Retirees and former unionized employees of mining company Cliffs Natural Resources in Canada may soon recover C$18 million ($14 million), or 60% of a C$28 million shortfall in their pension funds, according to terms of a settlement.
Members of Cliffs Natural Resources’ pension saw their health benefits eliminated after the company shuttered its Canadian operations and filed for creditor protection in 2015 under terms of the Companies’ Creditors Arrangement Act (CCAA), according to Canada’s United Steelworkers (USW) union. The pension plan had not been fully funded, and pensions were reduced by 21% to 25%.
The settlement affects 1,700 retirees and former unionized employees of Cliffs Natural Resources’ former Wabush Mine in Labrador, and the company’s rail operations in Quebec. The settlement calls for the pensioners to share a payment, estimated at C$10.9 million, to compensate for the loss of health benefits, although the precise amount of the payment will be confirmed at a later date, the union said.
“This is good news for pensioners and former workers,” Marty Warren, the union’s director for Ontario and Atlantic Canada, said in a release. “Our union has fought relentlessly alongside the former Cliffs workers and pensioners and this struggle has finally paid off with this settlement.”
The USW said pension beneficiaries had registered as creditors with the court-appointed monitor, while the USW sought legal maneuvers to obtain as much as it could get for former employees, including priority treatment for the pension plan. The union also brought a class-action suit on behalf of the pensioners and former workers against Cliffs Natural Resources’ parent company in the US.
Warren said that despite the settlement, pension reform in Canada is still needed to better protect workers’ pensions and benefits in bankruptcy and insolvency cases.
“The fundamental problem remains—pensioners and workers most often get the short end of the stick in corporate bankruptcy and insolvency cases,” he said. “Their pensions and benefits are relegated to the back of the line, while banks and other financial institutions get priority.”
The settlement still requires the approval by the courts, as well as the creditors affected by the company’s bankruptcy protection proceedings.