Politicians, retirees push for new laws to protect pensioners

In the wake of the Sears Canada bankruptcy, which is leaving 16,000 retirees unsure about the future of their under-funded pension plan, support is growing for new laws to better protect Canadian workers during corporate collapse.

CARP, a national non-profit advocacy group formerly known as the Canadian Association for Retired Persons, will be onParliament Hill on Wednesdayto meet with dozens of MPsas it lobbies for legislativechange.

"What CARP is asking for is that unfunded pension liability be given 'super priority' status so it goes to the front of the line," said Wanda Morris, vice-president of CARP.

• Sears case shows the risk of defined benefit pensions for employees
• Sears managers, execs will still pocket big cash bonuses even though retailer is closing

Pensioners hold no priority when it comes to dividing upassets during bankruptcy, and Morris said that typically in this country, defined benefit pensions are underfunded.

"There are about 16,000 [retirees] at Sears, but it just pales compared to the 1.3 million that potentially could be at risk. That's 1.3 million corporate pensioners with defined benefit pension plans," said Morris.

Private member's bills being tabled

On Oct. 17, BlocQubcois MPMarilne Gill proposed a private member's bill,C-372, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act.

The amendment would"correct the injustice faced by retired workers whose pension plans and group insurance plans are not protected when their company goes bankrupt or undergoes restructuring."

Later this fall, Hamilton Mountain MPScott Duvall plans to introduce his own private member's bill on the issuer. While he notes he hashad talks with Gill, he said his bill will be a little bit different.

"It's basically modifying the legislation the way it's worded now. When people go into bankruptcy protection the pensioners will be a secured creditor," Duvall said.

'Could have been prevented a long time ago'

In 2009, the NDP proposed the so-called nortel actto have workers seeking to claim the unfunded portion of their pensions considered as preferred creditors in bankruptcy proceedings.

But thatnever passed, and Nortel retirees lost a percentage of their pension benefits as the former tech company dissolved.

• Sears demise is Nortel all over again for pensioners, says expert

"This could have been prevented a long time agowith Nortel. The Liberals said they wanted to change it, but it's been a long time. Many companies have gone bankrupt since and the law hasn't been adjusted," Duvall said.

"The crazy thing is, if this legislation doesn't pass, then corporations are allowed to walk away from their responsibilities," Morris said.

The office of Innovation Minister Navdeep Bains said in a statement Tuesday thatthe government is connecting Sears employees with services to help them through this difficult time, but gave no indication the department wouldseek to change the laws to protect pensioners in bankruptcy.