- Member of Parliament
- Member of Parliament
- Conservative
- Sarnia—Lambton
- Ontario
- Voting Attendance: 67%
- Expenses Last Quarter: $118,419.33
- Government Page
Mr. Speaker, I am very pleased to rise today and announce the passing in the Senate of my second private member's bill, Bill C-228, on pension protection.
This bill will ensure that pensioners who have worked their whole lives for a company will receive the pension benefit they are due. This is accomplished by providing transparency to know which funds are insolvent, providing a mechanism to transfer funds to make them solvent and, in the case of bankruptcy, putting pensions in priority ahead of creditors.
There have been many members of all parties in the House and the Senate who have been trying to pass such a bill for two decades. I want to thank all of my colleagues for their help with this. This is a great day for Canadian pensioners. No longer will we see companies go out of business and leave those who have worked hard their whole lives without any pension or with only part of a pension.
Thanks go to everyone in the House and the Senate who supported the bill. It is a great day for Canadian pensioners.
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Madam Speaker, it is a pleasure to be here at this, the final reading of this bill, before the vote tomorrow and hopefully the bill's going on to the Senate.
It has been a long journey. Over the last at least 10 years, possibly longer, there have been numerous efforts to bring forward bills to get the pension protection Canadians deserve.
Basically, when I looked at the work that had been done, in every one of them there was something that not everyone could agree on, so I cherry-picked from all the different ideas that people could agree on and said, “Let us at least do something. Let us move in the direction of good.”
That is how Bill C-228 came into being. Previously, there was a bill, Bill C-253 in the last parliamentary session, which made it to the industry committee. It was on the priority of pensions.
This bill would do three things.
It would table a report in the House on the solvency of pension funds, so we can have greater transparency and know which funds are in trouble.
It would create a mechanism for us to transfer funds into an insolvent fund from elsewhere in the business, with no tax implication, so we can fix the problem before it becomes a difficulty for the pensioner.
Then, in the event of a bankruptcy, we would pay out pensions in priority over secured creditors like large banks, preferred creditors, and unsecured creditors. That will put pensioners in a much better position. Pension funds will be solvent, in general, and when there is a bankruptcy, large creditors are way more likely to be able to survive one company's going bankrupt than an individual who has paid into their pension and is counting on it for their retirement.
The bill has had much study. It has heard input from all kinds of stakeholders, and we are here today with what I think is a really good balance of all the rights of the pensioners and those of the suppliers. I think we have a very acceptable balance.
I want to thank a number of people, the member for Elmwood—Transcona, the member for Manicouagan and the member for Joliette, as well as all the finance committee members. There have been numerous people who have helped this bill along, provided their input and provided suggestions to improve it. I want to thank the member for La Prairie, who traded his private member's spot for today in order to move this up quickly and get it over to the Senate.
It just shows that there is broad support for the bill. When we look at the concerns that were raised about the bill, there was one amendment that was made at committee to include severance pay and termination pay in the priority. I supported that. I said I supported it at second reading, but it was ruled out of scope by the Chair and eventually back in the House, where the Liberals wanted the Speaker to rule on it. I think the Speaker was correct in saying that committees do not have the power to put things in that are out of scope, but then we brought a unanimous consent motion.
The member for Elmwood—Transcona brought the motion to have the House decide to put that amendment back in. Unfortunately, at that point, the Liberals did not support that amendment, and the motion did not receive unanimous consent.
That amendment is now out of the bill. That was the controversial part. I think we can agree that the rest is the right thing to do for Canadians.
I am happy to hear the parliamentary secretary to the government House leader say tonight that he has not yet made his decision on how he is going to vote. I would encourage him to vote yes to Bill C-228.
Now is the time, in this parliamentary session, for us, after 10 years of bringing various and sundry bills, to finally do the right thing for Canadians and protect people who have worked their whole lives and paid into a pension fund. It is time to give it the priority it needs to have.
