Former employees and retirees of the defunct Northern Transportation Company Limited (NTCL) received a disturbing letter in the mail last month.
The letter, dated May 6, informed former NTCL employees that their monthly pensions would be reduced by 18.62%. On top of that, they’ve been overpaid since April 2020, money they’re now supposed to pay back.
“We don’t know what to do, our hands are tied,” said Wyatt Rathwell, former NTCL chief engineer and retiree. “I have to repay $30,000 now.”
It has been almost six years since NTCL declared bankruptcy and sold its assets to the territorial Department of Infrastructure. At the time, the pension plan had a deficit of $21 million. In its bankruptcy proceedings, NTCL blamed the cost of the pension plan in part on its high debt load.
During the bankruptcy proceedings, the Public Service Alliance of Canada (PSAC) tried to protect the pension plan.
“Once NTCL declares insolvency, they are former employees,” said PSAC pension and disability insurance officer James Infantino. “But we still had a responsibility for them.”
The PSAC was unable to hold the territorial government accountable for the pension plan because the government hired Offshore Recruiting Services Inc. to operate the business. This meant that the territory was not considered the successor employer and therefore was not responsible for the pension scheme.
The PSAC succeeded in obtaining part of the proceeds from the sale of assets transferred to the pension scheme, but it remained grossly underfunded.
Pensioners overpaid for 2 years
The May 6 letter was from the company that runs the pension plan – Lifeworks (formerly Morneau Shepell) – and was signed by Lifeworks director Debbie Gallagher. Retirees also learned that the pension plan was terminated on March 31, 2020. But Lifeworks did not receive approval of the termination report from the Office of the Superintendent of Financial Services (OFSI) until March 31, 2022.
“We were required to pay you 100% of your pension portion under federal law until the termination report was approved,” Gallagher wrote.
This means that retirees are responsible for the overpayment between April 2020 and March 31, 2022.
CBC contacted Lifeworks to find out why there was such a long delay between the termination of the pension plan and the approval of the termination report.
“During the preparation of the layoff report, Lifeworks discovered a number of data issues that needed to be addressed with the assistance of the previous administrator,” Heather MacDonald, senior corporate communications manager, wrote in response. . “A final report was provided to OSFI on October 18, 2021 and approved on March 31, 2022.”
The territorial government is not responsible for the failure of private companies
Rathwell said Lifeworks will purchase an annuity on behalf of retirees and deduct the amount owed from the purchase price of the annuity. This will result in a further reduction in pension payments, a figure that is still unknown.
The uncertainty of the final pension amount is not welcomed by NTCL retirees.
“We’ve all been overpaid,” Rathwell said. “I could lose another 20-30%, I really don’t know. And it’s a bit nerve-wracking.”
Doreen Farrants, former business services manager at NTCL, shared her frustration with the outcome.
She wonders why the NWT government hasn’t done more to help retirees who have spent their careers in the territory and want to stay in the North. Farrants said the majority of people who worked for the defunct company were northerners who provided an essential service to other northerners.
“Why don’t you also take over the pension plan and keep it whole for the people of the North, the people you govern,” Farrants asked.
CBC has contacted the Department of Infrastructure for comment. A spokesperson said the situation was unfortunate, but the territorial government is “unable to act as a safety net when a private company fails to meet its benefits commitments.”
“It’s a tragedy on every level,” said Infantino of the Public Service Alliance of Canada. “That’s what all those retirees face when the sponsor goes bankrupt and there’s no insurance arrangement to protect them.”