Moved second reading of Bill C-228, An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985.

He said: Honourable colleagues, today I am pleased to rise as the Senate sponsor of Bill C-228, An Act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act and the Pension Benefits Standards Act, 1985.

This bill, known by its short title as the “Pension Protection Act,” has been a long time in the making. This bill has three simple elements: The first is a requirement for the Superintendent of Financial Institutions to provide a report to Parliament every year. The second is that people holding defined benefit pension plans move up the line of priority for payout if a company goes bankrupt. And the last is that companies be permitted to fund deficient pension plans without financial penalty.

Most of you will recall the collapse of Nortel in 2009. On January 14 of that year, Nortel filed for bankruptcy protection, leaving over 10,000 pensioners to face the prospect of suddenly having no pension. When the dust finally settled, Nortel pensioners received about 50 cents on the dollar.

This story played out again in 2017 when Sears Canada filed for bankruptcy protection. Once again, it was pensioners who were left holding the bag. Sears Canada’s defined benefit pension plan was underfunded by a quarter of a billion dollars, and in bankruptcy proceedings, the 16,000 former employees were lined up behind the banks, and other lenders, to collect their money. In the end, they saw their pensions cut by approximately 30%.

Colleagues, it has been estimated that over 100,000 Canadians have had their pensions slashed when firms went bankrupt. If you go back as far as 1982, the Canadian Federation of Pensioners suggests that number could be as high as 250,000. Colleagues, this is unacceptable.

During last Parliament’s committee hearings on Bill C-253, this bill’s predecessor, Ms. Laura Tamblyn Watts of CanAge relayed the story of a couple who had worked their whole lives, and contributed to their defined benefit pension plans. After the Sears bankruptcy, they lost their financial security. They asked, “How could it be possible that we both worked our whole lives, and contributed to our plans, and we now face poverty because we are last in line for our own money?”

The answer to that question, colleagues, is simple: It is possible because the law allows it. If a business goes bankrupt today, the assets currently get divided up in this order: The first are deemed trusts. This includes things like unremitted source deductions in relation to the Canada Pension Plan, or CPP, or the Quebec Pension Plan, or QPP, income taxes payable and Employment Insurance, or EI, contributions — basically, all those amounts that are deemed to be held in trust for the benefit of the Crown. In essence, colleagues, the government gets paid first.

After the government gets paid, there are unpaid suppliers. Suppliers have the right to repossess unpaid goods that were delivered 30 days prior to bankruptcy. Then those who are considered what is known as “super-priority” are paid out. This includes the value of unpaid agriculture and aquaculture products delivered 15 days prior to bankruptcy, the value of unpaid salaries and allowances up to a maximum of $2,000 per employee, the costs incurred by a government to decontaminate land included in the bankrupt assets and the value of deducted salary contributions and employer contributions to a registered pension plan.

Now, colleagues, don’t mistake that last item with pension benefits. It only covers the employee’s contributions to the plan that were deducted from their earnings — not the amount that they are owed from the pension plan itself. It only represents a fraction of their actual pension entitlement — it is essentially what they paid in.

After super-priorities, secured claims are paid out. After that, there are preferred claims. And then finally, pension plan liabilities are addressed, which get pro-rated along with the value of all other unsecured claims. In other words, the protection for an employee’s pension plan, which they may have paid into during their entire working life, falls to the end of the line. This needs to change. And, colleagues, that change is precisely what Bill C-228 will achieve.

Over the last 10 years, numerous attempts have been made to address this problem, beginning in 2010 with Bill C-501. Later, we had Bill C-405 in 2018; Bill C-253 and Bill C-269 in 2020; Bill C-225 in 2022; and finally, Bill C-228 which is before us today. All of these were private members’ bills, and consequently struggled to get through the other place.

Bloc Québécois MP Marilène Gill’s Bill C-253 made it the furthest, going through seven committee meetings before being reported back to the House with one amendment. However, it was unable to move any further before the general election was called in the summer of 2021.

Rather than trying to recreate the wheel, MP Marilyn Gladu, the sponsor of Bill C-228, pulled together portions of the previous bills that had support, and removed those elements which were contentious. In her second-reading speech, MP Gladu specifically mentioned drawing heavily from Bill C-405 and Bill C-253. As you may be aware, the current bill received unanimous support in the other place, but, as I’ve said many times here before, that should not move this chamber from doing its due diligence.

The purpose of the legislation is actually quite straightforward. It will help protect pension plan assets, and ensure the solvency of defined benefit pension plans by addressing three areas.

Number one is Bill C-228 amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure that claims in respect of unfunded liabilities or solvency deficiencies of pension plans receive super-priority status in bankruptcy proceedings. Instead of being paid out an amount pro-rated with the other unsecured claims, pension funds will receive the same priority and protection as salaries and pension fund contributions. It moves these unsecured liabilities up the line of priorities.

Number two is clause 6 of the bill amends section 40 of the Pension Benefits Standards Act, 1985 to change the requirements of the annual report. Currently, there is a requirement for an annual report on the solvency of pension funds, but the report goes to the Superintendent of Financial Institutions.

