Pension

[tsgarp]

Hi,
I was wondering about the details of Air Canada's new hire pension plan. What is the formula to determine your pension? How many years in until you are vested?

[groundpilot]

Hi,
I was wondering about the details of Air Canada's new hire pension plan. What is the formula to determine your pension? How many years in until you are vested?

It is based on career average earnings so varies quite a bit from pilot to pilot.

Having said that I have plotted a conservative career and figure at age 60 it will be around a $100,000 annuity with just over 20 years. Of course does not take into account inflation...

[neophyte]

Are new hires on a Target Benefit style pension? DC Pension? DB pension?

I heard recently that everyone is back on the DB. Any truth to this?

[yycflyguy]

Are new hires on a Target Benefit style pension? DC Pension? DB pension?

I heard recently that everyone is back on the DB. Any truth to this?

Negative. However, it is a future, realistic negotiation goal.

[Hangry]

Are new hires on a Target Benefit style pension? DC Pension? DB pension?

I heard recently that everyone is back on the DB. Any truth to this?

Negative. However, it is a future, realistic negotiation goal.

That is just not true. The DB is dead. Cemented in with the 10 year deal.

[Celtic1]

Hi,
I was wondering about the details of Air Canada's new hire pension plan. What is the formula to determine your pension? How many years in until you are vested?

It is based on career average earnings so varies quite a bit from pilot to pilot.

Having said that I have plotted a conservative career and figure at age 60 it will be around a $100,000 annuity with just over 20 years. Of course does not take into account inflation...

Is this 100k estimate on the old plan or the new one? I would have thought it would be quite a bit lower on the new plan based on 20 years service.

Thanks

[DropTanks]

.

[rudder]

While I agree you can beat the annual RCT limits under the terms of the new plan, I would take a closer look at the entitlement formula.

Yes, early earnings as a CA will dramatically enhance the benefit. Similarly, 4 years of status pay then NB FO pay for years thereafter creates significantly lower annual earned benefits towards the final pension benefit total. This plan does not function like a typical DB Plan - there will be no unfunded liabilities created by a back end earnings calculation.

The pension lottery will be much like the upgrade lottery. It is all about timing and age.

[yycflyguy]

Are new hires on a Target Benefit style pension? DC Pension? DB pension?

I heard recently that everyone is back on the DB. Any truth to this?

Negative. However, it is a future, realistic negotiation goal.

That is just not true. The DB is dead. Cemented in with the 10 year deal.

What evidence do you have to the contrary that it is not a negotiation goal?

Fact;
1. Everyone on DB is presently cheaper for the company as they enjoy a funding holiday
2. Pilots are contributing an additional 1.5% to an overfunded DB plan
3. Pilot unity starts with same pension plans

Call or email your representatives and ask if this is a negotiation goal.

[Mr. North]

Not everyone wants to be put on the DB. I personally prefer the security and independence of CWIP. It keeps the company from using the pension as a bargaining chip. And for many of the young pilots joining I'd argue they will make more with CWIP.

[Thomasthetank]

Negative. However, it is a future, realistic negotiation goal.

If you knew the history of Air Canada and its DB plans...

If you knew how the Company has to account for DB plan costs on its balance sheet. (Despite someone telling you it's "free" for the Company right now)...

If you knew the attitude towards DB plans of the two senior executives in the Company that hold the hammer on this...

You wouldn't be using the word "realistic".

If you believe your ACPA elected rep when they tell you the Company will reopen the DB plan, you might as well ask them to lower your income tax!

IMHO

[groundpilot]

New plan. It’s been said that the new plan can yield even more $$$ in retirement than the DB plan if you have the right career progression. I’d say people now that join young and upgrade quickly will make out like bandits in retirement from the TB plan.

The DB plan is deader than disco and will never see the light of day. Any company would give its left nut to get rid of a DB plan and they did it. They will not ever let it come back. Imho.

It may YIELD more but you are PUTTING MORE IN

You pay less into a DB and get MORE

But yes, the DB is DEAD

[fish4life]

Also in the airline industry I don’t think I’d even want a DB plan

[dumbbell daddy]

With the new AC pension "scheme", are you allowed to take out the commuted value when you retire instead of the payments? A typical DB plan would allow you to:

Transfer a large chunk to a LIRA.
Throw the remainder into your existing RRSP (if you had the room).
Take the rest in cash.

Thanks

[Thomasthetank]

With the new AC pension "scheme", are you allowed to take out the commuted value when you retire instead of the payments? A typical DB plan would allow you to:

Transfer a large chunk to a LIRA.
Throw the remainder into your existing RRSP (if you had the room).
Take the rest in cash.

Thanks

No expert on this, but we have a QRH that summarizes the two plans. Lump sum commuted values are available in both plans.

It says for DB members you can take a lump sum before age 50 if you have 25 years of service.

In CWIPP, you have a little more flexibilty. You can take a lump sum before age 50 if you have 20 YOS, or before age 55 if you have less than 20 YOS.

I think in both cases it has to go into a LIRA, not sure how much spills out and gets taxed. Don't know of anybody ever doing it in the DB plan, and of course, CWIPP is brand new so who knows if anybody ever will.

[dumbbell daddy]

Thanks for the response.
Cheers

[Thomasthetank]

Duplicate post

[tsgarp]

Sorry, really dumb question.

