Unable to pay their pensions?
Wrong!!! The Air Canada pension plan is underfunded by 2.1 billion dollars, what that means if the company shut down today, the LIABILITIES the pension plan must pay is 13 billiion dollars. So everyone will get paid, but will have to take a haircut of about 25% of what they expected.
Keep in mind this was an actuarial calculation using rules set out by the OSFI on the date of the calculations. The rules can change and the returns on investment can change, this could improve the amount the pension is funded for better or for worse.
I believe the upper limit that can be drawn the Air Canada Pension plan is $57,750, as this is 70% of $82500 maximum ceiling that pension is calculated on.
The pilot's have a supplementary pension plan, these contributions go in general revenues, and may not be protected in CCAA or bankruptcy. If I am mistaken, someone who has better information can correct me.
In the event of the pension closing down, there are three rules for payout.
Those over 65 on pension will continue to receive their lifetime pensions, minus the unfunded portion.
Those that retired early, all of the payments that they have already received will be subtracted from their contributions with interest minus the unfunded portion, if they have collected more than this amount, they will receive no more payments from the pension fund.
Those who are still working and contributing, will receive a refund of their contributions with interest minus the unfunded portion.
This pension fund in not a ponzi scheme and each participant completely funds his own retirement, it does not depend on the contributions of present workers or future workers, as some have alluded to. Both the member's contributions and the company's contributions are deferred wages.
In my opinion, contribution holidays should not be allowed. There is a rule that does not allow companies to over fund pensions by more than 10%, because some have hidden profits avoiding income taxes, the plan members should not be penalized for this, nor do I believe that surpluses should be withdrawn.