Pensioners should never again be left high and dry.
When multinational corporations like Sears Canada, Nortel Networks Corporation, and Slater Steel Inc. go bankrupt, the executives and bankers rarely lose out. Pensioners are left with the crumbs.
The federal government wants to hear from Canadians on how to fix a broken system that abandons loyal workers.
I urge the federal government to take the following four steps to protect workers and pensioners when companies restructure or go bankrupt:
1. Change bankruptcy laws so that workers and pensioners are first in line when it comes to paying creditors. The federal government should amend the Bankruptcy and Insolvency Act (BIA) to give workers and pensioners super-priority status when the company is in bankruptcy and receivership, so they are paid out of the remaining assets before other creditors (like banks, financial lenders, and debt holders).The federal government should also amend the Companies’ Creditors Arrangement Act (CCAA) to prevent employers from escaping their obligation to fully fund their pension plans and changing, cutting or eliminating pension, health, and welfare benefits.
2. Work with the provinces and territories to create a Canada-wide mandatory pension insurance program. Providing a national fund to backstop benefits and rescue stranded pension plans, along the lines of Ontario’s Pension Benefits Guarantee Fund, would provide a guarantee for workers and pensioners when companies go bankrupt.
3. Change the rules so that when companies have the money to fund their pension plans they must be required to do so before applying for bankruptcy protection. It’s critical that regulators have greater powers to scrutinize and challenge what companies are doing before they get to restructuring and bankruptcy proceedings. We only have to look to Sears Canada to see what happens when companies allow pension deficits to grow while spending billions on shareholders and company managers. Sears extracted as much money from the company for executives and shareholders as possible, and then abandoned workers and retirees by slashing their pension and health benefits.
4. Abandon Bill C-27, An Act to amend the Pension Benefits Standards Act, 1985. Bill C-27 which would enable federal Crown corporations and private sector employers in the federal jurisdiction to back out of their defined-benefit pension plan commitments to employees and retirees. Instead, the federal government should work to preserve and expand defined-benefit pension plans, in part by reviewing funding rules.