SAULT STE MARIE, Ont. – Essar Steel Algoma Inc. says the Ontario government has approved a new regulation providing funding relief for the company’s defined benefit pension plans.
The company says the new rules, retroactive to Dec. 1, allow for fixed payments over the next three years and extend the amortization period through to 2024.
Due to historically low interest, Essar Steel Algoma’s pension contribution requirements have more than doubled year over year, escalating to levels that were not sustainable, the company said in a statement.
“This new funding formula provides Essar Steel Algoma with greater predictability in the near term and more manageable payments over the long term,” CEO Kalyan Ghosh said in a news release.
Low interest rates used to calculate the liabilities of pension plans combined with volatile stock markets have forced many Canada companies to put millions more into their defined benefit plans.
Essar Steel Algoma isn’t the only company to seek help with its pension obligations.
Last week, Ottawa said it would bring in new regulations that would give Canada Post help with its pension as the postal service announced a massive overhaul of its business.
Air Canada (TSX:AC.B) also required a special regulation from the federal government allowing it to eliminate its pension deficit over a longer period than usual.
Essar Steel Algoma Inc. is a subsidiary of Essar Steel, a global integrated steel producer with an annual capacity of 14 million tonnes.