Sears fiasco could spur pension protection

We live in a time when our outrage bubbles and boils daily. And just as quickly we move on, taking aim at the next indignation.

Which makes the enduring disgust over the treatment of Sears workers in this country so remarkable. It has proved to be enduring.

Now, there are those seeking to surf that outrage into legislation to protect pensioners across the country.

Putting pensioners first when a company collapses is an idea that is gaining momentum and could be the legacy of the Sears fiasco, even if it is too late for the workers.

It would require the Liberal government to move on what is in reality a morality issue and is being couched as a matter of corporate social responsibility.

It’s also a key issue for the middle class this government champions.

There are about 16,000 retirees at Sears who are unsure what portion of their pension they will ever see, but there are another 1.3 million Canadians who are covered by defined benefit pensions from private employers (full disclosure, I am one of them).

The Bloc Québécois has tabled a private member’s bill seeking amendments to existing legislation to protect pensioners. The NDP has served notice it will introduce its private member’s bill in the coming days.

The Conservatives appear ready to work with their NDP colleagues, and former industry minister Tony Clement told the CBC that the current system doesn’t properly serve workers.

Needless to say, none of this will be worth anything without Liberal buy-in.

CARP, the nation’s largest seniors advocacy organization, held a highprofile lobby day on Parliament Hill on Wednesday and met with at least 50 MPs, including about 20 Liberals.

Wanda Morris, who led the lobby day, also met with officials in the offices of Finance Minister Bill Morneau and Innovation Minister Navdeep Bains.

Independent expert voices have been raised saying the time is now to launch a national overhaul of the way pensions are managed in this country.

Right now, those on defined benefit pensions — a plan under which retirees receive a guaranteed pension based on salary and years of service — are unsecured creditors in the case of bankruptcy. They are in line behind secured lenders.

Sears paid out $9.2 million to executives to try to keep the company afloat, before walking away from its pension obligations.

There will be those who argue that those lucky enough to have the gold standard of pensions really need no government protection. Companies have moved away from such pensions. A proposed bill introduced by Morneau would make it easier for federally controlled pensions to move away from them, and millennials will never see them.

There will be those who argue that moving workers to the head of the line will risk investment in this country and creditors will be reluctant to help struggling companies if they are not first in line in case of insolvency. But Sears may be a tipping point. We lived through this when Nortel folded in 2009 and more than 20,000 of the company’s pensioners endured seven anxious years in the courts as $7.3 billion (U.S.) of the company’s liquidated assets were divvied up.

The court and professional fees over the life of the bankruptcy case cost about $2 billion, reducing the pension payouts. Ultimately, pensioners, on average, got about 55 cents on the dollar, and the money was finally distributed this year.

“There is such a thing as the notion of social justice,” Gilles LeVasseur, a law and business professor at the University of Ottawa, told me.

“There is a question of loyalty and reciprocity we need to address. These are honest, hard-working people.”

He is calling for a newly created supervisory body that will ensure pensions are properly funded and managed with accountability measures, some teeth and consequences for companies that fall short.

Alternatively, there could be an amendment to existing legislation prohibiting companies from paying dividends if they cannot meet their pension requirements.

Canadians should be outraged, Morris says. These workers are people who put their lives into their work, are certainly not fat cats and put their heart and soul into making Sears better. “And they got screwed,” she said. Bains maintains the Liberals are working with Sears pensioners by offering them an array of government services to help them through a tough time. There is no indication the Liberals will do anything more.

Pensions and conflict-of-interest allegations have dogged this government for weeks. Here’s a chance for a good news initiative on pensions. Tim Harper writes on national affairs. tjharper77@gmail.com, Twitter: @nutgraf1