New hire experiences

[FL030]

Is ALPA Canada planning to engage with the government over these sweeping changes to labour law — including the right to strike? This seems like exactly the kind of thing we pay union dues for them to advocate for us. Maybe they have already and are working on communicating that to us?

[Protonpilot]

I have flown with him and now I am even more excited to fly together more as I can agree with most of what he said.

One thing though I hope pilots will realize: CWIPP is a scam and we should eb able to opt out and do normal RRSP, cash clear the difference as salary for those salaries above the 18% RRSP threshold. Total money for each person will be more, I did the math and I know my shit. But most people here dont seem to get that. Only the pension from before 2014 was actually worth something. Remember CWIPP is a company making tons of money on YOUR money, you could keep it. Having to wait till 60 at min (or deferral if you wanna go early) is a huge scam.

And lets be honest, who wants to be a button pusher at air canuck till 60 if you could go at 50 by drawing 4% of your rrsp, sounds pretty aweful.

I'm not sure I understand your math here.

If you're above the RRSP limit, with a 18% CWIPP contribution that means your salary is above $187K, which is most of the pilots at Air Canada. That's almost the top tax bracket in Ontario (there are two higher ones for income exceeding $220K and $258K). So anything above that limit is taxed at about 50%. So you're saying you can do better with those excess funds even if you start out with half compared to the professional investors who manage the CWIPP pension fund? And they grow your money tax free, whereas you'll be subject to tax anytime you sell a security that has increased in value? So their net growth rate on similar investments will exceed yours.

What are you going to be investing in, and what rate of return are you expecting to achieve to do better than the investment managers at CWIPP, given the above?

And when you say, "Remember CWIPP is a company making tons of money on YOUR money". Where does that come from? CWIPP is a regulated pension plan built for unions, run by unions. All of the money, by law, belongs to the members which is why benefit increases are granted when any significant surplus accumulates. Expenses are paid to the various entities that manage the plan (legal, investment, etc...) but these are in line with other plans as far as I know.

[CodJockey]

Interesting how quickly the conversation becomes “trust the experts” anytime someone questions handing over massive chunks of their pay every month.

[altiplano]

The more I see what CWIPPis about and has done, the more I like it.

It allows you to tax shelter above the RRSP limit, there isn't a cap on that. Members returns are proportional to their contributions rather than a pooled benefit of the DB where the low contributors can just get their best 5 at the end of their careers and contribute less than me but get more than me. Transparent all the benefits to the plan members...

You want to talk about a company running a pension for profit? That's Air Canada's subsidiary "Trans Canada Capital" which manages the DB funds with a view of not benefit for the members, but profit to the airline and eventual plan wind up resulting in Air Canada keeping the left overs. That means suppressing benefits, not improving.

Then of course you have "Air Canada Life Insurance Company" which is a company created by Air Canada to pay itself to reinsure billions in pension liabilities. It's all a shell game that is bilking Air Canada DB plan members of their money, covering up actual plan liabilities, and protecting Air Canada from having to make contributions to the plan. How could they be putting NOTHING in? Recall these plans were in deficit barely 10 years ago, now magically it's multi billions in surplus while AC sucks out from it.

These enterprises are more profitable than the airline. Maybe this is the reason for the bloated AC work force, gives them more suckers to pay into their ponzi scheme pension plan.

[PointNine]

I have flown with him and now I am even more excited to fly together more as I can agree with most of what he said.

One thing though I hope pilots will realize: CWIPP is a scam and we should eb able to opt out and do normal RRSP, cash clear the difference as salary for those salaries above the 18% RRSP threshold. Total money for each person will be more, I did the math and I know my shit. But most people here dont seem to get that. Only the pension from before 2014 was actually worth something. Remember CWIPP is a company making tons of money on YOUR money, you could keep it. Having to wait till 60 at min (or deferral if you wanna go early) is a huge scam.

And lets be honest, who wants to be a button pusher at air canuck till 60 if you could go at 50 by drawing 4% of your rrsp, sounds pretty aweful.

I'm not sure I understand your math here.

