# Bill C-253 -- An Act to amend the Bankruptcy and Insolvency Act and the Companies Creditors Arrangement Act seeks to give pensioners priority in the e



## JulianWolfe (May 22, 2021)

I am posting this because it may be of interest to anybody who is a member of a company pension plan or has friends and family who are members of a company pension plan. There is bill before the Federal House of Commons - Bill C-253 that seeks to safeguard defined benefit pensions in the event a company goes bankrupt. Today pension funds are considered unsecured creditors. Bill C-253 -- _An Act to amend the Bankruptcy and Insolvency Act and the Companies Creditors Arrangement Act _seeks to give pensioners priority in the event a company goes bankrupt. 

There is a real chance for this bill; it passed two votes in the house, and is now in committee. If it passes the committee it would go back to the house for a final vote as early as June. The bill has support from the Bloc, Conservatives, NDP and some Liberal back-benchers.

*Action is needed now to ensure it passes. Anybody can help by telling their MP to support Bill C-253. They can do this by simply going to the Canadian Federation of Pensioners (CFP) website and click the link "Email your MP Now".

Link to CFP.......*https://www.pensioners.ca

The Canadian Federation of Pensioners (CFP) advocates on behalf of defined benefit pension plans and their members. Founded in 2005, the CFP is the united voice of 23 retiree groups, representing 300,000 defined benefit pensioners, who work together to improve pension security across Canada. CFP is affiliated with CARP, CanAge, FADOQ and the National Pensioners Federation.


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## sags (May 15, 2010)

Preventing pension defaults by requiring contributions and adequate auditing is a better option.

Unfortunately, in bankruptcy there are often few assets available for anyone regardless of the ranking of creditors.


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## ian (Jun 18, 2016)

DB plan funding in Canada is at it's highest level in 20 years.

Do not know the details of this however it may cause issues for corporate borrowers in the future and I would assume that includes protection for 'debtors in place'....lenders who extend loans to bankrupt firms in order for them to wind down efficiently or reorg.

Clearly there should be better DB pension protection but this is not as straightforward as it may appear.

pensioners.ca needs to revise their web site....they should not be misrepresenting the state of DB pensions by claiming 74 percent are under water. Rather, they should be pointing out the vast majority are funded at 90 percent plus, then list ones that fall below 80 or 85. They are purposely creating a false impression of funding levels.

Mine is currently funded at 94 and 98 percent respectively for going concern and windup valuation. As are many others.

One of the problems with Sears is that the Directors apparently emptied the coffers by declaring dividends prior to bankruptcy. This type of behaviour needs to be stopped.











Canadian DB pension plans see improved funded positions in Q1: reports | Benefits Canada.com


Canada’s defined benefit pension plans’ funded positions continue to improve in 2021, ending the first quarter at their highest levels in more than 20 years, according to Mercer Canada’s pension health index. It found solvency ratios increased from 114 per cent at the end of 2020 to 124 per cent...



www.benefitscanada.com


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## ian (Jun 18, 2016)

My understanding is that these monies can be used for edu expenses other than tuition. Residence fees, books, transportation...whatever.


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## Beaver101 (Nov 14, 2011)

> _ ... Today pension funds are considered unsecured creditors. Bill C-253 -- An Act to amend the Bankruptcy and Insolvency Act and the Companies Creditors Arrangement Act seeks to give pensioners priority in the event a company goes bankrupt._


Haven't had the chance to look into the link but what's the priority # given to pensioners with this Bill passing? 2nd from the end of the list now instead of being first on the end of the list? I can't imagine how many lawyers are involved working on this piece of legislation.


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## JulianWolfe (May 22, 2021)

Beaver101 said:


> Haven't had the chance to look into the link but what's the priority # given to pensioners with this Bill passing? 2nd from the end of the list now instead of being first on the end of the list? I can't imagine how many lawyers are involved working on this piece of legislation.


This bill would place unfunded pension obligations in same category as unpaid wages - at the top of the list - ahead of secured creditors and unsecured creditors - in other words the pension fund would have "first" claim on company assets. This bill would be a game changer for pensioners in Canada.


