Nova Scotia

Union hopes Northern Pulp 'will do the right thing' and make pension payment

Last month, Northern Pulp disclosed in court creditor protection proceedings that the special pension payments are not part of its revised forecast for late 2020, 2021 and 2022.

The mill has said special pension payments are not part of its revised forecast for late 2020-2022

The Northern Pulp mill in Abercrombie Point. More than 300 people lost their jobs when pulp production at the Pictou County mill ceased on Jan. 12, 2020. (Andrew Vaughan/The Canadian Press)

The union representing laid-off Northern Pulp workers says its members are "very nervous" but hopeful the Nova Scotia mill will pay nearly $3.7 million to cover a deficit in pension plans, including $342,000 due next month.

Last month, Northern Pulp disclosed in court creditor protection proceedings that the special pension payments are not part of its revised forecast for late 2020, 2021 and 2022.

"I believe the company at the end of the day will make the payment," said Wanda Skinner, president of Unifor Local 440 and one of two active union employees at the mill.

2 defined benefit pension plans

After 54 years, pulp production at the Pictou County mill stopped on Jan. 12, 2020, throwing 302 people out of work.

The mill has two defined benefit pension plans; one for 134 active and retired salaried employees, and a larger one for hourly workers with 476 active and retired members.

"I know our laid-off employees, our retired employees and even the active employees. We are very nervous. We're hoping that the company continues making that pension payment. And as they are continuing to try to get the company back up and running, I'm trying to be optimistic for everybody," said Skinner.

"Everybody's expecting to get a pension out of this and they don't want to be shortfalls. They already lost their jobs."

The mill did not respond to a request for comment.

What Paper Excellence told the court

The mill is currently in creditor protection and operating on borrowed money from its parent company, Paper Excellence, while it tries to develop an acceptable waste effluent treatment facility so it can restart the operation.

The matter is before the Supreme Court of British Columbia.

In a December 2020 application to extend creditor protection to April 2021, general manager Bruce Chapman disclosed the mill does not plan to use cash flow to make $3.68 million in special defined benefits pension contributions over the next two years.

Superintendent of pensions 'concerned'

Mary Ellen Rainey, Nova Scotia's superintendent of pensions, filed a response noting contribution holidays are not allowed when a company is in creditor protection unless the pension is in surplus.

"The superintendent is concerned that the special defined benefits pension contributions are not included in the forecasts going forward into 2022," lawyer Sheldon Choo, wrote on behalf of Rainey.

Neither of the two plans at the mill is in surplus.

The Northern Pulp mill in Abercrombie Point, N.S., is viewed from Pictou, N.S., Friday, Dec. 13, 2019. (Andrew Vaughan/The Canadian Press)

In June 2020, the company filed an actuarial valuation showing the hourly employee defined pension plan has a going-concern deficit of $39 million with a solvency ratio of 82 per cent if the plan was wound up. The salaried employees plan had a $2.6-million ongoing deficit and a wind-up solvency ratio of 99 per cent.

"The failure to pay the special payments to liquidate a going-concern deficit in relation to the defined benefits of the pension plan for the three months from September to November 2020, and the planned failure to pay for December 2020, and for 2021 and 2022 is contrary to the Nova Scotia Pension Benefits Act," the superintendent's office wrote.

"While it is understood that special payments are unsecured, the superintendent wishes to express her concern to this honourable court but is hopeful that a further extension of the stay of proceedings will allow the petitioner to settle its ongoing issues, so that they can resume operations in a restructured way that would allow for the resumption of the special payment contributions."

The superintendent of pensions declined to comment.

Company contribution uncertainty

Skinner said the first $342,000 payment is due next month. The company said previous payments exceeded requirements allowing it to skip payments up to September.

Special pension contributions for 2021 and 2022 are approximately $3.34 million, according to court records and are due in February 2022, Skinner said.

"Are they allowed to make the payment? It is before the courts. It's not on the cash flow, as far as I can see. But I believe Bruce Chapman and Paper Excellence will do the right thing and make sure that payment is made on time this year," Skinner told CBC News.

Notwithstanding its plan to forgo special pension payments, in December the company said it would draw down on borrowing to meet other employee and retiree obligations.



Paul Withers


Paul Withers is an award-winning journalist whose career started in the 1970s as a cartoonist. He has been covering Nova Scotia politics for more than 20 years.