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Uncertain times

Service NL Minister Dan Crummell.
Service NL Minister Dan Crummell.

More than 100 frustrated Wabush Mines retirees packed into the Catholic church in Wabush to hear how their pensions will be affected as Cliffs Natural Resources files for creditor protection.

Senior officials from Service NL and pension experts held an information session for retirees on Aug. 17, providing them with information on technical aspects of provincial legislation and protection for pensioners.

In an interview with The Aurora, Service NL Minister Dan Crummell said the province is doing all it can to work on behalf of pensioners and protecting the interest of plan members.  
“People need to understand this is a complicated issue involving multiple laws and regulations.” 
Crummell said creditor protection and bankruptcy laws in Canada falling under federal responsibilities while Cliff’s deals with Quebec courts complicates matters.  
Provincial law requires pension funds to be held in a separate trust from the company, protecting the funds from bankruptcy, Crummell explained. In the case of former Wabush Mines employees, provincial law requires a company to continue to pay out pension payments during creditor protection proceedings.  
“Money contributed toward the plan continues to be safe,” Crummell said. “And they’ll continue to see their pensions.” 
But the pensions are in deficit. The last actuary provided to the provincial government a few months ago showed them to be just 86-90 per cent funded.  
Crummell said they’re on par with most pension plans in the country and across the world, which have been in deficit since the 2008-2009 global financial crisis.  
He noted the province’s legislation requires companies to make special payments into plans to make up for the deficit.

“They do this over time; you can’t have crash like 2008 and the pension plan goes into deficit of tens or hundreds of millions of dollars and have the company put it in right away.” 
Cliffs put over $60 million in special payments over the next six years, with $11 million made last year, Crummell said.  
“So we’ve been feeding the fire, making sure they close the gap.” 
The legislation is working, he said.

“We have the strongest legislation in country, when it comes to pension plans, and we’ve been enforcing these directives.” 
Cliffs were complying until they filed for creditor protection. While in creditor protection the company filed a motion to courts in Quebec to stop the special payments.  
“We retained a lawyer in Quebec to oppose that motion. Unfortunately, the company won out. These things happen and it’s not unusual for it to happen.” 
Right now Cliffs doesn’t have to continue to make the special payments going forward while in credit protection, Crummell explained.

In the meantime, the province continues to have conversations with its lawyers in Quebec about where to go next.  
“If the company finds a way to continue to operate — and who knows if Cliff’s rise from the ashes — they will be required to continue and resume payments to the payment plan.” 
Crummell said if Cliffs ceases to operate the province will continue to ensure the protection of the plan members and benefits, and would work with stakeholders to make sure their place as accreditors was respected in the event of bankruptcy proceedings.  
“We would help represent plan members in that scenario to go after the company when they liquidate their assets to pay back the pension plan monies that are requires.” 
There’s no guarantee that will happen, however, and that’s creating some angst with the pensioners.  
Crummell said he couldn’t speculate what kind of impact it would have on pensioners who are looking at losing a few hundred dollars per month.  
“But the money is there, the money is theirs. It would affect what they’re getting on a monthly basis, and that’s the reality of the unfortunate situation.” 
Calling the situation ‘fluid’, Crummell said there’s still some uncertainty.  
“We’re still not sure what Cliffs will do, they’re still in creditor protection and we’re keeping a close eye on things and trying to manage this from a pension perspective.”

 
ty.dunham@tc.tc

Senior officials from Service NL and pension experts held an information session for retirees on Aug. 17, providing them with information on technical aspects of provincial legislation and protection for pensioners.

In an interview with The Aurora, Service NL Minister Dan Crummell said the province is doing all it can to work on behalf of pensioners and protecting the interest of plan members.  
“People need to understand this is a complicated issue involving multiple laws and regulations.” 
Crummell said creditor protection and bankruptcy laws in Canada falling under federal responsibilities while Cliff’s deals with Quebec courts complicates matters.  
Provincial law requires pension funds to be held in a separate trust from the company, protecting the funds from bankruptcy, Crummell explained. In the case of former Wabush Mines employees, provincial law requires a company to continue to pay out pension payments during creditor protection proceedings.  
“Money contributed toward the plan continues to be safe,” Crummell said. “And they’ll continue to see their pensions.” 
But the pensions are in deficit. The last actuary provided to the provincial government a few months ago showed them to be just 86-90 per cent funded.  
Crummell said they’re on par with most pension plans in the country and across the world, which have been in deficit since the 2008-2009 global financial crisis.  
He noted the province’s legislation requires companies to make special payments into plans to make up for the deficit.

“They do this over time; you can’t have crash like 2008 and the pension plan goes into deficit of tens or hundreds of millions of dollars and have the company put it in right away.” 
Cliffs put over $60 million in special payments over the next six years, with $11 million made last year, Crummell said.  
“So we’ve been feeding the fire, making sure they close the gap.” 
The legislation is working, he said.

“We have the strongest legislation in country, when it comes to pension plans, and we’ve been enforcing these directives.” 
Cliffs were complying until they filed for creditor protection. While in creditor protection the company filed a motion to courts in Quebec to stop the special payments.  
“We retained a lawyer in Quebec to oppose that motion. Unfortunately, the company won out. These things happen and it’s not unusual for it to happen.” 
Right now Cliffs doesn’t have to continue to make the special payments going forward while in credit protection, Crummell explained.

In the meantime, the province continues to have conversations with its lawyers in Quebec about where to go next.  
“If the company finds a way to continue to operate — and who knows if Cliff’s rise from the ashes — they will be required to continue and resume payments to the payment plan.” 
Crummell said if Cliffs ceases to operate the province will continue to ensure the protection of the plan members and benefits, and would work with stakeholders to make sure their place as accreditors was respected in the event of bankruptcy proceedings.  
“We would help represent plan members in that scenario to go after the company when they liquidate their assets to pay back the pension plan monies that are requires.” 
There’s no guarantee that will happen, however, and that’s creating some angst with the pensioners.  
Crummell said he couldn’t speculate what kind of impact it would have on pensioners who are looking at losing a few hundred dollars per month.  
“But the money is there, the money is theirs. It would affect what they’re getting on a monthly basis, and that’s the reality of the unfortunate situation.” 
Calling the situation ‘fluid’, Crummell said there’s still some uncertainty.  
“We’re still not sure what Cliffs will do, they’re still in creditor protection and we’re keeping a close eye on things and trying to manage this from a pension perspective.”

 
ty.dunham@tc.tc

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