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## ian (Jun 18, 2016)

JulianWolfe said:


> This bill would place unfunded pension obligations in same category as unpaid wages - at the top of the list - ahead of secured creditors and unsecured creditors - in other words the pension fund would have "first" claim on company assets. This bill would be a game changer for pensioners in Canada.


The fact is that very, very few pensioners have suffered losses.

Very bad for those that have but given the current funding level of DB pensions.

I suspect that there is a very high (IMHO) probability of an election in the fall. This may well die on the order paper.


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## MrMatt (Dec 21, 2011)

JulianWolfe said:


> This bill would place unfunded pension obligations in same category as unpaid wages - at the top of the list - ahead of secured creditors and unsecured creditors - in other words the pension fund would have "first" claim on company assets. This bill would be a game changer for pensioners in Canada.


It will also mean unions will get very aggressive with ensuring funding. 
Your pension isn't 100% funded, push them into bankruptcy.

I think that it is important to have properly funded DB pensions. I also think that DB pensions are effectively dead in Canada, and this will be the end of them, except for the government.

I wonder what happens when someone pushes to have OMERS fully funded?


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## MrMatt (Dec 21, 2011)

JulianWolfe said:


> This bill would place unfunded pension obligations in same category as unpaid wages - at the top of the list - ahead of secured creditors and unsecured creditors - in other words the pension fund would have "first" claim on company assets. This bill would be a game changer for pensioners in Canada.


Not quite, unpaid wages means you can go after the directors personal property.
You'll never get a director if that applied to pensions


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## sags (May 15, 2010)

If they implement legislation to deal with pensions after the company is in financial distress, they may not feel the need to protect the pensions BEFORE they go into distress.

I want to see pro-active legislation that ensures the pensions are never in danger of liquidation in the first place.

Preventing problems is easier than fixing them later.


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## JulianWolfe (May 22, 2021)

Your support would be greatly appreciated. Please go to *pensioners.ca* and click the "email your MP now" link to voice your support. Thanks for your comments and suggestions!


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## ian (Jun 18, 2016)

This is not a simple issue. It is being presented as such but nothing could be further from the truth.

Changes have been made to pension legislation in some jurisdictions. Perhaps some type of pension/company funded insurance scheme is needed. Similar to Ontario, but with much higher hurdle rates.

Placing pension funds ahead of all secured creditors has some serious unintended consequences to employees and to employers.

The web site pensioners.ca is presenting an argument that is overly simplistic and ignores many of the key issues. I certainly would not support the this legislation based on this site.

Underfunded pension plans occur in the public sector. One of the largest underfunded DB plans in Canada is the Newfoundland Gov't Employees Pension. Underfunded by a whopping $8 Billion in pension and pension benefits. and managed by a Government that is essentially insolvent. 

Unfunded pension employee and pension benefit plans can be as disastrous as underfunded pension plans. People on extended benefits or disability soon learn this from their employer's insurance carriers when the employer goes bust or stops paying the premiums.









Newfoundland and Labrador addressing $8.18BN unfunded pension, employee benefits liabilities | Benefits Canada.com


At the end of March 2020, Newfoundland and Labrador had $4.89 billion in unfunded pension liabilities, including unfunded liability and promissory notes, according to a report released last week by the premier’s economic recovery team. Added to the province’s $3.29 billion in unfunded liability...



www.benefitscanada.com


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## Retired Peasant (Apr 22, 2013)

No skin in this game, but TIL 150 is the limit on a thread title


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## sags (May 15, 2010)

We both have DB pensions and I would rather hear......

No need to worry as we have legislation in place to ensure the funding is adequate to pay all the liabilities........than to hear

No need to worry because if the company goes bankrupt and the fund in underfunded, you might get something from the assets a few years from now.


