April 21, 2019
In response to bankruptcies at Nortel and Sears that resulted in former employees having to make do with drastically reduced pensions, the Liberal government made a commitment to introduce measures that would protect defined benefit plan pensions. However, as CBC News reporter Karina Roman explains in her recent piece, pensioner groups feel that proposed legislative changes outlined in the March 2019 federal budget simply don’t go far enough. One of those measures would make a corporation’s directors liable for bonuses, severance pay or incentive benefits paid to executives, managers or directors in the year prior to a bankruptcy. In the article, Jana Steele, a partner in Osler’s Pensions & Benefits Group, comments on the impact this change could have.
“I think it will certainly give directors … pause and may make them look more closely at decisions at a more micro level than they otherwise may have in the past, because of the potential risk of liability that this provision would impose on them,” says Jana.
That said, pensioner advocates suggest that, overall, the government’s proposed amendments fall short of reform that would truly protect employees’ pensions in the event of insolvency. According to pension experts, the government’s options are limited because insolvency proceedings can be so complex.
“I think the federal government is trying to find a middle ground,” Jana continues. “The proposed legislative changes, to me, are trying to strike a balance and trying to do something, but there’s only so much you can do given all the different factors and all the different interests that are at play when an insolvency is happening.”
To learn more about the proposed legislative changes set out in the federal budget, read Karina Roman’s full report from April 21, 2019, “’Cold comfort’: Ottawa’s plans to protect pensions not good enough, say critics,” online at the CBC News site.