Senators must pass C-228 now to avoid delaying Canadian pensioner protections

On Nov. 23, 2022, Parliament voted unanimously to support Bill C-228. This legislation, which is now proceeding through the Senate, will protect millions of Canadian seniors and their families who rely on defined benefit pensions for their financial security in retirement. This legislation firmly places the interests of people before banks. As organizations representing seniors and retirees across Canada, we are calling on all Senators to support the swift passage of this bill. C-228 was heralded by seniors and pensioner organizations across the country, and has received widespread media coverage. Parliamentarians should be lauded for their unanimity in furthering pension protection – a once-in-a-generation opportunity to ensure that retirees receive the pension they are owed when their former employer declares bankruptcy. Michael Powell is president of the Canadian Federation of Pensioners. Photograph courtesy of the Canadian Federation of Pensioners However, not everyone applauds this landmark achievement in protecting pensioners. Organizations opposed to Bill C-228, including associations of pension managers, financial, and business interests, have issued open letters and op-eds outlining their objection to pension protection. They offer alternatives to C-228, all of which are based on unilaterally transferring the pension risk from companies to individual pensioners. Make no mistake, the "pension sector" is not just opposed to C-228; they are opposed to pension protection. Their position is untenable because it prioritizes the pension sector over the interests of Canadian retirees. Here's why. First, the pension sector consistently focuses on reducing companies' pension costs at the expense of seniors' financial security. They argue that employers should not be responsible for their pension commitment in insolvency. In pension regulation consultations, they are on record as supporting the elimination of—or at least a significant reduction in—solvency requirements. This would leave pensioners short-changed for life. The math is simple. Lower costs to companies mean less money in pensions which means greater risk to pensioners in insolvency. Laura Tamblyn Watts is the founder and CEO of CanAge, a national seniors' advocacy organization. Photograph courtesy of CanAge This position explicitly treats vulnerable Canadian seniors as acceptable collateral damage in insolvency. Putting the financial security of vulnerable Canadian seniors at risk without their informed consent is the very definition of elder financial abuse. Canada has a bad track record in this regard. Since 1982, an estimated 250,000 Canadian seniors, including pensioners from Sears, Nortel, Groupe Capitale Médias, and White Birch, have faced financial insecurity and poverty when their former employer filed for insolvency with an underfunded pension. Some have incurred pension income cuts of 30 per cent. These are real people facing real hardships because, until now, Parliament had consistently sided with big banks, lenders, and insolvency sector lobbyists. Second, no data or evidence supports the predictions of dire consequences. The pension sector predicts nationwide financial doom and gloom if C-228 is put into law, including higher borrowing costs and potentially making financing unavailable for a bankruptcy restructuring, thereby ensuring the demise of a distressed company. This opinion is offered without data. It is surprisingly similar to objections raised in opposition to the Wage Earner Protection Program, which protects the wages of workers whose employers became insolvent. WEPP passed in 2005, yet the pension industry cannot provide examples of the many Canadian companies that were predicted to be forced into liquidation because of increased borrowing costs or the inability to raise capital. It has never produced data showing that Canadian productivity and employment lag that of competitor nations due to WEPP. Trish MacAuliffe is president of the National Pensioners Federation. Photograph courtesy of the National Pensioners Federation Third, if we change the rules, companies will change their behaviour. Bill C-228 offers Canadians much-needed legislative change that would compel corporate behavioural change before insolvency occurs. By legislating super-priority for defined benefit pensions in the event of insolvency, corporations and lending markets will be forced to adjust to reflect that the pension commitment is real. The Air Canada story illustrates this point. Filing for insolvency in 2003, Air Canada had a $1.3-billion pension deficit. Over the next 10 years, the deficit ballooned to $4.2-billion. When asked for further relief in 2013, then-finance minister Jim Flaherty demanded conditions be attached to the relief. This included severe restrictions on share buybacks, dividends, and executive compensation. In response, Air Canada fully funded its pension by May 2015. On behalf of the millions of Canadians who have worked hard all their lives and paid into their pensions, let's all work together to put the needs of vulnerable seniors ahead of corporate self-interest. We urge the Senate to act decisively and support C-228. Michael Powell is president of the Canadian Federation of Pensioners. Laura Tamblyn Watts is the founder and CEO of CanAge, a national seniors' advocacy organization. Trish MacAuliffe is president of the National Pensioners Federation. Philippe Poirier-Monette with Réseau FADOQ, Bill VanGorder with CARP, and Bénédicte Schoepflin with Canadian Network for the Prevention of Elder Abuse are all contributing authors to this piece. The Hill Times

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Senators must pass C-228 now to avoid delaying Canadian pensioner protections

Organizations representing seniors and retirees across Canada are calling on all Senators to support the swift passage of this legislation.

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