Sears pensioners’ court battles could have been avoided
September 13th, 2018 - 2:03pm
We often hear how important it is for Canadians to prepare themselves for retirement. That advice is definitely solid, but there have been instances where people have seen their preparations whither, in part or entirely, when a company fails. Yet despite repeated events, governments are reluctant to protect pension plans and ensure that companies are contributing in a way that will keep these funds robust. Sears Canada has been the most recent example of this and the struggle to protect those pensions is playing out in an Ontario Superior Court.
The court is considering a petition from retirees to have Sears remaining assets allocated to the company’s under-funded pension plan. A court-appointed monitor for the bankruptcy process is arguing against the idea, stating the other creditors are not in a position to challenge it. That argument highlights the fact that private pension plans do not have the strong protection needed to ensure they are adequately funded. If they had been, those pensioners wouldn’t be fighting to secure the $260 million shortfall in their pension fund.
While Sears employees are caught up in legal proceedings and battling to protect their pensions, it is important to remember that they have kept up their part of the bargain and earned what they are fighting for. That’s because, on a basic level, pensions are a form of deferred wages. They represent years of work and an agreement between a company and its employees that the work will be paid for now and later in retirement.
If those agreements were not in place, the responsibility for retirement preparation would rest squarely on the individual. But when pensions are underfunded and a company fails, the missing funds can be viewed of as stolen. In the case of Sears, executives at the top of the corporate structure were compensated, but the workers are still scrambling. Proof of that came in the aftermath of the closure of hundreds of stores. That’s when the Sears Canada board mounted more than $2 million in expenses at the same time as they were stripping thousands of workers of their pensions and severance pay.
The government is well aware that retirement security and pension protection are big concerns for many Canadians. That’s why they campaigned on improving retirement security for Canadians. So far, their actions have not equalled the hope they created during the election and it remains to be seen if retirement security and protection of pension will be a part of their legislative agenda in this parliament at all.
New Democrats continue to advocate for stronger pension protection and introduced legislation that will do that. We have seen the government pick up NDP initiatives and run with them on other issues. No one would complain if they did the same with the bill to end pension theft, but that isn’t expected. That leaves pensioners to fight it out in the courts to receive what they have already earned. Sears is just the latest example of this and it will happen again if governments don’t get serious about pension protection once they are elected - especially if they have been elected with an expectation to address the issue.