Ontario government appoints representative to protect pensioners
TORONTO, Aug. 31 /CNW/ - The Ontario government today appointed a representative to protect the interests of pensioners covered by the Pension Benefits Guarantee Fund while Algoma Steel Inc. continues its restructuring efforts.
Bill Farlinger, Chairman of the Board of Ontario Power Generation, will be at the table while Algoma Steel and its stakeholders work to restructure Canada's third largest steel company.
The government made the decision in order to protect pensioners and the assets of the PBGF. Algoma Steel's pension plan is currently underfunded by over $500M.
"The government is concerned about one company claiming the entire Fund," said Minister of Finance Jim Flaherty. "The Fund was established in 1980 to protect over one million pension plan members and pensioners in Ontario, not just one company."
"The government will have a very specific focus in this process and that focus is pension protection," said Minister of Economic Development and Trade Bob Runciman. "We remain firm that we will not provide direct financial assistance to individual companies."
Ministry of Finance
August 31, 2001
Pension Benefits Guarantee Fund
The Pension Benefits Guarantee Fund (PBGF) was established in 1980 to protect basic pension benefits for pension plan members when a defined benefit pension plan is wound up with insufficient assets.
The PBGF is funded by annual levies charged to employers with defined benefit pension plans. In general, the PBGF guarantees the first $1,000 per month of pension benefits. The PBGF does not guarantee non-pension benefits such as health or dental, or future indexation of pension benefits. The pension benefits of over a million Ontarians are protected by the PBGF.
The PBGF is administered by the Financial Services Commission of Ontario (FSCO). The fund currently has an estimated $200 million available to pay new claims. PBGF assets are invested in cash equivalents or bonds.
While PBGF revenues and disbursements vary from year to year, revenues have averaged about $30 million per year and annual payouts on claims have averaged $10 million.
The "qualifying plans" provision was enacted in 1992. The provision entitles any employer whose pension plans have assets in excess of $500 million (at market value) to declare them to be qualifying plans.
- Qualifying plans must fund current service costs (the costs of benefits
earned in a year) as well as any unfunded liabilities (the excess of
plan liabilities over assets).
- However, unlike other pension plans, qualifying plans are not required
to make "special payments" for solvency deficiencies.
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For more information visit www.gov.on.ca/fin
For further information: Media Contact: Bronwen Evans, Minister's Office, Ministry of Finance, (416) 325-0369