Sears saga shows that pensions have to be protected
July 14th, 2017 - 2:49pm
When a store fails there is more at stake than finding a new place to meet consumer’s needs. For employees the challenges are only beginning. The bigger the enterprise, the more people will be affected and that’s when the retailer’s problems start to present bigger challengers challenges for the government. That’s because when pension plans are shredded and severance packages aren’t paid out, our social safety net has to bear the burden. In some instances, Canadians are left to pick up the pieces while company ownership is laughing all the way to bank - that’s what’s happening as Sears Canada undergoes court-supervised restructuring and is receiving protection from creditors under the Companies' Creditors Arrangement Act.
The first casualties of these developments have been employees who were recently laid off and just learned their severance packages won’t be paid out. What’s most unfair about this is that the largest burden is placed on those who spent the most time in the company. Long service, in this case, gets you nothing or costs you more, depending on how you look at it. That same sentiment applies to 16,000 Sears’ retirees who are waiting to learn if their pensions will be cut.
Sears has been under-funding almost everything except the owner’s bank account for years and retail analysts have predicted the company’s decline. The Ontario Superior Court had already ruled that Sears Canada was under-funding it’s pension plan and had ordered it to beef up payments. Now the company is asking the courts to suspend $3.7 million worth of monthly payments to its pension and post-retirement benefit plan.
New Democrats have been telling governments for years that pensions and pay need to be protected when creditors come calling instead of falling to the back of the line. What is so often lost in the equation is the fact that pensions earned by workers are really just deferred wages. It’s hard to understand how diverting, withholding, or seizing those funds can be anything but illegal. This illustrates how the current system is broken - but it can be repaired.
The government knows as much and the Liberals even campaigned on a promise to improve income retirement security for all Canadian seniors. So far we are waiting for them to propose any solution and they haven’t even acknowledged the grim future of the workers and retirees involved in recent bankruptcy proceedings.
As mentioned at the outset, one individual has been getting fantastically wealthy from the company’s bad fortune. Billionaire hedge fund manager, Eddie Lampert is the controlling shareholder of Sears and Kmart in the U.S., and of Sears in Canada who has presided over the company’s uninterrupted downward spiral. A piece by Alan Freeman for iPolitics outlines the life of excess he is able to lead while siphoning off and monetizing all the value from Sears’ holdings. With no prior retail experience, he sold everything that had any value and announced dividend payments without re-investing any money in the company. As Freeman suggests, Sears may have been in trouble anyway, but Lampert has made things much worse.
Still there is a significant role for the government to play, especially when it comes to making sure that pensions are secured. The Liberals have to stick to their election promises and protect retirees. New Democrats believe this is a matter of fairness for workers and will continue to fight for a Canada that works for everyone. This means making sure that corporations and multinationals can’t steal the pensions that workers and retirees have already earned because Canadians deserve to retire with dignity.