What to do about bankrupt bankruptcy laws
Hey there, time traveller!
This article was published 16/03/2022 (440 days ago), so information in it may no longer be current.
For people fortunate enough to have a company pension, it is one of the most significant investments of their lives. They pay into it over decades and depend on it for their food, lodging and, hopefully, some enjoyment in their retirement.
Investment is the key word. Pensions are not a handout or a perk. They are part of the wage package. Employers and employees each pay an agreed amount into the pension fund as part of the terms and conditions of employment.
The key to any good investment culture is confidence. Investors want to be confident that, when it comes time to be paid out for their investment, the money will be there and they will get paid. Workers should expect the same of their pension.
That is why it is damaging – both to individuals and to the very idea of workplace pensions – when employers are allowed to take holidays on their contributions to pension funds in good times; racking up big pension liabilities that jeopardize the fund that they later use as an excuse to not increase wages and other benefits for workers.
Even more damaging is when large corporations fail and then use Canada’s inadequate bankruptcy laws to take the money that should be put into their employees’ pension fund and instead hand it over to CEOs, banks, investors, and insurance companies.
This is theft, plain and simple. The fact that this kind of behaviour is legal under Canadian law adds insult to injury and makes it harder for workers to get justice.
When Sears Canada filed for bankruptcy protection, the company suspended $3.7 million worth of payments to its pension and post-retirement benefit plan. In addition, the company laid off 2,900 workers and refused to pay them severance, then announced it would pay $7.6 million in retention bonuses to 43 executives and senior managers. Sears later set up a $500,000 “hardship fund” to help some of those 2,900 employees. That’s over $176,000 per executive, and only $172 per employee.
That is why I was glad to pick up the torch from my retired colleague, former MP Scott Duvall, and introduce a bill that would amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to require companies to:
1) Bring any pension plan fund to 100 per cent before paying any secured creditors;
2) Pay any termination or severance pay owing before paying any secured creditors;
3) Prevent a company from stopping the payment of any retirement benefits during any proceedings under the BIA or CCAA.
This reform is long past due, and I am determined to carry on the fight on behalf of workers here in Elmwood–Transcona and across Canada.
Elmwood-Transcona constituency report
Daniel Blaikie is the NDP MP for Elmwood-Transcona.