After contributing 43 years to a company pension plan and setting himself up to retire at 62, the one thing Pete Reid hadn’t budgeted for was his main income stream being significantly slashed with General Chemical’s bankruptcy in 2005.
Workers at the Amherstburg-based firm had 10 to 32 per cent chopped off their pensions, forcing some to take on jobs to help make ends meet.
Recalling the panic of those days, Reid is delighted to hear that Bill C-228, aimed at preventing such scenarios, passed a third reading in the Senate and is now awaiting a royal ascent before becoming a law.
“This is a long overdue,” said Reid, who was a millwright and served as Canadian Auto Workers’ plant chairperson at the General Chemical plant.
“Everyone was scared to death back then. We didn’t know how much was in the pension fund.
“You work all those years, contribute to a plan you count on, then it’s gone. Too many companies have just walked away and left workers with reduced pensions or worse.”
Bill C-228 amends Canada’s Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure unfunded liabilities or solvency deficiencies of pension plans are given priority in the event of a private-sector firm declaring bankruptcy.
The legislation also requires companies with defined benefit plans to file annual reports with the government on their solvency plans to create more transparency.
Reid said pensions at General Chemical ranged from $2,000 to about $3,400 a month for workers prior to the cuts.
The first $1,000 of those pensions were protected by provincial legislation in 2005. That figure has since risen to $1,500.
“We weren’t as bad as what happened to the workers at SKD Automotive,” Reid said.
“There were some horror stories there. There wasn’t too much left in their pension fund when they went bankrupt (in 2009).”
SKD had one of its three divisions in Amherstburg and there was a $9-million shortfall in the pension fund for the company’s 661 employees.
The labor landscape is littered with examples of similar stories, including the major bankruptcies of Sears and Nortel that saw thousands of employees get reduced pensions.
Sears Canada’s 18,000 employees lost 30 per cent of their monthly benefit. Nortel’s 20,000 pensioners got between 55 and 70 cents on the dollar.
“Labor council is celebrating the Senate’s decision to pass Bill C-228,” said Windsor and District Labor Council interim president Mario Spagnuolo.
“It’s a huge victory for some of our most vulnerable citizens. In the past, it has been so unjust what has happened to our seniors.”
Spagnuolo said the Canadian Labor Congress has been aggressively lobbying senators since February to pass the legislation.
“This was an issue that crossed all party lines,” Spagnuolo said. “It was good to see support coming from all sides of the house.”
Unifor Local 200 president John D’Agnolo is happy the days of negotiating for a few extra pension dollars in a bankruptcy are ending.
“We’ve had a couple recently, including one here in Windsor (JD Norman Industries) that Local 195 had to do,” D’Agnolo said.
“I’d rank this bill right up there near the top of victories for the labor movement in recent years.”
However, not every group has expressed support for the bill.
The Chamber of Commerce of Canada joined with the Association of Canadian Pension Management, the Canadian Bankers Association, the Pension Investment Association of Canada, the Canadian Manufacturers and Exporters and the Canadian Association of Insolvency and Restructuring Professionals in writing to the House of Commons Finance Committee arguing against the bill.
The letter stated C-228 would increase the cost of, and limit access to credit for, Canadian businesses offering defined benefit plans. It also argued that the pension liabilities on the books would make lenders less eager to finance their operations and make it more difficult in restructuring situations.
In addition, the groups said providing annual reports on the solvency of pension funds also adds more costs to doing business in Canada.
D’Agnolo said it’s hard to predict the long-term impact of the bill as the number of defined benefits pension plans is dwindling.
“I can’t remember the last time we negotiated a defined benefit plan,” D’Agnolo said. “At the end of the day, businesses will just add this to the other factors they use in determining where to make investments.”
Sarnia-Lambton Conservative MP Marilyn Gladu’s private member’s bill is expected to receive royal assent quickly given its all-party support in both the House of Commons and Senate.
The bill will be phased in over four years.