Air Canada 2012 Annual Report Download - page 116
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2012 Air Canada Annual Report
116
The significant weighted average assumptions used to determine the Corporation’s accrued benefit obligations and cost are as
follows:
Pension Benefits Other Employee Future Benefits
2012 2011 2012 2011
Discount rate used to determine:
Accrued benefit cost for the year ended December 31 5.20% 5.50% 4.90% 5.35%
Accrued benefit liability as at December 31 4.30% 5.20% 4.17% 4.90%
Expected long-term rate of return on plan assets used
to determine:
Accrued benefit cost for the year ended December 31 6.60% 6.90% not applicable not applicable
Rate of future increases in compensation used to
determine:
Accrued benefit cost for the year ended December 31 2.50% 2.50% not applicable not applicable
Accrued benefit obligation as at December 31 2.50% 2.50% not applicable not applicable
Sensitivity Analysis
Sensitivity analysis on 2012 pension expense and net financing expense relating to pension benefit liabilities, based on
different actuarial assumptions with respect to discount rate and expected return on plan assets, is as follows:
0.25 Percentage Point
Decrease Increase
Discount rate on obligation assumption
Pension expense $ 15 $ (15)
Net financing expense relating to pension benefit liabilities (11) 9
$4 $ (6)
Long-term rate of return on plan assets assumption
Net financing expense relating to pension benefit liabilities $29 $ (29)
Increase (decrease) in pension obligation $ 560 $ (563)
As further described in Note 2EE, with the amendments to IAS 19 Employee Benefits which will be adopted by the
Corporation on January 1, 2013, this sensitivity analysis is not indicative of the impact to 2013 pension expense or pension
obligation under the revised accounting standard.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 6.75%
annual rate of increase in the per capita cost of covered health care benefits was assumed for 2012 (2011 – 7.50%). The rate
is assumed to decrease gradually to 5% by 2015. A one percentage point increase in assumed health care trend rates would
have increased the total of current service and interest costs by $5 and the obligation by $56. A one percentage point
decrease in assumed health care trend rates would have decreased the total of current service and interest costs by $5 and the
obligation by $54.