To all Pionairs members –
Many of our members have inquired about Air Canada’s plan to offer an Early Retirement Incentive Plan (ERIP) to the unionized groups. The proposal put forward by Air Canada was a way to make early retirement an immediate possibility for its senior people and give an opportunity for the laid off junior employees to return prior to the expected upturn in the flight schedule late summer / early fall.
Your Pionairs Pension Committee has been included in discussions with Air Canada and submitted a number of questions to Air Canada about the program and its impact on the surplus.
In summary, please be assured that:
- The ERIP will not affect your existing pension
- The impact on the pension plan surplus is expected to be no more than a 2% reduction
- In any event, Air Canada will ensure the surplus remains above 105%
- Pension Plan rules and pension legislation do allow Air Canada to use these funds
- All members’ pensions are determined by the pension plan rules which are in effect as at the date of retirement. Their pensions remain unaltered by any future rule changes that either increase or decrease the pension benefit available to active members.
Please see additional information below.
Air Canada launches Early Retirement Incentive Program (ERIP)
for CUPE, Unifor, IAMAW and CALDA
At the end of March, Air Canada asked to meet with the Pionairs Pension Committee to share their plans for an early retirement incentive plan for IAMAW, CUPE, Unifor and CALDA. They met separately with the unions to share the same information.
The unions accepted the terms of the package and Air Canada said they would fund these programs from the current Pension Plans aggregate surplus which, as of January 1, 2021 stood at $3.0 billion and a solvency ratio of 114%. The Air Canada pension rules and pension legislation do allow Air Canada to use the pension plan surplus to fund these programs.
The Pionairs Pension Committee submitted a number of questions to Air Canada about the program and its impact on the surplus.
Air Canada assured Pionairs they will limit the number of accepted applications, if necessary, to ensure that they can maintain the contribution holiday in the pension plans now and in the future. In other words, they will ensure that the surplus remains above 105%.
Air Canada will only know the exact impact on the solvency ratio on each individual plan once AC knows who elects to leave under the program and once their actuary (Mercer) adjusts the actuarial valuation results to reflect the impact. The solvency ratio as at Jan 1, 2020 for each of the unions was IAMAW 117%, CUPE-110%, Unifor-111% and CALDA-107%.
Based on assumed take-up rates it is estimated that the program will reduce the solvency ratio of each pension by a maximum of 2%. Eligible employees have until May 14, 2021 to apply.
We will continue to monitor this program as it unfolds and keep you informed.
Pionairs Pension Committee
Pionairs helping Pionairs.