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## JulianWolfe (May 22, 2021)

I sincerely hope that your company(s) stay healthy and you get to collect your DB pensions without worry! I understand your comment, however, whatever legislation has been put in place, at either provincial or federal level, has been rather weak and poorly enforced, as companies continue to lobby for more lenient rules. A recent development has been a move to incorporate "Going Concern" rather than "Solvency" as the funding benchmark in several provinces. The would further weaken current pension funding levels. Other countries like UK, Australia, and US, as well as some European countries have protection for DB pension funds. A stark example of this is Nortel. The Nortel employees in the UK and the US did not lose much of their pension; while the their Canadian counterparts lost 40%. We should be embarrassed at how we treat our pensioners! It is likely that a higher pension status in bankruptcy would ensure companies get serious about pension funding. The MPs who are sponsoring Bill C-253 are seeking to remedy this injustice for the benefit of all DB members in Canada.


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## ian (Jun 18, 2016)

JulianWolfe said:


> I sincerely hope that your company(s) stay healthy and you get to collect your DB pensions without worry! I understand your comment, however, whatever legislation has been put in place, at either provincial or federal level, has been rather weak and poorly enforced, as companies continue to lobby for more lenient rules. A recent development has been a move to incorporate "Going Concern" rather than "Solvency" as the funding benchmark in several provinces. The would further weaken current pension funding levels. Other countries like UK, Australia, and US, as well as some European countries have protection for DB pension funds. A stark example of this is Nortel. The Nortel employees in the UK and the US did not lose much of their pension; while the their Canadian counterparts lost 40%. We should be embarrassed at how we treat our pensioners! It is likely that a higher pension status in bankruptcy would ensure companies get serious about pension funding. The MPs who are sponsoring Bill C-253 are seeking to remedy this injustice for the benefit of all DB members in Canada.
> [/QUOT


I do not believe that anyone would question this protection is necessary. The rub is how to achieve a level of protection without some serious unintended consequences to businesses, secured creditors, directors, and employees.

Might it be better establish a pension plan self funding insurance pool similar to a fund like Assuris that protects insurance company annuity payments?


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## JulianWolfe (May 22, 2021)

The PBGF in Ontario is one such employer funded pool, but it only offers up to $1500 per month of compensation, which is far from adequate. This limit requires some qualification - if a pensioner experiences a loss of say $1000 per month from a $3000 per month pension - a loss of 1/3 - then the compensation from PBGF is 1/3 of $1500 or $500. The pensioner is not made whole. This is only in Ontario, the other provinces and the feds have nothing. Please understand that UK, US, Australia and several European countries have priority treatment in bankruptcy and/or pension protection schemes - and their economies are doing just fine. There are no unintended consequences! It is Canada that is out of step. In this case it is "us" who are in a "third world " country with respect to pension protection. There is a growing awareness of this in Canada and a increased impetus to do something about this - hence Bill C-253.


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## ian (Jun 18, 2016)

JulianWolfe said:


> The PBGF in Ontario is one such employer funded pool, but it only offers up to $1500 per month of compensation, which is far from adequate. This limit requires some qualification - if a pensioner experiences a loss of say $1000 per month from a $3000 per month pension - a loss of 1/3 - then the compensation from PBGF is 1/3 of $1500 or $500. The pensioner is not made whole. This is only in Ontario, the other provinces and the feds have nothing. Please understand that UK, US, Australia and several European countries have priority treatment in bankruptcy and/or pension protection schemes - and their economies are doing just fine. There are no unintended consequences! It is Canada that is out of step. In this case it is "us" who are in a "third world " country with respect to pension protection. There is a growing awareness of this in Canada and a increased impetus to do something about this - hence Bill C-253.


The US program is backed by their Federal Guarantee Corp. It is a federally administered fund.

It is underfunded. The Teamsters Central States Pension Fund is slated to be bankrupt in about five years. As in NO money left...zero. It is a multi employer pension. UPS had the smarts to get out and run a number of years ago. They could see where it was going so they cut their losses, ponied up with part of the deficiency attributable to their members and ran like hell away from it. Very smart...started their own pension plan.

The US pension guaranty fund does not have enough to fund this huge shortfall. Central States will bankrupt it. There is a plan to go to Congress for funding but that may not happen.


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