STEL SALARIED PENSIONERS ORGANIZATION
With reference to the
November 14, 2003, update, the Interim Advisory Committee met with the firm of
Koskie Minsky, which we had confirmed to be a leader in pension and benefits
law, on November 27, 2003. After a
wide-ranging discussion we agreed to retain them as legal counsel.
It was agreed in this
meeting that, because we understood Stelco had already met with the Financial
Services Commission of Ontario (FSCO), a letter should be sent to both FSCO and
Stelco, from Koskie Minsky, requesting confirmation of the discussions (as
reported in the November 15 Hamilton Spectator) and that we be notified of
future discussions so that representatives of our Organization could attend and
participate. This letter was sent on
November 28 with no response to date.
Points arising from our
meeting with Koskie Minsky included:
·
no legal action is
required at present but we need to be financially prepared to
take immediate legal action, if necessary,
·
to be effective we need
to maximize the membership of our Organization,
·
we need to clarify the
workings of the Pension Benefit Guarantee Fund (PBGF).
As of December 31, 2002, we
understand that the Stelco Inc. Retirement Plan For Salaried Employees* had a funded ratio of 80.8*,
hence our use of 80% in the following example provided by Koskie Minsky which
helps explain the PBGF:
*
(Registered Plan 338509 Hilton Works & Stelco Tower)
“The Pension Benefits Guarantee Fund (the
"PBGF") is an insurance fund, established under the Pension
Benefits Act, that provides partial protection to members of
defined benefit pension plans where:
·
the employer has become insolvent or bankrupt;
·
the pension plan is unable to fund all the
pension benefits promised under the plan; and,
·
the Superintendent of Financial Services has
declared that the PBGF applies to the plan.
The PBGF does not guarantee 100
% of your pension benefit entitlement. Instead, as a very general rule of
thumb, the PBGF will guarantee the first $1,000.00 of your pension and your
remaining entitlement is paid in accordance with the funded ratio of the plan.
The following simplified examples demonstrate a PBGF
calculation of entitlement.
Pension Benefit Entitlement = $3,000.00/month
1. Employer becomes insolvent or declares
bankruptcy.
2. On wind up, it is determined that the pension
fund can only pay 80%
of the benefit promised or
$2,400.00/month
3. FSCO determines that the PBGF applies.
4. PBGF Calculation is made: [Formula: First
$1,000 is fully guaranteed, only 80% of the remaining $2000.00 (or $1600.00)
will be paid]
After PBGF Calculation: Pension Benefit
Entitlement = $2,600/month”.
We will be communicating
with you soon on the other issues listed above.
For further information regarding the Pension Benefits Guarantee Fund please click on the link below and visit the Financial Services Commission of Ontario web site to view the 24-page PBGF Policy Document. Pension policies are available in Acrobat PDF format (v 3.0 minimum). A FREE copy of the software required to view Acrobat PDF files is available for downloading by clicking here.
Financial
Services Commission Of Ontario - Pension Benefits Guarantee Fund