On September 7, 2018, the union sent out a bulletin to the membership concerning Air Canada’s plan to annuitize pensions. In the September 7th bulletin, the union communicated that CUPE’s pension lawyer had written to Air Canada (AC) to request disclosure of the application by AC to the Minister of Finance for the incorporation of AC Life Insurance (ACL). AC declined to give disclosure to the union citing the reasons outlined in the September 7th bulletin. The union felt, and still feels, that it is important to review the details of the company’s application for ACL as the details may provide helpful information to the union so that it can better assess if the company’s annuitization plan is good for AC pension plan members. The union wants to ensure, as best as it can, that the reinsurance pricing is competitive and the surplus is not reduced by the company’s plan. Remember that the pension concessions the unions gave in 2009 is one of the big reasons the pension fund is currently in surplus; the concessions have resulted in a reduction of about $1billion in liabilities for the combined employee pension plans.
After consulting with its experts, the pension committee, and other unions, CUPE decided to send a second letter to AC seeking the same disclosure as above and advising AC that they would have no choice but to formally object to the incorporation of ACL if AC again declined to provide disclosure. IAM, UNIFOR, and CALDA joined CUPE in sending this second letter. In the second letter, the unions also asked two important questions about the company’s plan regarding the cost of the reinsurance. In any event, the company declined to provide disclosure a second time. After reviewing the company’s answer to the second letter the unions decided to file a formal objection to the company’s application for incorporation of ACL to OSFI (the Office of the Superintendent of Financial Institutions). Click HERE to view the objection. ACPA joined the other four unions in sending the objection. In the objection, again written and filed by the union’s pension lawyer, the unions raised several concerns, including those mentioned in the first two letters to AC, the cost of the reinsurance by ACL and the impact on the surplus. The objection also mentions that if AC provides the disclosure requested by the unions, they may reconsider their objection.
It will now be up to the Federal Minister of Finance to decide whether or not to hold an inquiry into the company’s incorporation of ACL and related issues. At minimum, the unions’ concerns will now be on record with the pension regulator OSFI. We will keep you posted as events unfold.
President, Air Canada Component of CUPE