Air Canada Pension Plan Solvency Deficiency Funding Regulations (SOR/2004-174)

Regulations are current to 2017-11-20 and last amended on 2011-04-01. Previous Versions

Air Canada Pension Plan Solvency Deficiency Funding Regulations

SOR/2004-174

PENSION BENEFITS STANDARDS ACT, 1985

Registration 2004-08-09

Air Canada Pension Plan Solvency Deficiency Funding Regulations

P.C. 2004-899 2004-08-09

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to the definition surplusFootnote a in subsection 2(1), subsection 9(1), paragraph 10.1(2)(b)Footnote b and section 39Footnote c of the Pension Benefits Standards Act, 1985Footnote d, hereby makes the annexed Air Canada Pension Plan Solvency Deficiency Funding Regulations.

Interpretation

  •  (1) The following definitions apply in these Regulations.

    Air Canada pension plan

    Air Canada pension plan or plan means a defined benefit plan in respect of which Air Canada is the administrator and that was established before January 1, 2004. (régime de pension d’Air Canada ou régime)

    beneficiary representative

    beneficiary representative means a union representative or a court-appointed representative of the members or former members of a plan or of the other beneficiaries of a plan. (représentant des bénéficiaires)

    initial order

    initial order means the order issued on April 1, 2003 in respect of Air Canada under section 11 of the Companies’ Creditors Arrangement Act. (ordonnance initiale)

    initial solvency deficiency

    initial solvency deficiency means the solvency deficiency of a plan emerging as at January 1, 2004. (déficit initial de solvabilité)

    Protocol

    Protocol means the Air Canada/OSFI Pension Funding Relief Protocol of May 14, 2004 entered into by Air Canada and the Office of the Superintendent of Financial Institutions. (protocole)

  • (2) Except as otherwise provided in these Regulations, expressions used in these Regulations have the same meaning as in the Pension Benefits Standards Regulations, 1985.

Application

 These Regulations apply in respect of Air Canada pension plans.

Funding

 The funding of a plan shall be considered to meet the standards for solvency if the funding is in accordance with Part 1 or 2.

PART 1Solvency Standards for Air Canada Pension Plans

Information To Be Filed with Superintendent

 An initial solvency deficiency and any subsequent solvency deficiency of a plan may be funded in accordance with this Part if the following information is filed with the Superintendent not later than the day on which the initial order expires:

  • (a) an actuarial report that values the plan as at January 1, 2004;

  • (b) a statement by Air Canada confirming that the beneficiary representatives have consented on behalf of the members, former members and other beneficiaries of the plan to the funding of the solvency deficiency of the plan in accordance with these Regulations;

  • (c) a certified copy of a resolution of the board of directors of Air Canada agreeing to the funding of the solvency deficiency of the plan in accordance with these Regulations;

  • (d) a copy of the promissory note issued in respect of the plan and referred to in section 4 of the Protocol as well as a copy of the security agreement referred to in paragraph 5(b) of the Protocol; and

  • (e) confirmation by Air Canada that contributions equal to the normal cost of the plan required to be remitted on or before the day on which these Regulations come into force and, if applicable, the special payments referred to in paragraph 11(c) of the Protocol have been remitted to the pension fund.

Exemption

  •  (1) If the information referred to in section 4 is filed with the Superintendent in respect of a plan in accordance with that section, the plan is exempt from the application of subsections 8(1) and (2) of the Act in respect of the following amounts:

    • (a) any special payments, employer contributions or other amounts accrued or due to the pension fund before January 1, 2004; and

    • (b) the principal outstanding amount of a promissory note, issued in respect of the plan and referred to in section 4 of the Protocol, if that amount becomes due and payable in full as a result of the occurrence of an event of default under the terms of the promissory note.

  • (2) For greater certainty and except as described in subsection (1), a plan is not exempt from the application of subsections 8(1) and (2) of the Act in respect of any special payments, contributions or other amounts that are accrued or due to the pension fund under these Regulations.

Application of Pension Benefits Standards Regulations, 1985

 If the information referred to in section 4 is filed with the Superintendent in respect of a plan in accordance with that section, section 9 of the Pension Benefits Standards Regulations, 1985 applies in respect of that plan except as otherwise provided in this Part.

  •  (1) For the purposes of this Part, paragraph (a) of the definition solvency deficiency in subsection 9(1) of the Pension Benefits Standards Regulations, 1985 shall be read as follows:

    • (a) the value of the assets of the plan, determined on the basis of market value,

  • (2) In this Part, for the purpose of paragraph (d) of the definition solvency deficiency in subsection 9(1) of the Pension Benefits Standards Regulations, 1985, the present value of any special payment calculated before January 1, 2004 and the present value of any special payment required to be made in respect of an initial unfunded liability emerging as at January 1, 2004 shall be zero.