I look forward to the vote tomorrow, and I look forward to having all parties in the House support Bill C-228.
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moved that the bill be read the third time and passed.
She said: Madam Speaker, I am very pleased to rise to speak to my private member's bill, Bill C-228, today at third reading. It was successfully passed as amended at the finance committee. Bill C-228 is centred on pension protection, working to prevent the loss of pensions for employees whose companies have declared bankruptcy.
Canadians deserve to know that the contributions they have made their whole lives will result in a secure financial future for themselves and their families, but the last few years have shown us that security can disappear in a moment. My bill would remedy this issue.
The bill would do three things. First, it would require that an annual report on the solvency of pension funds be tabled here in the House of Commons for greater transparency and oversight. Second, it would provide a mechanism to transfer funds into a pension fund to restore it to solvency. Finally, in the case of bankruptcy, pensions would be paid out ahead of large creditors and executive bonuses. The acceptance so far by this Parliament and the good work that has been done on the bill by all parties show that there is a common spirit and desire to improve pension security for Canadians. For that, the House has my sincere thanks.
Over the last 10 years, efforts by many parties and senators have been put forward to introduce bills to improve pension protection in Canada. I cherry-picked from all the ideas that were previously supported in the House and put them together in Bill C-228. Learning from both the numerous cases of company collapse and the various pension protection bills that came before to improve pension protection in a way we can all live with is my goal here today.
To put things in context, I want to point out that there have been far too many cases of businesses that have declared bankruptcy to the great detriment of their own employees.
Nortel Networks declared bankruptcy in 2009, leaving 200,000 Canadians to fend for themselves when it came to their pensions. An article published in the Financial Post in 2016 entitled “The big lesson from Nortel Networks: Pension plans aren't a guarantee” gave a detailed account of the battle waged by these employees as they tried to recover even part of their share of Nortel's assets, which were estimated at $7.3 billion. Legal and consulting fees totalled over $1.9 billion, which further reduced the amount these former employees were seeking.
According to CBC, at the end of 2016, former Nortel employees were pleased with the agreement they reached under which they would get a payout of 40¢ on the dollar. That was an improvement over the 10¢ on the dollar they were initially offered.
However, in 2020, the employees lost out again when the Ontario pension benefits guarantee fund managed to reclaim some $200 million from monies allocated to pensioners in Nortel's bankruptcy proceedings.
In all, the whole mess with Nortel turned into a more than 11-year battle for former employees who failed several times while simply trying to obtain the financial security to which they were entitled. That is just one example.
Sears Canada is another infamous case and perhaps one of the most well known. Between 2005 and 2013, Sears Canada paid more than $3 billion in dividends to shareholders, even as it was operating at a loss and its pension plan was underfunded by about $133 million. In 2017, Sears Canada declared bankruptcy after attempting to restructure. During the restructuring, Sears Canada faced heavy criticism for giving retention bonuses to 43 executives and senior managers, but it did not plan to offer severance to laid-off employees. Allegedly, the bonuses were intended to maintain the morale of senior staff at the cost of providing necessary funds for the company's pension plan, leaving more than 17,000 pensioners cheated of their full pensions.
Sears pensioners learned their pensions were going to be cut by 30%. Seventy-two-year-old Ron Husk of Mount Pearl, Newfoundland, told the CBC that the cut caused his monthly pension payment to drop by $450. Many said they would have to go back to work in sales, in their seventies. Pensioners in Ontario fared marginally better because of the provincial mechanism that protects the first $1,500 of a pensioner's payment, but it made little difference overall. In today's era of extreme inflation, it is helping even less.
Looking back further, when the T. Eaton Company folded in 1999, the vast majority of its 24,500 employees were terminated without being paid termination pay and severance pay, as well as other amounts owed to them. All employee and retiree health and other benefits were cancelled. In the end, the liquidator released payments to employees and retirees of just 53.7 cents on the dollar. There are several other noted cases where courts have ruled in favour of creditors and lenders over pensioners, including Indalex, Stelco and Grant Forest Products among others.
