Saskatchewan Wheat Pool has rejected an order from the federal government that it make additional payments to support an employee underfunded pension plan.
On Oct. 26 the Office of the Superintendent of Financial Institutions, or OSFI, sent a notice to the pool directing it to immediately make special payments totalling more than $6.5 million, which OFSI said the pool owes and to ensure the pool remains up-to-date on its payments.
“The SWP has failed to ensure the proper funding of the plan fund,” acting superintendent Julie Dickson said in the letter to pool chief executive officer Mayo Schmidt.
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“Moreover, SWP’s continued failure to remit these payments in order to ensure that the funding requirements are met is contrary to safe and sound financial or business practice.”
The pension plan is in a $38.8 million shortfall position as of Dec. 31, 2005, which if left unresolved will reduce pension payments to 600 active pool employees and 1,400 retirees.
The notice was welcomed by Grain Services Union general secretary Hugh Wagner, who said the pool should “do the right thing” by making all payments as required by OSFI.
However, the pool has filed formal notice that it intends to dispute OSFI’s interpretation of the company’s legal obligations to the plan and threatened to go to court over the issue.
Lawyer Randy Bauslaugh, acting on behalf of the pool, said the company does not believe it is required to make special or additional contributions beyond what the plan requires.
“Our client believes the legislation requires the plan, not the employer, to address funding shortfalls,” he said in a News release
news.
The pool’s position is that the pension plan does not address how to deal with a shortfall, and because the company and union cannot agree on a solution, the plan should be terminated.
“If the superintendent does not agree with the pool, the company intends to seek court direction before it makes any additional payments,” he said.
Wagner dismissed the pool’s talk of going to court as more of the same.
“They’ve been blustering like this for quite some time, and at the same time they’ve increased their (payment) offers,” he said.
The GSU recently rejected an offer from the pool to make a one-time $20 million payment and then wind down the plan, which would have reduced benefits to employees by an estimated seven percent.
Some Western Producer employees remain members of the Saskatchewan Wheat Pool/Grain Services Union
pension plan because of this newspaper’s previous ownership.
