Pension

[leftoftrack]

http://www.ctvnews.ca/business/air-cana ... -1.2392510

Montreal-based Air Canada said its aggregate solvency pension surplus as of May 20 has been estimated at $1.2 billion, up from $660 million as of Jan. 1 and well above the $89-million surplus on Jan. 1, 2014.

Now does Air Canada start getting to take pension contribution Holidays? if so do they now regret going to Defined contribution for new hires?

[Rockie]

Corporate executives and Conservative politicians view DB pensions as an evil that needs to be eradicated - except their own of course.

[dukepoint]

Air Canada will never regret going to DC pensions for all new hire pilots. They're cheeper. ACPA caved..........its them who should regret it. As the years go on, and DC membership rises, the "stragglers" with the DB pension package will be in jeopardy. Great job ACPA. Its hillarious how fast the pension got back on track after the DC package was innitiated.

There are so many "divisions" within the pilot group, all doing the exact same job, its nausiating. The pay scales are a friggin mess, all for doing the exact same job, with the exact same responsiblity. There's "grandfather" rates, "hired before this date" rates, "Rouge" rates, "Force-reduced rates" "grandfathered new hire" rates..... "expanded new hire" rates...........unreal. The Company will use these "divisions" against us at every opportunity.

With Rouge now operating a "business class" product in direct contrevention of the contract, the pilot group is being seriously "tested".....this will not stop as long as we continue to "roll over". I'm curious as to the "spin" ACPA will put on this move. I'm sure, it will somehow be spun as a "great for the Company, and great for the pilots".

Maybe we can have another new pay scale...the "Business class at Rouge" rate....

B-scale pilots, sometimes making as much as $80,000/year LESS....... flying an exact copy of the Mainline product.........nice. What other airline allows this?????

Mainliners had better see the danger in allowing this to occur. This ain't gonna bite us all in the a$$ is it???

DP.

[TrailerParkBoy]

Jazz Pilots at ALPA have rolled over also with the "division-ing" within the pilots group.

1. New hire Pay scale (not a B Scale as per ALPA Reps)
2. Top Pay Scale for Dash 8's after 7 years, with not protection if reduced!
3. New hire DC Pension.

I'm sure I am missing just a few points here!

[dukepoint]

It's all in "the plan".

Know how to split a huge solid Oak log??? Use plenty of wedges.....wage and pension differences for similar work are wedges.
Tap one in here, another there, and pretty soon, with enough of them......... the thing suddenly splits with a thundering crack.



FWIW.....I know AC Management has a "flow chart" of how to get to their "end game".

We'd better start figuring it out, cuz I think were already half-way there.

DP.

[Rockie]

Air Canada pilots haven't been a "solid" anything in many years (if ever), so management long ago reached their end game because we do not constitute even a token barrier to whatever changes the company wants to make. In defence of ACPA it doesn't matter a bit who represents us, in the end we represent ourselves and we will never do anything except look out for #1.

As you point out permitting the DC pension is self defeating for those of us on the DB and we will regret it.

[bearinmind]

There is a problem with DC's that no one is talking about. They will be reduced to make profits today, but as the individual ages, and the DC pension wont cover his retirement, they will work longer. They work longer at a higher pay scale. Over time the DC will be more expensive because not enough will be put away in the beginning of a career because the wages are too low. Time bomb.

tick tick tick

[rudder]

The value of a DC plan relies on 3 factors:

- rate of return/interest rates
- compounding/time value of money
- matching rate


So, if you are young enough and the employer has a healthy (read 150-200%) matching rate, and assuming average returns then the principal sum available at retirement should be adequate. You will, however, be subject to the vagaries of prevailing interest rates when you convert the account to an annuity (RIF/LIRA).

Therefore, a DC plan is of little or no value to a 50+ new-hire pilot at AC but could be of significant value to a 25-30 year old new-hire. Still, any DC plan is arguably deficient to a solid DB plan.

[ratherbee]

The DC plan, although it will likely pay out much less, has some advantages. It will still be there at 100% if the company goes bankrupt. It does not lose 50-60% of its payout if the employee dies. It is also portable.
So imagine the ability to pack up and move offshore to finish up your career in a more tax friendly country. The company will lose the forced loyalty they have with those of us in the DB.

[ratherbee]

DP,

"As the years go on, and DC membership rises, the "stragglers" with the DB pension package will be in jeopardy."

If this is true there must be some examples of this happening to other workers. The worst pension disaster I can think of was the Nortel shutdown where DB pensioners lost pretty well everything.

There are laws in place to stop the scenario you are talking about, specifically pension laws and labour laws (DFR for example).

