I am concerned about the security of my pension and request a meeting with you to discuss your party’s plan to protect Canadians with defined benefit pensions like mine in the event of an insolvency. I am a member of the CCRetirees Organization which represents salaried non-represented retirees of the former Chrysler Canada. Our organization is also affiliated with the Canadian Federation of Pensioners, the National Federation of Pensioners and CARP who overall represent over 4 million Canadians.
Over 1.3 million Canadian retirees and their spouses have defined benefit pension plans. These plans are funded by employers and employees with benefits paid to employees when they retire. Yet, their retirement security is not guaranteed.
The federal government has a key role to play in protecting Canadian pensioners. While defined benefit pension plans are subject to both federal and provincial legislation, there is minimal legal protection for pensioners in the event of an insolvency. The risk to these pensions occurs when a company becomes insolvent with a pension that is underfunded.
We have identified two immediate areas for federal action:
1. Create a Pension Insurance Plan that insures 100% of the pension liability. This should be fully funded by the plan sponsors. If pensions were 100% insured, pension solvency requirements could be relaxed, resulting in a break-even or reduced cost for sponsors.
2. Amend insolvency legislation (specifically the CCAA and BIA) to extend super-priority to the unfunded pension liability. While this would not guarantee pensioners receive 100% of their pensions, it is an action the federal government could take to provide increased pension security to all pensioners of companies entering insolvency.
Last fall’s Chapter 11 filing by US-based Sears once again highlighted the disparity between US and Canadian pension protections. In Canada, Sears pensioners lost their health and dental benefits, and, outside of Ontario, 20% of their pensions. In contrast, 90,000 Sears pensioners in the US will be shielded from the fallout because the company’s underfunded pension obligations will be covered by the federal US Pension Benefit Guaranty Corporation.
This disparity is un-Canadian and must be addressed immediately. Canadian laws fail to protect pensioners against under-funding even as significant bonuses are paid to executives, and asset liquidations enrich shareholders.
Pensioners have worked hard all their lives and deserve to have their pensions protected.
As the combined voice of more than 1.3 million members, we are calling on the federal government to move swiftly to address this inequity and protect Canadian pensioners.
We look forward to meeting with you and sharing your party’s plan with our members and our neighbours in our riding.