Essar Steel Algoma will receive pension fund relief from the province.
The new regulation allows for fixed payments over the next three years and extends the amortization period, through to 2024. The regulation is deemed effective as of December 1, 2013.
Historically low interest rates have led many of Ontario’s defined-benefit pension plans, both public and private, to seek relief measures. Despite ongoing payments to the plans, Essar Steel Algoma's pension contribution requirements have more than doubled year over year, escalating to levels that were not sustainable. This led Essar to pursue an alternative pension funding model.
“This new funding formula provides Essar Steel Algoma with greater predictability in the near term and more manageable payments over the long term,” Essar CEO Kalyan Ghosh said in a statement. “We truly appreciate the support of all of the plan members, including our employees, retirees and the union; without them this solution would not have been possible.”
The regulation was passed with the help of Sault MPP David Orazietti.
“I am pleased that our government has been able to accommodate this important pension relief request made by Essar Steel Algoma,” Orazietti said in the release. “Essar is a vital part of our community and region and this step will help them work toward long-term sustainability.”