Frustrating I agree but maybe no need to be alarmed.

[ratherbee]

DP

Maybe the multitude of pay rates (over 20 when the B737 shows up) can be addressed next time? Maybe the pilots will be ready for a simpler status pay or pay grouping system like the one we voted against in 2011?

Maybe next time...

[ratherbee]

The most frustrating thing to me is the that the company can now buy back shares rewarding themselves and shareholders rather than be forced to over contribute to our pension fund as was previously agreed to.

Next is the fact that we have agreed to raise our contribution level without the chance for a reduction or holiday. Next is the RCA's....

[fish4life]

Personally being a younger guy I'd much rather prefer generous matching DC pension plans over a DB. I am not naive enough to think that the company I work for will still be around 30+ years from now and it's nice that it's your money that you have complete control over it. Also as nice as it is to have a guaranteed payout DB's make it extremely hard on an airline in particular because when the market crashes and they have the greatest payouts to the pension to make up it tends to also be part of a recession that drops demand for air travel so the airline gets hit on both fronts.

[ourkid2000]

Yeah, think Nortel pensioners.....

[Rockie]

Personally being a younger guy I'd much rather prefer generous matching DC pension plans over a DB. I am not naive enough to think that the company I work for will still be around 30+ years from now and it's nice that it's your money that you have complete control over it.

Then you're also probably not naive enough to believe in the freedom 55 myth. You also no doubt know that your retirement will depend entirely on your own investment expertise without the benefit of investment professionals, the power of large institutional investment numbers or actuarial averaging.

[fish4life]

Why would freedom 55 not work? I have no need to drive an Audi and have a 500k+ home so by putting 20k away / year + (inflation since my wage will go up) into retirement I should have no issue with that. My goal however is to enjoy my job and not feel like I need to retire by 55. That figure is assuming it's just my money going in now if I could work where I could have a generous matching I'm talking 10% of my salary as well then I'd be laughing. Also simple index investing should be enough no need for some fancy investment fund. I even tell my friends in the public sector with DB's not to rely on that since even the government is broke look at all those DB's in Detroit and now Chicago I bet they with they had a DC pension now

[Rockie]

Why would freedom 55 not work? I have no need to drive an Audi and have a 500k+ home so by putting 20k away / year + (inflation since my wage will go up) into retirement I should have no issue with that. My goal however is to enjoy my job and not feel like I need to retire by 55. That figure is assuming it's just my money going in now if I could work where I could have a generous matching I'm talking 10% of my salary as well then I'd be laughing. Also simple index investing should be enough no need for some fancy investment fund.

Laughing? Do yourself a favour and read everything you can about investing...you won't regret it.

[AirMail]

Lets not forget it's not all ACPA to blame, it's also the pilots themselves who voted in favour of these divisional contracts. What AC or WJ does has a trickle effect through the cdn industry. But alas we as pilots only care about one thing, and that's ourselves. Let's give ourselves a pat on the back.

[fish4life]

Ok well let's use American Airlines as my generous DC pension it's a 16% of your salary contributed to a 401k (RRSP) if we had that in Canada I'd be all over it. I realize that being a DB holder you need younger people to keep contributing to keep it a float but honestly again as a younger guy I have zero desire to contribute to something that won't be there when I retire... Kinda like how my taxes go to support the OAS payments

[Rockie]

I realize that being a DB holder you need younger people to keep contributing to keep it a float but honestly again as a younger guy I have zero desire to contribute to something that won't be there when I retire... Kinda like how my taxes go to support the OAS payments

Incorrect. The pension is a fund and no one's pension is funded by pilots behind them, nor will it disappear should the company go bankrupt. I don't know about OAS, but the CPP is also a very healthy fund in its own right that will also remain if the government went bankrupt. It is not part of the general government account and its benefits are not paid out through taxation.

Once again I encourage you to do a lot more reading.

[tbaylx]

I realize that being a DB holder you need younger people to keep contributing to keep it a float but honestly again as a younger guy I have zero desire to contribute to something that won't be there when I retire... Kinda like how my taxes go to support the OAS payments

Incorrect. The pension is a fund and no one's pension is funded by pilots behind them, nor will it disappear should the company go bankrupt. I don't know about OAS, but the CPP is also a very healthy fund in its own right that will also remain if the government went bankrupt. It is not part of the general government account and its benefits are not paid out through taxation.

Once again I encourage you to do a lot more reading.

OAS is paid out of general tax revenues vs the CPP which is a managed investment. As Rockie mentioned CPP is considered a well managed fund that generates excellent returns and is self sustaining. OAS is highly unlikely to disappear, however the age at which you may begin to collect may very well change, as it should as people live longer.