The national advocacy group for retirees has called for new legislation to protect workers’ pensions. CARP (previously the Canadian Association of Retired Persons) issued a statement yesterday in response to a settlement between Sears Canada and its employees regarding retirement benefits. Last month the beleaguered retailer asked permission from the Ontario Superior Court to cease payments for health and dental benefits, life insurance and pension payments for former employees, retirees and surviving spouses. This was vehemently opposed by those affected, but a compromise was found yesterday as the firm confirmed it would continue paying benefits and pension payments up to the end of September.
Whether this accommodation will be extended past then remains to be seen as Sears goes through liquidation sales in an attempt to save its business. According to spokesperson for CARP, Anthony Quinn, regardless of what happens with Sears’ restructuring efforts, its past and present employees should be protected.
“I think everyone hopes Sears will take this opportunity to find a plan to save as many jobs as they can and continue to pay the benefits they owe to pensioners,” he says. “If this is just a period of grace until they shutter the doors or file for bankruptcy, that’s not much of a win for the pensioners that were in court yesterday.”
While Sears’ future very much hangs in the balance, the reality for the retirees is that the company’s pension fund has a deficit of $267 million. Should the company declare bankruptcy, the likelihood the retirees will receive their benefits or pension look slim. When it comes to creditors, former workers will not be at the front of the queue, admits Quinn, which needs to be rectified by policymakers, he adds.
“We believe that pensions are nothing more than deferred wages that are negotiated and the obligation to the pensioners should come before all other creditors, secured or not,” he says. “We want changes to the Bankruptcy Act to reflect that.”
For workers in Ontario, there is respite in the form of the Ontario Pension Benefits Guarantee Fund that guarantees private sector pensions up to $1,000 per month. This needs to be rolled out right across Canada, believes Quinn, as concerns about adequate pension provisions mount across the country.
“In Ontario there is a mandatory contribution paid by defined benefit plans into a fund if a company cannot meet its commitments,” he says. “It is maxed out at $1,000 a month, so it’s not the full pension, but it is a lot more than other provinces get. We at CARP want the legislators to require all provinces to have a mandatory pension-funded insurance plan.”
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