May 1, 2003, Air Canada changed the vacation system to a current year vacation. All Air Canada employees now earn and take their vacation in the same vacation year, May 1 to April 30. Retirements always commence on the first day of a calendar month.

If you retire during the upcoming Vacation Year then your vacation annual entitlement will be prorated. All proration due to absences will occur within the vacation year of the absence. Crew Planning has a proration chart that they use to determine the actual number of vacation days you are entitled to.

If you want to be paid out for the vacation you earn and are entitled to, you should bid all your vacation after your retirement date. If you want to take some vacation during the vacation year that you are retiring in, prior to your retirement date and do not want to have to repay the Company for any excess vacation days taken, then prior to your retirement date you need to bid only the number of days you are entitled to or less.

You can do an approximate calculation of the number of vacation days you will be entitled to, that you have earned prior to your planned retirement date and you can determine the number of Statutory holidays you should be entitled to as well. If you add these two together then you will have an idea of what your actual total entitlement is and you can bid so that you do not exceed your entitlement. If you wish to confirm what your actual vacation entitlement is you can contact Crew Planning and they will advise you.

YUL and YYZ: crewplng.east@aircanada.ca
YYC and YVR: crewplng.west@aircanada.ca

A quick approximate proration calculation can be done as follows: divide your normal total vacation annual entitlement by 12 (the total number of months in a vacation year) to get the value for a single month. You then multiply this times the number of months from May 1 to your retirement date. This gives you an approximation of the number of vacation days you will be entitled to. Note: If you anticipate being on a Reduced Block (RBP) you only earn 60% of your vacation entitlement for each month on a RBP so this will reduce your entitlement for those months accordingly. If you anticipate being on a reduced block and do not want to overbid vacation days prior to your retirement, you should definitely check your entitlement with Crew Planning.

Example 1: September 1 Retirement
Normal Vacation Annual Entitlement 35 days divided by 12 months = 2.91 days, approximately 3 days per month. Retiring September 1 is 4 months from May 1 (May/June/July/August).
4 X 2.91 = 11.64 vacation days, which rounded up is 12 days.
The Statutory holidays you are entitled to, are the ones occurring during the Vacation year that occur in months you are on the payroll. So in this case that would be 2, Victoria Day in May and Canada Day in July. In this example your total approximate Annual and Statutory Entitlement would be 14 days (12 + 2).

Example 2: February 1 Retirement
Normal Vacation Annual Entitlement 35 days divided by 12 months = 2.91days, approximately 3 days per month. Retiring February 1 is 9 months from May 1 (May 1 to January 31)
9 X 2.91 = 26.19 vacation days, which rounded down is 26 days. In this case you would be entitled to 8 statutory holidays, those occurring between May 1 and January 31.

In this example your total approximate Annual and Statutory Entitlement would be 34 days (26 + 8).

Vacation entitlements are based on your service date or adjusted service date with Air Canada. For bidding purposes, you will be allotted full annual and statutory vacation based on the assumption that you will be an active employee for the upcoming vacation year. For those, with currently approved absences, you will be awarded a reduced entitlement based on those absences.

A discrepancy report is run monthly, monitoring all absences and reductions are made. If you have submitted to retire and Crew Planning is aware of this and knows that you have been awarded more days than you are entitled to prior to your retirement date they will reduce your vacation prior to the block awards. If the advice of your retirement is received by them following the block awards in a vacation month, they will reduce the vacation with an “unavailable no fault”, post awards. It is all a matter of timing.

If Crew Planning does not know about your retirement and is unable to adjust (reduce your award) and you end up taking more vacation than you are entitled to before you retire, then you will have to repay this amount when you retire. If there is an over payment of vacation it will be recovered by the Company on your final pay.

Hopefully this is useful for those who are considering retirement in the upcoming vacation year (May 1 to April 30) and allows you to plan your vacation bidding accordingly.

In Solidarity,

Your Component Pension Committee

Are you getting the most out of your pension plan?

Lisa Raymond on January 10, 2020

*** 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

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