The
Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator
for permission to post the following article by Reporter Gillian Livingston
(The Canadian Press) published in the February 23, 2003 edition
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Feb. 23, 2004. 12:27 AM |
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Stelco woes may prompt review |
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By Gillian Livingston |
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The Ontario government isn't concerned about a pension shortfall at the Ontario Teachers' Pension Plan, but is keeping watch on whether pension rules have to be revised given a major pension deficit at Stelco Inc. "The plan is governed between the teachers and the government of Ontario, so we have a seat at the table and I'm confident that the issues that confront the plan right now can be resolved," Finance Minister Greg Sorbara said on the weekend while at the Liberals' annual general meeting. "It's not something I think that gives rise to serious concern," said Sorbara, calling the deficit, "an actuarial shortfall." Late last week, the Ontario Teachers' Pension Plan reported that for the first time since its creation in 1990 the plan's assets aren't big enough to cover the cost of future retiree benefits, creating a whopping $6.2-billion shortfall as of January. Claude Lamoureux, chief executive of the teachers' pension plan, blamed the shortfall on the downward shift in interest rates, combined with other changes, that have added about 35 per cent to the plan's cost of future benefits, "a factor totally beyond our control." The news of the deficit is a reversal from the plan's $1.5-billion surplus last year and follows its 18 per cent rate of return in 2003, the third best performance in its history. The Ontario Teachers' Pension Plan "is one of the strongest in the province and in the country," Sorbara said. Lamoureux also told Ontario teachers not to worry since the plan has $75.7 billion in assets and there's time to take corrective measures, if necessary. Workers at Stelco, which is restructuring under bankruptcy protection, are calling on the Ontario government to guarantee their pensions as a way to help the company out of its financial trouble. So far, the government hasn't promised a bailout package for the steelmaker. "Stelco may be the catalyst that has us review some of the regulatory aspects of the (Pension Benefits Guarantee Fund) and regulating pensions generally," Sorbara said. Stelco, which filed for protection from its creditors last month, has a pension shortfall estimated at about $1.3 billion. Its unions have called on the Ontario government to dip into its Pension Benefits Guarantee Fund. It provides partial pension security in case a company goes bankrupt. "There's certain issues directly related to the pensions we regulate, including the so-called 'too big to fail' category of plans, including Stelco, that we may want to have a look at," Sorbara said. A rule brought in by the New Democrats in the early 1990s allowed companies to take "holidays" on making pension contributions if they met certain criteria, such as size. In addition, "the structure and funding of the Pension Benefits Guarantee Fund may be something we want to have a look at," he said. Stelco workers have raised concerns that the fund won't have enough money in its coffers if the company goes under. Pension plans regulated by the province contribute specific amounts to the fund, depending on their type and size. "We're constantly reviewing these things," Sorbara said. "Sometimes when you have an issue like Stelco, that inspires you into a more careful look at whether or not certain regulatory changes would be appropriate," he said. "So we're at that stage." |