In the event an insolvency leads to winding up the pension plans, the provincial pension benefits guarantee fund would cover the shortfall for the first $12,000 of beneficiaries’ annual pensions. Anything above that would take a cut proportional to the final solvency ratio of the plans.
A 2015 economic study revealed the devastating impact a complete collapse of Stelco could have on the region. According to the report, up to 8,600 Stelco pensioners live in the city, accounting for 6.3 per cent of its residents over age 60. The average Local 1005 retiree in the city collects about $16,000 per year and would stand to lose just over $4,000 of that if the company became insolvent.
So far, no one has seen an interruption to pension benefits, although U.S. Steel did win court approval in 2015 to halt payments for post-employment benefits, such as drug and dental care, that were costing the company about $3.5 million per month. The Bedrock deal includes provisions to fund post-employment benefits through a new trust or corporate entity, but the proposal has upset Howe because he says projections suggest it will only raise enough to cover 70 per cent of the needs of Local 1005 members, compared with 100 per cent for Local 8782.
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