Morally Bankrupt Too?
The Sears debacle and the nursing homes inquiry
WHEN SEARS CANADA filed for bankruptcy in July, older workers and retirees of the once popular retailer reacted with shock and anger. As part of its corporate restructuring, the company will halt some of its payments to its underfunded defined benefit pension plan, which means retirees will be hit with an unexpected and unwelcome reduction in their monthly pension cheques.
Robert Regnier, who worked 39 years for Sears, wrote to CARP to share the harsh impact on his retirement income that will occur due to the company not fulfilling their pension obligations: “I will receive 81 per cent of my pension, losing approximately $2,900 per year. I will lose my health and dental benefits, which will cost us approximately $2,100 per year. I lose $15,000 of life insurance. I worked my butt off for this company only to realize that they are looking out for themselves and to hell with the employees.”
It’s a familiar story, says Wanda Morris, CARP’s vice-president of advocacy. “When compan- ies declare bankruptcy, pensioners and their pensions are given short shrift,” she says. “The assets that are available go to secured creditors and executives, who often walk away with their wallets unscathed.”
CARP is calling for an amendment of the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act so pensioners rank ahead of secured creditors in priority of repayment obligations. It also wants companyfunded pension insurance mandatory in all provinces.