Steel Mills
Essar Steel Algoma Retirees Concerned About Pension Decision
Written by Sandy Williams
January 25, 2016
Essar Steel Algoma has received permission from a Toronto court to suspend special payments to its pension fund.
The announcement alarmed retirees who were unsure what the suspension meant for their monthly pensions and benefits. Would they receive their checks?
The decision was explained by Don Barill, president of the Steelworkers Organization of Active Retirees (SOAR), in a recent Sault Star article.
“The agreement is they will continue to pay your pensions as they have and your benefits as long as the company is operating,” said Barill. The suspension does not affect current pension payments to retirees.
Essar Steel Algoma will stop making special payments that top up pension funds for salaried workers, hourly employees, and WRAP. Algoma pays about $1.62 million a month for current services costs on the pension plans and another 3.38 million in special payments. The special payments will be suspended until the company emerges from insolvency said Justice Frank Newbould of the Ontario Superior Court.
“I have sympathy for the employees and in particular for the retirees, who are the most vulnerable,” said Newbould. “There is little doubt that [Essar Steel Algoma and related companies] do not have sufficient cash resources to make these special payments.”
Newbould said that Essar Steel Algoma needs the certainty of not making payments during insolvency proceedings.
“Any such uncertainty would be detrimental to the sales and investment solicitation process (SISP) to be undertaken. A successful SISP is in the interests of all stakeholders including the United Steelworkers and the retirees.”
Newbould added, “The United Steelworkers, on behalf of the current employees, will have a seat at the table with interested lenders or buyers in the [SISP search for a new owner or major investor]. It will be an important seat. However, the plight of the retirees is different, and there is not the same economic interest in any lender or buyer in satisfying their concerns as there would be with the United Steelworkers and the current employees.”
“If the company went totally down, in other words it ceased to operate because they can’t find somebody to run it, then it would affect their pensions. But, again, the current operating employees, their pensions are paid up to a pretty good level, and the people that retired prior to 2001, even the WRAP Plan is funded to a certain level,” said Barill.
“A lot of people have been calling, and we’re just trying to tell them that it’s really not as bad as it might be presented, particularly through the press,” Barill said.
Sandy Williams
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