In the Indalex case, Indalex Limited obtained creditor protection under the Companies’ Creditors Arrangement Act, also known as the CCAA. The court authorized Indalex to obtain debtor in possession, or DIP, financing, which would provide the company with loans to continue operating its businesses during the restructuring period. These DIP lenders had superior priority over the existing debt, equity and other claims.
At a hearing for approval of this motion in 2008, two groups of pension claimants opposed this distribution, asserting that the assets equal to the funding deficiencies in the two defined-benefit pension plans administered by Indalex were deemed to be held in trust and should be given to the pension plans in priority over the DIP lenders. The CCAA court ruled in favour of the DIP lenders, not the pensioners. This decision was upheld and became a precedent for the Grant Forest Products case. Sadly, many other examples of workers who did not receive their full pensions exist.
There is no doubt that this has been a problem for a long time. The government needs to intervene by taking stringent measures to rectify this and protect Canadian workers.
I want to acknowledge the contribution of some of my House of Commons colleagues. Many MPs from all parties have come to see me to propose bills on this same topic.
Currently there is a requirement for an annual report on the solvency of a fund, but it goes to the superintendent of finance, and it is not clear what, if any, actions are taken. In fact from 2003 to 2020, there is evidence that companies continued to have insolvent pension funds. My bill would require this report to be tabled here for greater transparency and oversight. Currently the average federally managed fund is at 109% solvency, so it is a good time to implement the measures of this bill.
The second part of the bill is to allow companies with insolvent pension funds to transfer additional funds from other assets in the business into the pension fund, without tax implications, to make it solvent.
In October 2017 and again in 2020, the Bloc member for Manicouagan introduced her private member's bill, Bill C-253, which would amend the Bankruptcy and Insolvency Act and the CCAA. The bill would provide priority status for pensions in the event of bankruptcy proceedings. This bill ultimately made it to committee, but died on the Order Paper when the Liberals called the election. I have incorporated her bill here with some suggestions brought forward.
There was concern that implementing an immediate priority for pensions could have unintended consequences. The suggestion was to have the coming into force of the reporting on the insolvency of funds to happen immediately, along with a mechanism to top up the fund and restore it to solvency. However, it was recommended to have several years for companies to get their funds in order before implementing the priority part.
Five years was the period suggested originally in the bill, but there were stakeholders who preferred to see it be three years. At committee, we were able to come to a compromise of four years for the coming into force of the priority portion of the bill. I want to also acknowledge that the Liberal member for Whitby sponsored an e-petition on pension protection, supporting this very issue.
My bill has been reviewed by a variety of stakeholders, from the Canadian Labour Congress to financial institutions and many pension associations nationally, including the Canadian Federation of Pensioners and the Canadian Association of Retired Persons.
Bill VanGorder, the chief operating officer of CARP, offered this quote:
Most older Canadians have fixed incomes but face rising costs, growing inflation, an unpredictable economy and retirement savings that suffer as a result. The Canadian Association of Retired Persons...believes it is vital that the Federal Government protect pensioners by giving them “priority” status and creates a pension insurance program that insures 100% of pension liabilities. This proposal would go a long way in making that happen.
Some banks and large financial institutions have expressed their reluctance to me. They are concerned that, if pensioners are given priority, companies with insolvent funds will have to pay higher interest rates to obtain credit and will be less likely to apply for credit.
This is part of the reason why the implementation schedule should allow time for companies with insolvent funds to get their finances in order. I would like to point out that, if a company cannot restore the solvency of its fund within four years, it should indeed pay a higher interest rate to obtain credit because it really does present a higher risk.
In summary, this means reporting to Parliament on the solvency of funds for greater transparency so we can ensure actions are being taken to protect pensions, creating a mechanism to top up the funds to restore solvency, and, in the event of bankruptcy, ensuring that people who have worked their whole lives receive the pension they were promised.
