Hundreds of pensioners who worked at Wabush Mines in Labrador prior to its closure last year are coming to grips with the shocking news that their health and life insurance benefits are about to be cancelled.

The former owner of the iron ore mine, U.S.-based Cliffs Natural Resources, has informed the United Steelworkers union that it will discontinue health and life insurance benefits for the retirees.

The company recently began debt restructuring for its troubled Canadian assets, including Wabush and Bloom Lake, under the Companies' Creditors Arrangement Act.

Jason Penney, outgoing president of Local 6285 of the USW in Wabush, said pensioners' benefits are now being "yanked out from under them" with very short notice.

Benefits to end on June 1

Several generations of workers in Labrador have been paying into the benefit program for a half-century, and some estimates put the number of people affected at between 700 and 800.

"It's going to put some people in very difficult positions," Penney said.

The benefits will end on June 1, leaving many pensioners scrambling to fill prescriptions and find alternative coverage.

Penney said the pensioners had an "extensive plan" that covered travel and prescriptions, among other things, and paid a death benefit of between $10,000 and $12,500.

The news broke as Penney was preparing to put the locks on the union office for one last time on Friday, and is yet another blow to a region that is already reeling from a severe downtown in the iron ore industry.

The closure of Wabush Mines resulted in the loss of nearly 500 jobs. Cliffs' Bloom Lake project in northeastern Quebec, near the border with Labrador, was also shelved.

The area is also preparing for another setback next month when 150 workers at the Iron Ore Company of Canada in Labrador City are laid off from their jobs.

Pension plan well-funded

Penney said the union is considering a legal challenge against Cliffs over the benefit issue, but he's not confident of a good outcome because "laws in Canada allow workers to be the last ones on the list" when it comes to creditor protection.

'If the parent company is still operating, they should have to pay their obligations.'
- Jason Penney

Penney said it's unfair the parent company of Cliffs remains viable in the United States, but because the company's Canadian subsidiary is going bankrupt, the pensioners are the ones to suffer.

"If the parent company is still operating, they should have to pay their obligations," said Penney.

Meanwhile, Penney said the pension program is 92-per cent funded, but he wouldn't be surprised if the company defaulted on the unfunded portion.

With files from Ramona Dearing