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Air Canada said Dec. 19, that the Government of Canada has advised the airline that, further to the agreement announced on March 12, 2013, new regulations applicable to Air Canada’s pension funding obligations have been formally approved.
The new regulations, scheduled for publication on Jan. 1, 2014, were approved under the Pension Benefits Standards Act in respect of special payments under Air Canada’s domestic defined benefit registered pension plans for the period between 2014 and 2020 inclusive, expiring Dec. 31, 2020. As part of the new regulations, Air Canada will be required to make payments of at least $150 million annually with an average of $200 million per year, to contribute an aggregate minimum of $1.4 billion over seven years in solvency deficit payments, in addition to its current service payments. Air Canada may elect to opt out of the new regulations under certain circumstances.
In addition, previously announced changes to the early retirement provisions in Air Canada’s Canadian defined benefit plans have been approved by the Office of the Superintendent of Financial Institutions and will become effective on Jan. 1, 2014.
Air Canada will provide an update on the solvency position of its Canadian defined benefit plans when it reports its 2013 full year results in the first quarter of 2014.
