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

10. For the purposes of the Pension Benefits Standards Regulations, 1985, a payment that is required to be made in respect of a plan by section 9 or 13 or subsection 16(2) shall be considered a special payment.

11. A plan shall be funded in each plan year by the special payments referred to in sections 9 and 13 in addition to the contributions and any applicable special payments set out in subsection 9(7) of the Pension Benefits Standards Regulations, 1985.

12. Until the 2006 plan year, an actuarial gain shall not be used to reduce the amount of any special payments due to the pension fund, but it may be applied to reduce the amortization period or periods applicable to the payment of a solvency deficiency or used to reduce, on a pro rata basis, the special payments required to fund the solvency deficiency during any of the 2006 to 2013 plan years.

13. Except as provided in section 15, a solvency deficiency that emerges in a plan year that begins after the day on which these Regulations come into force shall be funded by equal annual special payments sufficient to liquidate the solvency deficiency over a period not exceeding the greater of

• (a) the number of years remaining in the payment schedule referred to in section 9, calculated from the beginning of the plan year in which the solvency deficiency emerges, and

• (b) five years.

14. For the purpose of paragraph 10.1(2)(b) of the Act, the prescribed solvency ratio level is the solvency ratio calculated on the basis of the most recent actuarial report.

• 15. (1) A solvency deficiency that emerges after the day on which these Regulations come into force and that results from an increase in pension benefits, pension benefit credits or other benefits payable under a plan shall be funded in accordance with subsection 9(4) of the Pension Benefits Standards Regulations, 1985.

• (2) The present value of the special payments required to fund the solvency deficiency referred to in subsection (1) shall be included for the purpose of paragraph (d) of the definition “solvency deficiency” in subsection 9(1) of the Pension Benefits Standards Regulations, 1985.

• 16. (1) In this section, “deficit” means the amount by which the liabilities of a plan exceed its assets.

• (2) Subject to subsection (3), if a plan is fully terminated and the plan has a deficit as at the day of the termination, the annual payments due in respect of the principal outstanding amount of the promissory note that is issued in respect of the plan and referred to in section 4 of the Protocol shall be remitted to the pension fund as they become due and payable, until such time as the principal outstanding amount of that promissory note is paid or the deficit is eliminated, whichever is earlier.

• (3) If the principal outstanding amount of the promissory note referred to in subsection (2) becomes due and payable in full as a result of the occurrence of an event of default under the terms of the promissory note, the annual payments referred to in that subsection are not required to be remitted.