An amendment was brought forward by the member for Elmwood—Transcona to include severance and termination pay at the same priority as pensions, ahead of secured creditors, and it was presented at finance committee. Indeed, discussions were held with all parties regarding this, and at second reading I said I would support this measure.
However, it was ruled out of scope by the clerk and the chair of the finance committee. The committee then voted in the majority to overturn the ruling of the chair and add this amendment to the bill.
Subsequently, the parliamentary secretary to the government House leader asked for a Speaker's ruling to eliminate the amendment since it was out of scope. The Speaker did rule it out of scope, and that amendment does not appear in the bill.
I respect the decision of the Speaker, although I am disappointed that this addition did not go forward, since I think people should receive their severance in the case of bankruptcy. However, with the priority falling after secured creditors, preferred creditors and unsecured creditors, it is unlikely they will get it, which contravenes the law in many provinces. In Ontario, for example, the law is that people get a minimum of one week of salary for every year of service.
Other amendments at committee included the deletion of clause 6, which eliminated a mechanism to get third party insurance on the insolvent portion of a pension fund. No one seemed to think this was as brilliant an idea as I originally thought. Clause 7 was also deleted to clean up sections 8.1 and 8.2, which were holdovers from previous legislation.
I want to thank everyone who helped to improve my bill at committee, and for passing it there expediently to bring it to this stage.
In summary, I am now asking all members of the House and the Senate to work to get this bill over the finish line and truly improve pension security for Canadians. We are so close. Let this 44th Parliament be the one to ensure that Canadians are able to live with dignity into their golden years.
Our continued efforts will ensure that Canadians are able to support themselves and their families with the pensions they have worked over a lifetime to earn. Please vote to support Bill C-228.
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moved that Bill C-228, An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985, be read a second time and referred to a committee.
She said: Madam Speaker, today is April Fool's Day, so I could not start this speech without saying that one would have to be a fool not to support my private member's bill.
My private member's bill is centred on pension protection and working to prevent the loss of pensions for employees whose companies have declared bankruptcy. Canadians deserve to know that the contributions they have made over their whole lives will result in a secure financial future for themselves and for their families. However, the last few years have shown us that security can disappear in a moment. We need to do better for Canadians.
My bill would remedy this issue. It would do three things. First, it would require that an annual report on the solvency of pension funds be tabled here in the House of Commons for greater transparency and oversight.
Second, it would provide a mechanism to transfer funds into a pension fund to restore it to solvency or to ensure the insolvent portion until the funds could be restored.
Finally, in the case of bankruptcy, pensions would be paid out ahead of large creditors and executive bonuses.
To put things in context, I want to point out that there have been far too many cases of businesses that have declared bankruptcy to the great detriment of their own employees.
Nortel Networks declared bankruptcy in 2009, leaving 200,000 Canadians to fend for themselves when it came to their pensions. An article published in the Financial Post in 2016 entitled “The big lesson from Nortel Networks: Pension plans aren't a guarantee” gave a detailed account of the battle waged by these employees as they tried to recover even part of their share of Nortel's assets, which were estimated at $7.3 billion. Legal and consulting fees totalled over $1.9 billion, which further reduced the amount these former employees were seeking.
According to CBC, at the end of 2016, former Nortel employees were pleased with the agreement they reached under which they would get a payout of 40¢ on the dollar. That was an improvement over the 10¢ on the dollar they were initially offered.
However, in 2020, the employees lost out again when the Ontario pension benefits guarantee fund managed to reclaim some $200 million from monies allocated to pensioners in Nortel's bankruptcy proceedings.
In all, the whole mess with Nortel turned into a more than 11-year battle for former employees who failed several times while simply trying to obtain the financial security to which they were entitled. That is just one example.
Sears Canada is another infamous case, perhaps one of the most well known. Between 2005 and 2013, Sears Canada paid more than $3 billion in dividends to shareholders, even as it was operating at a loss and its pension plan was underfunded by about $133 million.
