WORKERS DESERVE BETTER
Ottawa must act to protect pensions in bankruptcies, writes Hassan Yussuff.
Imagine dedicating 27 years of your working life to one company, only to find out you are out of a job and won’t be getting the full pension you have paid into all that time.
That is the reality facing Gail Paul of Corner Brook, Nfld., and more than 16,000 other Sears workers across Canada who are either close to retirement or already retired.
The aftermath of the 2008 financial crisis and recession has been littered with the shaken futures of those who once worked for seemingly unshakable Canadian and American icons like Sears, Nortel, CanWest, U.S. Steel, the list goes on. We hear lots in the news about these giants, but pensioners are losing out when smaller companies shut down too.
The lesson from every one of these examples is clear: Workers and pensioners should not, and must not, be at the end of the line when companies go under.
All of these workers have every right to feel betrayed by their former employers. Especially when they see executives walk away with rich bonuses, their careers, savings and retirements intact. But it isn’t just the companies who have betrayed these workers and so many thousands before them — it’s the federal government.
Ottawa can, and should, be doing more for pensioners. For starters, it can support the legislation being proposed by the NDP that recommends changing bankruptcy laws so that pensioners are first in line, not last, when it comes to paying down creditors.
Critics argue that putting pensioners first in line would leave lenders less inclined to help companies in crisis. But that argument isn’t good enough given how many people’s futures have been shattered. It also ignores the reality that lenders have ample resources to inform the risks they take. Workers, on the other hand, have no option but to trust that their employers won’t just walk away from their obligations to employees.
The federal government can, and must, ensure bankruptcy laws put pensioners at the front of the line. And it can go one very important step further: working with the provinces and territories to create Canada-wide mandatory pension insurance. Such a system would guarantee monthly pensions up to $2,500 whenever an employer with an underfunded pension plan — like Nortel or Sears — files for bankruptcy. It would be paid for by pension funds, a fair trade-off, given their taxexempt status.
Pension insurance isn’t just about protecting pensioners — it helps companies with no prospects of recovery or needing temporary help. It’s not a new idea — the United States and the United Kingdom are among other countries with nationwide mandatory pension insurance.
Today in Canada, only Ontario has a mandatory fund. Created in 1980, it guar- antees pensions to a maximum of $1,000 per month. That’s expected to increase to $1,500 per month.
Mandatory insurance is required for most of the important assets Canadians have. We are required to insure our vehicles, our homes, and even our jobs — employers must pay into Employment Insurance and Workers’ Compensation to operate. Mandatory insurance exists because some things are critical to protect. And as Canada’s unions have long argued, pensions are among the most critical assets anyone will ever have.
The federal government must demonstrate it has the courage to stand up for pensioners like Gail Paul. She, and thousands like her, dedicated their working lives to trying to make the companies they worked for successful, and they deserve to be treated with respect and dignity, not told they’ll have no choice but to work through retirement and turn to government services for support.
The first principles of freedom are always at risk of being overrun by politicians and others who seem not to understand their own hubris and how it plays out. Mark Milke, president of Calgary’s Sir Winston Churchill Society