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The Ac Pension Is Not Really A Big Deal,if Interest Rates Go Up .25%


LongTimer V
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A 25 basis point increase in rates would help, but not significantly reduce the deficit. It's currently about 10x $473 million, so rate increases totalling say, 1-2 percentage points (100-200 basis points), would be of significant help. But what are the chances of even a 50 basis point increase right now?

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The .25% increase having a 1/2 billion dollar effect on the pension is one thing and is extremely bogus as a way of considering pension solvency.

Another was of looking at the pension plans is:

The total amount of benefits paid to retirees was covered by the earnings of the assests plus a surplus. When the companies contributions are added into the pot the assets of the pension plans increased by $400 million dollars last year.

This at a time when the stock and bond markets are down and the earning on the assets was as bad as it has ever been.

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Said it before, will say it again.

The issue is that corporations have limited time left to abuse the window of low interest rates and lock down the pension concessions. Once they hammer down the employees, interest rates will rise, deficits disappear, pensions are in surplus, and they can take another 'holiday' while siphoning off the exess again.

The question is, how long can the government keep rates low?

:ninja:

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So, if the rates go up, it will benefit AC, that's what you think ? What about the cost of borrowing ? What about the customer ? You know, the people you depend on for your benefits ? If rates are going north, you can bet that the first thing slashed in their budget will be air travel ( or pushing for a cheaper ticket) :Clever:

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So, if the rates go up, it will benefit AC, that's what you think ? What about the cost of borrowing ? What about the customer ? You know, the people you depend on for your benefits ? If rates are going north, you can bet that the first thing slashed in their budget will be air travel ( or pushing for a cheaper ticket) :Clever:

I would say that a 100 basis point increase in rates would help AC's pension cash flow concerns more than it hurts its revenues. You'd have to go well north of 100 points before the increase becomes counterproductive.

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I'm no economist but i will only share my point of view as a customer. I'm from the south shore of YUL and what i see is not the best picture: Fuel at 1.50/liter ( about the same price than summer 2008, before the crash), much more houses on the market for sell and longer, what i use to buy for food is more expensive than 2 years ago ( i mean, more than 2%/year), more job loss in the news, people just fed up with the taxes adding up every year ( look at the students manifestations around Qc), people buying bigger toys than they can afford ( cars, house, bikes, gismos, etc ), banks not really willing to lend money ( personal experience: Asked to raise my credit card limit and they asked me my T4 + other info. Never happened before. (More than perfect credit score). And finally, AC related: People know i work for AC ( In fact it's Jazz but, for them it's the same - go figure ...) and tell me because what is going on now at AC, they are not booking their next vacation with AC, in fear that they won't make it.

Soooooooo, i think that rates are not set to raise for the forseable future and if they go up, it will be ugly around here :glare:

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More good news from the 'X-FILES' of the Canadian banking / political world!?!?

Remember; Harper had a perpetual vow to 'never' attend a meeting of the 'Council on Foreign Relations' (CFR) and later promised not to involve Canada in a US style bail-out of the banks etc. The unfortunate reality; when the crap hit the fan a few years back, Harper was summonsed, attended at the CFR and then returned to Canada to begin his bail-out programs?

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