Pension protection for Canadians is long overdue. When a company becomes insolvent and its pension is underfunded, pensioners are powerless to intervene and secure their pensions.
Sears, Nortel and other corporate pensioners experienced sharp reductions in their annual pension income after those companies failed. In March of this year, Imperial Tobacco filed for protection under the Companies’ Creditors Arrangement Act (CCAA). Yet another group of defined-benefit pensioners now find themselves potentially facing cuts to their pensions. Action to resolve this issue is long overdue.
What is the problem? Over 1.3 million Canadian retirees and their spouses have private defined-benefit pension plans. But there are no real protections for Canadian defined-benefit pensioners when a company goes bankrupt. While all other creditors can negotiate terms to protect their interests, pensioners have no such ability. Creditors in name only, pensioners are entirely dependent on legislation to protect their interests. They aren’t even allocated a seat at the table, unless the court grants them one.