An NDP private member’s bill recently introduced into the House of Commons aims to put pensioners ahead of the list of secured creditors, a reversal of the current status quo which has left Sears employees in Nanaimo powerless in the wake of the company’s bankruptcy last year.
Retirees from the major Canadian department store and IBM, as well as a federal government employee, were among a full room of concerned citizens from Nanaimo to Langford who gathered in Ladysmith on Tuesday night as the NDP’s Pensions Critic Scott Duvall spoke about his proposed “pension theft” legislation.
Duvall is a former Hamilton, Ont., city councillor who had first-hand experience in his riding dealing with underfunded pensions after steel company, Stelco Holdings Inc. emerged from three years of bankruptcy protection last year, still owing hundreds of millions to current and former employees.
The essence of Bill C-384 is not new and has even been put forward in the three previous parliamentary sessions. Duvall has studied those examples for the past year and worked with lawyers to ensure success this time around.
“This is unfair, this is not proper, you’re basically negotiating for your own wages,” he said.
Current federal laws under the Company Creditors Arrangement Act and Bankruptcy and Insolvency Act dictate that secured creditors such as banks, investors and parent companies are in line before unsecured creditors, such as unfunded pension liabilities.
Duvall called the courts carrying out these federal laws, which supersede provincial legislation, as the “wild, wild west.”
“That’s money that should not be taken away from you, that’s money you’ve paid into and they (employers) have an obligation to fund that plan,” he said. “If we put legislation there that you cannot take the benefits away during that process then we can stop it.”
The NDP’s private member’s bill introduced last November would bump workers or retirees up in the line to ensure they receive termination or severance pay, and pensions.
“Before any money is paid out to any one of those companies, the banks, the investors, the money has to be put into the pension fund and then you can go and divide and share all you want because it’s our money – don’t take it away from us, stop stealing from us,” Duvall said.
Among those who attended the town hall was Nanaimo’s Paul Smith with his 75-year-old father David, a retired worker at Pacific Press.
“If his pension’s not there then it’s going to fall onto me to be the bread winner because it’s just the two of us,” Smith said, adding their situation is stable but they are conscious of the changing economic pressures.
“The bank doesn’t care if his pension’s gone. We still have to pay the mortgage on his house, we still have to buy the medication, all that stuff costs money.”
Nanaimo-Ladysmith MP Sheila Malcolmson said the closure of Sears and the government’s failure to protect pensions has left people “rattled.”
“They are thinking about their own pensions, they’re thinking about where they might be 20 years from now knowing that there are more and more bankruptcies,” she told the Chronicle.
“We’re sensing a lot of alarm but also a lot of support for the quite simple fix that’s proposed by my colleague’s bill to simply move people that have paid into a pension plan higher in priority so that their at the front of the line.”
Malcolmson encouraged anyone supporting the change to put their name on a petition because each 25 signatures allows MPs to stand in the House and speak on the issue for one minute.
“It’s quite an elegant fix and I think it would make people in our region sleep a little easier knowing that their earnings they’ve been setting away through their pension plans are going to be there for them when they need it,” she said.
What also remains to be seen is how Liberal Finance Minister Bill Morneau plans to proceed with Bill C-27, which would permit federally-regulated employers to establish what’s referred to as a ‘target benefit’ pension plan.
The Canadian Union of Public Employees’ national president Mark Hancock is among those on record as being opposed to the changes and in a letter to the Morneau called C-27 a “fundamentally flawed piece of legislation.”
Duvall added that it’s “ambiguous” and “a dangerous bill that takes all the risk onto the pensioner.”
“It takes the the defined benefit plan, your guaranteed money that you know you’re going to retire on, and it converts it over to what they call a target plan,” he said.
“Eevery year it has to get an actuary report and if it doesn’t meet that target you have to renegotiate. There’s no stability in your pension, you don’t know if you might lose it, you might have to raise your premiums, or you can do both. It takes all the burden off the company on the defined benefit and it puts all the risk onto the retiree.”