The Corporation has a registered pension plan that covers substantially all employees and includes both defined benefit (DB) and defined contribution (DC) provisions. The DB provisions provide a pension based on years of service and highest average earnings over five consecutive years of employment. DB pension benefits under the registered plan will increase annually by 60% of the Consumer Price Index for Alberta. Under the DC provisions, employer contributions are based on the participating members’ pensionable earnings and contribution levels.
The Corporation also sponsors a supplemental pension plan providing an additional DB pension based on years of serviceand highest average earnings (including incentive pay) to both DB and DC members whose benefits are limited by maximum pension rules under the Income Tax Act. The supplemental pension plan benefits do not automatically increase. In addition, the Corporation provides employees with post-retirement benefits other than pensions, including extended health and dental benefits beyond those provided by government-sponsored plans, life insurance and a lump-sum allowance payable at retirement, up to age 65.
The Corporation measures its accrued benefit obligation and the fair value of plan assets for accounting purposes as at December 31 of each year. Actuarial valuations are conducted every three years. The most recent actuarial valuation was prepared as at December 31, 2006. As the DB plan has a solvency ratio of less than 85%, actuarial valuations would normally be required annually. During the year ended December 31, 2005, the Corporation applied for and received an exemption from Alberta Finance waiving this requirement. The next required valuation will be performed as for the period ended December 31, 2009.
Total cash payments for employee future benefits for 2007, consisting of cash contributed by the Corporation under the DB and DC provisions of the registered pension plan and cash payments directly to beneficiaries of the Corporation’s unfunded other benefit plans, were $13.7 million (2006 – $15.8 million). For the year ended December 31, 2007, the total expense for the DC provisions of the plan is $3.7 million (2006 – $3.3 million).
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