CARP is pleased that Sears Canada will extend its employee benefits and pension payments for an additional two months. However, the advocacy group still has concerns about the pension deficit and how the company will continue to fund payments beyond September 30th.
“This two month extension gives a bit of breathing room but now all parties need to turn their attention to a sustainable solution to protect pensioners,” said Wanda Morris, VP of Advocacy, CARP.
CARP is calling for critical legislative changes to better protect employees.
“Pensioners today are dually exposed: companies aren’t fully funding their pension obligations, and bankruptcy law relegates pensioners to the back of the line when it comes to collecting unfunded amounts,” said Morris.
Earlier today, Sears Canada struck a deal with DIP lenders to extend retiree benefits and pension payments until Sept. 30th. But the future of Sears is still uncertain.
Should Sears become bankrupt or if the pension is wound up, Ontario residents can access some relief through the Ontario Pension Benefits Guarantee Fund. This fund guarantees private sector pensions up to $1,000 per month. Unfortunately, no other Canadian province has such a fund.
As a result, CARP’s calling for the following:
1. Amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act so pensioners rank ahead of secured creditors in priority of repayment of obligations.
2. Make company funded pension insurance mandatory for all provinces. Ontario retirees have some protection. All pensioners should have at least as much.
“Canada’s bankruptcy laws must change to recognize that after employees, pensioners have top claim to any remaining assets until their pensions are fully funded,” said Morris.
“Just because a company fails doesn’t mean its current and future pensioners should lose their retirement security too. All Canadians bear the costs when pensioners lose retirement income.”
CARP (formerly known as the Canadian Association of Retired Persons) is a national, non-partisan, non-profit organization that advocates for financial security and improved health care for Canadians as we age. With over 300,000 members and local chapters across Canada, CARP plays an active role in the creation of policy and legislation that impacts older Canadians. CARP works closely with all levels of government and collaborates with other organizations to advocate on health and financial issues.
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