The pension battled heated up in Hamilton at a major rally at the local Steelworkers Hall on Friday afternoon, but it’s been a hot issue since the US Steel Canada (formerly Stelco) entered into bankruptcy protection in September 2014. In fact, the new unofficial slogan of the influential USW Local 1005 is ‘CCCA is Legalized Theft,’ which often appears on banners and shirts worn by union members and their allies.
The CCAA [Companies’ Creditors Arrangement Act] along with the Bankruptcy and Insolvency Act [or BIA], prioritizes the payment of secured creditors over the payment of workers’ benefits and pensions. This effectively allows for the drastic reduction or suspension in benefits and pensions for retirees during bankruptcy protection, and sees pensions as one of the last items paid. Pensioners can be left without money while secured CEO bonuses are paid out. Most recently, the CCAA was used in such a manner in the case of Sears Canada, and its application has wreaked havoc on Stelco retirees in recent years. Since 2009, CCAA protection has been granted by the federal government in 286 separate instances.
Pension entitlements for workers and retirees have become an problematic target for employers in recent years at the bargaining table, during a work closure or relocation, and through bankruptcy protection. In some instances, this has led to the introduction of two-tiered pensions in which new hires are afforded a less secure retirement, while in others, it has led to the overall suspension of pensions for companies going through bankruptcy.
The attack on pensions is especially fierce when a defined benefit, or DB pension, is at stake. A defined-benefit pension (as Stelco retirees have) specifies a clear and guaranteed monthly amount each month for retirees, regardless of broader market conditions at the time. In contrast, a defined-contribution (DC) pension specifies how much workers and employers contribute each month during employment, but leaves monthly (or annual) payments for retirees based upon market conditions, and inherently riskier.
In the case of US Steel Canada, a defined-benefit plan provided an important and hard-earned financial entitlement to retirees and offered them secure and stable payments, but left US Steel Canada with what they saw as excessive long-term expense after acquiring Stelco. This became especially problematic during it’s bankruptcy. After US Steel Canada declared bankruptcy, the workers’ pension – which is an “unsecured” debt – became one of the last creditors to receive compensation. Instead, secured creditors – most notably lender such as banks (and in the case of US Steel Canada, their parent company US Steel) – were in line for funds before the pensioners.
Perhaps increasingly because of situations such as this, workers have come to see pensions as deferred wages. In other words, unions are urging their members and the public to view pensions as wages that workers could have been entitled to during their working lives, but instead deferred them until retirement. The money, in short, should belong to the retirees- not the employer.
Friday September 15 was a standing-room only event at the Hamilton Area Steelworkers office on Barton St, with most national and local media outlets on hand. The many Steelworkers in attendance were joined by Machinists, Energy Professionals, CUPE members, postal workers, the local Labour Council President, and other workers – both unionized and non-unionized. Hamilton Mountain MP Scott Duvall (himself a former Hamilton-based Steelworkers Local President) and outgoing Federal NDP leader Tom Mulcair announced their intent to introduce legislation that amend the CCAA and BIA to place pensions as secure creditors that would then receive the same consideration as banks and other lenders. Additionally, Duvall’s legislation would require pension plans to be 100 per cent funded before secured creditors are paid and would prevents companies from suspending other retirement benefits during court-supervised restructurings, as was the case at U.S. Steel Canada.
This type of legislation is certainly needed, and it’s announcement from Duvall came a mere days after Sears retirees found out they would only be entitled to 81% of their expected pension. Duvall didn’t mince words at the rally, asserting – rightly – that “The workers are not asking for anything more than what they already have…They are asking to commit to the agreements for employment and (for companies) to stop stealing from them.”