Regulation allows for fixed payments over the next three years and extends amortization period to 2024.
SAULT STE. MARIE, Ont. – The Ontario government has passed a regulation providing funding relief for Essar Steel Algoma Inc.’s defined benefit pension plans, which allows for fixed payments over the next three years and extends the amortization period to 2024.
Historically low interest rates have led many of Ontario’s defined-benefit pension plans, both public and private, to seek relief measures. Despite ongoing payments to the plans, Essar Steel Algoma’s pension contribution requirements have more than doubled year over year, escalating to levels that were not sustainable, leading to the pursuit of an alternative funding model.
“This new funding formula provides Essar Steel Algoma with greater predictability in the near term and more manageable payments over the long term,” said Kalyan Ghosh, the steel manufacturer’s CEO.
Essar Steel Algoma Inc. is a subsidiary of Essar Steel, a steel producer with an annual capacity of 14 million tonnes. Based in Sault Ste. Marie, Ontario, the company Algoma manufactures flat rolled steel products, including hot and cold rolled sheet and plate.