Air Canada 2006 Annual Report Download - page 97
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The net benefit obligation recorded in the statement of financial position is as follows:
2006 2005
Pension benefits $ 1,149 $ 1,433
Other employee future benefits 998 942
Net benefit obligation 2,147 2,375
Current portion (271) (221)
Pension and other benefits liability $ 1,876 $ 2,154
The current portion of Pension benefits represents past service contributions for the Domestic Registered Plans,
scheduled to be paid during 2007 while the current portion of Other employee future benefits is an estimate of
the claims to be incurred during 2007. The current portion is included in Accounts payable and accrued
liabilities.
Total cash payments for 2006, consisting of cash contributed by the Corporation to its defined benefit plans,
cash payments to beneficiaries for post-employment and post-retirement plans, and cash contributed to its
defined contribution plans were $520 (2005 – $355).
Pension and Other Employee Future Benefit Expense
The Corporation has recorded net defined benefit pension and other employee future benefits expense as
follows:
Pension Benefits Other Employee Future Benefits
2006 2005 2006 2005
Components of
Net Periodic Pension Cost
Current service cost $ 254 $ 202 $ 77 $ 85
Interest cost 640 650 48 50
Actual return on plan assets (1,515) (973) (1) (1)
Actuarial (gain) loss on benefit obligation (47) 1,362 (43) 19
Costs arising in the year (668) 1,241 81 153
Differences between costs arising in the
year and costs recognized in the year in
respect of:
Return on plan assets 774 281 - -
Actuarial loss (gain) 65 (1,362) 26 (23)
839 (1,081) 26 (23)
Net periodic benefit cost of plans 171 160 107 130
Amount charged to affiliates (33) (28) (23) (24)
Net defined benefit pension and other
employee benefits expense (a) $ 138 $ 132 $ 84 $ 106
Weighted average assumptions used to
determine the accrued benefit cost
Discount rate 5.00% 5.75% 5.00 – 5.50% 4.50 – 5.75%
Expected long-term rate of return
on plan assets 7.50% 7.50% 7.50% 7.50%
Rate of compensation increase (b) 4.00% 4.00%
(a) Includes $10 of Pension Benefits related to Jazz (2005 — $5), which is consolidated under AcG-15.
(b) A rate of compensation increase of 0% in 2005 and 2% in 2006 was used in determining the net benefit
pension expense and 4% for the remaining years.
Other Benefits — Sensitivity Analysis
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care
plans. A 9.75% annual rate of increase in the per capita cost of covered health care benefits was assumed for
2006 (2005 – 10%). The rate is assumed to decrease gradually to 5% by 2013. A one percentage point
97
Combined Consolidated Financial Statements 2006