All Members,
We are long overdue with this News Letter. It is time to remind everyone that we have some concerns that only an active membership can resolve. For the past 24 months we have brought your concerns to the company around jobs being done by staff or non union members. We need you to send an e-mail to the executive, any time you see a staff person or non union member doing a job that is normally done by a dues paying member. This needs to happen so we can further our complaint on this topic and to get more people hired into the union classifications. Since January 4th until February 15th 2011 there has been 16 people leave the union membership because they quit or were terminated or for other reasons. Read the rest of this entry »

This is a further update regarding the Company’s election for 10 year solvency funding relief and to set out the Union’s position regarding the Company’s request for the consent of the members and former members of the Pension Pla.  KINWU has decided to vote against the Company’s proposal and encourages all retirees and other former members of the Plan to vote “NO” and mail in their ballots as soon as possible.  The deadline is November 19, 2010.

As we indicated in our last update, the Union is not satisfied that the guarantee being offered by INVISTA B.V. will actually be available to pay for the deficiency in the Pension Plan.  Based on advice from insolvency experts, the Union believes that if INVISTA (Canada) is insolvent, any payment from INVISTA B.V. under this guarantee will be subject to the claims of the Company’s creditors.  The Company has refused the Union’s request to provide the guarantee in favour of all the Plan members and the Union.  If this guarantee is as rock solid as the Company says it is, then it would cost them nothing to provide a guarantee in favour of the Plan members and/or the Union.  The Union believes the Company is simply misleading the members with the promise of a guarantee that will not be enforceable when it is really needed. 

The Company is also refusing to provide an assurance that members who are terminated will be allowed to receive 100% of the value of their pensions.  The Company says it is not necessary given the low number of terminations over the history of the Plan.  However, the Union and the members have no way of knowing what the Company plans to do in the next ten years.  In the event that the Company does another restructuring such as the Maitland facility and lays off a large number of members, there is a risk that terminated employees may suffer a loss equal to the transfer ratio, which is currently 65%.  In the Union’s view if it is unlikely that pension transfers will not be reduced, it would cost the Company nothing to guarantee that terminated members will receive the full value of their pensions.

The Company is also refusing to provide any increase in pension benefits to offset the effects of inflation, known as indexing.  There has been no such increases since 2001.  Given that the Company will be saving $51 million in 2010, $33 million in 2011 and $24 million each year until the end of ten year amortization period, the Union strongly believes the Company should be prepared to provide indexing on pensions in exchange for the members’ consent to the ten year funding period.

For the above reasons the Union intends to object to the Company’s election and encourages all retirees and former members of the Plan to do the same.  The Company is asking you to bear the risk of potential loss in your pension without anything in exchange and no assurance that your pensions will not be negatively affected.

If you have any questions or wish to comment on the Union’s position please send us an e-mail which is linked to the website.

We are writing to provide an up-date regarding the company’s election for solvency funding relief under the Invista Canada pension plan #0242727. Our first communication stated that you will all be getting a letter in the mail, and by now everyone should have received it. We hope you have all digested the information. As noted in the package, the Union will be casting a vote on behalf of all the active employees and has retained an experienced law firm in the pension field to provide advice so that the Union can make an informed decision that is in the best interest of its members, but we appreciate your input and feedback. 

As explained in the company letter, the Plan is underfunded. We have been advised by legal counsel that due to the downturn in the markets, the recession of 2008 and 2009, and current interest rates, funding deficiency is a widespread problem affecting virtually every plan in the country. The solvency relief measures were intended to assist companies in financial difficulty by easing the requirements to fund deficiencies, including the ability to pay the deficiency over a ten year period instead of 5 (Option 3) with the consent of two-thirds of the members. As the company has refused to provide financial disclosure requested by the Union, we are not in position to determine if in fact the company is in financial difficulty and assess the risk that the pension deficiency will not be paid.

What we know is that in the event that the company goes insolvent and the Plan remains under-funded, our hard earned pension benefits will be reduced. If the Plan was wound up today the actuarial estimate is that our pensions would be cut by 35% (the 65% transfer ratio). This risk exists whether the company funds the deficiency over 5 or 10 years. But, the longer the company takes to pay the deficiency means the longer that risk is born by the members and the pensioners.

The company is offering some level of insurance through a guarantee by the parent company (INVISTA B.V.). However, in response to our questions the company advised that the guarantee will not be made in writing to the Union, the members and pensioners or even the Plan, but rather from INVISTA B.V. to INVISTA Canada. We are advised by legal counsel that in the event INVISTA Canada goes insolvent, if any payments are made by INVISTA B.V. under this guarantee, the payments will form part of the company’s estate and will be subject to claims by the company’s creditors. There is no assurance that these payments will or even can be used to pay for any outstanding pension deficiency. To be a meaningful guarantee the Union, the members and/or the Plan must have an ability to enforce the guarantee. The Union is seeking to secure such a guarantee from the company.

The Union is also seeking clarification regarding the ability of members to transfer 100% of their pension entitlement out of the Plan if they terminate prior to being eligible to retirement. When a plan is underfunded the value of the pension is required to be reduced by the transfer ratio (65%) unless certain conditions are met. Before the Union will support the company’s election we want assurance that all terminated members will not be forced to receive 65% of their pension entitlement.

We know that DIPAC has recommended to its members that they accept the company’s proposal to fund the deficiency over ten years. We are asking that retirees and other former members of the Plan consider the Union’s concerns before making a final decision. Retirees and Union members should also know that while the company is asking us to help with the funding deficiency, for many years prior to 2008/09 the Plan had very large surplus funds ($112 Million in 2007 and $129 Million in 2004). The company did not use these excess assets to improve our benefits or provide indexing increases to pensions in pay to deal with the effects of inflation on our pensions. The company made no contributions to the Plan during these years. Instead, INVISTA used all of the surplus reserves to cover the regular cost of benefits by taking what is referred to as a (contribution holiday).

The Union believes that retirees should consider this in making their decision. We believe the company should be prepared to offer pension increases on a regular basis if they want the members and the retirees to assume the risk of pension reductions.

We also ask that if you have any questions, the current Union Executive of KINWU is more than willing to answer your questions as best we can. You can go to the part of our website, that has our email addresses and submit your questions that way. We want you to be FULLY informed, as with the information you received in the mail was far from clear.