![Air Canada eliminates pension deficit](https://www.benefitscanada.com/wp-content/uploads/sites/7/2014/01/Air_Canada.jpg)
Air Canada estimates that its $3.7 billion pension deficit has been eliminated within the past year and will have a small surplus, partly due to a 13.8% return on investments.
The airline says there were other factors that helped, such as pension benefit changes that reduced the solvency deficit by about $970 million, an additional contribution of $225 million to reduce the deficit, and a higher discount rate.
The discount rate used to value the pension obligations is determined pursuant to guidance of the Canadian Institute of Actuaries. The discount rate used at Jan. 1, 2013 was 3.0%. Air Canada used an estimated discount rate of 3.9% at Jan. 1, 2014.
Final pension plan valuations will be completed in the first half of the year.
“Air Canada’s three primary pension objectives are to ensure our employees’ and retirees’ pensions are secure, the pension solvency deficit is eliminated and that the costs associated with maintaining the pension plans remain affordable, predictable and stable,” says Calin Rovinescu, the airline’s president and CEO. “We have, over the past four years, made significant progress on all these objectives”.
Related articles: