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COLUMN: Carol Hughes on protecting workers' pensions

Protecting workers’ pensions the right thing to do, says Algoma - Manitoulin - Kapuskasing Member of Parliament
MP Carol Hughes
Algoma-Manitoulin-Kapuskasing MP Carol Hughes. File photo

Algoma-Manitoulin-Kapuskasing MP, Carol Hughes writes a regular column about initiatives and issues impacting our community.

Last week, a bill designed to protect workers’ pensions when their employers declare bankruptcy or insolvency passed third and final reading with unanimous support in the House of Commons.

The bill, C-228, builds on years of work from previous NDP MPs (Chris Charlton, Wayne Marston, and Scott Duvall) going as far back as 2006. It’s designed with the simple goal of ensuring that, should a corporation fall into bankruptcy or insolvency, that pensions are paid out as a priority over creditors, ensuring that those deferred wages that workers put aside for retirement are paid first. 

This is a vital step for the protection of employees’ pension earnings to ensure they are treated fairly.

As we’ve seen in the past, when large corporate entities fell into bankruptcy, secured and unsecured creditors were at the front of the line. It’s the kind of bill that received little media attention, but likely will have a big impact on workers across the country.

This type of legislation has been needed for decades.

Many will remember some prominent bankruptcies and insolvencies of major Canadian firms, like Sears, Nortel, and Stelco. Once those firms went under, creditors were paid back ahead of pensioners, and their employees were robbed of some of the pensions they earned while working for these companies.

This bill puts workers to the head of the line, as it should be, as pensions are deferred wages. Those employees earned that money already, and losing those wages is tantamount to theft. In many cases, executives received bonuses for failing companies before their workers’ pension funds were paid out.

A key measure in Bill C-228 is that it also requires regular annual reporting to Parliament on pension funds’ financial standing and provides paths to fix problems when pension funds are not in good financial standing.

Therefore, not only does it ensure that workers’ pensions are paid out as a priority, but it also gives greater scrutiny to the management of the fund, providing an extra layer of protection that ensures that they remain solvent.

Functionally, what it does is make pension liability a very real issue for companies to consider even during periods of strength and growth.

The bill could be a game-changer for corporate behaviour. It will ensure that pension plans are fully funded, as it becomes a liability for companies over the longer term if those pension funds aren’t treated with care.

According to the latest data provided by Statistics Canada, 6.5 million Canadians were active Registered Pension Plan members as of 2020, accounting for 37.1 per cent of all workers. It’s vital that those pensions are protected to ensure Canadians can be secure in their retirement. 

The bill now goes to the Senate, where amendments to the legislation are still a possibility. However, given that the bill was supported unanimously in the House of Commons at Third Reading, it’s clear that this type of legislation was needed, and that it’s popular.

While certainly there remains work to do to ensure that workers’ pensions are protected and Canadians are secure in their retirement, this is definitely a step in the right direction.

Moving forward, we need to also focus on strengthening the Canada Pension Plan, to ensure all Canadian workers can retire with dignity.

Retirement security remains an important issue that must continue to be in the public eye. As more and more Canadians retire, the importance of stable pension systems will become even more of a vital issue.



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