The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by Reporter Tara Perkins published in the July 8, 2004 edition
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Jul. 8, 2004. 12:42 AM |
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Pensions healthier as markets rise |
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By Tara Perkins |
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Most workers can rest easy about their corporate pensions - but not at Stelco. Fears about underfunded plans have been overblown, says a new report by the Dominion Bond Rating Service (DBRS). Good investment returns in 2003 brought many pension plans up to healthy levels, the report says, and recovery of the stock market and increasing interest rates should eliminate problems for many other plans. Joining Stelco in the ranks of companies that "still have major pension issues" are Air Canada, Bombardier and Quebecor World, DBRS says, as well as auto parts makers. On the other end of the pension rainbow, banks, food and beverage manufacturers, processors and retailers, as well as oil and gas firms are among those with fuller pots. Dofasco's plan is overfunded, at 104 per cent, thanks to better than expected investment returns. A pension plan that's 80 per cent funded is in good shape, the report said. Less than 80 per cent is considered underfunded, while those under 70 per cent have significant issues. In 2003, 57 per cent of companies reported that their plans were at least 80 per cent funded, up from 51 per cent the year before. DBRS examined 296 companies across 16 sectors. Quebecor - the only industrial company besides Stelco with a pension fund deficit that increased in 2003 - was funded at 49.9 per cent. Stelco's plan was 78.9 per cent funded in 2003. That compares to 71.2 per cent at Regina-based IPSCO, and 66.6 per cent at Sault Ste. Marie-based Algoma. But Jarrett Bilous, an analyst with DBRS, says Stelco's overall pension deficit is larger than its fellow steelmakers, and "is a major issue for the company that needs to be addressed." An increase in future pension costs caused Stelco's pension deficit to grow from $650 million to $752 million last year. A large part of that rise is because the company, like many others, adopted more conservative accounting practices to figure out how much they'll owe in the future, Bilous said. Stelco earned $334 million on the pension money it invested last year, compared to a loss of $76 million in 2002, Bilous said. Manufacturing companies "rank among the most labour-intensive in the economy and, being heavily unionized," could face serious pension problems, the DBRS report said. tperkins@thespec.com 905-526-4620 |