Benefits & Pensions
Pension bill that gives plan members ‘super-priority’ during windups, bankruptcies receives royal assent
A federal bill that gives pension plan members “super-priority” during plan windups and bankruptcy proceedings has received royal assent.
Bill C-228, a private members’ bill, was a “change many years in the making,” said Lana Payne, national president for Unifor.
“I’m glad to see lawmakers in both chambers say ‘enough is enough’ and put workers first by adopting this legislation,” said Payne. “Pensions are deferred wages and they cannot be allowed to be stripped away and put to the back of the line if the company closes up shop.”
Despite being adopted, the Bill’s changes will not come into effect for four more years, the union said. C-228, An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985 was a private members’ bill tabled by the MP for Sarnia-Lambton Marylin Gladu.
“Canadians remember the Sears closure, and the devastating effects of the old system of prioritization. This law finally corrects that order of priorities to protect pensioners,” said Les MacDonald, Unifor National Executive Board Retirees Representative.
MacDonald presented to the Senate Committee considering the Bill in February 2023 and reported on the positive impact the legislation will have on retirement security for workers in Canada.
Currently, if an employer has a defined-benefit pension plan and declares bankruptcy or insolvency, the plan needs to be wound up so that all pension assets are paid out, the union said. Pension plans may suffer from wind up deficits, a term that calculates the amount of additional money needed to fund the benefits to 100% for retirees on the date of wind up. Bill C-228 will put any outstanding amounts due to the pension fund wind up ahead of secured creditors, regardless of whether the corporate entity declares bankruptcy or restructuring, it said.
“Bill C-228 means that workers can have even more faith that their negotiated pensions are guaranteed. They put in the work, they deserve the benefits. Why shouldn’t workers come first?” continued Payne.
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