faq

Answers To… The Most Frequently Asked Questions

 

1.         Why are we not representing active employees?

2.         Will the SSPO work to protect the pensions and benefits of salaried retirees from a Quebec or Alberta plant?               

3.         Why did I receive a “Notice To Retired Salaried Beneficiaries?  

4.         What is the difference between CCAA and the Bankruptcy And Insolvency Act, which is designed to liquidate a company?  

5.         We have been told that there are 17 different pension plans.  Are some more secure than others? 

6.         I’ve heard that the hourly plans are more under-funded than the salary plans.  Could they all be merged?

7.         How might the bridging benefit be affected?

8.         Does the Stelco’s payment of SSPO’s legal costs compromise the lawyer-client relationship?

9.         Will the life insurance be intact through CCAA? 

10.     What can we do to attack the executives’ ‘gold plated pensions’?

11.     Are the widows or widowers of salaried retirees represented by SSPO?

12.     How vulnerable are we to the large corporate creditors and investors?

13.     What is the benefit provided by PBGF?  

14.     What can happen to pension and benefits during CCAA?

15.     How long are the CCAA proceedings expected to last? 

16.     If Stelco becomes financially successful after restructuring can the pensioners recover any of the benefits given up in CCAA?

17.     Why is the pension plan under-funded?

18.     Does completion of the CCAA process bring closure to our pension and benefit concerns?

19.     How does the SSPO handle the finances?  Does it know what the costs will be?

20.     What is the significance of the word “crystallize” with respect to benefits?

21.     Hilton Works is badly contaminated.  If Stelco was liquidated who would have first option on the assets, secured creditors or environmental clean up?

22.     Do you have any comments on the Union position that Stelco is not insolvent and should be taken out of CCAA?

23.     Can we stop Stelco’s executives from getting the same kind of financial package that Air Canada executives received?

24.     As an active employee who is a member of SSPO, will my interests be represented?

 

 

1.  WHY ARE WE NOT REPRESENTING ACTIVE EMPLOYEES?

We are a group working to protect pensioner’s interests, although any successes we have will most likely be of benefit to ALL who are in the salaried plans.  However, any such benefit would apply on AFTER a member retires.  We cannot represent anyone who still has an employer-employee relationship, as that gets into the realm of a union and we are not a union and have no intentions of becoming a union.  Our group simply cannot act as your agent with Stelco.  We hope you understand our position and continue to belong to our group as a means of contributing to your future as a RETIREE.

 

 

2.  WILL THE STEL SALARIED PENSIONERS ORGANIZATION WORK TO PROTECT THE PENSIONS AND BENEFITS OF SALARIED RETIREES FROM A QUEBEC OR ALBERTA PLANT?

1.      If you are a salaried retiree, retired from a plant outside of Ontario, but are a member of an Ontario plan, then YES, the Stel Salaried Pensioners Organization will work to protect your pension and benefits.

2.      If your pension and benefit plan originates from a plan other than Ontario then unfortunately, as our retained lawyers only deal in Ontario Law, we are unable to represent you.  Although it will be necessary for you to pursue other means to protect your interests, you are welcome and encouraged to join and become a member of our Organization in order to help support our cause.  It is believed that any successes in Ontario may also prove beneficial to out of province situations.

 

NOTE:  If uncertain as to which category you are in (i.e. 1 or 2 above), you should contact your respective Human Resources Department and request a letter of confirmation as to which province your pension and benefit program originates.

 

 

3.  WHY DID I RECEIVE A “NOTICE TO RETIRED SALARIED BENEFICIARIES?

(IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT R.S.C. 1985. c. C-36, AS AMMENEDED AND IN THE MATTER OF A PROPOSSED PLAN OF COMPROMISES OR ARRANGEMENT WITH RESPECT TO STELCO INC. AND THE OTHER APPLICANTS LISTED IN SCHEDULE “A” APPLICATION UNDER THE COMPANIES’ CREDITORS ARRANGEMENT ACT. R.S.C. 1985. c. C-36, AS AMENDED)

 

Stelco is complying with a court order that requires the Company to send you notice with respect to the Representation Order that was granted.  The Court has appointed the four persons named to act on behalf of the salaried retirees (beneficiaries of the registered plans) throughout the CCAA proceedings.  The four representatives were put forward by the Steering Committee of the Stel Salaried Pensioners Organization  (SSPO) and accepted by the Court.  They will actively partake in the negotiations leading to the development of a Plan of Arrangement and the remaining eleven members of the SSPO Steering Committee will act in an advisory role to them.  The mission of the SSPO is to protect the basic pension and benefit plans for Stelco salaried pensioners.

 

Negotiations will be required inside of the CCAA process and the four persons named will work closely with the SSPO’s legal counsel (Koskie Minsky) on behalf of the Retired Salaried Pension Plan Members (beneficiaries) in an effort to protect pensions and benefits.  Those who do not wish to be represented by the SSPO may opt out in writing as per the notice and must do so before March 15, 2004. That is the purpose of the notice you received. 

 

It is a personal decision for each and every person to make with respect to their wish to be represented by this Organization and its’ representatives. 

 

Those who wish to represent themselves have every right to do so by simply notifying the parties as instructed in the notice.  However, they also must appreciate any form of representation will be at their own expense.

 

There is significant advantage in being part of a large group.  There is strength in numbers and numbers can generate significant resources when and if the need should arise.  A large group of stakeholders can also make themselves heard and their presence felt throughout this process.