If you're above the RRSP limit, with a 18% CWIPP contribution that means your salary is above $187K, which is most of the pilots at Air Canada. That's almost the top tax bracket in Ontario (there are two higher ones for income exceeding $220K and $258K). So anything above that limit is taxed at about 50%. So you're saying you can do better with those excess funds even if you start out with half compared to the professional investors who manage the CWIPP pension fund? And they grow your money tax free, whereas you'll be subject to tax anytime you sell a security that has increased in value? So their net growth rate on similar investments will exceed yours.

What are you going to be investing in, and what rate of return are you expecting to achieve to do better than the investment managers at CWIPP, given the above?

And when you say, "Remember CWIPP is a company making tons of money on YOUR money". Where does that come from? CWIPP is a regulated pension plan built for unions, run by unions. All of the money, by law, belongs to the members which is why benefit increases are granted when any significant surplus accumulates. Expenses are paid to the various entities that manage the plan (legal, investment, etc...) but these are in line with other plans as far as I know.

You are correct that RRSP is essentially maxes out at 187k/year. The point I am getting at is that when I calculate a moderate investment return in my RRSP of say 7%, after all the years I end up with more combined money in my RRSP plus 4% payout than CWIPP wil every pay me before the age of say 84 which is the average age one lives.

In other words, you do RRSP at the max, you get more than what CWIPP pays you if you go at 60 or 65. In addition, the extra money, yes taxed could just be put in a non registered account, can be leveraged to your liking and whatever you have left when you are dead can go to your kids if you have any.
CWIPP in my opinion is an outdated system based on people planning on working until 60+ and being risk adverse. RRSP can get me the same with less input, inheritable and it would be mine.

Again, check out the calculator online I posted earlier, it might not convince you but give an idea what I am talking about. I know most people like the word and psychological idea of pensions and hence this will stay.
On a side note: Unions have employees, CWIPP is the same and they all need to be paid. CWIPP also needs to make sure future payouts will always be guaranteed, that the fund is growing and all. That risk is what you don't get covered by doing just RRSP - and its big enough for the RRSP to win at returns of 6-7% over a 20 year career despite being capped.

Legally the money might be mine. However, for me money is mine when I can decide what to do with it, when and how. That's not the case here. I understand how the word pension is appealing, it just doesn't appeal to me because I most likely have less total value in the end and much less flexibility over it. Hence I would like to be able to do RRSP and get the difference as salary once I reach the 187+/year. It's just wishful thinking and I know this pilot community thinks different.

Cheers

[PointNine]

The more I see what CWIPPis about and has done, the more I like it.

It allows you to tax shelter above the RRSP limit, there isn't a cap on that. Members returns are proportional to their contributions rather than a pooled benefit of the DB where the low contributors can just get their best 5 at the end of their careers and contribute less than me but get more than me. Transparent all the benefits to the plan members...

You want to talk about a company running a pension for profit? That's Air Canada's subsidiary "Trans Canada Capital" which manages the DB funds with a view of not benefit for the members, but profit to the airline and eventual plan wind up resulting in Air Canada keeping the left overs. That means suppressing benefits, not improving.

Then of course you have "Air Canada Life Insurance Company" which is a company created by Air Canada to pay itself to reinsure billions in pension liabilities. It's all a shell game that is bilking Air Canada DB plan members of their money, covering up actual plan liabilities, and protecting Air Canada from having to make contributions to the plan. How could they be putting NOTHING in? Recall these plans were in deficit barely 10 years ago, now magically it's multi billions in surplus while AC sucks out from it.

These enterprises are more profitable than the airline. Maybe this is the reason for the bloated AC work force, gives them more suckers to pay into their ponzi scheme pension plan.

Funny enough, I know someone at TCC and they get A1 passes. Not that I care as I try to not rely on standby but I thought it was dumb. They definitely don't lack money there, CWIPP might be different but it's still not better than just doing it in the tax deferred RRSP where the money also grows tax free. Anyways, let's agree to disagree.

[Daniel Cooper]

Is ALPA Canada planning to engage with the government over these sweeping changes to labour law — including the right to strike? This seems like exactly the kind of thing we pay union dues for them to advocate for us. Maybe they have already and are working on communicating that to us?

Maybe they're not aware of it? The new email newsletter didn't mention it at all.

[altiplano]

The more I see what CWIPPis about and has done, the more I like it.

It allows you to tax shelter above the RRSP limit, there isn't a cap on that. Members returns are proportional to their contributions rather than a pooled benefit of the DB where the low contributors can just get their best 5 at the end of their careers and contribute less than me but get more than me. Transparent all the benefits to the plan members...

