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O. Reg. 202/02: ALGOMA STEEL INC. PENSION PLANS

filed June 28, 2002 under Pension Benefits Act, R.S.O. 1990, c. P.8

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ONTARIO regulation 202/02

made under the

Pension benefits act

Made: June 26, 2002
Filed: June 28, 2002
Printed in The Ontario Gazette: July 13, 2002

algoma steel inc. pension plans

contents

 

Interpretation

1.

Interpretation

 

Original pension Plans

2.

Exemptions re winding up

3.

Payments on winding up

4.

Duties of administrator re winding up

 

New Pension Plans

5.

Exclusion from the Guarantee Fund

6.

Restrictions re annuities and transfers on wind up

 

Amendments to
the New Pension Plans

7.

Amendments re escalated adjustments and early retirement provisions

8.

Restrictions on increasing benefits

9.

Special early retirement window benefits

10.

Special plant closure benefit

 

Special Payments
(New Pension Plans)

11.

Initial solvency deficiency

12.

Special early retirement window benefit deficiency

13.

Solvency liabilities

14.

Special payments

15.

Solvency asset adjustment

 

Reports
(New Pension Plans)

16.

Report upon establishing the new pension plans

17.

Other reports

 

Interpretation

Interpretation

1. (1) In this Regulation,

“early retirement window” means a period,

(a) that begins on January 1, 2002 and ends on October 31, 2002,

(b) that begins on January 1, 2003 and ends on October 31, 2003, or

(c) that begins on January 1, 2004 and ends on July 31, 2004;

“General Regulation” means Regulation 909 of the Revised Regulations of Ontario, 1990 (“General”) made under the Act;

“new Hourly Employees Plan” means The Algoma Steel Inc. Pension Plan for Hourly Employees registered under the Act as number 1079904;

“new pension plans” means the new Hourly Employees Plan, the new Salaried Employees Plan and the new Wrap Plan;

“new Salaried Employees Plan” means The Algoma Steel Inc. Pension Plan for Salaried Employees registered under the Act as number 1079896;

“new Wrap Plan” means the Algoma Steel Inc. Wrap Pension Plan registered under the Act as number 1079888;

“original Hourly Employees Plan” means The Non-Contributory Pension Plan Covering Hourly Paid Bargaining Unit Employees of Algoma Steel Inc. registered under the Act as number 335802;

“original Salaried Employees Plan” means The Algoma Steel Inc. Salaried Employees Pension Plan for Employees in Canada registered under the Act as number 335810.

(2) Expressions in this Regulation have the same meaning as in the General Regulation, except where otherwise indicated.

Original Pension Plans

Exemptions re winding up

2. The following provisions do not apply with respect to the original Hourly Employees Plan or the original Salaried Employees Plan:

1. Subsections 68 (2) and (5) of the Act.

2. Section 75 of the Act.

3. Subsections 81 (1), (2), (3), (5) and (8) of the Act.

4. Section 86 of the Act.

5. Subsections 34 (5), (6) and (7) of the General Regulation.

Payments on winding up

3. (1) Where an order has been made under subsection 83 (1) of the Act in respect of the original Hourly Employees Plan, the administrator shall pay to each person who is entitled on wind up to payment of benefits guaranteed by the Guarantee Fund or other amounts guaranteed by the Guarantee Fund an amount equal to the sum of,

(a) 100 per cent of the benefits and other amounts for the person included in the calculation of the Guaranteed Benefit liability; and

(b) the amount determined under subsection (2) related to all other benefits for the person included in the calculation of the Ontario wind up liability.

(2) The amount referred to in clause (1) (b) is determined as follows:

1. Calculate the ratio of the Ontario assets of the plan to its modified Ontario wind up liability as of September 17, 2001 but before any transfer of assets to the new Hourly Employees Plan.

2. Multiply the ratio by the value of 100 per cent of the benefits in respect of the person, included in the calculation of the modified Ontario wind up liability but not included in the calculation of the Guaranteed Benefit liability in respect of the person.

(3) Where an order has been made under subsection 83 (1) of the Act in respect of the original Salaried Employees Plan, the administrator shall pay to each person who is entitled on wind up to payment of benefits guaranteed by the Guarantee Fund or other amounts guaranteed by the Guarantee Fund an amount equal to the sum of,

(a) 100 per cent of the benefits and other amounts for the person included in the calculation of the Guaranteed Benefit liability; and

(b) the amount determined under subsection (4) related to all other benefits for the person included in the calculation of the Ontario wind up liability.

(4) The amount referred to in clause (3) (b) is determined as follows:

1. Calculate the ratio of the Ontario assets of the plan to its modified Ontario wind up liability as of September 17, 2001 but before any transfer of assets to the new Salaried Employees Plan.

