© Copyright 2006 Rogers Publishing Ltd. The following article first appeared in the June 2005 edition of BENEFITS CANADA magazine.
A leaked Stelco proposal raises questions about its pension plan.

Reports of a leaked Stelco proposal regarding its pension plan is creating a little friction for some of the parties involved. Published reports have said that the steelmaker would like to freeze the amount of its pension payments for at least 10 years.

Rolf Gerstenberger, union president of Local 1005, which has 3,000 active Stelco employees and 7,000 retirees, says that if such a plan were to go through it would be considered illegal by the union. “Our biggest concern is that we had no knowledge of it(the proposal)and we’re the union that represents all these pensioners. So just because it’s CCAA(Companies’ Creditors Arrangement Act), they(Stelco)think they can come up with these schemes without having to talk to us.”

He adds that if a similar measure were taken 10 years earlier, current pensioners would have about $1,200 a month more than they do now. “We’re not very happy with this [proposal]—even that it would be floated,” he says.

Gerstenberger stresses the union has a contract that was signed in 2002 and it should not have to deal with any of the CCAA process, by which creditor protection is granted to firms. It’s just a matter between Stelco and its creditors, he says. And according to reports of the leaked document, the plan would take away one of the critical rights of employees to negotiate any increase to pension benefits prior to Jan. 1, 2016. “What are they saying: that we don’t have the right to bargain collectively after CCAA?” asks Gerstenberger. He says the union expects Stelco to live up to pension funding obligations. Helen Reeves, a spokesperson for Stelco, declined to comment on the proposal.

In addition to freezing the pension, one report stated that Stelco wants to raise $250 million in funds through bond issues, $150 in new equity issues and $175 million from the sale of some subsidiaries.

In the meantime, the steelmaker will be forced to work through the mediation process. After an Ontario court ordered the process to go ahead, Courtney Pratt, Stelco’s president and chief executive officer said, “we welcome the establishment of a confidential and mediated process and…believe that discussions conducted in a confidential setting assisted by a mediator will be much more likely to achieve progress than negotiating in public.”

Joel Kranc

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