New Air Canada workers represented by the Canadian Auto Workers will be placed in a new retirement plan with defined benefit and defined contribution components rather than the airline’s traditional pension plan, under a decision handed down Sept. 16 by a Canadian government arbitrator according to a news release from the union.
The Canadian Auto Workers union, which represents about 4,000 Air Canada employees, has been in arbitration with the Montreal-based company since June 27, arguing against replacing the defined benefit plan with a defined contribution plan.
Under the new plan, employees will be part of the Air Canada defined benefit pension plan under a reduced formula and also a new a defined contribution plan contributed to by both the employer and employees.
Jo-Ann Hannah, CAW director of pensions and benefits, said in a telephone interview that the union does not “hold this model up as the best way to go” but the arbitrator’s decision did prevent Air Canada from setting a nationwide precedent of companies eliminating their DB plans.
“Many employers would have seen that as a license to demand DC plans for new hires,” she said. “What we did was really give some inspiration to unions and workers who have DB plans that they have a right to have those plans.”
Air Canada has 10 DB plans with a combined C$10.9 billion (US$11 billion) in assets and a DC plan for non-union members worth C$11 million.
Air Canada spokesman Peter Fitzpatrick declined comment.