Air Canada 2013 Annual Report Download - page 113

2013 Consolidated Financial Statements and Notes
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9. 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 to 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")
with defined benefit commitments registered under the Pension Benefits Standard Act, 1985 (Canada). The US plan, UK plan
and Japan plan are international plans covering members 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. Under the terms
of the domestic registered and supplementary plans, there is no indexation provided after January 1, 2007. Benefit payments
are from trustee-administered funds, however there are also a number of unfunded plans where the Corporation meets the
benefit payment obligation as it falls due. Plan assets held in trusts are governed by regulations. The governance of the plans,
overseeing all aspects of the plans including investment decisions and contributions, lies primarily with the Corporation. The
Pension Committee, a committee of the Board of Directors, assists in the monitoring and oversight of the plans to ensure
pension liabilities are appropriately funded, pension assets are prudently invested, risk is managed at an acceptable level and
retirement benefits are administered in a proper and effective manner.
The other employee benefits include 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.
Amendments to the Defined Benefit Pension Plans
In December 2013, amendments to the defined benefit pension plans, determined in accordance with new collective
agreements during 2011 and 2012 and changes applicable to non-unionized employees as communicated to them in 2013,
were approved by OSFI and became effective January 1, 2014. As a result of this approval, the Corporation has recorded a
credit of $82 in Benefit plan amendments in 2013 related to the impact of those amendments on pension liabilities. By virtue
of its size and incidence, this item is separately disclosed within the consolidated statement of operations.
In 2012, as a result of changes to retirement age in the collective agreement between Air Canada and the Air Canada Pilots
Association, which were not subject to regulatory approval, the Corporation recorded a credit of $127 in Benefit plan
amendments.
Pension Plan Cash Funding Obligations
As at January 1, 2013, the aggregate solvency deficit in the domestic registered pension plans was $3,700. The next required
valuations to be made as at January 1, 2014, will be completed in the first half of 2014, but as described below, they will not
increase the 2014 pension past service cost funding obligations. Based on preliminary estimates, in aggregate, the domestic
registered pension plans are estimated to be in a small surplus position on a solvency basis as at January 1, 2014.
Pension funding obligations are generally dependent on a number of factors, including the assumptions used in the most
recently filed actuarial valuation reports for current service (including the applicable discount rate used or assumed in the
actuarial valuation), the plan demographics at the valuation date, the existing plan provisions, existing pension legislation and
changes in economic conditions (mainly the return on fund assets and changes in interest rates). Actual contributions that are
determined on the basis of future valuation reports filed annually may vary significantly from projections. In addition to
changes in plan demographics and experience, actuarial assumptions and methods may be changed from one valuation to the
next, including due to changes in plan experience, financial markets, future expectations, changes in legislation and other
factors.
In July 2009, the Government of Canada adopted the Air Canada 2009 Pension Regulations. The Air Canada 2009 Pension
Regulations relieved Air Canada from making any past service contributions (i.e. special payments to amortize the plan deficits)
to its domestic defined benefit registered pension plans in respect of the period beginning April 1, 2009 and ending
December 31, 2010. Thereafter, in respect of the period from January 1, 2011 to December 31, 2013, the aggregate annual
past service contribution was the lesser of (i) $150, $175, and $225 in respect of 2011, 2012, and 2013, respectively, on an
accrued basis, and (ii) the maximum past service contribution permitted under the Canadian Income Tax Act. Current service
contributions continued to be made in the normal course while the Air Canada 2009 Pension Regulations were in effect.