IT’S
TIME TO URGE ONTARIO PREMIER DALTON McGUINTY TO TAKE ACTION ON REGULATION 5.1
NOW
The root of
Stelco’s pension plan problem derives from Regulation 5.1 of the Ontario
Pension Benefits Act also known as the ‘Too Big to Fail’ regulation. This 1992
regulation allowed companies that had pension funds in excess of $500 million
to elect to be treated as a “qualifying plan”. Starting in 1996 Stelco elected
to “qualify” its Pension Plans and was thus exempted from making un-funded
liability payments with respect to any solvency deficiencies applicable to the
plans.
Regulation 5.1 was amended in
2002 so that employers are no longer allowed to take the “qualifying plan”
election. However, Stelco was grandfathered and allowed to retain “qualifying
plan” status and continues to make no solvency deficiency payments. The result
is that our pension plans have continued to deteriorate financially, are now
woefully underfunded on a solvency basis, and as a result the future security
of our retirement pensions remains in serious jeopardy. At the present time we are deeply concerned
that this situation will not get addressed inside of CCAA without the immediate
intervention of the Premier and his Government.
Therefore, we are asking for
Premier Dalton McGuinty and his government to intervene on behalf of Stelco
pensioners, because without government intervention there will be serious
consequences in terms of ongoing future risks for all pensioners and our
spouses.
At our December 14th
membership meeting, our legal counsel once again stressed the importance of you
applying immediate political pressure on the Premier to address the 5.1
Election and the resulting pension underfunding crisis. “Everyone has to
make noise”.
Click Here to view a newspaper report of that membership meeting published in the
Hamilton Spectator.
On December 1st,
our lawyer Murray Gold sent a letter off to Premier Dalton McGuinty on behalf
of SSPO expressing our concerns, and the request for a meeting to review the
situation. Click Here to view that
correspondence. (Note: Posted in Acrobat PDF format. A free copy of Adobe Reader is available for
downloading by clicking here.)
In order for our efforts
to succeed, EACH AND EVERY ONE OF
US MUST ACT NOW WITHOUT DELAY. We must
move quickly to take full advantage of a very small window of opportunity to
force a solution to the 5.1 Election inside of CCAA. Your influence cannot be overstated.
We urge you to sit down right now and take a few moments
to invest your future security by sending a letter voicing your concerns to
Ontario Premier Dalton McGuinty.
We also strongly recommend that you send copies of those letters to
Minister of Finance Greg Sorbara, Management Board of Cabinet Chairman Gerry
Phillips, Special Advisor to the Premier James Arnett, your local
elected member of the Ontario Provincial Parliament, and Stelco President &
CEO Courtney Pratt. Click Here
for their mailing addresses.
SSPO strongly urges
pensioners to advance the following concerns to the Premier. Below are points that are intended as means
to assist you in crafting your letter.
We suggest you chose a few that you feel quite strongly about and tell
the Premier, Dalton McGuinty, why you feel that way.
l . Click Here to view SSPO December 2004 Newsletter (Note: PDF format)
§ Page 1, lead story, SSPO concern etc., ---actuary, assumptions too optimistic….
§ Page 2, Deutsche Bank bid so far creates more secured debt, which will outrank claims in any future financial crisis.
§ Page 3, PBGF increase needed
l Not reasonable / fair / just, that a company in CCAA / bankruptcy protection should be allowed to remain in or take advantage of "too big to fail" legislation that exempts them from solvency payments to its pension plans.
l
Pensions are
essentially deferred wages, an alternative form of work compensation, and need
to be ranked higher on the "creditor scale" than bondholders, banks etc.
In fact SALARIED pensioners at Stelco DID CONTRIBUTE a percentage of their
regular salary to their pension plans until 1987 - ie most retirees contributed for most or their
entire Stelco career.
l Judge Farley has reminded all participants in the restructuring process to keep in mind the interests of retirees as "the most vulnerable of the stakeholders". The Judge expects all bidders to address the pension funding issue. In other words the judicial system attaches great importance to pensioner needs.
l Stelco's stated goal is to preserve pensions, not weaken them (Courtney Pratt, Nov 30, letter "To all Employees"). Now in 2004, Stelco is in a much stronger financial position, and is likely to continue to be in the future. It is time to restart solvency payments. It may not be realistic to expect the total solvency deficiency to be made up immediately, but a realistic schedule of payment must begin now. For example in the Air Canada CCAA a schedule of 5 to 10 years was agreed on.
l The "business cycle" is subject to many vagaries. The Province should bear in mind that it will be left in a very vulnerable position in any future insolvency due to very low funding in the PBGF. The viability of the PBGF (Ontario Pension Benefit Guarantee Fund) will be made more secure if the Stelco pension solvency funding is addressed now.
l Mr. Premier we urge you to reconsider NOW, the solvency funding exemption for Stelco's pension plans in Regulation 5.1. Think of your own MPPs' generous pensions, and the importance you and they put on them. Our pensions are not so generous. We need your government to respond to this issue in a way that insures the pensions of Stelco pensioners, now and in the future.
We
have found from past experience that a personal letter expressing your concerns
to a government representative is much more effective than merely signing your
name to a form letter. Politicians have
confided that personal letters receive far greater attention in terms of a more
personalized response. They do respond
to form letters, but it is not a high priority and usually they respond in
similar fashion. So whenever possible,
we would urge those who are able to craft their own letter to do so. We also invite you share your letters and
responses with us.
In addition to sending your
letter the Premier (and others copied on the recommended circulation) it will
be important for you to get family members and friends to do the same.
Click Here to view an
excellent letter sent to the Premier (et al) by fellow pensioner George
Harvey. George has graciously allowed
us to share this letter with you as a means of encouraging others to write the
Premier with their concerns.
Click Here for Sample Of
E-Mail Or Letter To Premier Dalton McGuinty.
Click Here for Listing Of
Targeted MPP’s and other suggested recipients.
Click Here for the official
government Listing Of All Ontario MPP E-Mail and Mailing Addresses.