This bulletin is to inform you about the newly bargained pension changes and the implementation timeline for each item.
Our Pension Plans:
Currently, we have two types of pension plans:
The Mainline Defined Benefit (DB) Pension plan (Alight) and a Mainline Hybrid Pension plan
And
The Air Canada Rouge Hybrid Pension plan
All members hired before November 7, 2011, are on a Defined Benefit (DB) plan.
Members hired on November 7, 2011, and after, from Mainline and Air Canada Rouge, are on a Hybrid plan.
A Hybrid plan consists of two components: a Defined Benefit (DB) component and a Defined Contribution (DC) component.
For a brief primer on the difference between a DB and DC plan, please click the link below:
Pension Committee Update – July 2023 – AC Component
NOTE: all members of CUPE from both Mainline and Air Canada Rouge, are contributing to a Defined Benefit plan. The difference is that members hired before November 7, 2011, are 100% in a DB plan, and members hired on and after that date, are contributing 50% into a DB plan.
| Plans | Mainline Defined Benefit (DB) Pension plan | Mainline Hybrid Pension plan | Air Canada Rouge Hybrid Pension plan |
| Designated Members | All members hired before November 7, 2011 | All members hired on and after November 7, 2011 | All members hired at Air Canada Rouge |
| Plan Type | Defined Benefit (DB) | Hybrid (Defined Benefit & Defined Contribution) | Hybrid (Defined Benefit & Defined Contribution) |
Pensionable Earnings Cap Increased to $88,000:
Effective in 2025, (and not prior to 2025), the pensionable earnings cap has increased from $80,000 to $88,000.
This is the first time in 40 years that this cap has been increased.
The expansion for this earnings cap is necessary since wages are rising, and the YMPE (Yearly Maximum Pensionable Earnings), which is set by the government annually, and used in our pension formula, is going higher as well. It is $71,300 for 2025.
To reach the pensionable earnings cap of $88,000, earnings will have to be earned commencing in 2025. As an example: if a member plans to retire with an AAC (Average Annual Compensation or best consecutive 36 months), of $88,000, the member will have to earn $88,000 in 2025, 2026 and 2027.
NOTE: any earnings above $80,000 prior to 2025, will not be calculated as pensionable earnings.
For a brief explanation about the YMPE, please click the link below:
YMPE. What is it and why does it matter to you? – AC Component
Implementation Timeline: the projection tool on the Alight website will be updated with the new cap by December of 2025.
DB Component for Hybrid Members:
Contributions – For service beginning on January 1, 2025, members will be contributing a flat 3% to their DB plan, instead of the varying rate depending on years of service.
Implementation Timeline: all Hybrid members began contributing at a flat rate of 3% as of August 2025. For members who were contributing at 2% and 2.5% since the beginning of this year, retroactive contributions will be deducted from the retroactive wages once the pay arbitration is finalized in the first or second quarter of 2026 to pay for the difference and increase to 3%.
Pension Benefit Formula – Also effective on January 1, 2025, a new flat rate of 1% will replace the current 0.595% / 1% rate which is used in the pension benefit formula.
The 0.595% rate is used to calculate the AAC (Average Annual Compensation or best consecutive 36 months) up to the YMPE and the 1% rate is used for the AAC above the YMPE.
Implementation Timeline: for Hybrid members who have retired in 2025, their retirement pension benefit will be recalculated using the new flat rate of 1%, as well as the retroactive contribution rate, retroactive pay, and new earnings cap.
No date has been established as to when this will be completed.
DC Component for Hybrid Members:
Effective January 1, 2026, all newly hired members will have their DC contribution rate set at the highest contribution rate/amount.
New members can choose a lower contribution rate at anytime in the portal to reduce their deductions.
NOTE: all Hybrid members hired before January 1, 2026, who have not yet changed their default contribution rate and would like to contribute more to their DC plan at Manulife, can voluntarily choose a higher rate and deductions in the portal.
Indexation:
Pension payments will be indexed on three occasions:
January 2026, January 2028 and January 2030. Indexation for 2028 and 2030, will be conditional on the solvency ratio of the DB plan.
On January 1, 2026, pension payments will be indexed at 1%, this is without any conditions.
If the solvency ratio of the DB plan exceeds 125% on January 1, 2027, then pension payments will be indexed at 1.5% on January 1, 2028.
If the solvency ratio of the DB plan exceeds 125% on January 1, 2029, then pension payments will be indexed at 1.5% on January 1, 2030.
NOTE: Members who retired in the year before the date the pension is adjusted – the increase will be pro-rated based on the number of months since the date of retirement.
Merger of Plans:
The Air Canada Rouge Hybrid plan will be merging with the Mainline pension plan. Even though the Air Canada Rouge and Mainline Hybrid are managed separately, both plans are identical.
All conditions that apply to Mainline members, will apply to Air Canada Rouge members, that is, they will now be able to buyback their pension for breastfeeding leaves and will be able in the future to access their DB account on the Alight website.
Implementation Timelines:
– Once a pension plan text is prepared and approved by CUPE, it will then be sent to OSFI (The Office of the Superintendent of Financial Institutions Regulators) for approval.
NOTE: It can take 12 to 18 months for OSFI of finalize approval of the merged pension plans.
– Air Canada Rouge members who have taken a breastfeeding leave in 2025, can apply to buyback their pension within 90 days from returning to duty as per the buyback timeline restriction/requirements.
NOTE: there is currently a hold on pension buybacks. Members who have applied and will apply for a pension buyback will receive their forms by the end of March 2026.
– Air Canada Rouge members will be able to access the Alight website on HR Connex to view their DB account by the second quarter of 2026.
Retiring Allowance:
For the term of this Collective Agreement, any Air Canada Mainline member retiring, who has 125 or more sick days on his/her effective date of retirement, will receive a retirement allowance of 240 hours at their applicable retroactively updated rate of pay.
For Service Directors, the retiring allowance will be paid at the narrow body rate set out in Article 5.04 as retroactively updated following the Arbitration.
Ground and Cabin Security Premium Is Pensionable Earnings:
The Ground and Cabin Security Premium (GCSP) is pensionable earnings as it is paid earnings and taxable.
Reminder: Profit Sharing/Bonus and Per Diems are not considered pensionable earnings.
Contact Information for Pension Plans:
For DB account information, contact Alight at 1-855-354-6944.
Alight website: HR Connex > Retirement > DB Pension Plan (Alight)
Air Canada Rouge members can call 1-855-538-7799, for inquires about the DB component of their Hybrid plan.
Manulife: www.manulife.ca or 1-866-222-6368
Basic Overview of Pension Structure:
Plan Administrator:
Once the merger of the DB pension plan and Mainline Hybrid pension plan with the Air Canada Rouge pension plan is completed, Air Canada will be the pension plans administrator.
Investment Companies:
– For the DB pension plan and the DB component of the Hybrid plan, it is managed by TCC (Trans Canada Capital) which is a subsidiary of Air Canada.
– The DC component of the Hybrid plan is managed by Manulife.
Service Provider:
– Members personal DB accounts are managed by a service provider called Alight. Members have access to their DB accounts through the Alight website, which is located at HR Connex and can call to speak to a representative.
Zoom Q&A:
A Zoom Q&A will be held around Spring 2026.