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Hundreds of Stelco pensioners are about to bombard politicians with
letters and phone calls, asking the government to step in and help solve
Stelco's pension deficit.
"Everyone has to make noise," lawyer Murray Gold told a
meeting of salaried pensioners this week at the Hamilton Convention
Centre.
He said the government must understand the pension issue is critical
to Hamilton, and urged Stelco's salaried pensioners to write letters and
call politicians.
Even though Stelco's pensions don't appear to be a problem now, Gold
told them to act now to secure their pensions for the future in the event
Stelco gets into financial trouble again.
Now is the time because Stelco is making enough money to start paying
off its $1.2 billion pension deficit, he said.
"I can tell you this company has the ability to make
contributions," he said. "The money is there."
Stelco's 4,100 salaried pensioners worked as clerks, accountants,
supervisors, secretaries. They now receive an average pension of about
$20,000.
Gold told the pensioners that beneath the judicial supervision of
Stelco's bankruptcy protection, many other interested parties are busy
wheeling and dealing to secure their own financial interests, and not
those of pensioners.
Paying off the pension deficit is not a priority for creditors who
want to see their debts taken care of first, he said.
Stelco is currently making all required contributions to its pension
funds, and pensioners are receiving all money owed to them. But in 1996,
the company took advantage of a provincial too-big-to-fail pension law.
It was based on the assumption that large companies could not go
bankrupt. Because they could keep paying their pensioners each year, they
were allowed to scale back payments into a solvency fund that normally
holds enough money to pay the company's future pension obligations.
Stelco has more than 13,000 pensioners in total. Now, if Stelco ever
goes bankrupt, its former employees, both salaried and unionized, will be
out $1.2 billion.
That doesn't tell the whole story, Gold said, because Stelco has been
systematically opting for the lowest possible pension costs. For
instance, actuaries assumed a shorter lifespan of employees to reduce the
amount Stelco has to put into the funds, Gold said.
Stelco CEO Courtney Pratt said he understands the pension deficit
concern. "It is an issue," he said. "It's something that
we had before we came into CCAA (bankruptcy protection) and we would
still have if we hadn't gone into CCAA. The issue is finding a
solution."
If the company stopped using the too-big-to-fail law, it would
immediately be faced with an enormous solvency deficiency, he said.
"The issue is how you deal with this deficiency. I don't know
what the answer would be. It's not easy, primarily because it's such a
big number," Pratt said.
Gold wants to see the government come up with some kind of payment
schedule that allows Stelco to pay off the $1.2 billion in a relatively
short period of time.
He would like to see companies that are submitting an offer to buy
Stelco, like Severstal and U.S. Steel, include a plan to deal with the
pension deficit.
This week, Gold received a letter from Premier Dalton McGuinty's
office agreeing to a meeting to discuss the issue.
tperkins@thespec.com
905-526-4620
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