Algoma Steel Laying Off Over 1,000 Workers

The news from Algoma Steel has sent a shockwave through Sault Ste. Marie. More than 1,000 employees are now facing layoffs set to begin in March 2026, a move driven by the company’s accelerated transition to electric arc furnace (EAF) steelmaking and the mounting pressure from U.S. tariffs.

The blast furnace and coke-making operations will permanently close, ending more than a century of integrated steelmaking at the company. Algoma also emphasized that it will work with federal and provincial partners to support employees and provide resources through the transition period.

Whether you are part of the 900 unionized workers in Local 2251, the 150 salaried employees in Local 2724, or any other affected group, your pension could become one of your most valuable financial assets during this transition.

What’s Happening at Algoma Steel?

On December 1, union leaders from United Steelworkers Locals 2724 and 2251 confirmed that over 1,000 layoff notices had been issued. The timing was difficult for employees, with the news arriving just weeks before the holidays.

Why the layoffs?

Several pressures collided:

1) Accelerated transition to electric arc furnace (EAF) steelmaking
Algoma Steel had been planning for years to transition away from its traditional blast-furnace and coke-oven operations. The shift to electric arc furnaces increases efficiency and makes production more flexible. Layoffs were expected eventually, but originally much further in the future.

2) Impact of U.S. tariffs
U.S. President Donald Trump’s 50 percent steel tariffs sharply restricted Algoma’s access to the American market. The company reported nearly half a billion dollars in losses last quarter as a result. These tariffs are the primary reason the company accelerated its transition timeline.

As Laura Devoni, Algoma Steel’s VP of HR and corporate affairs, explained, the tariffs “fundamentally altered” the competitive landscape and forced the company to move a year earlier than planned.

3) Industry-wide global oversupply
Even beyond tariffs, the global steel industry has been grappling with oversupply pressures. Germany’s ThyssenKrupp announced cutbacks just days earlier, signaling that steelmakers internationally are under strain.

How Long Will the Layoffs Last?

Union leaders indicated that Algoma expects the layoffs to last at least 35 weeks. After that threshold, workers may be eligible to choose severance instead of continuing to wait for recall.

Key points from the unions:

• Local 2724 (salaried workers): 150 layoffs, leaving 250–300 members after March.
• Local 2251 (hourly workers): 900 layoffs, leaving 1,930 members.

Recall rights depend on years of service. Workers are allowed to take temporary jobs elsewhere during the period and still return to Algoma if recalled.

What This Means for Your Pension

For many affected workers, the pension decision may turn out to be the biggest financial choice of their career.

Algoma Steel employees may have:

• A Defined Benefit (DB) pension
• A Defined Contribution (DC) pension
• A hybrid or negotiated plan structure depending on job role, years of service, and union agreements

While the details vary, laid-off workers typically face two main pension pathways when their employment ends:

Option 1: Leave Your Pension Where It Is

If you have a DB pension, you can usually leave the pension in the plan and receive a monthly lifetime pension starting at your normal retirement age.

This may be the simplest option for some workers.

Pros:

• Predictable monthly income for life
• No investment management required
• Potential survivor benefits

Cons:

• No access to the lump sum value today
• Limited flexibility
• The pension is tied to the plan’s long-term performance and rules

Option 2: Take the Commuted Value (CV)

If you choose to transfer the commuted value, your DB pension is converted into a lump sum that you can move into:

1. A Locked-In Retirement Account (LIRA), and
2. Possibly a taxable excess amount (if the value exceeds CRA limits)

The commuted value represents the present-day cost of your future pension payments.

Pros:

• You gain full control of your investments
• Potentially larger long-term growth
• Can integrate with a full retirement plan
• You are no longer tied to the employer’s plan or future funding levels

Cons:

• Requires investment decisions
• Market risk
• If mismanaged, future retirement income can suffer

One of the top questions we receive from laid-off steelworkers is whether the commuted value makes sense for them personally. The answer depends on age, health, retirement timing, and financial goals.

Option 3: Consider a Copycat Annuity

A “copycat annuity” is a private insurance policy designed to mirror your existing DB pension, but outside of the employer’s plan.

It’s popular among laid-off workers because:

• It recreates the guaranteed monthly pension.
• There is most often a “cash surplus”.
• It shifts the risk to a large Canadian insurer such as Manulife, Desjardins, Sun Life or Canada Life.
• Survivorship options mirror the company plan.

This can offer the “best of both worlds” for workers who want the security of a monthly pension without remaining tied to the company.

What Algoma Workers Should Do Now

If you’ve been laid off or expect to be laid off in March, here’s what we recommend:

1. Review your pension statement immediately

You need to know:

• Your credited service
• Your accrued benefit
• Whether your plan is DB or DC
• Your earliest retirement date
• Your termination options
• Whether you qualify for unreduced early retirement

2. Get your Commuted Value calculation

You are entitled to request it. This number is essential for making an informed decision.

3. Assess your retirement timeline

If you are within 3–10 years of retirement, the decision becomes even more important. You amy be able to push the cash surplus to the following tax year.

4. Avoid making quick decisions under stress

These layoffs landed right before the holidays and will stretch into 2026. It’s understandable to feel pressure, but your pension decision will affect the next 20–30 years of your life.

5. Speak with a pension specialist

Most workers make this decision only once. We help workers in situations exactly like this, with specialized experience serving Canadian employees impacted by mass layoffs.

If You’ve Been Laid Off at Algoma Steel, We’re Here to Help

Pension decisions during layoffs are complex, especially with uncertainty about recall rights, industry changes, and shifting timelines.

At Pension Solutions Canada, we specialize in helping workers who are:

• Facing layoffs
• Managing a defined benefit or defined contribution pension
• Considering their commuted value
• Evaluating a copycat annuity
• Planning a retirement transition in Ontario

We can walk you through your options with clarity and simplicity, and help you build a financial plan tailored to your new reality.

If you want help understanding your Algoma Steel pension and retirement options, contact us today.