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Kelowna  

'I've still got nothing': Benefits being cut for some members of Interior Lumberman’s Pension Plan

Pensioners left in the lurch

As many as 150 British Columbia lumber industry companies and their workers are getting a massive shock as they begin to sell their companies, retire, and start collecting pension benefits they have been paying into for decades.

Some who are already collecting benefits from the Interior Lumberman’s Pension Plan have had their payments reduced by as much as 40 per cent due to a solvency deficit within the fund that the pensioners and their lawyer allege is a result of mismanagement.

Al Fedorchuk worked with and for Glen Huggard out of Kelowna for almost two decades. Both are now struggling to come to terms with the pension shortfall.

"I was just an employee," Fedorchuk said. "I should be frickin taken care of, whether they cut him off or do whatever, that should have nothing to do with me."

Fedorchuk turned 65 last May and he still hasn't seen a dime of his pension.

"I've still got nothing. I put the paperwork in to take a lump sum, I just want to distance myself before they go belly up."

Fedorchuck has nothing good to say about the pension plan or its administrators, "I can't afford to fight them, they're fighting us with our own money. They're just ruthless, dismissive, arrogant, it's unbelievable."

The Plan

The ILPP was started back in 1978 as a defined benefit plan and covered independent, non-unionized forestry sector companies and their employees working in the B.C. Interior.

According to David Wotherspoon of Wotherspoon Law, who is representing some of the pensioners and business owners, the plan was designed to provide independent contractors with some of the coverage of their unionized counterparts, including medical and pension benefits.

"The administrators of the ILPP are entitled to the advice of professional advisors, lawyers and actuaries, to guide their decisions. Notwithstanding these resources, the administrators allowed the plan to establish a solvency deficit of around 60 per cent. That is the problem," Wotherspoon says.

Arlene Brown's family owned a logging contractor operation that is no longer in business, but that hasn't stopped the ILPP and its lawyers from suing for a 'top-up' fee for the pension fund, which ILPP admit has been running at a solvency deficit for years.

"When we first got into the plan, the mill didn't want the union and they offered us this plan. If you didn't take it, you didn't have a job or contract. So we took it. The medical and the pension were awesome but now, not so much," Brown says.

Brown and her husband, who was also an employee, are now being asked to pay a lump sum back into the pension plan while also receiving a 40 per cent reduction in benefits.

"We're fighting all the way, it's total bullsh*t. This is absurd. It's ludicrous what they're doing to people and we have to step in and stop it. (The fund) was totally mismanaged, they're not saying that, of course. But they need all of us to pay this money so that they can keep going. We've already taken a 40 per cent loss," Brown said.

Oversight and intervention

A letter sent to the Minister of Finance by the Interior Logging Association in January 2023 called on the province to step in and take some action on the issue.

"I am again requesting the ministry review the history of 'the Plan' and its long-standing solvency deficiency," says the letter from Todd Chamberlain with the ILA.

Chamberlain's letter also alleges that the BC Financial Services Authority has some liability for failing to oversee the plan.

The BC Financial Services Authority, which is responsible for the supervision and regulation of the financial service sector, is aware of the issue.

"It is a difficult situation for all involved. People want to know their pensions are secure and sustainable," said the B.C. Ministry of Finance in a statement.

"This is a multi-employer plan that is administered by a board of trustees. It is the trustees’ duty to administer the plan in the best interests of its members, including holding each employer responsible for meeting their funding requirements under the law."

A spokesperson for the Ministry of Finance says the BCFSA is continuing to offer support as the trustees work to address the challenges.

Wotherspoon, the lawyer working on the file, admits it's a long and convoluted process that he feels could be helped by government intervention.

"The employer members that I represent are defending claims brought against them on the basis that the ILPP was negligently managed, creating a significant deficit, and that the ILPP is now looking to employers to make up for their negligence," he said.

"Before their withdrawal from the plan, the employer members, many of whom are also employees, contributed every penny the administrators asked them to contribute."

The response

Interior Lumberman’s Pension Plan administrator Gillian Kenny said the current and ongoing pension issues are only related to the plan's logging division, not the sawmill division.

Kenny disputed Wotherspoon’s claim that the pension has a solvency deficit of 60 per cent.

"In fact, as of the latest actuarial valuation on December 31, 2022, the solvency deficit is 24.7 per cent. The Trustees, in partnership with the continuing participating companies, are on track to further decrease this deficit," she said.

"As the administrator of the ILPP, we are concerned about the impact on members and have been working to address funding issues with companies and the regulator. We understand the personal toll this is taking on our members and are taking all possible steps within the law to minimize negative effects."

Kenny said the pension plan must comply with provincial regulations.

"These rules require that defined benefit obligations be funded to an 85 per cent threshold on an ongoing basis. However, when companies cease contributing to the plan, the legislation requires that they fund 100 per cent. If they do so, their members will receive 100 per cent of their benefit. If a company does not fund, the benefits for the members may be reduced."

Kenny says there are a variety of reasons companies and their associated members may be impacted; the company may no longer be in business, they may have requested to opt out of the plan or they are working on a payment schedule.

"Unfortunately, the only recourse involving companies that have not made required payments is legal action, again to ensure that the pension benefits of their associated members can be paid. For continuing-participating companies in the logging division, there is no impact on their members."



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