The parent company of Northstar Aerospace Inc. is rejecting as accusation that it has abandoned pensioners who are facing a 24 per cent cut as it moves to close its Milton, Ont. facility in September.
“Heligear does not control the pension design or its investments, which are the responsibility of the pension board,” said Greg Harper, vice-president of human resources at Heligear Acquisition Co. “Heligear has made every payment required in its negotiated collective agreement with the Union which also requires the company to make a final-lump sum payment. Heligear has not proposed any reduction of pension benefits. Any reduction or shortfall is a function of the plan management and design, which are not within Heligear’s control.”
The statement noted Heligear purchased select assets of Northstar Aerospace in 2012 through an insolvency proceeding that saved the company’s businesses in Milton and Tecumseh, Ont. The pension itself is a multi-employer target-benefit plan run by the Canada-Wide Industrial Pension Plan, an arrangement set up in 1970 for employees of companies whose unions have an affiliation with the Canadian Labour Congress.
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Harper’s statement follows claims by Unifor, the union representing the Milton plant’s workers, that the company has unfairly treated pension members who now face a 24 per cent cut to their benefits due to the plan’s shortfall. A 2015 actuarial valuation of the Canada-Wide Industrial Pension Plan reported the fund had a transfer ratio of 65 per cent on a windup basis and a solvency deficit of $115 million. The plan declined to comment on the Northstar Aerospace situation.
Heligear argues Unifor has no legal basis to hold the company responsible for the pension shortfall and is blaming the union for the current state of the plan. “Without Heligear’s bold investment and subsequent support of these businesses, they would not likely exist today,” said Harper. “At that time, the pension plan for Milton hourly employees was underfunded due to poor management, including plan design, prior to 2012. Heligear promised to continue contributions to the plan beginning in 2012, but did not have the resources to accept responsibility for the consequences of prior years of poor management by the previous company.”
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Unifor members occupied the company’s Milton operations in protest until late Friday night. Northstar Aerospace’s only reason for failing to make up the shortfall is “corporate greed,” according to Jerry Dias, Unifor’s national president, in a press release. According to a posting on Unifor’s Twitter feed, a “cease-and-desist order” brought the occupation to an end on Friday.
Jordan Fremont, a pension lawyer at Hicks Morley Hamilton Stewart Storie LLP, notes the union is essentially making a moral argument about the company’s obligations given the provisions in the collective agreement. “The union is seeing that their members are going to be faced with reduction or shortfalls for the pension, and they’re basically asking the employer to kick in extra money to make that not happen,” he says.
“The union is just trying to put some more suasion on [the company] to do what the union thinks is the right thing to do,” he adds. “But it’s a legal argument versus a moral argument. And in business, morals don’t always win.”
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In light of the competing arguments, who do you agree with? Do you think Northstar Aerospace has an obligation to make up the shortfall or is there another side to the story given the history of the plant and the pension plan? Have your say in our weekly online poll.
As for last week’s poll, it asked whether high prices and excessive regulation of recreational marijuana are likely to push users to try to access the drug through their benefits plans once the law changes next year. Just 13 per cent of respondents said feel the move to legalize marijuana will lead to people seeking to access it at a lower price through their benefits plan. Another 33 per cent said the provisions in benefits plans would allow plan sponsors to prevent misuse and deny coverage. The remaining 53 per cent said the issue remains uncertain as the government has yet to provide legislation surrounding pricing and other rules for recreational marijuana.
