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Six organizations representing Canadian retirees say proposed amendments to the federal Bankruptcy and Insolvency Act would have a positive impact on defined benefit pension plan members.

In an open letter to the House of Commons standing committee on finance, the six organizations —CanAge, the Canadian Federation of Pensioners, the Canadian Network for the Prevention of Elder Abuse, CARP,  the National Pensioners Federation and the Réseau FADOQ — said federal insolvency and pension laws currently favour the protection of big banks and executive bonuses over financial protection for pensioners.

Under current legislation, when the assets of a bankrupt or insolvent company are divided, secured creditors, banks are paid first. Bill C-228 addresses this by giving pensioners super-priority status in corporate insolvency, which means pensioners move closer to the front of the line, improving their likelihood of receiving their full pension.

Read: Amendments to bankruptcy, insolvency legislation could disincentivize DB pension plan sponsors, say ACPM, PIAC

On Oct. 17 and 19, the committee will hold hearings on Bill C-228, which would give DB pension plan members super-priority status. “Pensioners should not be acceptable collateral damage in insolvency,” said Michael Powell, president of the Canadian Federation of Pensioners, in a press release. “Pensions are deferred wages earned by Canadians while they work and payable to them when they retire. In supporting C-228, MPs can act decisively to compel companies to honour their pension obligations.”

In its letter, the six organizations said that, by legislating super-priority for DB pensions in the event of insolvency, corporations and lending markets will be forced to adjust to reflect the legal reality. “In other words, companies will be compelled by lenders to fully fund their pensions and hold back executive bonuses and dividends if their pensions are underfunded.”

Read: Liberals unlikely to pursue super-priority for pension plan members: expert