Government must protect pensioners

Change rules so they’re first in line, says 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 paid into all that time.

That’s the reality facing 62-year-old Gail Paul of Corner Brook, N.L., 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 pensioners are first in line, not last, when it comes to paying down creditors. The same has been proposed by the Bloc Quebecois.

Critics argue putting pensioners first 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 have no option but to trust 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 tradeoff, given their tax-exempt 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 U.S. and the U.K. are countries with nationwide mandatory pension insurance. In Canada, only Ontario has a mandatory fund. Created in 1980, it guarantees 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 we have. We are required to insure our vehicles, our homes, 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.

Pension insurance isn’t just about protecting pensioners.

Hassan Yussuff is the president of the Canadian Labour Congress.