May 5 2023
On April 18, 2023, Bill C-228 was given Royal Assent and became law. Bill C-228 becoming law means if employers file for bankruptcy or insolvency, pension plans will have super-priority status.
The passage of Bill C-228 is an important step towards improving protection for pension plans. Until Bill C-228, pension and benefit plans were at the back of the line when employers declared bankruptcy or restructured. There were repeated instances of retirees seeing their pensions reduced through no fault of their own.
One reason Bill C-228 was adopted was the labour movement advocated for this law. Participants in the Canadian Labour Congress lobby day in February, including participants from the National Union of Public and General Employees (NUPGE), spoke with Members of Parliament and Senators about the need to support Bill C-228. In February and March, NUPGE and other unions also encouraged union members to contact Senators to get them to support Bill C-228.
Sears only the most recent example of failure to protect pension and benefit plans
When Sears Canada filed for bankruptcy, retirees saw their pensions cut by 30% and lost their benefits. It then emerged that, in the years leading up to the bankruptcy filing, the owners of Sears Canada had taken $1.5 billion out of the company in dividends and share buybacks, even though the pension fund had a deficit and funds were needed to rebuild the company. For workers who had worked hard for the company for decades, it was a betrayal.
But what happened at Sears Canada isn’t new. US Steel, Nortel and Canwest are just some of the more notorious examples where workers and retirees had their pensions and benefits cut when companies declared bankruptcy or restructured.
Key provisions of Bill C-228 won’t take effect for 4 years
Unfortunately, under the transitional provisions in the bill, the most important sections of the legislation won’t take effect for 4 years. While this seems like a long period, it is an improvement on what the mover of the bill, Marilyn Gladu, a Conservative Member of Parliament, originally proposed!