Pension plans | Common front to protect pension funds

(Ottawa) The three main opposition parties have all tabled bills in the House of Commons to preserve workers’ pension funds in the event of a company bankruptcy. Now that the New Democratic Party (NDP) is supporting the Liberal government, will any of these bills have a better chance of being passed?

Mylene Crete
The Press

Claude Sénéchal had been retired for 12 years when Sears declared bankruptcy in 2017. Overnight, his monthly pension was cut by 30%. He also lost all the benefits that the company guaranteed him when he retired: life insurance, dental insurance, vision and medical insurance.

“In the case of a retiree who is 65 and over, you can’t get over it,” he notes. It’s impossible. You have to agree to tighten your belt and live with less. »

In October 2017, 3,100 Sears retirees, who benefited from a defined benefit plan, were in this situation in Quebec. The liquidation of the company’s assets has reduced their loss of income, which is now 14%. For some, this loss still hurts a lot.

In an open letter in March, a number of groups, including the Canadian Federation of Pensioners and the Réseau FADOQ, urged the Liberal government to pass legislation to protect pension plans. “Pensions are deferred wages,” they recalled.

Consensus in opposition

The Conservative Party, the Bloc Québécois and the New Democratic Party have all tabled bills in the House of Commons to prevent other people from living through such a nightmare. Retirees are among the last creditors reimbursed in the event of a company’s bankruptcy. They do not benefit from any special status, unlike the banks which are paid first.

“Retirees are not represented among the priority creditors in the same way as municipal taxes,” explains Bloc Québécois MP Marilène Gill. This is its third attempt since 2015. Its previous bill to correct this situation made it all the way to parliamentary committee stage in the last Parliament, before dying on the order paper after the election was called. .

“Just last year in June, all the groups supporting the bill covered 3.5 million people in Canada,” she says. For me, it was significant. It showed that there was a need for the population. »

The legislation she proposes now includes compensation for the loss of group insurance. NDP MP Daniel Blaikie’s bill goes even further by requiring that these insurances be maintained outright and that retirees be paid first, before the banks. It also requires pension funds to report regularly to the Office of the Superintendent of Financial Institutions so that action can be taken quickly if they are underfunded.

Conservative Marilyn Gladu also suggests that retirees be among the priority creditors in the event of bankruptcy – not the first – but her bill contains nothing for group insurance. “It’s a big cost that is uncertain,” she justifies.

His bill, however, would provide insurance that would guarantee up to $2,000 per worker and allow an underfunded pension fund to be transferred to another pension plan. It has already reached second reading.

Necessary compromises

If there is consensus among the three opposition parties to prioritize retirees in the event of bankruptcy, they will have to compromise to settle the issue once and for all. “We’ve been trying to get a bill on this subject for 10 years, so it’s time to decide what we can agree on,” says Marilyn Gladu.

The member for the Ontario riding of Sarnia–Lambton says she is open to amendments, but does not want to bend on the issue of group insurance, which would not be accepted by the Conservatives and the Liberals.

The protection of pension funds is not part of the agreement between the government of Justin Trudeau and the NDP, but Daniel Blaikie is still hopeful that a bill will be adopted.

“I’m still optimistic – not that the government might be ready to do something about the issue – but that there might be a way to find a consensus on the opposition benches, says -he. We really just need a majority in the House of Commons. »

One of the bills could therefore pass without the support of the government, which does not hold a majority of seats. The fact remains that the parties may have difficulty agreeing.

Even if he had been invited, Daniel Blaikie was conspicuous by his absence Monday at a joint press conference of Marilyn Gladu and Marilène Gill who call for a transpartisan effort.

Backbencher Ryan Turnbull, who sponsored a petition on protecting pension funds, was also absent, despite trying to convince his colleagues in the Liberal caucus to move forward.

“Ultimately, if we don’t do it now, we will never do it,” said Quebec director of the Steelworkers union, Dominic Lemieux, who was present at the press conference.

The Minister of Innovation, Science and Industry, François-Philippe Champagne, does not close the door. “We all agree that pensions should benefit from greater protections,” said his press secretary, Laurie Bouchard, in writing. ” […] In particular, we want to avoid adverse and unforeseen consequences that may be suffered by businesses, workers and retirees. »

Compulsory payment of benefits could, for example, make a bankrupt company less attractive for takeover.

It is too late for Sears retirees like Claude Sénéchal, but he intends to continue to lead the fight. “It’s not because we are no longer directly involved that we are going to drop the ball,” he concludes.

When insurance makes all the difference

The hundreds of retirees from Groupe Capitales Médias are not all equal. Those who worked for the daily The right will be able to recover most of the loss of their retirement income after the company’s restructuring in 2019. Ontario offers an insurance plan to guarantee benefits in the event of bankruptcy, which Quebec does not have.

“It’s one of the great advantages we enjoy in Ontario, an advantage we didn’t suspect,” notes Pierre Jury, who was a columnist at the Straight until 2020. Like many, he was unaware of the existence of the Pension Benefits Guarantee Fund (PBGF) until he needed it.

Of the six daily newspapers of Groupe Capitales Médias, The right is the one whose pension fund has suffered the greatest losses. Employees lost 28% of their defined benefit plan. Pierre Jury expects to recover almost all of this shortfall next fall.

The situation of Pierre Pelchat, a retiree from Sun, is quite different. His retirement income has been cut by 22% since 2020. “What is shocking is that we contributed and we played the rules of the game, he confides. Then, someone decides overnight that it’s over. You had $100,000 in your bank account, you have $75,000 left and you have no more say. »

Retirees have been campaigning for several years for the Quebec government to create insurance that would guarantee the benefits of pension funds in the event of bankruptcy, like the one that exists in Ontario.

The PBGF has been around since 1980 and is administered by the Financial Services Regulatory Authority of Ontario. It guarantees the first $1,500 of monthly benefits.

“It’s another type of protection that doesn’t require any contribution from the government,” explains Jean-Paul Joanisse, treasurer of the Canadian Federation of Pensioners. In Ontario, the fund is fully funded by companies that offer defined benefit plans. Its value stood at nearly $1.2 billion in 2021, according to its most recent annual report.

Quebec remains to be convinced

Despite their letters, their demonstrations and their press conferences, the pensioners failed to convince the Minister of Finance, Eric Girard. He fears that this will accelerate “the decline of defined benefit plans”. However, a meeting is scheduled between the group of retirees and employees of his firm on May 13.

“We are very sensitive to the situation of retirees,” he said in writing. On the other hand, a guarantee fund similar to that of Ontario would imply a significant additional cost for all participants in all plans. He argues that Law 68 passed in December 2020 to allow target benefit plans gives new options for retirees to transfer their assets when their pension fund is at risk.

Pierre Pelchat and Jean-Paul Joanisse are not giving up. They hope to sensitize all political parties to their cause in anticipation of the next election campaign. They will also have to convince the unions, who fear losing some of the money that would normally go into the envelope for the renewal of collective agreements.