Under the DC plan, does the company choose how your pension fund is invested, or do you select an investment advisor? Also, if I'm understanding this correctly, you contribute 6% of your wages up to 140K, the company matches it and when you retire that money is yours?

[FL-280]

The 140k Cap was removed with CWIP

[Thomasthetank]

Sorry, really dumb question.

Under the DC plan, does the company choose how your pension fund is invested, or do you select an investment advisor? Also, if I'm understanding this correctly, you contribute 6% of your wages up to 140K, the company matches it and when you retire that money is yours?

You don't choose investments, it's more like a DB plan that way, you just show up for work. It's all explained on their website:

https://cwipp.ca/benefits

[altiplano]

Sorry, really dumb question.

Under the DC plan, does the company choose how your pension fund is invested, or do you select an investment advisor? Also, if I'm understanding this correctly, you contribute 6% of your wages up to 140K, the company matches it and when you retire that money is yours?

That's basically what we got in the 2012 government forced contract. In 2017, as mentioned, we achieved CWIPP.

It's a target benefit plan with a guaranteed payout for life. Payout is based on years in the plan and total career earnings. If you have a high earning career, ie. early upgrade it is likely to pay more than a DB plan. If you ride as an RP your whole career, you will have a lower payout.

You have nothing to manage or choose. Just make your contributions - 7.5% and without CRA cap on how much you can tax shelter.

Earliest unreduced pension at 20 years service and 60 years old.

If you leave the company, the money is still yours, you can take a deferred pension, or buyout.

[fish4life]

Sorry, really dumb question.

Under the DC plan, does the company choose how your pension fund is invested, or do you select an investment advisor? Also, if I'm understanding this correctly, you contribute 6% of your wages up to 140K, the company matches it and when you retire that money is yours?

That's basically what we got in the 2012 government forced contract. In 2017, as mentioned, we achieved CWIPP.

It's a target benefit plan with a guaranteed payout for life. Payout is based on years in the plan and total career earnings. If you have a high earning career, ie. early upgrade it is likely to pay more than a DB plan. If you ride as an RP your whole career, you will have a lower payout.

You have nothing to manage or choose. Just make your contributions - 7.5% and without CRA cap on how much you can tax shelter.

Earliest unreduced pension at 20 years service and 60 years old.

If you leave the company, the money is still yours, you can take a deferred pension, or buyout.

You might want to double check but I’m fairly certain it’s not a guaranteed payout for life by any means, you are given a targeted payout but if the market crashes hard your payout is reduced.

[altiplano]

Sorry, really dumb question.

Under the DC plan, does the company choose how your pension fund is invested, or do you select an investment advisor? Also, if I'm understanding this correctly, you contribute 6% of your wages up to 140K, the company matches it and when you retire that money is yours?

That's basically what we got in the 2012 government forced contract. In 2017, as mentioned, we achieved CWIPP.

It's a target benefit plan with a guaranteed payout for life. Payout is based on years in the plan and total career earnings. If you have a high earning career, ie. early upgrade it is likely to pay more than a DB plan. If you ride as an RP your whole career, you will have a lower payout.

You have nothing to manage or choose. Just make your contributions - 7.5% and without CRA cap on how much you can tax shelter.

Earliest unreduced pension at 20 years service and 60 years old.

If you leave the company, the money is still yours, you can take a deferred pension, or buyout.

You might want to double check but I’m fairly certain it’s not a guaranteed payout for life by any means, you are given a targeted payout but if the market crashes hard your payout is reduced.

I perhaps worded it ambiguously.

Guaranteed payout for life in that a payment is coming every month for the rest of your life. You will never run out of money. The payment is within a target range based on fund performance.

The payments to date on the fund have never gone down, but they have gone up. Markets crash, it may go down at some point, but still it will pay within the target range, ie. not go down by much, particularly relative the incident that may have hit the markets.

[wingmonkey]

I hate to be that guy to necro a dead post, but about the DC/TB new pension plan...
In February this year, ACPA had a press release that individuals could have a "buy-in" to transfer registered funds from a list to "purchase prior years of eligible pilot service and pension".
Has anyone done this or can anyone explain what it means or how it works?
Would someone who does this still need to complete 20 years and hit 60 to take an unreduced benefit? What's the actual use or benefit to using this proposed buy-in scheme?
Thanks in advance!

[a220hereicome]

I hate to be that guy to necro a dead post, but about the DC/TB new pension plan...
In February this year, ACPA had a press release that individuals could have a "buy-in" to transfer registered funds from a list to "purchase prior years of eligible pilot service and pension".
Has anyone done this or can anyone explain what it means or how it works?
Would someone who does this still need to complete 20 years and hit 60 to take an unreduced benefit? What's the actual use or benefit to using this proposed buy-in scheme?
Thanks in advance!

There's a set of FAQ put out by the plan on how it works. Lots of eligible groups, but some hoops to jump through to get approval.

Best to check with a committee rep if you have questions. But here goes...

My limited understanding is that some pilots who were hired in their early 40s might be interested in buying back a few years to be able to get the 60/20 criteria that lets you retire without a penalty. You get a quote online, basically take it or leave it with no obligation.

Someone hired really young doesn't really need to buy in, they're going to hit the 60/20 anyway.

And just because you had 5 years at SkyRegional doesn't mean you'll be able to buy in 5 years. The plan at Sky was a 2% match (I think), so unless you invested in Tesla for those 5 years you're probably going to come up short of the amount required for 5 years. CWIPP will give you partial service and credit though based on the transfer balance.