You want to talk about a company running a pension for profit? That's Air Canada's subsidiary "Trans Canada Capital" which manages the DB funds with a view of not benefit for the members, but profit to the airline and eventual plan wind up resulting in Air Canada keeping the left overs. That means suppressing benefits, not improving.

Then of course you have "Air Canada Life Insurance Company" which is a company created by Air Canada to pay itself to reinsure billions in pension liabilities. It's all a shell game that is bilking Air Canada DB plan members of their money, covering up actual plan liabilities, and protecting Air Canada from having to make contributions to the plan. How could they be putting NOTHING in? Recall these plans were in deficit barely 10 years ago, now magically it's multi billions in surplus while AC sucks out from it.

These enterprises are more profitable than the airline. Maybe this is the reason for the bloated AC work force, gives them more suckers to pay into their ponzi scheme pension plan.

Funny enough, I know someone at TCC and they get A1 passes. Not that I care as I try to not rely on standby but I thought it was dumb. They definitely don't lack money there, CWIPP might be different but it's still not better than just doing it in the tax deferred RRSP where the money also grows tax free. Anyways, let's agree to disagree.

Yeah, we can argue self directed investment vs fixed income but a mix is probably a good thing and a lot of our guys do benefit from the fact they will never run out of money coming through their door...

But the thing you're missing is that you can't tax shelter contributions above 18% of $187K in an RRSP, that's about $33K.

There's presently no cap on that 18% of income in what you're tax sheltering under CWIPP. We have CWIPP WB, even NB CAs making $400K+ and tax sheltering more than double what they would if it was just an RRSP. That's about $40K more income protected from the highest marginal tax rates of 50%+, ie another 20K going into your portfolio.

I'd take that 50% plus return on day one of not paying taxes.

[PointNine]

The more I see what CWIPPis about and has done, the more I like it.

It allows you to tax shelter above the RRSP limit, there isn't a cap on that. Members returns are proportional to their contributions rather than a pooled benefit of the DB where the low contributors can just get their best 5 at the end of their careers and contribute less than me but get more than me. Transparent all the benefits to the plan members...

You want to talk about a company running a pension for profit? That's Air Canada's subsidiary "Trans Canada Capital" which manages the DB funds with a view of not benefit for the members, but profit to the airline and eventual plan wind up resulting in Air Canada keeping the left overs. That means suppressing benefits, not improving.

Then of course you have "Air Canada Life Insurance Company" which is a company created by Air Canada to pay itself to reinsure billions in pension liabilities. It's all a shell game that is bilking Air Canada DB plan members of their money, covering up actual plan liabilities, and protecting Air Canada from having to make contributions to the plan. How could they be putting NOTHING in? Recall these plans were in deficit barely 10 years ago, now magically it's multi billions in surplus while AC sucks out from it.

These enterprises are more profitable than the airline. Maybe this is the reason for the bloated AC work force, gives them more suckers to pay into their ponzi scheme pension plan.

Funny enough, I know someone at TCC and they get A1 passes. Not that I care as I try to not rely on standby but I thought it was dumb. They definitely don't lack money there, CWIPP might be different but it's still not better than just doing it in the tax deferred RRSP where the money also grows tax free. Anyways, let's agree to disagree.

Yeah, we can argue self directed investment vs fixed income but a mix is probably a good thing and a lot of our guys do benefit from the fact they will never run out of money coming through their door...

But the thing you're missing is that you can't tax shelter contributions above 18% of $187K in an RRSP, that's about $33K.

There's presently no cap on that 18% of income in what you're tax sheltering under CWIPP. We have CWIPP WB, even NB CAs making $400K+ and tax sheltering more than double what they would if it was just an RRSP. That's about $40K more income protected from the highest marginal tax rates of 50%+, ie another 20K going into your portfolio.

I'd take that 50% plus return on day one of not paying taxes.

I am not missing out on that and well aware of what you are saying. Despite the psychological idea of the additional sheltered money being there at these salaries of 400k plus, RRSP total value still wins at RRSP returns of 6-7% annually with the capped amount you can shelter. The reason simply is that CWIPP keeps a lot, pays out conservatively and increases payouts very conservativly. Check last year, SP500 did 20+%, CWIPP have 5% (And that's not the main reason for my disliking of CWIPP). I did not just miss out on these details.

