I am delighted with this new law, which will finally be able to protect workers. Big lenders are needed, sure, but workers and retirees can finally know they won’t come last. As a former Nortel worker, this law unfortunately comes too late, but we hope that it will be of use to other employees and retirees.
As a retired banker, if these changes go ahead, companies will have a lot of trouble financing themselves, because the unfunded liabilities of corporate pension funds will be considered senior claims in the calculation of the loan values at which a company will be entitled to its banker. In order to be able to borrow, companies will probably be inclined to send the assets that constitute the bankers’ current guarantees to satellite legal entities not owned by the operating companies. The majority of companies will probably end it and no longer create defined benefit funds in order to avoid funding problems, which will penalize the employees of these companies. Companies will be inclined to grant defined contribution pension funds.
Regarding Bill C-228, which awaits royal assent to come into force, the precise details have yet to be known, and it is also important to know that there will be a four-year moratorium before it comes into effect. ‘applied. So yes, retirees can savor their victory, but the fallout from it will still have to wait a few more years for this victory to materialize. The Canadian Federation of Pensioners, led by its president, Mike Powell, has done a tremendous job of achieving this long-awaited goal for almost 20 years, and the political situation marked by a minority government has also been a favorable factor; the Bloc had unsuccessfully proposed similar legislation in the previous term.
The bill that aims to better protect pension plans makes perfect sense. After thirty-two and a half years spent at La Tribune, in the bosom of Power Corporation, I still find it difficult to get angry with this ex-employer who shed his responsibilities with regard to the pension plan by selling off his assets to an ambitious, but not very wealthy “buyer” – ex-federal Minister of Justice moreover – who would not, it seems, have appreciated the enormous risks of the adventure in which he was embarking. Both the buyer and the seller could not ignore that they were putting the pensions of their employees at risk. Beyond legal mechanisms such as Bill C-228, we must also question the moral and financial responsibility of those who trample on the dignity of their employees and ex-employees with complete impunity.
Good news, but financial institutions will probably reduce the borrowing capacity of companies by an amount equivalent to the deficit of pension funds. Companies that will see their borrowing capacity decrease could face closures due to lack of financing. The ability to adapt to changes is great, but it also depends a lot on the reaction time that we allow.
There have been enough business failures in the past that have left many retirees destitute and in disarray. In this regard, the new Bill C-228 is certainly reassuring. The other creditors of a bankrupt company usually have the means and the time to bail themselves out. This is often not the case for retirees, for whom a return to the labor market would be very difficult, if not impossible. After contributing their lifetime to society, giving them priority is only fair.
It was time for this law to be adopted and promulgated, it is reassuring for us retirees who had participated and contributed to a defined benefit pension plan.
