Co-op Atlantic pensions could be slashed by as much as 30%
'That's definitely going to be a difficult situation for them to adjust to,' says actuary
About 1,200 people in Atlantic Canada who work or worked at Co-op Atlantic are facing the possibility of their pensions being reduced as much as 30 per cent, CBC News has learned.
That's according to the pension administrator Eckler Ltd., an actuarial firm hired after Co-op Atlantic filed for creditor protection last year.
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"The pension plans are guaranteed by the company to fund them and when the company can no longer provide the funding necessary to pay for deficits that have built up, if you can't get enough money out of the [creditor proceedings] then the retirees end up getting hit," said Derek Gerard, a principal and actuary with Eckler Ltd.
The final figures on payouts won't be known until after a court case next month.
A New Brunswick judge will decide where the pension falls on the creditor's list.
Documents filed by the bankruptcy monitor KPMG say the pension is underfunded by almost $31 million and the money available for all creditors is estimated to be between $30 million and $32 million.
'It's going to be hard'
Eckler is arguing the pension should be paid first but the second-largest creditor, the National Bank of Canada, disagrees.
Gerard said there have been similar cases in Canada in which pensions have received some of the money but "it's just a case of how much and who you're ahead of."
A 30 per cent pension reduction would be a "tough hit" on retirees, he said.
"That's definitely going to be a difficult situation for them to adjust to."
Members are disappointed that substantial changes to the pension are pending, said co-chair of the Co-op Atlantic Retirees Association Johan Spiering, who is based in Moncton.
"It's going to be hard," he said. "Many of the Co-op retirees were working clerical jobs and weren't making that much," he said.
Employees were promised up to 60 per cent pay from their top-earning years, depending on how the number of years worked, said Spiering.
"Now they're facing having even less," he said, "And the cost of living continues to climb."
The court case is set for March 30.
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With files from Laura Chapin