Cliffs needs to better protect Wabush pensioners, Dwight Ball says
Wabush pension cutbacks to take effect in early 2016
Premier Dwight Ball says Cliffs Natural Resources has an obligation to provide for retired workers in Labrador West, following news that pension payments will be reduced in the new year.
"I wrote Cliffs [this morning] asking them to live up to their obligations — be the corporate citizen that they say they are — and I've asked them to honour their obligation to those pensioners," Ball told reporters Thursday.
"It's a difficult situation ... It leaves an impact on the pensioners that are receiving benefits today and, of course, future benefits for [workers] that will receive benefits in the future."
Disappointing news
Retired workers at the now closed Wabush Mines got disappointing news Thursday when the provincial superintendent of pensions revealed workers' payments will be reduced in the new year.
Michael Delaney told reporters that retirees will continue to receive payments but, because the pension fund is not full, they can expect a reduction in a matter of months.
Roughly 2,300 former workers will be affected — some 1,200 who were put out of work when the mines and related railways shut down in 2014, plus another 1,100 who had retired.
He said some retirees have drawn 100 per cent of their pensions and that's had a negative impact on those who haven't yet retired.
"If the plans are 75 to 80 per cent funded and a retiree is receiving a pension cheque of a $1,000 dollars a month, then the expectation is that in February or March of next year, that pension cheque will be reduced to the neighbourhood of $750 to $800 dollars a month to reflect the funded position of the plans," Delaney said.
Cutbacks coming in 2016
After closing its costly operations almost two years ago, Cliffs Natural Resources is now trying to sell its Canadian assets — including Wabush Mines.
But Delaney said it's unlikely a new sponsor will come on board and "assume the responsibilities."
Delaney expects pensioners will see a 20 to 25 per cent decease in their benefits.
Winding up the plan, he said, will ensure there is money for everyone.
"This decision is intended to ensure that all members will be treated fairly and equitably under the plan windup process," he said.
"For the people who have not yet retired, when their benefit is eventually paid from the plan, there won't be a situation where retirees have been overpaid and eaten into the amount that may be payable to those other members."
Delaney said the decision to terminate the pension plans is also in the best interests of future buyers. A new employer of the mines, he said, won't be financially obligated to uphold the previous agreement.
According to Delaney, the superintendent of pensions is an independent position that acts in the best interests of members, and is independent of government.
With files from Glenn Payette