The province has taken action to protect the pension benefits and jobs for workers at Catalyst Paper, which owns and operates the pulp and paper mill in Crofton, and operations at Port Alberni and Powell River.
There are currently almost 1,000 retired workers from Catalyst Paper who receive pension benefits, and the company employs about 1,500 workers.
Effective immediately, the province has amended the Pension Benefits Standards Regulation to modify the relief granted Catalyst in 2012 by the previous Liberal government.
That relief gave Catalyst Paper a longer period to pay off its significant 2012 pension funding shortfall.
This also allowed Catalyst to focus on its operations, while still securing pension benefits for its salaried retirees and workers.
“In the face of punitive U.S. trade action, our job is to make sure the interests of B.C. workers and retirees are protected,” said Premier John Horgan.
“We are working hard to address the impacts of this threat and ensure the long-term viability of Catalyst’s B.C. operations, but should threatened tariffs force Catalyst Paper to take desperate actions to protect its own interests, our government’s action will protect retirees and workers.”
Ned Dwyer, Catalyst’s president and CEO, said the company understands that Catalyst’s operations are critical to its employees, pensioners, suppliers and its operating communities.
“With strong pulp and paper prices, we have been able to withstand the onerous U.S. duties we face, but the industry requires real solutions to address the ongoing challenges in B.C. with respect to fibre, electricity costs and other competitiveness issues,” he said
Catalyst recently liquidated its U.S.-based assets and operations in a $175-million deal.
The government’s initiative means pension entitlements for Catalyst’s salaried retirees and workers would be more secure should the company owners, in the face of tariffs, be forced to sell or close one or more of its three pulp and paper mills on the Island.
This would be accomplished by insisting the company fund the remainder of the 2012 outstanding pension obligation immediately.
U.S.-Canada trade relations have deteriorated in recent months and B.C. trade officials now anticipate punitive U.S. tariffs, possibly as high as 28.5 per cent, on Catalyst’s products as early as next month.
“Our government is putting retirees and workers first,” Horgan said.
“We cannot stand by and allow almost 1,000 Catalyst retirees — with an average company pension already less than $20,000 per year — to be last in line should U.S. tariffs push Catalyst into bankruptcy or dissolution.”
In 2012, Catalyst filed for protection from its creditors to undergo a restructuring process.
To reduce cost pressures on the company, the province amended the Pensions Benefit Standards Regulation to relieve Catalyst of its normal funding obligations by giving the company a longer period to pay off its pension funding shortfall.
Catalyst’s salaried employees’ pension plan had an estimated pension funding shortfall of $74 million at the time of restructuring in 2012.
The usual payment period for a solvency deficiency is five years.
Instead, the effect of the relief was to give Catalyst flexibility to pay off the 2012 pension funding shortfall over 16 years.
The regulation has been modified such that, in the event of a sale of assets or a filing under the CCAA, the entire pension funding shortfall would become payable immediately.