Super-priority for Pensioners: An Impact Assessment and Policy Prescription

Canada is an international laggard in its treatment of pensioners. Many countries protect pensioners from the fallout of financially distressed employers. The EU requires member governments to “necessary measures” to protect the interests of employees with respect to pension rights.

U.S. jurisdictions protect pensioners’ assets – up to $64,000 per year. A special fund in the U.K. guarantees pensioners 90 percent of their pensions. In Canada, there is no federal pension protection. Only in Ontario are some private pension plans protected, and that protection is only on the first $12,000 annually. Corporate defined benefit pension plans are underfunded by billions of dollars, putting 1.3 million Canadian pensioners at risk.

There are two historical precedents for protecting pensioners by giving them priority ahead of secured creditors, known as super-priority, in the event of bankruptcy or insolvency. CARP is calling for legislation to give all unfunded pension liabilities super-priority.


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