Concern about employee pensions

With the uncertain future of U.S. Steel Canada, concerns are now being raised about the employee pension plan. It is supposed to be preparing them for life beyond the mill. But is there cause for concern?

This is a period of uncertainty for retired employees of the company, but just how big the impact will be all depends on how this plays out. U.S. Steel could either be restructured, be sold, or go bankrupt. One business analyst says pensioners shouldn’t be too concerned. And while it is still too soon to know just exactly how much pension plans will be affected, politicians are already weighing in.

In the wake of U.S. Steel filing for creditor protection, the financial security of its pension plan for employees is being called into question and politicians at all levels are trying to give reassuring answers.

Ontario Finance Minister Charles Sousa: “We’re going to work with them, bring them to table, try to work with them the best we can to resolve this issue. More importantly, it’s the employees and those families affected that we have to try to support, and that’s what we’re going to be doing.”

Roughly 850 million dollars is owed to 14-thousand retirees. At the end of 2013, the pension plan was only 78 percent funded, and while that number is expected to increase this year, political leaders say it should be 100 per cent covered already.

Ontario NDP Leader Andrea Horwath: “It may be the Canadian operations, but the Canadian operations are part of a larger company that’s doing quite well thank you very much and that shouldn’t just be able to use this CCAA protection or this Canadian operations as an excuse not to pay these obligations. They should be paying those obligations.”

But one business analyst says it’s too early to push the panic button.

Marvin Ryder, DeGroote School of Business: “At this point, U.S. Steel is not signalling any plan to disappear, to close down, and if they did for whatever reason shut down some operations in Hamilton, the obligation is not to the assets we have in Hamilton, it is to U.S. Steel Canada which might function out of Nanticoke, let’s say. But those obligations would continue on for 15,00 retirees that they have..”

Politicians have already heard from concerned constituents and want to see action from the federal government.

Toby Barrett, MPP, Haldimand-Norfolk: “This is yet another wake up call. We need an economic plan. We need a policy — not only for our economy, not only for manufacturing, but for heavy industry.”

Hamilton Councillor Brian McHattie: “And we need to contact the federal government to see what the secret deal was that they signed with us steel back just a short number of months ago to allow them to get off their commitments that they made and what the federal government’s going to do to make sure we carry on.”

The Ontario government gave U.S. Steel a 150 million dollar loan to top up the pension plan which was meant to be repaid by this fall — but there doesn’t seem to be enough money for that. If the loan is not paid back then it would fall on taxpayers to shoulder. But Ryder says that’s unlikely to happen. Usually during a restructuring, the loan isn’t forgiven, but rather the deadline to repay it is extended and it shouldn’t be any different with U.S. Steel.