This text is part of the special section Personal Finances
In recent years, many Quebec retirees have lost a significant portion of their pension funds with the financial restructuring of companies on the verge of bankruptcy. But Bill C-228 could change that and better protect pension recipients.
In 2019, the press company Groupe Capitales Médias received the green light from the Superior Court of Quebec to restructure due to its economic difficulties. Retirees, whose annuities are considered ordinary claims, lose more than a quarter of their retirement funds.
“We found it scandalous that, in a context of restructuring, retirees were bailed out last,” commented Philippe Poirier-Monette, special advisor for government relations at Réseau FADOQ, the largest group of seniors in the country. Pension funds are deferred wages; people agreed to less salary to have more pension funds. »
“From time to time, there are plenty of cases that have struck the imagination, deplores the FADOQ spokesperson. There have been scandals of bonuses given to senior executives before pension funds were respected. In addition to Groupe Capitales Médias, the same situation also occurred during the restructuring of companies such as Sears stores, Nortel Networks, the mining company Cliffs on the North Shore or the Mabe plant which was owned by General Electric. . In many cases, pension benefits are cut, life and group insurance are eliminated.
“There was a hole in the Bankruptcy and Insolvency Act that allowed defined benefit plans to be abandoned in the context of a restructuring,” observes Philippe Poirier-Monette. And there, it will no longer be possible! »
A long-awaited bill
On November 23, Bill C-228 to protect workers’ pension plans in the event of a company’s bankruptcy was passed unanimously in the House of Commons. The bill seeks to give priority to the claims of defined benefit pension plans in the event of the bankruptcy or insolvency of a company. This means that companies in financial difficulty will have the obligation to prioritize the bailout of deficit pension funds, thus protecting workers more.
“We welcome this bill very favourably,” rejoices Philippe Poirier-Monette. Since 2005, this is the fifth bill tabled in this area, but it is the first time that a bill has gone as far as the Senate. »
The bill was introduced by Bloc Québécois MP Marilène Gill, in collaboration with other MPs, such as Conservative Marilyn Gladu. To obtain a unanimous vote within the parties, the bill has been the subject of compromise and will not offer absolute protection to pension recipients. For example, C-228 does not address group insurance coverage. While pension fund deficits have also risen in the order of priority, these are not secured claims, such as bank loans. This means that if a company’s assets are insufficient, beneficiaries will also lose a portion of their pensions.
But the FADOQ welcomes the major advances for the workers. “The message we are trying to send to the Senate is that it must pass quickly through their legislative process, insists Philippe Poirier-Monette. It is expected that the bill will be put on the agenda quickly. The bill will soon be evaluated in the Senate. If passed without amendment, it will receive Royal Assent and become law.
Record indexing
At the same time, Retraite Québec announced an indexation of 6.5% of pensions for 2023 – a high rate which is explained by the increase in the cost of living. “This upgrade is much more notable in a context where inflation has been galloping, as in 2022,” explains Philippe Poirier-Monette.
In years of high inflation, Philippe Poirier-Monette argues that recipients of provincial pensions would benefit from seeing their pensions indexed each quarter, as the federal government does.
This special content was produced by the Special Publications team of the Duty, pertaining to marketing. The drafting of Duty did not take part.