Referring to Sears Canada Inc.’s recent pension issues, the government announced in its 2018 budget it would seek feedback from pensioners, employees and companies in the coming months to determine options to better address retirement security for Canadians.
“All Canadians deserve more peace of mind when it comes to their retirement and companies must act in good faith towards their employees,” the budget documents noted. ”At the same time, we recognize the challenges facing courts as they try to maximize recovery in bankruptcies that affect not just workers and pensioners, but also small businesses, lenders and other creditors which are owed money. Our government is committed to finding a balanced way forward.”
What the government isn’t saying is that it’s going to shift the priorities in bankruptcy situations so that lost pension benefits are a thing of the past, notes Joe Nunes, president of Actuarial Solutions Inc.
Wanda Morris, vice-president of advocacy at CARP (formerly the Canadian Association of Retired Persons), agrees. “This was wishy-washy. This is an issue we’ve known about this since Nortel. This isn’t a new issue on the government’s horizon.”
The Sears scenario is an example of a tough balancing act, says Steve Gendron, principal at Eckler Ltd. “It’s good that the federal government is exploring this issue,” he adds, noting that proposed new rules that allow for 85 per cent solvency funding in Ontario could lead to similar scenarios in situations of unexpected plan windups.
The budget also noted the government would be launching public consultations on a regime to address unclaimed pension balances. The discussions will then potentially result in the introduction of legislative and regulatory amendments.
“In any plan that I’ve worked on, there are people that cannot be located . . . so this would be beneficial for all,” says Gendron.
“It’s going to cost millions of dollars to set it up, but the federal government is probably the best place to have it done,” he adds.