Happy New Year! It has been three years since Justin Trudeau said on the 2015 federal campaign trail, “Obviously the Canadian government needs to work with provincial partners and a wide range of actors to ensure that we’re doing everything we can to protect people’s pensions.”
More than two years in office and one thing has become clear: Prime Minister Trudeau is not doing enough to protect Canadians’ pensions.
Pensions really are deferred wages – you pay into them while you are working in order to be financially secure in retirement. It once was fair to assume that after a lengthy career, a hard working Canadian would have a guaranteed pension. Employers and employees contributed to a plan, and when the worker retired they knew the exact amount of the monthly payout. It was guaranteed. These pension plans are known as Defined Benefit Pension plans (DBPs).
That was until the government introduced Bill C-27 on October 19, 2016. The bill removes an employer’s legal obligations to fund their employees’ earned benefits and allows for the conversion of federally-regulated DBPs to target benefit plans. Under these new target benefit plans if the stock market crashes or the pension plan’s investments underperform, it is the workers’ benefits that could be reduced or premiums increased; the employer is no longer obligated to guarantee a monthly payout amount. This change could lower benefits for both current and future retirees. The conversion will result in virtually all risk of market volatility being downloaded from the employer onto employees and retirees.
To be clear, C-27 targets employers in federally-regulated businesses such as banking and railways, as well as crown corporations. For Kootenay-Columbia this largely affects workers with Canada Post, banks, telephone systems like Telus or Shaw, Canadian Pacific and Canadian National railroads, and federal government retirees.
The government assures us that these benefit changes will not be allowed to happen without the consent of the workers and retirees.
But let’s be serious: we can all see through this disguised attempt at security and recognize that employers will try to persuade workers and retirees to take on these new, risky benefits with enticing offers such as lump sum cash payments, onetime salary adjustments, increases in paid vacation or sick days and improvements in other benefits such as dental. But these benefits should not be at the cost of secure pensions and retirement after contributing into a plan for your entire career. Since, Bill C-27 has not yet been passed into law there is still time to try and change the government’s mind on this bad piece of legislation.
If you aren’t an employee of a federally-regulated business you might assume your pension is safe. Don’t be so sure! Do you know if your pension plan is fully funded? As 16,000 Sears Canada workers discovered, theirs was not. They had to watch their bankrupt employer pay $6.5 million in bonuses to corporate executives while the future of their pensions is unknown.
Canada’s bankruptcy laws give priority to investors, banks and parent companies over workers’ pensions and benefits. Under current legislation, large multinational corporations are using Canada’s bankruptcy laws to take money meant for workers’ pensions and divert it to pay off their secure creditors, who in many cases are often their parent companies. This is corporate theft!
My colleague and NDP Pensions Critic, Scott Duvall has introduced Bill C-384, a bill I am proud to support. This bill would fix current legislation to first protect workers’ pensions and benefits and force companies to provide termination or severance pay, before paying secured creditors and executive bonuses.
I am hosting a telephone town hall on February 6th with Scott on the systematic attack happening to pensions by the Liberal government. Stay tuned for a save-the-date reminder landing in your mailbox later this month. I hope you will join the call to learn more about pension theft and have your questions answered. It is important to note recipients of GIS and OAS benefits are not affected by Bill C-27 or Canada’s bankruptcy laws.