In 2017, Sears Canada declared bankruptcy after attempting to restructure. During that restructuring, Sears Canada faced heavy criticism for giving retention bonuses to 43 executives and senior managers, when it did not plan to offer severance to laid-off employees. Allegedly, the bonuses were intended to maintain the morale of senior staff at the cost of providing the necessary funds to the company's pension plan, leaving more than 17,000 pensioners cheated of their full pensions.
Sears pensioners learned that their payments were going to be cut by 30%. Of Mount Pearl, Newfoundland, 72-year old Ron Husk told the CBC that the cut caused his monthly pension payment to drop by $450. Many said they would have to go back to work in sales in their seventies. Pensioners in Ontario fared marginally better because of the provincial mechanism that protects the first $1,500 of a pensioner's payments, but it made little difference overall and in today's era of extreme inflation it is helping even less.
Looking back further, when the Eaton company folded in 1999, the vast majority of its 24,500 employees were terminated without being paid termination pay, severance pay and other amounts owed to them. All employee and retiree health and other benefits were cancelled. In the end, the liquidator released payments to employees and retirees of just 53.7¢ on the dollar.
There are several other noted cases in which courts have ruled in the favour of creditors and lenders over pensioners, including Indalex, Stelco and Grant Forest Products, among others. In the Indalex case, Indalex Limited obtained creditor protection under the Companies' Creditor Arrangement Act, known as the CCWA. The court authorized Indalex to obtain debtor in possession, or DIP, financing, which would provide the company with loans to allow it to continue operating its business during the restructuring period. These DIP lenders had superpriority over the existing debt equity and other claims.
At a hearing for the approval of this motion in 2008, two groups of pension claimants opposed the distribution, asserting that assets equal to the funding deficiencies in two defined benefit pension plans administered by Indalex were deemed to be held in trust and should be given to the pension plan in priority over the DIP lender. The CCWA court ruled in favour of the DIP lender, not the pensioners. This decision was upheld and became a precedent for the Grant Forest Products case.
Sadly, many other examples of workers who did not receive their full pensions exist.
There is no doubt that this has been a problem for a long time. The government needs to intervene by taking stringent measures to rectify this and protect Canadian workers. I want to acknowledge the contribution of some of my colleagues in the House. Many MPs from all parties came to see me to present bills on this same topic.
In 2018, my colleague, the member for Durham, introduced Bill C‑405 on pension benefits standards in order to authorize the administrator of an underfunded pension plan, in certain situations, to amend the plan or to transfer or permit the transfer of any part of the assets or liabilities of the pension plan to another pension plan. This bill did not receive enough support, because changing the type of pension or the benefit amount means breaching the contract signed by employees who worked for a company for a certain number of years and thought they would receive a certain pension.
His bill also called for the tabling of an annual report in Parliament respecting the solvency of pension plans, which I thought was a useful and brilliant provision.
Currently, there is a requirement for an annual report on the solvency of a fund, but it goes to the superintendent of finance and what, if any, actions are taken is not clear. In fact, there is evidence, with companies like Air Canada, that pension fund insolvency has been allowed to continue for far too many years. My bill would require this report to be tabled here, for greater transparency and oversight.
In October 2017 and again in 2020, the Bloc member for Manicouagan introduced a private member's bill, Bill C-253, which would have amended the Bankruptcy and Insolvency Act and the CCAA. The bill would have provided priority status for pensions in the event of bankruptcy proceedings. It ultimately made it to committee but died on the Order Paper when the Liberals called the election. I have incorporated her bill here with some suggestions that were brought forward.
There was concern that implementing an immediate priority for pensions could have unintended consequences. The suggestion was to have the coming into force of the reporting on the insolvency of funds to happen immediately, along with the mechanism to top up the fund to restore it to solvency. It was recommended to have several years of time for companies to get their funds in order before implementing the priority part. Five years was suggested in the bill, but there are stakeholders who would prefer to see it at three years. I am flexible about this, and these are exactly the types of conversations that need to happen when the bill goes to committee.
