Stelco’s new owners and United Steelworkers (USW) Local 1005 have reached a deal over the underfunded pension plan.
When Bedrock Industries bought the troubled steelmaker last year, part of the agreement was for it to initially make a $30-million pension plan payment.
It also agreed to put in $10 million a year for the first five years and $15 million in annual payments for the next 15 years.
The new deal is for Bedrock Industries to make a $142-million lump sum payment on top of the annual schedule.
In return, the union gives up a 10 per cent stake in any future profits which were earmarked for the pension plan.
“This deal is looking like the pensions are going to go forward without any change to them,” Marvin Ryder, a professor at the DeGroote School of Business, said. “If you are a retiree there’s no change to anything you’re getting out of the fund.”
The professor also says this is a bit of a gamble for USW local 1005.
“If Stelco were to become a very profitable company making billions of dollars, you’ve sold yourself short,” DeGroote said. “But on the other hand, if this company winds up back under creditor protection in 10 years, you’re well ahead of the game.”
Ryder adds for retirees, the pension shortfall is real and immediate, and the lump sum takes the pension plan to 85 per cent of what it should be to meet its obligations.
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