Stop talking, start acting on pension reform

Most recently, it was Sears retirees facing retirement benefit cuts and pension reductions with the bankruptcy and dissolution of the iconic Canadian retailer. But not long before that, it was Stelco retirees facing similar hardships when U.S. Steel severed ties with its Canadian operations. And not long before that, it was another vulnerable group. And before that …

Problems with pension protection in this country seem to come up every few years. And the reaction is generally the same: Something needs to change so that retirees aren’t always at the bottom of a feeding chain in the creditor protection process. Right now, they come dead last, which means typically there’s nothing left for them.

So why hasn’t something happened? It’s not as if people aren’t trying. NDP MP Scott Duvall recently tabled a private member’s bill calling for changes to the Company’s Creditors Arrangement Act (and the Bankruptcy and Insolvency Act) to ensure “unfunded liabilities or solvency deficiencies” in pension plans get priority in bankruptcy. It also demands an employer maintain group insurance programs providing benefits for employees and former employees. Good for Duvall and his party. It’s not the first time they’ve done this. Last time, a similar effort got some support from the Liberals when they were in opposition. But when it came to a vote, the Liberals and Conservatives voted together to kill the idea.

Here’s the unvarnished reality: If protecting pensions through bankruptcy was easy, someone would have done it by now. There are a host of complexities, but let’s just deal with the main roadblock.

If pensions, benefits and protection are top priorities, something else is not. And if that something else is corporate creditors, a major dilemma arises. Former industry minister Tony Clement put it well in a recent CBC report: “How do you create the hierarchy of rights so that lenders will still lend to companies with a reasonable expectation that they can get their money out if something goes wrong, and protect the employees who have given part of their earnings and have a reasonable expectation of pension rights?”

In other words, if you gain improved protection for pensions and benefits, but in doing so make it difficult or impossible for companies to attract investment, who really wins?

It’s a fair point. But it’s time we stopped allowing that to be the excuse for not protecting Canadians who have poured sweat and blood into pensions only to see them diminished or even ended.

Executives get all or most of their money in bankruptcies. So do senior managers and preferred creditors. It may not be easy, but there has to be a way to see pensioners added to that list. The status quo simply isn’t right or justifiable.