Air Canada pension plan regulation

[cdnpilot77]

A small snipet taken from the Canada gazette II regarding the AC pension plan funding. It seems the relief that was given in 2009 has been altered but extended in this new plan.

However this paragraph jumped out:

New funding relief regulations will support the continued existence of a financially viable Air Canada, which is in the best interests of plan members and beneficiaries of the company’s pension plans. An agreement respecting pension plan funding arrangements and other requirements applicable to Air Canada for the years 2014 to 2020 was concluded between the Minister of Finance and Air Canada in May 2013 (the Agreement). The Agreement states that the Minister of Finance is prepared to recommend to the Governor in Council that special regulations offering further relief to Air Canada from 2014 to 2020 come into force following the expiry of the 2009 Regulations. The Agreement also provides that, as a condition of relief, the company agrees that increases in executive compensation will be frozen at the rate of inflation, special bonuses will be prohibited and limits will be imposed on executives’ incentive plans. In addition, Air Canada will be subject to a series of covenants and undertakings, including the prohibition of dividends and share repurchases, and no implementation of pension plan benefit improvements without regulatory approval.

For the Union types who concern themselves with executive compensation as a means of distrust and hatred for those individuals, this should be a victory, no?

For some conspiracy theorists there is never enough, this will just be a "smokescreen" as the execs do whatever they want anyways with the governments unofficial blessing.

Thoughts?

Edit to add the link: http://www.gazette.gc.ca/rp-pr/p2/2014/ ... 44-eng.php

[ratherbee]

For the Union types who concern themselves with executive compensation as a means of distrust and hatred for those individuals, this should be a victory, no?

Well, that's not me because I wouldn't want or be able to do their jobs anyway. I like what I do, thanks very much.

The executives are already well paid through their performance-based compensation so any addition "bonuses" would obviously be viewed by many as opportunistic and perhaps unethical.

However, for the worker bee's, like me, there is no hope for any improvements to our pension plan unless the "regulator" agrees. Not likely imho. If our pension plan becomes fully funded prior to negotiations in 2016 it would be nice to be able to negotiate back some of the concessions that we agreed to or were forced upon us. For example, early retirement penalties or a small increase to benefits to address inflation (MPU's), or requiring the Company to contribute to a fully funded pension to protect us from future downturns. It looks like the regulations will prevent that from happening.

The recently hired pilots holding their pensions in the DC plan could have their plans improved without government oversight as they appear to be excluded from these regulations. So I hope the union commits to bringing them up to the maximum contribution level i.e. 18% (pilot 6/Company 12).

[yycflyguy]

Pension plans are already in a surplus.

http://www.theglobeandmail.com/report-o ... e16444449/

[ratherbee]

Pension plans are already in a surplus.

http://www.theglobeandmail.com/report-o ... e16444449/

You mean they "were" in a surplus on December 31, 2013 based on the solvency test. That may have changed already as bond yields have gone down since then. What would the discount rate be today? Point is that a small surplus can disappear overnight. Don't expect the pension issue to fade away.

I suspect that AC won't opt out of the regulations until after another round of negotiations is completed in 2016. Just a guess though.

[TrailerParkBoy]

Pension plans are already in a surplus.

http://www.theglobeandmail.com/report-o ... e16444449/

You mean they "were" in a surplus on December 31, 2013 based on the solvency test. That may have changed already as bond yields have gone down since then. What would the discount rate be today? Point is that a small surplus can disappear overnight. Don't expect the pension issue to fade away.

I suspect that AC won't opt out of the regulations until after another round of negotiations is completed in 2016. Just a guess though.

Of course they won't opt out now! They will all of a sudden be losing money and be on bankruptcy row, then blame the employees for being overcompensated and have the government block any union effort to control their fate!

[yycflyguy]

Yes, those numbers were based on January 1, 2014. I suspect that it will continue to show a surplus as Calin's drive to raise AC stock price will encourage investors when the plan is solvent or in a surplus.

It was known during the forced negotiations that a bond market recovery of 2% would eliminate the pension insolvency. Unfortunately, many ACPA members and, more importantly, the arbitrator agreed with the doom and gloom of the day and implemented a DC for new hires. Management must be giddy with glee over the cost savings of the new plan. 3.7 Beeeeellion dollar recovery is quite the "miracle".

Like you said "Company to contribute to a fully funded pension to protect us from future downturns" would protect ACPA against future leverage in negotiations. It is a regulatory change that would have to occur through OFSI.

[Franky Jr]

The recently hired pilots holding their pensions in the DC plan could have their plans improved without government oversight as they appear to be excluded from these regulations. So I hope the union commits to bringing them up to the maximum contribution level i.e. 18% (pilot 6/Company 12).

I thought it was 6/12 already, what are new hires getting?