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( For retirees of the new Air Canada family)
Number 629 , Tuesday, October 23, 2001,
We first Published in October 1995.
Chief Pilot - Vesta Stevenson - Co-pilot - Terry Baker
To get in touch with either editor/pilot our email address is
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A brief NetLetter just to keep up the continuity.
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From: <
Subject: Pension notes
Date: Wed, 17 Oct 2001 14:17:40 -0700
Is my AC Pension safe ??
1. The Air Canada Pension Plan ( Canada) is registered with the Office
of the Superintendent of Financial Institutions in Ottawa and the Canada
Customs & Revenue Agency It is supervised by federal law (that is right
across Canada). It is completely separate from Company operations/finances
and cannot be touched by the Company for any reasons. In the unlikely event
that the Company ceased to exist, the Plan would still operate, as it does
today, for retirees. All monies (contributions from employees and AC) are
invested by an AC Pension Plan Master Trust through various financial
advisors. As Sponsor of the various plans ( 5 for AC 7 for CAIL) the
Company is responsible to make up any shortfall between contributions and
benefits. This would have to be addressed during any radical restructuring
of the Company.
2. The AC Master Pension Plan Trust invests the money in equities
(60+%), bonds (35+%) and real estate (1.5+%) It is in everyone's interest
that the financial performance of the Trust performs well. In the past
several years it has shown very good growth, which is needed to sustain our
benefits. Since the Fall of 2000 that growth has slowed considerably,
especially in the light of the current stock market. Little if any growth
is expected for 2001. As markets tend to be cyclical it is hoped growth
should resume in the future. Until it does however, any thought of
increased benefits are unlikely. Much will also depend on how fast the
current AC financial problems are resolved.
3. I cannot address anything in relation to the CAIL plans as I am
simply not familiar with them. But they are somewhat similar. And I'm still
learning much about our own plans.
4. Valuations of the Plan must take place every 3 years and are often
done more frequently by our sponsor, AC.
Valuation relates to the liabilities of the plan.....that is the ability of
the plan to meet it's obligations for Pensions. It DOES NOT EQUATE TO
GROWTH of the money in the Trust Fund. In other words you might have growth
but no surplus funds......growth is essential to meet normal obligations.
Even a surplus might not allow extra money for improvements without extra
contributions from both AC and the active employees. Our sponsor tends to
take a conservative approach to the Plan and in light of difficulties other
large plans are currently experiencing (Ontario Teachers, Ont. Municipal
Employees, etc.) this has served us well. However the Pionairs have
improvements in mind for the future and in conjunction with the unions will
put them forward at the appropriate time.
5. Ad Hoc increases.....we would all like to see more than the current
50% of CPI. However over a 17 year period this has resulted in an increase
of over 30%. In the past nine years the increase has been 19 %. We tend to
forget the value of 'compounding' each years increase (small as it might
seem). The cumulative effect is good when compared to many other companies.
Of 298 companies surveyed (with plans comparable to ours) on 33 offered
increases of 50 % or more. The remaining 265 offered either no indexation
or something less than 50%. FYI the ad-hoc increase this year cost
approximately $12 million. Based on Canadian market practice, our
indexation policy seems to be competitive and appropriate.......more would
be better of course, and that's a future challenge.
6. Surplus : Evaluation of the Pension Fund must be done every 3
years. Our Pension Trust is frequently done every year (for example the
current evaluation is for the year ending Dec. 31, 2000, the results of
which will be presented next week to our Committee). Any surplus that might
accrue in the Pension Trust Fund as a result of an evaluation of
liabilities versus assets, done by arms-length professionals for the
Sponsor ( AC), can only be used for legitimate Pension purposes....for
example, an enhancement of the benefits or keeping the plan viable in light
of bad market conditions (which is what's happening currently), that sort
of thing. The Sponsor cannot access funds directly, even for investment
purposes. All access to the Fund is through an appointed Custodian, in our
case CIBC MELLON TRUST. They must be in agreement on the purpose of
withdrawing the funds. Since they are governed by Federal law with respect
to Pensions they would only agree to legitimate use of funds, e.g.
investments ( all of which are specified by Federal law ), payments for
retiree benefits, refunds to employees leaving AC who do not qualify for
pensions, etc.
