Air Canada 2011 Annual Report Download - page 102

2011 Air Canada Annual Report
102
10. PENSIONS AND OTHER BENEFIT LIABILITIES
The Corporation maintains several defined benefit and defined contribution plans providing pension, other post-retirement
and post-employment benefits to its employees, and former employees for whom the related pension assets and liabilities
have not yet been settled.
The Corporation is the administrator and sponsoring employer of ten Domestic Registered Plans ("Domestic Registered Plans")
under the Pension Benefits Standard Act, 1985 (Canada). The US plan, UK plan and Japan plan are international plans covering
employees in those countries. In addition, the Corporation maintains a number of supplementary pension plans which are not
registered. The defined benefit pension plans provide benefits upon retirement, termination or death based on the member's
years of service and final average earnings for a specified period.
The other employee benefits consist of health, life and disability. These benefits consist of both post-employment and post-
retirement benefits. The post-employment benefits relate to disability benefits available to eligible active employees, while
the post-retirement benefits are comprised of health care and life insurance benefits available to eligible retired employees.
Cost Recovery for Assigned Employees
Certain Corporation employees performed work for Aveos until July 14, 2011, the date of transition to employment at Aveos
and then ceased to accrued benefits under the Corporation-sponsored defined benefit pension plans and under the
Corporation-sponsored health, life and disability benefit plans. Other Corporation employees performed work for Aeroplan
until June 1, 2009, the date of transition to employment at Aeroplan and then ceased to accrue benefits under the
Corporation-sponsored defined benefit pension plans and under the Corporation-sponsored health, life and disability benefit
plans.
In 2009, approximately 750 Air Canada employees chose to transition to employment at Aeroplan. For those employees who
transferred to Aeroplan, their service, which largely determines benefit levels under the Air Canada pension and other
employee benefit plans, ceased to accrue as of the date of employment with Aeroplan. Air Canada and Aeroplan continue to
discuss the terms surrounding the transfer of pension benefits and certain implications relating to the same remain to be
resolved. Air Canada continues to retain plan assets and report plan liabilities for services accrued for the transferred Aeroplan
employees as at December 31, 2011, pending final determination of this matter. Post transition, Aeroplan is contributing
current service costs in their pension plan for service accruing with Aeroplan.
These consolidated financial statements include all of the assets and liabilities of all Corporation-sponsored plans. The
employee benefit expense in these consolidated financial statements includes the expenses for all employees and past
employees participating in the plans less a cost recovery which is charged to Aveos and Aeroplan for those employees
contractually assigned. The cost recovery includes current service costs for pensions and a portion of post-employment and
post-retirement benefits based on actuarial calculation for their specific employee group. This cost recovery amounted to $21
for the year ended December 31, 2011 (2010 – $27).
Pension and Benefits Agreement with Aveos
Air Canada and Aveos are parties to a Pension and Benefits Agreement covering the future transfer of certain pension and
benefit assets and obligations to Aveos. In 2010, the Office of the Superintendent of Financial Institutions (“OSFI”) provided
its approval for the transfer of pension assets and liabilities from the Air Canada pension plans to the Aveos pension plan for
certain non-unionized employees of Air Canada who became employees of Aveos effective October 16, 2007. The amount of
the asset transfer was established as a pro-rata share, based on solvency liabilities, of assets in the Air Canada pension plans as
at October 16, 2007. The resulting amount was adjusted by investment returns and benefit payments until the actual date
funds were transferred. The transaction, completed in 2010, included an asset transfer of $43, as well as a reduction of $43 to
the benefit obligation, in addition to transferring cash payments previously made under the Pension and Benefits Agreement
of $2.
As described in Note 20, the transfer of pension assets and liabilities from the Air Canada pension plans to the Aveos pension
plan for certain unionized employees of Air Canada who became employees of Aveos effective July 14, 2011 has yet to occur
and is subject to approval by OSFI.