Mark McNeil Hamilton Spectator

November 16 2017


Stelco’s five pension plans will be administered by Morneau Shepell, the high-profiled HR consulting and pension management firm founded by federal Finance Minister Bill Morneau’s father.

The announcement Wednesday by the Financial Services Commission of Ontario comes after the regulatory agency last month said the company would take over administrative responsibilities for the Sears Registered Retirement Plan.

Both pension plans have been in the news with the liquidation of Sears and the nearly three year court-supervised restructuring of U.S. Steel Canada that eventually led to the steelmaker re-emerging at the end of June with its old name and new owner Bedrock Industries.

McMaster University business professor Marvin Ryder says pension plans for Sears employees are in a worse shape than those for Stelco workers.

“It doesn’t mean Stelco pensions won’t be reduced at some point in the future,” he said.

“It’s too early to know what kind of hair cut might be required because we don’t know how much money might come in.”

The restructuring plan calls for a land trust to remediate and sell currently unused Stelco property. Revenue from that, along with up to $300 million in contributions from Bedrock over the next several years depending on business results, will be used to mitigate an $800 million pension fund shortfall.

As well, Morneau Shepell will subcontract a financial services company to invest money in the plan now to help improve the bottom line.

Morneau Shepell has been in the pension administration business for more than 50 years and administers 40 per cent of pension funds of the top 500 companies in Canada.

“If I was a Stelco retiree I would take great comfort in knowing Morneau Shepell was administering my pensions,” said Ryder. “Morneau Shepell is the gold standard. These people know what they are doing. They have a reputation for this.”

A release from the FSCO said, “The five pension plans are continuing, and monthly pension payments to retirees will continue without interruption. Morneau Shepell will be in contact with all plan members in the new year.”

“Morneau Shepell will work co-operatively with all stakeholders including Stelco, plan members, and their representatives to ensure commitments made to the pension plans in the restructuring are fulfilled.”

A spokesperson for FSCO was not available Wednesday for comment nor was a spokesperson for Morneau Shepell.

United Steelworkers Local 1005 president Gary Howe says the optics of the handing the contract to a Liberal-connected pension administration company doesn’t look good.

“Isn’t this a conflict of interest? You have the provincial Liberals handing this off to the (federal) finance minister’s company … you’d think it was a conflict of interest but apparently it is not.”

Meanwhile, Bill Morneau is facing continued criticism over Conflict of Interest with his sponsorship of pension Bill C-27 at a time when he held one million shares in his family company.

When it comes to Stelco pensioners, Howe said, the greater concern for the time being is finding resources to cover pensioner benefits, something that has been handed to Steelworkers unions in the case of unionized employees.

“We’ve been finding that there is almost one death a day … we have seen a lot of attrition in our pension plan. With the pension plan we have a real mature plan.”

This means, he said, as time goes on there will be less money required for pension payments. However, aging pensioners on the books today have great demand for benefits, said Howe.

Local 1005 receives $20 million per year to pass on in benefit payments to 1005 retirees. Howe says there has been some reduction in benefit payments that members previously received but so far they are managing. Salaried retirees have seen benefit reductions as well, most notably with life insurance that they no longer receive.