A group of former forestry workers feel they have been slighted in a move by the IWA Forest Industry Pension Plan. Stephen Thacker, one of those workers, said because of an amendment made by trustees, he and other workers will no longer be paid out the commuted value of their pension.
The letter that Thacker and others received earlier this year read: "When you terminated your membership you were told that a payment of the balance of your commuted value would be paid out five years from the initial payment. This is no longer the case. Effective March l, 2014, the Trustees will no longer be making these balance payments. Therefore, if you are expecting a balance payment after March 1, 2014, this payment has been eliminated."
Thacker said he wants others affected by this change to know about it and band together to perhaps do something.
"There's supposed to be 2,500 people that this is affecting at least," Thacker said. "I just want to find these people and get them on board."
He said he has a local law firm looking into it and was also recently approached by a group from the Lower Mainland. That group is seeking legal advice from a speciality lawyer for pensions.
They are now waiting to find out from the two lawyers what their next move should be.
"Basically that's a contract — how can you go back on that?" Thacker said.
“The funds aren’t there they say,” Thacker said. “Every year when we were in contract negotiations, all we ever heard was when the fund was fully funded. I think it’s only been once in the 30 years since I’ve been in the IWA. Is it ever going to be fully funded? With more automation, with more people losing their jobs, sawmills shutting down?”
“The amendments were made because the current funding of the pension plan under B.C. pension legislation—it’s required that the board of trustees make changes to the plan to demonstrate that the contributions coming into the plan are sustainable for benefits being paid,” said Derrick Johnstone, deputy general manager at IWA Forest Industry Pension & Ltd Plans.
“To my knowledge there’s never been a reduction like this. It’s the board’s responsibility to examine all options that are available to them. They worked for months with their advisors to determine the most fair and equitable with the membership. The elimination of the commuted value payments was one of the changes.
“They made some other benefit reductions and at the same time active members increased their contribution significantly.”
Johnstone said once the board of trustees approved the benefit reductions they had to go to the superintendent of pensions for B.C. for approval before they could be enacted, and that approval was given by the superintendent.
“The elimination of the commuted values has only impacted people that have left the plan,” Johnstone said. “The 25,000 pensioners have not been affected. The members in the plan are paying more, as are the employers in the plan.”
He said the board of trustees responsible for the pension plan are made up of equal parts union representatives and industry representatives.
He explained the plan is called a multi-employer plan. It represents all of the bargaining forest-industry members, in this case the United Steelworkers.
The commuted value changes affected about 2,400 people.
Johnstone said there is really no process to appeal the changes for those affected.
“Once the superintendent of pensions has approved them, they are in effect,” he said. “Of course members are free to solicit legal advice on their own, and many have.”
Thacker said he is losing $26,000 with the loss of the commuted value payments.
“On a pension, that’s a year’s wages,” he said. “A lot of people think we are just commuted value hunters — well, this was offered to us by the IWA’s policy.
“We got a percentage on our commuted value when we broke service, which means we don’t work in the industry anymore, they commuted the value of our pensions.”
The IWA noted in the letter that many factors over the past several years have made it difficult for the financial health of the Plan.
“Despite our positive investment returns over the past six years, pension costs continue to grow faster than Plan assets,” the letter read. “Under British Columbia pension law, the Board is required to make amendments to ensure the Plan remains sustainable for the future. The Trustees looked at options available and considered fairness to all members.
“When you terminated your membership in the Plan and took out the commuted value of your pension, a certain portion was ‘held back’ due to the funded position of the Plan at that time. Under BC Pension law, the Plan is prohibited from making the full payment of a member’s commuted value if the Plan is not fully funded. Our financial position has declined further since the time you terminated your membership and these balance payments would further reduce the Plans assets.”
Thacker said he heard that those affected could apply to the Superintendent at a later date to possibly reverse that.
“But if they already took it away from us are they really going to give it back?” he said. “That would be a total shocker.”