 

As yet there is no Plan Of Arrangement, nor have discussions been entered into at this early stage.  The idea behind CCAA is to develop a plan with all stakeholders, which may take the better part of a year or perhaps even longer.

 

 

4.  WHAT IS THE DIFFERENCE BETWEEN CCAA AND THE BANKRUPTCY AND INSOLVENCY ACT, WHICH IS DESIGNED TO LIQUIDATE A COMPANY? 

Briefly, within CCAA there is a ‘stay of proceedings’ which prevents creditors from taking action against the company.  This is of limited duration and must be extended frequently. If Stelco’s restructuring effort fails then the next step is insolvency, at which point the secured creditors, such as banks for example, have first priority of the assets.  The unsecured creditors, including the pensioners and employees among many, get what’s left (not including the pension funds which are separate and secure, to the degree that they are funded).

 

 

5.  We have been told that there are 17 different pension plans.  Are some more secure than others?

Yes, although until we get up-to-date actuarial data we can’t give more details.

 

 

6.  I’ve heard that the hourly plans are more under-funded than the salary plans.  Could they all be merged?  

It is unlikely that they will all be merged.  Generally, hourly and salaried plans are not merged but there is more potential for the different salaried plans to be merged.

 

7.  How might the bridging benefit be affected?

When the bridging benefit is from the pension plan (which we believe it to be) if the plan is wound up and is underfunded the bridge will be reduced proportional to the level of underfunding.  PBGF does not apply to this type of benefit.

 

8.  Does the Stelco’s payment of SSPO’s legal costs compromise the lawyer-client relationship?

The court order specifies that Koskie Minsky take their instructions from SSPO.  The only slight risk is from the account details that Stelco have the right to request before they pay but there will be no disclosure of instructions, advice, tactics or strategy and the lawyers are under overwhelming professional obligation to maintain confidentiality

 

 

9.  Will the life insurance be intact through CCAA?

Life insurance is part of the benefit package which is currently intact.  However, it may be eliminated or reduced during the negotiation process during CCAA.

 

 

10.  What can we do to attack the executives’ ‘gold plated pensions’?

The SSPO scope excludes so called ‘top hat’ pensions and only covers the basic pension.  In other CCAA cases the unions and salaried employees have not been very successful in attacking these pensions.

 

 

11.  Are the widows or widowers of salaried retirees represented by SSPO?

Yes.

 

 

12.  How vulnerable are we to the large corporate creditors and investors?

Make no mistake, we are not at the top of the power apex.  A new investor may not feel a large obligation to retirees.  But, the negotiations are court supervised and should be fair.  Our strengths are political, voting power and moral.

 

13.  What is the benefit provided by PBGF?

PBGF kicks in when an underfunded pension plan is wound up.  It guarantees a full pension up to the first $1000 per month.  Above that the pension is reduced by the percentage underfunding.

 

 

14.  What can happen to pension and benefits during CCAA?

Benefits can be reduced and pension plans can be wound up during the CCAA process.  How and when this occurs is all part of the negotiations.

 

 

15.  How long are the CCAA proceedings expected to last?

We expect to be in the thick of things in 6 months and the whole process will probably take at least 1 year.

 

 

16. If Stelco becomes financially successful after restructuring can the pensioners recover any of the benefits given up in CCAA?

That would be part of the negotiations.

 

 

17.  Why is the pension plan under-funded?

In the 1990s a change was made to the regulations that allowed very big companies to not fund on a solvency basis (that funding required to ensure the plan is fully funded on wind up).  It was assumed that such large companies would not go bankrupt.  Because Stelco took advantage of that regulation, and low interest rates, Stelco’s plans would not be fully funded on wind up, if indeed, they are wound up.  This was a bad regulation and has since been changed.

 

 

18.  Does completion of the CCAA process bring closure to our pension and benefit concerns?

Yes.  On the other hand it’s possible for Stelco to go back into CCAA in the future, as Algoma did.

 

 

19.  How does the SSPO handle the finances?  Does it know what the costs will be?

We know that Stelco will most likely pick up expenses after January 29.  Our expenses before then were about $15 000.  However, there is uncertainty about future costs so the committee wants to build and maintain a contingency fund.

 

20.  What is the significance of the word “crystallize” with respect to benefits?

We will take the position that benefits are vested on retirement and so crystallize (become fixed) but the laws surrounding benefits are much more complex than those concerning pensions.

 

 

21.  Hilton Works is badly contaminated.  If Stelco was liquidated who would have first option on the assets, secured creditors or environmental clean up?

The Ministry would do an environmental assessment and would not allow plant sale before the problems are fixed.  The cost of that would be taken from the assets.

 

 

22.  Do you have any comments on the Union position that Stelco is not insolvent and should be taken out of CCAA?

We don’t have hard data to know if the Union has a case.  If the court lifts the stay and Stelco exits CCAA after declaring itself insolvent it would be very difficult for them to carry on business.

 

 

23.  Can we stop Stelco’s executives from getting the same kind of financial package that Air Canada executives received?

This is one of the most ugly aspects of restructuring, but a new equity investor, one of the most powerful interests, who can lay down his conditions, may be willing to pay to keep key people.

 

 

24.  As an active employee who is a member of SSPO, will my interests be represented?

Legally, SSPO only represents salaried retirees, not active employees, however, there is a considerable overlap of interests, especially for those close to retirement.  Salaried active employees may want their own group to represent their special interests not covered by SSPO.

 

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