Government has taken action to protect the pension benefits of workers and retirees at Catalyst Paper by amending the Pensions Benefits Standards Regulation to help ensure that pension entitlements for Catalyst salaried retirees and workers will be more secure should the company owners decide to sell or close one or more of its three pulp and paper mills in Port Alberni, Crofton and Powell River.

In 2012, Catalyst Paper filed for protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA) to undergo a restructuring process. To reduce cost pressures on the company, the Province amended the Pensions Benefit Standards Regulation to relieve Catalyst of its normal funding obligations by giving the company a longer period to pay off its significant 2012 pension funding shortfall.

Catalyst’s salaried employees’ pension plan had an estimated pension funding shortfall of $74 million at the time of restructuring in 2012. The usual payment period for a solvency deficiency is five years. Instead, the effect of the relief was to give Catalyst flexibility to pay off the 2012 pension funding shortfall over 16 years, with a balloon payment to pay off that solvency deficiency by June 30, 2028.

In addition to pension relief, employee unions also agreed to wage concessions to support continued operation of all three mills in Port Alberni, Powell River and Crofton.

In the context of U.S. tariffs on paper products, the June 2018 sale of Catalyst’s U.S. assets, and concerns expressed by the Catalyst retirees associations, the Province has modified the conditions of the 2012 relief to improve protection for the salaried workers’ pensions. The regulation has been modified such that, in the event of a sale of assets or a filing under the CCAA, the entire pension funding shortfall would become payable immediately. This will help protect the pensions of almost 1,000 retired salaried employees.

In the absence of a sale, CCAA filing or the other trigger conditions listed in the amendment, the exemption continues as it has since 2012, and Catalyst will be required to continue to make payments and entirely pay off the 2012 pension funding shortfall by June 2028.

The B.C. government has been actively engaged in working with Catalyst to help support the sustainability of Catalyst’s mills at Crofton, Port Alberni and Powell River, and Metro Vancouver distribution centre.

In April 2018, Premier John Horgan and ministers convened a roundtable with Catalyst, MLAs, mayors and labour representatives to discuss competitiveness in the face of the U.S. decision to levy high duties against Catalyst Paper’s exports of newsprint, book publishing and printing papers.

Since April, the provincial government has been engaged in detailed discussions with Catalyst to address impacts of U.S. duties, examine competitiveness issues, and work toward improving the viability of the company’s three mills and HQ/distribution centre, which employ 1,500 people. This work is ongoing and is not impacted by the regulatory change announced today.

Catalyst Paper’s combined operations in B.C. generate over $2 billion in annual economic activity and are key contributors to the local economies of Vancouver Island, Powell River and Metro Vancouver.