2. Multiply the ratio by the value of 100 per cent of the benefits in respect of the person, included in the calculation of the modified Ontario wind up liability but not included in the calculation of the Guaranteed Benefit liability in respect of the person.

(5) On application by the administrator, the Superintendent may, from time to time, allocate from the Guarantee Fund and pay to the original Hourly Employees Plan or the original Salaried Employees Plan, as the case may be, sufficient money to provide, together with the Ontario assets, for the continued payment of benefits determined under this section and under section 34 of the General Regulation.

(6) In this section,

“Guaranteed Benefit liability” has the same meaning as in subsection 34 (4) of the General Regulation;

“modified Ontario wind up liability” has the same meaning as in subsection 34 (3) of the General Regulation.

Duties of administrator re winding up

4. (1) This section applies in the event of the wind up of the original Hourly Employees Plan or the original Salaried Employees Plan.

(2) The administrator of the applicable pension plan shall not purchase an annuity from an insurance company in satisfaction of the obligation under the plan to provide a pension unless the market value of the assets of the plan is at least equal to the premium required to be paid to the insurance company to purchase the annuity.

(3) The administrator of the applicable pension plan shall give the Minister of Finance a copy of any report that the administrator is required to file with the Superintendent.

New Pension Plans

Exclusion from the Guarantee Fund

5. (1) Pension benefits provided by the new pension plans are not guaranteed by the Guarantee Fund.

(2) The administrator of any of the new pension plans is not required to file a Pension Benefits Guarantee Fund assessment certificate, despite subsection 18 (7) of the General Regulation.

(3) Algoma Steel Inc. is not required to pay to the Guarantee Fund an annual assessment in respect of any of the new pension plans, despite subsection 37 (1) of the General Regulation.

(4) Sections 30 and 37 of the General Regulation do not apply with respect to the new pension plans.

Restrictions re annuities and transfers on wind up

6. Subsection 29 (8) of the General Regulation does not apply with respect to the new pension plans.

Amendments to
the New Pension Plans

Amendments re escalated adjustments and early retirement provisions

7. (1) The new Hourly Employees Plan or the new Salaried Employees Plan, as the case may be, is exempt from sections 14 and 26 of the Act with respect to an amendment described in subsection (2) if the amendment is filed with the Superintendent on or before September 1, 2002.

(2) The exemption relates to an amendment of the escalated adjustment and early retirement provisions that is effective on September 17, 2001.

Restrictions on increasing benefits

8. (1) Until the initial solvency deficiency and the special early retirement window benefit deficiency in the new Hourly Employees Plan or the new Salaried Employees Plan, as the case may be, are liquidated, the plan shall not be amended to increase pension benefits or ancillary benefits except as authorized by subsection (2) or (3).

(2) Amendments to the pension benefits and ancillary benefits provided by the new Hourly Employees Plan may provide for,

(a) the special early retirement window benefits described in section 9;

(b) the special plant closure benefit described in section 10;

(c) escalated adjustments that are not in excess of the escalated adjustments under the original Hourly Employees Plan as they existed on September 16, 2001; and

(d) extension of the final average earnings formula for employment after July 31, 1999 under the original Hourly Employees Plan in effect on September 16, 2001 to some or all years of employment before July 31, 1999 of a member of the plan.

(3) Amendments to the pension benefits and ancillary benefits provided by the new Salaried Employees Plan may provide for,

(a) the special early retirement window benefits described in section 9;

(b) the special plant closure benefit described in section 10; and

(c) escalated adjustments that are not in excess of the escalated adjustments under the original Salaried Employees Plan as they existed on September 16, 2001.

Special early retirement window benefits

9. (1) The special early retirement window benefits provided by the new Hourly Employees Plan or by the new Salaried Employees Plan, as the case may be, are all the pension benefits and ancillary benefits to which members are entitled under the plan,

(a) if they elect early retirement under a temporary program offered for a period that falls within an early retirement window; or

(b) if they elect early retirement under any other temporary program offered for a period within the window that begins on August 1, 2004 and ends on December 31, 2006, other than a program described in subsection (2).

(2) The temporary program excluded from clause (1) (b) is a program that offers benefits in excess of the benefits that would have been available under the early retirement provisions of the original Hourly Employees Plan or the original Salaried Employees Plan, as the case may be, as those provisions read on September 16, 2001.

Special plant closure benefit

10. (1) The special plant closure benefit provided by the new Hourly Employees Plan is the plant closure benefit payable upon the wind up of the plan in whole or in part to or in respect of a person who, on September 16, 2001, was a member of the original Hourly Employees Plan.

(2) The special plant closure benefit provided by the new Salaried Employees Plan is the plant closure benefit payable upon the wind up of the plan in whole or in part to or in respect of a person who, on September 16, 2001, was a member of the original Salaried Employees Plan.

