Parliament has passed the Pension Protection Act (Bill C-228), which makes some long overdue changes to finally protect pensioners and workers who stand to lose some or all of their pensions when companies go bankrupt.
PSAC has been pushing for new legislation that would safeguard workers’ pensions in cases where employers have underfunded pension plan liabilities and become bankrupt or insolvent. Up to now, other creditors such as banks have had priority while pensioners and workers have been the ones to suffer losses to their hard-earned pensions.
In several cases in the recent past, PSAC has represented members whose employers were involved in bankruptcy proceedings. In both instances, the defined benefit pension plans were underfunded, and the employers were in severe financial difficulties.
In the case of members working for Dominion Diamond Mines in the Northwest Territories, there was a successful restructuring of the company, and the defined benefit pension plan continued intact. However, in the case of the Northern Transportation Company Ltd. (NTCL), another northern employer that filed for bankruptcy in 2017, members were more severely impacted.
If the new legislative changes had been in place at the time, the pensions of vulnerable former NTCL workers – members of the Union of Northern Workers – would have been secured. Instead, members had their pensions reduced by 18 percent or more on average impacting their retirement security.
PSAC presented these cases as prime examples to push for the changes in a submission to the Senate Banking committee that studied the Pension Protection Act.
The media coverage of employees and pensioners impacted by the colossal financial failures of corporations such as Sears and Nortel are powerful reminders of why these changes are needed.
The Pension Protection Act amends the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985. It includes a four-year transition period after coming into force which should provide employers and defined benefit pension plan sponsors enough time to adjust their financing arrangements and address any pension funding challenges.
Members of Parliament and Senators passed the bill unanimously and it received Royal Assent on April 27, 2023.