[rudder]

Pension.

Biggest issue is actually inability to take the benefit as a commuted value vs normal form for either the AC DB or the CWIPP.

There will be DB pilots retiring next year at close to a $200k/yr benefit. No indexation. Normal form. Spousal survivor benefit. Then zero.

Some of the CWIPP members - particularly recent hires with rapid upgrade and projected decades of service - will do even better. Possibility of some partial indexation. Normal form. Spousal survivor benefit. Then zero.

Option to take commuted value hedges against inflation by allowing transfer to a registered investment account. Zero tax on transfer to surviving spouse. Remaining balance reverts to the estate (subject to final income tax return and fully taxed as income). So worst case 50% remains in estate.

Most pilots that I know in non-indexed DB plans have taken commuted value option if available.

[Protonpilot]

PointNine, I looked at your CWIPP vs RRSP comparator. You put a lot of effort into this, well done.

I think we’ll have to fundamentally disagree on the purpose of a pension plan. I remember the roadshow back in 2017 when the membership was introduced to CWIPP. The question about ‘leaving it to my kids’ was put to the pension committee and their response was “CWIPP is a pension plan, not a life insurance policy”. A pension plan, by definition, is designed to provide an income to you and your surviving spouse when you retire. Full stop. If you try to make it do other things, then you’re going to water down the payout in retirement.

I do have a few observations/questions about your comparator.

CWIPP targets 6% per year return, managed by professionals. If you’re going to make a comparison, then I think it’s fair to set the return for the average pilot in their RRSP at 6% as well (you had it set higher). With this return, CWIPP expects to provide 2% benefit increases on average in most years, this was told to us by the pension committee. They’ve delivered quite a bit better than that since we joined, but we’ll stick with 2%. I also set the life expectancy to age 87 which is what the pension committee says our actuaries assume for retiring pilots.

Your calculator produces a pension of $15K/month for CWIPP at age 60. Are you applying the 2% benefit increase slider in the ALPA pension estimator? I asked a colleague with those same credentials, and he showed a pension $210K/year or $17.5K/month given the same inputs you used: 75 hours/month, hired age 33 in 2023 with the career progression you used. Anyways, I’ll stick with the $15K/month you used.

Your analysis is showing the CWIPP pension paying $15K/month at age 60 rising to $25K/month at age 87 (with the 2% benefit increases post retirement). Your note says, ‘$0 estate’. This assumes the member dies. But if the member lives longer than age 87, this is paid until death and presumably keeps increasing. If the member dies with a spouse, the spouse receives 60% of this pension until their death, no matter their age. I don’t think it’s accurate to say there’s no value after age 87 which is what that statement implies.

Your RRSP model at 4% withdrawal produces slightly more than half the CWIPP monthly payout, $8K/month, rising to $13K/month at age 87. I don’t see how that provides for a better retirement.

Your RRSP model with depletion at age 87 provides for an improved payout, $12K/month at age 60 rising to $20K/month at age 87, still less than CWIPP but not a dollar paid out after that. What if you live longer than 87, you or your spouse? CPP and OAS aren’t going to cut it. How is that better, especially given the trend in increasing life expectancy?

[Protonpilot]

Most pilots that I know in non-indexed DB plans have taken commuted value option if available.

These are Jazz pilots retiring off the DB plan?

It's extremely rare with Air Canada pilots, less than 1% take this option.

[rudder]

Most pilots that I know in non-indexed DB plans have taken commuted value option if available.

These are Jazz pilots retiring off the DB plan?

It's extremely rare with Air Canada pilots, less than 1% take this option.

Are you certain that commuted value is an option for AC pilots in the DB Plan? My counterparts suggest otherwise. I do not have access to a copy of the plan text.

If commuted value is an available option, it would also be represented in the selection of benefits statement issued following retirement.

This must be a feature included in the plan text in order to be available. Some plans do not permit. Some permit 50%. And some permit 100% (Jazz DB Plan).

[Protonpilot]

Most pilots that I know in non-indexed DB plans have taken commuted value option if available.

These are Jazz pilots retiring off the DB plan?

It's extremely rare with Air Canada pilots, less than 1% take this option.