(3) Despite subsections (1) and (2), the special plant closure benefit does not include the amount of a plant closure benefit that is greater than the benefit payable under the provisions of the original Hourly Employees Plan or the original Salaried Employees Plan, as the case may be, as those provisions read on September 16, 2001.

Special Payments
(New Pension Plans)

Initial solvency deficiency

11. The initial solvency deficiency of any of the new pension plans is the solvency deficiency that is determined on the basis of a solvency valuation on September 17, 2001.

Special early retirement window benefit deficiency

12. (1) The special early retirement window benefit deficiency of the new Hourly Employees Plan or the new Salaried Employees Plan, as the case may be, is the amount of the deficiencies described in subsections (2) and (3).

(2) The special early retirement window benefit deficiency for a temporary program offered for a period that falls within an early retirement window is the amount by which “A” exceeds “B” where,

“A” is the portion of the solvency liabilities of the plan, as determined on the last day of the applicable early retirement window, that relates to the special early retirement window benefits to which members are entitled under the temporary program, and

“B” is the portion of the solvency liabilities of the plan, as determined on the last day of the applicable early retirement window, that relates to all the pension benefits and ancillary benefits to which those members would be entitled in the absence of the temporary program.

(3) The special early retirement window benefit deficiency for any other temporary program offered for a period that falls within the window that begins on August 1, 2004 and ends on December 31, 2006 is the amount by which “C” exceeds “D” where,

“C” is the portion of the solvency liabilities of the plan, as determined on the last day on which members may retire under the temporary program, that relates to the special early retirement window benefits to which members are entitled under the temporary program, and

“D” is the portion of the solvency liabilities of the plan, as determined on the last day on which members may retire under the temporary program, that relates to all the pension benefits and ancillary benefits to which those members would be entitled in the absence of the temporary program.

Solvency liabilities

13. For the purposes of the definition of “solvency liabilities” in subsection 1 (2) of the General Regulation, the solvency liabilities of the new Hourly Employees Plan and the new Salaried Employees Plan also exclude liabilities for the special plant closure benefit described in section 10.

Special payments

14. (1) For the purposes of subsection 5 (1) of the General Regulation, the special payments required to be made in respect of the new Hourly Employees Plan and the new Salaried Employees Plan must also include,

(a) with respect to the initial solvency deficiency, the special payments required to liquidate the deficiency, with interest at the rates described in subsection 5 (2) of the General Regulation, by equal monthly instalments over the period beginning on June 28, 2002 and ending on September 16, 2016; and

(b) with respect to the special early retirement window benefit deficiency, the special payments required to liquidate the deficiency, with interest at the rates used in the report in which the deficiency was determined, by equal monthly instalments over the period beginning on the later of,

(i) June 28, 2002, or

(ii) the valuation date of the report in which the deficiency was determined,

and ending on September 16, 2016.

(2) For the purposes of subsection 5 (1) of the General Regulation, the special payments required to be made in respect of the new Wrap Plan must also include, with respect to the initial solvency deficiency, the special payments required to liquidate the deficiency, with interest at the rates described in subsection 5 (2) of the General Regulation, by equal monthly instalments over the period beginning on June 28, 2002 and ending on September 16, 2016.

(3) The initial solvency deficiency is excluded from the solvency deficiency described in clause 5 (1) (e) of the General Regulation for all of the new pension plans.

Solvency asset adjustment

15. (1) For the purposes of the definition of “solvency asset adjustment” in subsection 1 (2) of the General Regulation, the solvency asset adjustment of any of the new pension plans also includes the present value of the special payments described in subsection 14 (1) that are scheduled for payment within the period that begins on the valuation date of the applicable report and ends on September 16, 2016.

(2) Despite subsection (1), if the valuation date of the applicable report is September 17, 2001, the present value of the special payments required to liquidate the initial solvency deficiency is not included in the solvency asset adjustment.

Reports
(New Pension Plans)

Report upon establishing the new pension plans

16. A report required to be filed under section 13 of the General Regulation with respect to any of the new pension plans shall also set out the amount of the initial solvency deficiency and the amount of the special payments required to liquidate it in accordance with section 5 of the General Regulation.

Other reports

17. (1) A report required to be prepared under section 14 of the General Regulation with respect to any of the new pension plans shall also set out the following information:

1. Whether there is an initial solvency deficiency.

2. If there is an initial solvency deficiency, the amount of the deficiency and the special payments required to liquidate it in accordance with section 5 of the General Regulation.

3. Whether there is a special early retirement window benefit deficiency described in section 12.

4. If there is a special early retirement window benefit deficiency, the amount of the deficiency and the special payments required to liquidate it in accordance with section 5 of the General Regulation.

(2) For the purposes of clause 14 (8) (c) of the General Regulation, the report must also set out the liabilities for the special plant closure benefit described in section 10.

28/02