Air Canada 2014 Annual Report Download - page 53

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53
2014 Management’s Discussion and Analysis
Giving effect to the 2014 Regulations as outlined above, total employer pension funding contributions during
2014 amounted to $445 million.
CANADIAN DOLLARS IN MILLIONS 2014
Past service domestic registered plans $ 222
Current service domestic registered plans 127
Other pension arrangements (1) 96
TOTAL PENSION FUNDING OBLIGATIONS $ 445
1 Includes retirement compensation arrangements, supplemental plans and international plans.
Air Canada is permitted to opt out of the 2014 Regulations and have past service payments in respect of all
Air Canada pension plans, collectively, determined in accordance with normal funding rules.
Air Canada would consider opting out of the 2014 Regulations when the annual solvency deficit payments
under normal funding rules, which are determined using deficit levels over three years, would be less than
$200 million and when there would be a strong basis for confidence that the airline’s de-risking strategy
would make a future significant deficit unlikely to re-occur. At December 31, 2014, approximately 72.5% of the
pension liabilities were matched with fixed income products to mitigate a significant portion of the interest rate
(discount rate) risk.
In the event that Air Canada opts out of the 2014 Regulations, based on the normal funding rules and
subject to the finalization of the preliminary estimate of the pension solvency surplus of $780 million at
January 1, 2015, Air Canada’s past service payments to the domestic registered plans would be approximately
$90 million in 2015.
In the event that Air Canada does not opt out and continues funding its domestic registered pension plans
under the 2014 Regulations, Air Canada’s projected pension funding obligations, on a cash basis, for the years
2015 to 2019 would be as follows:
CANADIAN DOLLARS IN MILLIONS 2015 2016 2017 2018 2019
Past service domestic registered plans $ 200 $ 200 $ 200 $ 200 $ 200
Current service domestic registered plans 143 142 141 139 137
Other pension arrangements (1) 81 84 88 89 89
TOTAL PROJECTED PENSION FUNDING OBLIGATIONS $ 424 $ 426 $ 429 $ 428 $ 426
1 Includes retirement compensation arrangements, supplemental plans and international plans.