The terms of a settlement for Wabush Mines’ former employees and retirees are now available, including an $18-million payment to address a $28-million pension shortfall and an estimated $10.9 million to compensate for the loss of health benefits.
The settlement affects 1,700 pensioners and former unionized employees of the Newfoundland and Labrador-based mine owned by Cleveland Cliffs Inc., according to a press release from the United Steelworkers.
The pensioners and former workers, whom the union represented while actively employed, will recover $18 million of the $28-million pension shortfall, according to the settlement, which still requires approval by the courts and creditors affected by the company’s bankruptcy protection proceedings. It also calls for those pensioners to share a payment, estimated at $10.9 million, to compensate for the loss of health benefits.
Cleveland Cliffs closed its Canadian operations and filed for creditor protection in 2015 under the Companies’ Creditors Arrangement Act. With the pension plan underfunded, pensioners saw their payments cut by up to 25 per cent.
“This is good news for pensioners and former workers,” said Marty Warren, United Steelworkers’ director for Ontario and Atlantic Canada, in a news release. ”Our union has fought relentlessly alongside the former Cliffs workers and pensioners and this struggle has finally paid off with this settlement.”
He noted, however, that there’s still a need to reform outdated federal legislation to better protect employees’ pensions and benefits in bankruptcy and insolvency cases. “In this case, we were able to recover higher amounts than we originally hoped for,” said Warren. “But the fundamental problem remains — pensioners and workers most often get the short end of the stick in corporate bankruptcy and insolvency cases. Their pensions and benefits are relegated to the back of the line, while banks and other financial institutions get priority.
“Behind every Cliffs’ pensioner and worker who will suffer less harm as a result of this settlement, there are many more former Sears employees who will come out empty-handed. The law must change. That’s why Steelworkers have been lobbying federal MPs from every party this spring to demand better legislation that puts workers and pensioners first.”
While the federal government hasn’t signalled a shift in priorities in bankruptcy situations, it announced in its 2018 budget in February that it would seek feedback from pensioners, employees and companies in the coming months to determine options to better address retirement security for Canadians.