A new actuarial report concludes that pension plans sponsored by U.S. Steel Canada are so underfunded that if the company were to go out of business, plan retirees would lose more than 40% of their pension value, according to an article in the Hamilton Spectator.
According to the newspaper, the report shows that the four pension plans U.S. Steel Canada took on when it purchased Stelco in 2007 have more than $2.5 billion in assets, but would also face a $1.6-billion solvency deficiency if the company were to go bankrupt.
Rolf Gerstenberger, president of Local 1005 of the United Steelworkers union, told the Spectator that under the Stelco purchase agreement, U.S. Steel was supposed to eliminate the pension shortfall by 2015—a goal he says isn’t likely to be reached through U.S. Steel’s current schedule of special payments totalling $70 million annually.
Ontario companies facing pension solvency deficiencies are required to make up the shortfall over five years, unless they make special arrangements with the province. Under the terms of its 2004 bankruptcy protection agreement, Stelco was granted 10 years to replace the shortfall.