Pensioners and members of the Northern Transportation Co. Ltd.’s pension plan reached a settlement with the company on Friday that will see all special payments, which had been suspended since August, paid into the fund.
It provides the fund with a further $1.7 million, says Simon Archer, a lawyer at Koskie Minsky LLP, which represented more than 600 former and current pensioners. “It essentially got almost three times the amount of the special payments. We thought it was a pretty good deal, considering the risks of litigation.”
The pensioners and members of the company’s pension plan will also receive 21 per cent of the proceeds of the Northwest Territories government’s bid to purchase assets of the company. On Thursday, the Court of Queen’s Bench of Alberta approved the government’s offer, and lawyers for the banks, Northern Transportation and the Public Service Alliance of Canada — which represents more than 200 pensioners — agreed in principle to share the proceeds of the sale between the banks and the pensioners.
The company, which provides shipping services to communities and exploration projects throughout the Northwest Territories and the western Arctic, obtained protection under the Companies’ Creditors Arrangement Act in April 2016. It cited the deficit in its defined benefit pension plan as a major financial concern.
In August 2011, all participants and retirees of the pension plan received a formal written notification indicating the company believed the projected payments required to fund its existing solvency deficit would have a significant adverse impact on it. Consequently, it said it would pursue the Pension Benefits Standards Act’s provisions for workout schemes for distressed pension plans.
According to the company’s most recent actuarial valuation in December 2015, the defined benefit pension has approximately 90 active and 530 inactive or deferred members. The valuation projected a solvency deficit of $18.9 million. Since 2011, the company has regularly made additional contributions to the plan, totalling approximately $14.9 million, in order to eliminate the deficiency.
Last week’s court decisions mean there’s an improved funding position in the plan, says Archer. “We don’t know exactly what the effect is yet, but it will mean that a little bit more will go into the plan and a little bit more of the pensions will be protected.”
He also says the regulators have appointed a third-party administrator, Morneau Shepell Ltd., to wind up the plan. “They are going to take a look at the plan now and over the next month or two, they’re going to examine what the next steps will be, how much money is in the plan, what they think they can do with it to administer it and wind it up,” says Archer.
“We couldn’t get all of the funding required for the plan but we did get a lot more than was there previously and we think it was a pretty good settlement, all things considered.”