Air Canada 2006 Annual Report Download - page 96

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Benefit Obligation and Plan Assets
The following tables present financial information related to the change in the pension and other post-
employment benefits plans:
Pension Benefits Other Employee Future Benefits
2006 2005 2006 2005
Change in benefit obligation
Benefit obligation at beginning of year $ 12,921 $ 11,207 $ 940 $ 842
Current service cost 254 202 77 85
Interest cost 640 650 48 50
Employees’ contributions 89 80 - -
Benefits paid (627) (592) (60) (63)
Actuarial (gain) loss (74) 1,419 (38) 31
Foreign exchange 32 (45) (1) (5)
13,235 12,921 966 940
Change in plan assets
Fair value of plan assets at
beginning of year
10,421
9,673
14
10
Actual return on plan assets 1,493 1,016 1 1
Employer contributions 455 284 47 54
Employees’ contributions 89 80 - -
Benefits paid (627) (592) (54) (51)
Foreign exchange 27 (40) - -
11,858 10,421 8 14
Deficit at end of year 1,377 2,500 958 926
Employer contributions after
measurement date
(7) (6)
(6) (5)
Unrecognized past service cost - - - -
Unrecognized net actuarial gain (loss) (221) (1,061) 46 21
Net benefit obligation $ 1,149 $ 1,433 $ 998 $ 942
Weighted average assumptions used to
determine the accrued benefit liability
Discount rate 5.00% 5.00% 5.00 – 5.50% 4.50 – 5.75%
Rate of compensation increase (a) 2.50% 4.00%
(a) As a result of pay awards during 2006, a rate of compensation increase of 1.75% was used for years 2006
to 2008 in determining the net benefit obligation for the pension plan and 2.5% for the remaining years.
The pension benefit deficit at the end of the year by plan is as follows:
2006 2005
Domestic registered plans (a) $ 556 $ 1,657
US, UK and Japan 55 76
Supplementary plans 766 767
$ 1,377 $ 2,500
(a) Includes $19 (2005 — $17) related to Jazz, which is consolidated under AcG-15.
The deficit, on an accounting basis, at December 31, 2006 for pension benefits was $1,377 compared to $2,500
at December 31, 2005. The decrease in the accounting deficit is mainly the result of a return on plan assets of
approximately 13.8% for the year and funding of past service employer contributions of $261. The decrease in
the net plan deficit during the year is expected to result in decreased employer contributions for 2007 as
described below under Pension Plan Cash Funding Obligations.
96