Workers and pensioners at the NewPage mill in Port Hawkesbury could see better pension benefits under legislation introduced today, May 9.
"Government recognizes that buying annuities in today's market could mean a significant loss of benefits for NewPage employees and pensioners," said Minister of Labour and Advanced Education Marilyn More. "We are taking steps today to give these women and men an option that could result in some market recovery and some restoration of lost value."
Within six months of a pension plan closing, its administrator prepares a financial report that compares the value of the plan's assets with its obligations. After that report is approved by the province's superintendent of pensions, annuities are purchased to provide plan members future pension benefits.
NewPage's four pension plans are underfunded. If annuities were purchased now, pension benefits would be reduced by up to 40 per cent.
The bill introduced today would give the NewPage pension plans up to 11 years to recover from low investment returns and interest rates. While there are no guarantees about future market performance or interest rates, long-term performance has been positive.
It would also give members information to help them make their choice, the right to opt in or opt out of the extended wind-up, and an annual update of how the plan is doing each year of the extended wind-up.
"This bill will give our pensions a chance to grow and to take advantage of higher interest rates in the future," said Archie MacLachlan, vice-president of Local 972 of the Communications, Energy, and Paperworkers Union, which represents NewPage's unionized workers. "Our members understand that there are risks involved in the stock market and that interest rates may remain low for many years."
Three of the NewPage pension plans are for unionized workers in the mill, office and clerical positions and woodland operations and the other is for salaried, non-unionized workers. As of Sept. 30, 2011, the four plans included 646 active employees, 763 retired members, 46 inactive members and 53 deferred members.
Source: Nova Scotia Government