Cliffs Pensioners, Former Workers Recover 60% of Pension Shortfall
WABUSH, N.L., May 17, 2018 /CNW/ - After years of struggle, pensioners and former unionized employees of Cliffs Natural Resources in Labrador and Quebec may soon recover 60% of a shortfall in their pension funds.
The pensioners and former workers who had been represented by the United Steelworkers while actively employed will recover $18 million of a $28-million pension shortfall, according to terms of a settlement that requires approval by the courts and creditors affected by Cliffs' bankruptcy protection proceedings.
The settlement also calls for those pensioners to share a payment, estimated at $10.9 million, to compensate for the loss of health benefits. The exact amount of the payment will be confirmed at a later date.
The settlement affects 1,700 pensioners and former unionized employees of Cliffs' former Wabush Mine in Labrador and the company's rail operations in Quebec known as Chemin de fer Arnaud.
Cliffs pensioners saw their health benefits eliminated after the company closed its Canadian operations and filed for creditor protection in 2015, under terms of the Companies' Creditors Arrangement Act (CCAA). The pension plan had not been fully funded and pensions were subsequently cut by 21 to 25%.
"This is good news for pensioners and former workers," said Marty Warren, United Steelworkers (USW) Director for Ontario and Atlantic Canada.
"Our union has fought relentlessly alongside the former Cliffs workers and pensioners and this struggle has finally paid off with this settlement," Warren said.
Pension beneficiaries registered as creditors with the court appointed monitor in the Cliffs CCAA case, while the USW initiated and pursued a number of legal remedies to obtain the maximum for former employees, including priority treatment for the pension plan. The Steelworkers also brought a class-action suit on behalf of the pensioners and former workers against Cliffs' parent company in the United States.
While the settlement represents a significant victory for pensioners, there remains a desperate need to reform outdated federal legislation to better protect workers' pensions and benefits in bankruptcy and insolvency cases, Warren said.
"In this case, we were able to recover higher amounts than we originally hoped for. But the fundamental problem remains – pensioners and workers most often get the short end of the stick in corporate bankruptcy and insolvency cases. Their pensions and benefits are relegated to the back of the line, while banks and other financial institutions get priority," Warren said.
"Behind every Cliffs pensioner and worker who will suffer less harm as a result of this settlement, there are many more former Sears employees who will come out empty-handed," Warren noted.
"The law must change. That's why Steelworkers have been lobbying federal MPs from every party this spring to demand better legislation that puts workers and pensioners first."
SOURCE United Steelworkers (USW)
Marty Warren, USW District 6 Director, 416-243-8792, [email protected]; Tony DePaulo, Assistant to the USW District 6 Director, 905-869-0760, [email protected]; Bob Gallagher, USW Communications, 416-544-5966, 416-434-2221, [email protected]
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