  • (3) For the purposes of this Part, the definition solvency deficiency in subsection 9(1) of the Pension Benefits Standards Regulations, 1985 shall be read as including the following after paragraph (d):

    • (d.1) the present value of any special payment referred to in section 9 or 13 of the Air Canada Pension Plan Solvency Deficiency Funding Regulations,

    • (d.2) the present value of any special payment required to be made during the period beginning on January 2, 2004 and ending on December 31, 2013 in respect of an initial unfunded liability of a plan emerging after January 1, 2004,

  • (4) Subject to subsection 147.2(2) of the Income Tax Act, subsection 9(7.1) of the Pension Benefits Standards Regulations, 1985 does not apply in respect of a plan that is funded in accordance with this Part.

Solvency Ratio

  •  (1) The initial solvency deficiency of a plan shall be calculated as if any applicable special payments referred to in paragraph 11(c) of the Protocol had been remitted to the pension fund on December 31, 2003.

  • (2) The solvency ratio of a plan as at January 1, 2004 shall be calculated after determining the initial solvency deficiency in accordance with subsection (1).

Funding — Special Payments

  •  (1) The following definitions apply in this section.

    adjusted aggregate amount

    adjusted aggregate amount means, in respect of a plan year, the adjusted aggregate amount of annual special payments for that plan year as determined in accordance with subsection (4) or in accordance with subsections (4) and (5), as applicable. (total rajusté)

    unadjusted aggregate amount

    unadjusted aggregate amount means, in respect of a plan year, the unadjusted aggregate amount of annual special payments set out in the schedule for that plan year. (total non rajusté)

  • (2) Notwithstanding subsection 9(4) of the Pension Benefits Standards Regulations, 1985, an initial solvency deficiency of a plan shall be funded over a period not exceeding 10 years, beginning with the 2004 plan year and ending with the 2013 plan year, by an annual special payment to the pension fund in each of those years determined in accordance with subsections (3) to (5).

  • (3) The amount of an annual special payment in respect of a plan for a plan year shall be determined by multiplying the adjusted aggregate amount for that plan year by the ratio of the initial solvency deficiency of the plan to the aggregate amount of the initial solvency deficiencies of all of the plans.

  • (4) Subject to subsection (5), the adjusted aggregate amount in respect of a plan year set out in column 1 of the schedule shall be determined by multiplying the unadjusted aggregate amount set out for that plan year in column 2 by the greater of

    • (a) one, and

    • (b) the ratio of the aggregate amount of the initial solvency deficiencies of all of the plans to the sum of the present values, as at January 1, 2004, of each of the unadjusted aggregate amounts set out in column 2.

  • (5) If the adjusted aggregate amount determined in accordance with subsection (4) for the 2004 plan year is less than the result obtained by multiplying the assumed interest rate used in the valuation of the liabilities of the plans for the purpose of calculating their initial solvency deficiencies by the aggregate amount of the initial solvency deficiencies of all of those plans,

    • (a) the adjusted aggregate amount for the 2004 plan year shall be an amount equal to that result; and

    • (b) the adjusted aggregate amount for each of the 2006, 2007 and 2008 plan years may be reduced by an equal amount for each of those plan years such that the sum of the present values, as at January 1, 2004, of each of the adjusted aggregate amounts determined for the 10 plan years referred to in subsection (2) is the same as it would be if it were calculated without reference to paragraph (a).

  • (6) Air Canada shall, not later than 14 days after the expiration of the initial order, provide the Superintendent with a payment schedule setting out for each plan the amount of the annual special payment required to be made in each of the 10 plan years referred to in subsection (2) calculated in accordance with subsections (3) to (5).

  • (7) Notwithstanding subsection 9(14) of the Pension Benefits Standards Regulations, 1985, the annual special payment referred to in subsection (2) in respect of the 2004 plan year shall be made in two installments as follows:

    • (a) the first installment, in an amount equal to 75 per cent of that annual special payment, shall be remitted not later than the later of

      • (i) October 30, 2004, and

      • (ii) 30 days after the day on which these Regulations come into force; and

    • (b) the second installment, in an amount equal to 25 per cent of that annual special payment, shall be remitted not later than January 30, 2005.

  • (8) For greater certainty, the following special payments are not required to be paid in respect of a plan in a plan year:

    • (a) any special payment required to liquidate an initial unfunded liability emerging as at January 1, 2004 that would have been required to be paid in respect of that plan year under subsection 9(3) of the Pension Benefits Standards Regulations, 1985; and

    • (b) any special payment calculated in accordance with an actuarial report filed with the Superintendent before January 1, 2004 that would have been required to be paid in respect of that plan year under subsection 9(3) or (4) of the Pension Benefits Standards Regulations, 1985.

 
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