Air Canada 2013 Annual Report Download - page 114

2013 Air Canada Annual Report
114
In December 2013, further to an agreement reached with Air Canada in March 2013, the Government of Canada formally
approved the Air Canada Pension Plan Funding Regulations, 2014 (“the “2014 Regulations”) under the Pension Benefits
Standards Act, 1985 in respect of special payments under Air Canada's defined benefit plans applicable to the period between
2014 to 2020 inclusive, expiring December 31, 2020. According to the terms of the 2014 Regulations, Air Canada will be
required to make payments of at least $150 annually with an average of $200 per year, to contribute an aggregate minimum
of $1,400 over seven years in solvency deficit payments, in addition to its pension current service payments. Air Canada may
elect to opt out of the regulations and have special payments in respect of all Air Canada pension plans, collectively,
determined in accordance with normal funding rules.
Under the agreement with the Government of Canada, in respect of the plan years during which Air Canada funds its plan
pursuant to the 2014 Regulations, Air Canada is subject to a series of covenants and undertakings, including a prohibition on
dividends and share repurchases, as well as certain limitations on executive compensation arrangements. As requested by the
Government of Canada, Air Canada has also agreed to use reasonable efforts, during the negotiations of the next collective
agreements with Air Canada’s Canadian-based unions, to seek to include in those collective agreements provisions which
would have employees contribute fifty per cent of their pension plan normal costs, and has agreed not to implement pension
plan benefit improvements without regulatory approval.
Giving effect to the Air Canada 2009 Pension Regulations as outlined above, total employer pension funding contributions
during 2013 amounted to $475. After taking into account the effect of the 2014 Regulations, total employer contributions to
defined benefit pension plans for 2014 are expected to be $439.
Pension and Benefits Agreement with Aveos
Air Canada and Aveos were parties to a Pension and Benefits Agreement covering the transfer of certain pension and benefit
assets and obligations to Aveos. On July 14, 2011 (the “Certification Date”), certain unionized employees of Air Canada
elected to become employees of Aveos.
Following Aveos filing for court protection pursuant to the Companies’ Creditors Arrangements Act (“CCAA”) in March 2012,
OSFI ordered the termination of Aveos’ defined benefit pension plans and, as a result, the assets and liabilities accruing prior
to the Certification Date in respect of transferred employees were not transferred to Aveos’ plans and remain under
Air Canada’s pension plans. Settlement of obligations under the other post-retirement and post-employment benefits plans
pertaining to the transferred unionized employees were concluded in October 2013 with payment in trust to Aveos by
Air Canada in the amount of $6, for distribution to Aveos eligible recipients. The letter of credit of $20 previously issued in
favour of Aveos was returned to Air Canada.
Benefit Obligation and Plan Assets
These consolidated financial statements include all of the assets and liabilities of all Corporation-sponsored plans. The net
benefit obligation is recorded in the statement of financial position as follows:
2013 2012
Accrued benefit liabilities for
Pension benefits obligation $ 1,578 $ 3,528
Other employee future benefits 1,183 1,230
Net benefit obligation 2,761 4,758
Current portion (74) (72)
Pension and other benefit liabilities $ 2,687 $ 4,686