Three years after Wabush Mines filed for restructuring, its former employees and retirees will see an increase to their pensions, following a previous reduction of between 21 and 25 per cent, as a result of a proposed settlement in the matter.
While the amounts won’t be public until the court overseeing the company’s insolvency approves a settlement in principle, they’ll meaningfully increase the funded status of its defined benefit pension plans, according to Andrew Hatnay, a partner at Koskie Minsky LLP and counsel to salaried employees and retirees of Wabush Mines.
The settlement “will translate into monthly pension benefit increases to offset the reductions that the retirees are currently enduring,” wrote Hatnay in a statement to Benefits Canada.
Rita Pynn, co-chair of the Wabush pension committee, says the move is good news, especially after three years of effort by both salaried and unionized employees and retirees. “I didn’t really anticipate that we’d get to this point, but we have. We’re not getting everything back, but at least we’re getting something.”
The two defined benefit plans, which were both registered in Newfoundland and Labrador, covered employees in that province and in Quebec, as well as federally regulated workers. On termination, the plans had deficits of $55 million and special payments arrears of about $9 million.
In September 2017, the Quebec Superior Court ruled that the deemed trust that gives priority to pension claims under Newfoundland and Labrador’s Pension Benefits Act wasn’t effective in a liquidation scenario in a Companies’ Creditors Arrangement Act proceeding. The settlement follows a mediation process to deal with the outstanding issues.
Since 2015, the salaried group of retirees have seen a 25 per cent reduction to their pensions, while the unionized members saw a 21 per cent cut, says Pynn. “So there is going to be money put into our pension plan, and we will get some of our pension back.”
The proposed settlement also includes a lump-sum payment to cover medical benefits and life insurance, according to Pynn.
“It could be in the fall before we actually see this, but that’s OK,” says Pynn. “We’ve gotten by for the last three years, and I think we can wait another few months before we get it.”
While Wabush Mines’ parent company, Cleveland Cliffs Inc., declined to comment on the settlements. A spokesperson wrote in an email to Benefits Canada that the CCAA process is still underway.