CARP is collaborating with the National Pensioners Federation and Canadian Federation of Pensioners, calling for MP’s to create a solution to safeguard defined benefit pensions for retirees.
Current laws don’t protect pensioners, leaving many seniors destitute should their former employers declare bankruptcy.
- The risk to defined benefit pensions occurs when a company becomes insolvent and its pension is underfunded.
- When companies are in trouble but haven’t yet become insolvent, pensioners are powerless to intervene and secure their pensions. All other creditors can negotiate terms to protect their interests.
- Insolvency law does not treat pensioners fairly. Unlike creditors, pensioners are not automatically able to negotiate their terms when assets are divided. They aren’t even allocated a seat at the table, unless the court grants them one.
- An estimated 78% of defined benefit pension plans in Ontario are underfunded. In the event of an insolvency, those pensioners will not receive their full pension. This puts an estimated 850,000 pensioners at risk. (FSCO 2018)
CARP’s demands of government
- Create a pension insurance program that insures 100% of the pension liability.
- Amend insolvency legislation to extend super-priority to the unfunded pension liability.
- Commission a third party study to explore alternative legislative and regulatory solutions that will ensure pensioners receive 100% of their pensions in the event of corporate insolvency.
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