Most recently, the NDP member for Elmwood—Transcona reintroduced work first put forward by former MP Scott Duvall. What was originally Bill C-259 in 2020 would amend the act to ensure that claims in respect of unfunded liabilities or solvency deficiencies of a pension plan are accorded priority in the event of bankruptcy proceedings. It would also provide that an employer had to maintain group insurance plans that provide benefits to or in respect of its employees or former employees. This was the part of the bill that was a sticking point. This bill would also amend the Pension Benefits Standards Act to empower the superintendent of financial institutions to determine that the funding of a pension plan is impaired or that the pension plan administrator is at risk, and to set out measures to be taken by the employer in respect of the funding of the plan in such cases.
What I did was cherry-pick from all of the ideas that were previously supported by the House and put them all together in Bill C-228. Learning from both the numerous cases of company collapse and the various pension protection bills that came before to improve pension protection in a way we can all agree on is my goal here today. I also want to acknowledge that the Liberal member for Whitby is sponsoring e-petition 3893 on pension protections, supporting this very issue.
My bill has been reviewed by a variety of stakeholders, including the Canadian Federation of Pensioners and the Canadian Association of Retired Persons. Bill VanGorder, the chief operating officer of CARP, offered this quote:
Most older Canadians have fixed incomes but face rising costs, growing inflation, an unpredictable economy and retirement savings that suffer as a result. The Canadian Association of Retired Persons (CARP) believes it is vital that the Federal Government protect pensioners by giving them ‘priority’ status and creates a pension insurance program that insures 100% of pension liabilities. This proposal would go a long way in making that happen.
Some banks and large financial institutions have expressed their reluctance. They are concerned that if pensioners are given priority, companies with insolvent funds will have to pay higher interest rates to obtain credit and will be less likely to apply for credit.
This is part of the reason why the timing of the implementation should allow time for companies with insolvent funds to get their finances in order.
I would like to point out that if a company cannot restore the solvency of its fund after a period of five years, it should indeed pay a higher interest rate to obtain credit, because it really does present a higher risk.
The Canadian Labour Congress would like unions to have a say in how priorities are set when it comes to pensions.
If we can agree on the priority status and include that in the legislation, so that it is not subject to whim or pressure, I think that would strengthen pension protection.
In summary, this is reporting to Parliament on the solvency of funds for greater transparency so that we can ensure actions are being taken to protect pensions; creating a mechanism to top up the funds to restore solvency; and, in the event of bankruptcy, ensuring that people who have worked their whole lives receive the pensions they were promised.
The Library of Parliament has created an excellent table from the three-inch-thick Bankruptcy and Insolvency Act to show where I am suggesting pensions go in the priority of discussion. They would come after source deductions for CPP, QPP and EI and taxes due; after suppliers take back their goods delivered within a month of bankruptcy; after salaries up to $2,000 and the associated contributions; and before secured claims, preferred claims and unsecured claims.
Many members of the House in all parties have indicated their support for getting this bill to committee. I am open to consideration of other suggestions on how we can work to improve this bill to provide a successful outcome for Canadians, and I look forward to the industry committee's review of the bill.
I want to thank my colleagues for all their support in drafting this bill, and the MPs for Durham, Manicouagan and Elmwood—Transcona for their efforts to enhance pension protection. I would also like to thank Mr. VanGorder for his support and Mr. Mike Powell, the president of the Canadian Federation of Pensioners, for his invaluable help on this bill.
Finally, I want to end with a call to action. For many years, the House and the Senate have tried to address this issue. We have the opportunity now, as members of Parliament in difficult times, to come together and ensure that Canadians no longer find their pensions and retirement in jeopardy. We can work together to ensure that Canadians are able to live in dignity in their golden years, able to support themselves and their families with their hard-earned pensions.
Let us show Canadians that we have their interests at heart and support Bill C-228.
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