Are you certain that commuted value is an option for AC pilots in the DB Plan? My counterparts suggest otherwise. I do not have access to a copy of the plan text.

If commuted value is an available option, it would also be represented in the selection of benefits statement issued following retirement.

This must be a feature included in the plan text in order to be available. Some plans do not permit. Some permit 50%. And some permit 100% (Jazz DB Plan).

It's available in the DB plan with certain restrictions. A pilot can choose a commuted value up until the month prior to being eligible for an unreduced pension. For a pilot hired before age 35, this can be as late as 59.9. For a pilot hired after age 35, it will vary.

For someone hired in their twenties (like so many were back in the day) this can be a payout of between $2M and $3M at age 59.9. The option is right there in the drop down menu when we go on our company pension estimator.

As told to me by the pension committee in a DART, we only see one pilot every few years take that option. Big difference between a reliable monthly cheque and a pool of money that gets taxed up front (some of it) that you have to manage on your own until death.

[rudder]

As told to me by the pension committee in a DART, we only see one pilot every few years take that option. Big difference between a reliable monthly cheque and a pool of money that gets taxed up front (some of it) that you have to manage on your own until death.

Thx. Sounds like it is an option only available to early retirees.

As far as logistics - and speaking from experience - only a portion of the total commuted value proceeds (called the excess portion) is in fact taxed as income in the year received. There is a slightly convoluted formula that increases the percentage of this piece based on age (younger = higher percentage tax exposed). In my case it was only around 20%. Therefore 80% transferred at no immediate tax consequence.

With these funds under independent management, I expect to recoup the taxes deducted in 24 months or less. I believe that many of the Jazz PML 1.0 pilots had the same option (similar to an AC DB early retiree) and freed the funds up as they were not eligible to otherwise use the funds to buy back service in the AC plan. Not sure if that has been updated since the CWIPP enrolment. Even conservatively invested, these funds should have increased by nearly 100% over the last decade.

Like everything, if available it is a personal choice. There are many pro and con questionnaires that can be used to get a ‘better individual outcome’ selection. These are based on objective rather than subjective criteria and are intended to apply to individual circumstance rather than group demographics and averages (i.e. mortality tables). Then there is the subjective piece.

For us, estate value upon death of surviving spouse will increase by at least $1-2M thanks to the invested lump sum pension proceeds even factoring in mandatory withdrawals. In the meantime, we have a hedge against inflation in what would otherwise have been reduced spending power over time due to a frozen benefit payment amount.

In my case, it was a no-brainer and I am glad that I had the option to remove the funds and have them managed professionally.

For those that are in the CWIPP plan and looking at decades of contributions, my understanding is there is the potential for a very large normal form benefit. With any luck, plan surpluses will be used to offer at least some degree of indexation.

[Cptcrunch1987]

I’ve worked at Air Canada as a captain for 5 years now, and honestly, it’s extremely rare for me to work with a poor back-end crew. Most of my first officers are great too, but every once in a while someone shows up with a sour attitude that affects everyone around them.

The other day I had an FO refuse to shake the flight attendants’ hands during introductions. Later, when only one car showed up to take the entire crew to the hotel, I made sure they sent a second vehicle so everyone could get there properly. Afterwards he asked me, “Why would you care about them?”

That mindset is exactly what I see from some of the people commenting here.

The flight attendants are part of the crew just like the pilots are. They deserve respect and appreciation for the work they do. The situations they deal with day after day are insane. Sure, if an engine explodes, the flight deck has a lot of work to do. But some people act like not getting a coffee quickly enough is some kind of personal attack, without ever considering what kind of day the cabin crew may already be having.

And for those talking about the “disrespect” they experience from the back end, I’d ask:
When was the last time you requested to be included during the crew briefing?
When was the last time you walked to the back to introduce yourself before the flight?

Anyway, rant over.

I’m not writing this to convince the obviously jaded people, and honestly, some of you got jaded way too early. It should take at least 20 years and two divorces before you become as grumpy as some of you already sound.

I’m writing this for the flight attendants reading these comments so you know there are plenty of us up front who constantly talk about how much we appreciate your professionalism, hard work, and calmness in the most challenging situations.

And personally, I thank God every day that you’re back there dealing with the passengers so we can stay locked away up front.