Resolute Forest Products pension plans underfunded by $1.9 billion
Resolute Forest Products‘ pension plans are underfunded by $1.9 billion and its employees say they have already given up enough to keep the company in operation.
Minimal solvency level not met
Resolute Forest Products has not met the minimal solvency levels in its pension plans regulated by Quebec and Ontario’s funding relief regulations. These regulations, adopted in 2011, affect approximately 80% of Resolute Forest Product’s unfunded pension obligations.
As a result of these new regulations, Resolute Forest Products has until March 2013 to adopt corrective measures to attain the target solvency ratio within 5 years. The company needs to reduce its pension plan deficits by approximately $500 million.
The company says it will work with other plan stakeholders, including employees, retirees, unions and the provincial governments of Quebec and Ontario to develop corrective measures. Resolute Forest Products reports that with interest rates currently near historic lows, the company will work with these stakeholders to develop corrective measures that balance the need to meet their undertakings to retirees, but also to provide the company with the funding predictability they need to manage our business.
Gary Bragnalo, president of Communications, Energy and Paperworkers Union Local 39 in Thunder Bay, Ontario, said “We did enough. They went and bought Fibrek for a hundred-million bucks. They could have put that in the pension plan. So, if they’re gonna come back and ask for more from the workers, well, I don’t think it’s going to be too long of a conversation”.
Resolute trying to prevent wind up of pensions in Quebec, New Brunswick, and Newfoundland and Labrador
Resolute Forest Products filed a motion with the Quebec Superior Court on June 12, 2012 seeking an order to prevent pension regulators in each of Quebec, New Brunswick and Newfoundland and Labrador from declaring partial wind-ups of pension plans relating to employees of former Abitibi-Consolidated Inc. and Bowater Incorporated operations in these provinces, or a declaration that any claim for accelerated reimbursements of deficits arising from a partial windup is a barred claim under the company’s 2010 creditor protection proceedings.
The company believes that such a declaration would be inconsistent with the court’s confirmation of the plan of reorganization and the terms of the company’s emergence from creditor protection proceedings.
Additionally, a partial wind up plan would likely shorten the period in which any deficit within those plans would have to be funded.
The pension regulators are expected to file contestations to Resolute Forest Products motion by the end of August 2012.
Letter to employees
Resolute Forest Products recently sent a letter to its employees with an update on the pension deficit. In the letter, the company said “the company has no intention of terminating the plan. However, if it were to become necessary to terminate the plan while it has a solvency deficiency, and where the company was not in a position to eliminate the deficiency, your benefits would be reduced.”
- Resolute workers have done ‘enough,’ union says - Company and unions have 9 months to agree on corrective measures for pension plans (CBC)
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