New laws needed to ensure companies don’t leave retirees out in the cold
HELD IN LATE OCTOBER, THE 10TH ANNUAL ZOOMERSHOW LIFESTYLE EXPO ATTRACTED A RECORD CROWD OF 40,000 ATTENDEES
CARP REPRESENTATIVES blitzed Parliament Hill on Oct. 25, calling on the federal government to protect retirees whose companies have reneged on their pension promises.
CARP’s Put Pensioners First campaign was staged in the wake of the recent Sears Canada debacle, which saw the bankrupt company try to escape its unfunded pension obligations to 16,000 former workers.
“They’ve already lost their health and dental benefits and life insurance,” says Wanda Morris, CARP’s vice-president of advocacy. “Now they’re waiting to find out how much of their pension cheques will disappear. That’s just wrong.”
Morris and her team met with more than 70 MPs to lobby for legislation that would prevent the same thing happening in the future. “We’re asking that unfunded pension liability be given ‘super priority’ status so it goes to the front of the line,” said Morris.
It’s not unusual for companies to take pension “holidays,” whereby they suspend payments to the company plan and fall behind in their obligations. As a result, many public and private pen- sion plans have sizable deficits. This becomes a huge issue if the company declares bankruptcy – and tries to escape its pension obligations, leaving thousands of their retirees out in the cold without stable retirement income.
When Nortel, Indalex Canada, Royal Mines and Wabush Mines declared insolvency, they slashed their pensions, causing former employees financial uncertainty and hardship.
“Without new protections, more pensioners will lose their retirement security,” says Morris.
Right now, bankers and bond holders are paid in full before pensioners and other unsecured creditors see a dime. Yet bankers have many customers and will be far less affected by one loss. Similarly, other creditors may stand to lose amounts owed for 60, 90 or 120 days – but pensioners are typically owed for years or even decades of service.
“Just because a company fails doesn’t mean its current and future pensioners should lose their retirement security too,” said Morris. “Laws need to change to better protect pensioners.”
In an online petition that’s garnered more than 20,000 signatures, CARP is calling on the federal government to amend the bankruptcy laws so pensioners rank ahead of secured creditors in priority of repayment of obligations. And it’s lobbying provincial governments to make company-funded pension insurance mandatory.
Federal Innovation Minister Navdeep Bains admitted the Liberal government doesn’t have any plans to adopt legislation but told the CBC: “we’re engaging and we’re willing to work with anyone that wants to put forward proposals.”
In the meantime, some politicians are taking action. Both NDP MP Scott Duvall and Bloc Québécois MP Marilène Gill have recently tabled private member’s bills that would protect pensioners if their company goes bankrupt.