While construction giant Carillion is grappling with a massive pension deficit in its British operations, the Canadian arm, which filed for bankruptcy protection this week, has a much smaller shortfall.
Among the struggles plaguing the British parent company is a defined benefit pension deficit of about $1 billion. In Canada, documents filed by Carillion Canada Holdings Inc. as parts of its court filing show a deficit of about $20 million in the company’s pension and benefit plans. The shortfall includes a $5.9-million deficit in the defined benefit component of its pension plan, which the company closed to future accrual in late 2010. Besides the pension plan, which includes a defined contribution component, the company also offers a retirement plan for senior executives, as well as post-retirement benefits for both salaried and hourly paid unionized employees. In addition, the company’s savings programs include group registered retirement savings and deferred profit-sharing plans.
Carillion Canada said it expects to continue business as usual while it restructures and noted its move to seek protection under the Companies’ Creditors Arrangement Act isn’t a bankruptcy or a liquidation. The British parent company, meanwhile, has moved to liquidate. The Ontario Superior Court granted the company an initial order for protection on Thursday.
The company’s troubles come amid increased scrutiny of pension deficits during restructuring proceedings. Of note has been the troubles of Sears Canada Inc., which closed its stores this month and faces a large defined benefit pension deficit of about $267 million. The issue returned to the spotlight this week, when reporters asked Prime Minister Justin Trudeau about the Sears pension shortfall in Davos, Switzerland.
“Canada continues to support people going through difficult times,” Trudeau told reporters. “Obviously, pensioners who face uncertainty need to be supported, need to be reassured. That’s why Canada has measures like the Canada Pension Plan, like employment insurance benefits — a broad range of ways we can support people who are facing unexpected downturns or layoffs.”
Also adding to the pressure this week was a letter by New Democratic Party MPP Paul Miller to Ontario Premier Kathleen Wynne about the issue. Miller criticized Wynne for not meeting with the Sears Canada Retiree Group.
“Given that the Sears Canada pension plan is registered with [the Financial Services Commission of Ontario], this is a matter of provincial concern,” wrote Miller.
“FSCO was responsible for the plan’s oversight while it moved into an underfunded position, leaving plan members vulnerable. SCRG has approached both your office and FSCO to propose legitimate relief mechanisms for hardworking pensioners. lt is time that you stop stalling and start listening to their concerns. I urge you to meet with SCRG and work with Sears pensioners to come up with meaningful solutions so that pensioner won’t suffer from inaction.”