7. The Sponsor ( AC) cannot access the funds for its own use.
Therefore any talk about misuse of Pension Trust Fund money including any
surplus is simply fear-mongering, outright misleading info and not correct.
Under Federal Pension law a significant surplus might allow the Sponsor
AC ) to take a 'contribution holiday', that is not contribute for the
current year. Conversely if the Fund is in a deficit (as a result of market
conditions, etc.) the Sponsor ( AC ) must make up that deficiency as part
of the guarantee of benefits to retirees. The Sponsor is responsible to
ensure the Fund is viable hence the need to investment contributions
somewhat aggressively but prudently.
8. In summary : is our plan competitive ? Not bad indeed. Could it be
improved upon ? Anything can !
Is our Plan SAFE ? The short answer is YES.
Bill Rowe
Pionairs Pension & Benefits Representative
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Hi.. I have been a subscriber for some time now but just had a change of
address that brought up a 'welcoming' message which invited a short
auto-bio; so here goes
(Hope it's not too long)
Joined MCA in the early 50's. Worked on the construction phase of the
Pinetree Radar line; based mostly in Goose Bay. Worked on the Dewline
construction phase; based mostly in Mont Joli & Churchill. Moved to
overseas ops out of Gander, Montreal & Toronto. Ops included Hungarian
airlift out of Vienna to Canada. Was on the 1st familiarization flight
on the N.Atlantic on a DC4 from Gander to Shannon. Took 9:40 hrs at f/l
110 - 130 at 175 knots TAS. Transferred to Nordair in 1958 and worked on
all ops, including the African 'Hadj'; based at various times in
Montreal, Abidjan, Jeddah, Dakar, & Rabat. Over years flew on N.
Atlantic & domestic on 1049H Connies, DC6, DC7C, DC8-61. Retired
mid-1986 at time of take-over of Nordair by CP Air. Now residing in
Surrey, BC. My career was always in Flt Ops.
Gord Girvan
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Terry's travel tips.
Hi Interliner,
We are excited to bring you this incredible Interline special on Royal
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FROM ONLY $999 INCLUDING PORT CHARGES OF $388!
THAT'S ONLY $45 PER DAY!!!
-----------------------------------------------------------------
Rates are quoted in U.S. dollars per person (based on
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are additional. Offers apply to new bookings only, are capacity
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For more information on these and other specials, contact us at:
DARGAL Interline 1-800-690-3223 (North America)
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Fax: (250) 861-3283
E-mail:
Or visit NEW our Web Site at: www.dargal.com
(don't forget to check out our *Hot Deals* section!)
PLEASE QUOTE EM# 101701
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Smilies.
Last night while I lay sleeping, I died, or so it seems.
Then I went up to Heaven, but t'was only in my dreams.
But, it seems St. Peter met me, there at the Pearly Gate.
He said "I must check your record. So stand right there and wait".
He returned and said "Your record is clouded up with flaws.
But on earth I see you laboured, for a very worthy cause.
You fought snow and ice in the winter, and sweated in the summer heat.
You couldn't afford a big meal, when you stopped for a bite to eat.
I see where you drank whisky and used tobacco too.
Fact is you've done lots of things, which a good man shouldn't do.
We can't have men like you up here, your life was full of sin."
The he read the last of my record, grasped my hand and said.
"Come on in."
He took me up to the Big Boss, said "Take him in and treat him well.
He worked for Air Canada, Sir. He's had his share of hell."
. DID YOU KNOW?
That you can read or retrieve back issues of "theNetLetter" ?
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http://www.acfamily.org/netletter
and click on the "Archives" button.
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Vesta