It is not clear what, if any, actions are taken as a result of the generation or the receipt of this report.

Bill C-228 would require that an annual report on solvency of pension funds be tabled in both houses of Parliament. This would then provide it with the opportunity for greater oversight. This is a public tabling that ensures transparency and awareness.

Thirdly, colleagues, Bill C-228 will provide a mechanism to transfer funds to a pension fund without negative tax implications in order to help restore a pension fund to solvency. Together, these three changes will help ensure Canadians no longer find their pensions and their retirements in jeopardy.

Over the course of committee hearings for Bill C-228 and the earlier version, Bill C-253, three concerns were raised over this legislation, which I would like to address. The first is that if the bill is adopted, it will result in employers moving away from defined benefit pension plans. Colleagues, this is already happening.

Over the last 22 years, the percentage of defined benefit, or DB, plans has dropped from 21.3% in the year 2000 to 9.6% today. As noted by Mr. Brett Book, Policy Officer for CanAge, in his June 8, 2021, testimony at the House of Commons Standing Committee on Industry, Science and Technology, defined benefit plans are no longer being created.

He said:

In Ontario, DB plans fell by more than 10% between 2017 and 2019, even after the Ontario government lowered funding requirements for solvency from 100% to 85%.

The lowering of funding requirements did nothing to encourage more corporations to establish defined benefit plans. Instead, as stated by Mr. Book, “The only changes that happened were that there are fewer DB plans, not more, and corporations saved billions.”

The second objection which has been raised is the assertion that corporations with defined benefit plans will end up being subject to higher interest rates on their borrowing, which will make them uncompetitive and lead to more insolvencies. The Pension Investment Association of Canada and the Canadian Association of Insolvency and Restructuring Professionals brought this concern up at committee hearings on this bill. Their contention is 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 could, in turn, accelerate the rate of insolvencies.

Colleagues, this bill gives corporations four years to deal with any unfunded liabilities present in their defined benefit pension plans. As pointed out by the sponsor of this bill, MP Marilyn Gladu:

. . . 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 third argument, colleagues, is that giving super priority to pension plan assets could end up making it harder for insolvent companies to restructure and avoid bankruptcy. Quite frankly, as noted again by Mr. Book in his testimony:

This is simply not the case. Companies have the financial ability to fund pension requirements, but instead choose to use their cash for bonuses to corporate executives, dividends and share buybacks. Corporations do not have the legal requirement to protect pensions, so they don’t.

Furthermore, as pointed out by Mr. Michael Powell, President of the Canadian Federation of Pensioners, this same concern was raised in 2005, when the Wage Earner Protection Program Act was passed. This WEPP Act gave super priority to unpaid wages, unpaid expenses and a few other things. Mr. Powell noted at the time that the Insolvency Institute of Canada was raising the very same warning, saying that giving super priority status to wages could create:

. . . a significant negative impact on Canadian productivity and employment since businesses . . . will have a tougher time getting financing, and their costs could rise dramatically.

As Mr. Powell pointed out, it never happened. He noted that:

. . . nobody has provided any data that anything bad happened after WEPP. If it was that draconian, if the financial armageddon was going to occur, we should have data. These are things that people monitor.

Colleagues, the question could be asked: “Why couldn’t this legislation also include protection for severance and termination obligations?” It’s a fair question. In principle, it makes sense. Why would we protect wages and pensions but not severance? In fact, this amendment was proposed in committee, and the bill’s sponsor, MP Marilyn Gladu, fully supported it. However, the amendment was challenged and ruled out of scope by the Speaker of the other place. Colleagues, if we include it here, it will suffer the same fate when returned for review.

I look forward to hearing from stakeholders on all sides of these issues at committee. It is important that we do our due diligence, as I said. As we do, it is essential that we do not lose sight of the goal of the legislation before us, which is to find a way to protect the pensions of workers who, after working and contributing to a pension, are faced with the news that a company holding their pension assets has gone bankrupt, and they’re at the back of the line, behind all other creditors and executives.

As stated at committee by Bill VanGorder, the COO of the Canadian Association of Retired Persons:

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 . . . . This proposal would go a long way in making that happen.

Colleagues, I concur with Mr. VanGorder. This legislation makes the necessary changes which will significantly advance protection for the pension plans of hard-working Canadians who have literally paid their dues.

In The Hill Times article last week, Michael Powell of the Canadian Federation of Pensioners summed it up this way:

Under current insolvency law, banks eat first. When the assets of a failed company are divided as secured creditors, banks receive the first payouts.

Actually, colleagues, governments receive the first payouts, but he said, “banks receive the first payouts.” He went on to say:

Pensioners have no rights or status in insolvency. Super priority means that pensioners would move nearer to the front of the line, improving their likelihood of receiving their full pension.

The passage of this landmark bill marks the closest Canadian pensioners have come to meaningful pension protection.

Colleagues, I look forward to examining the bill in greater detail at committee and welcome your support in moving it forward.

Thank you.

I will. Thank you.

Thank you for your question, Senator Deacon.

The Superintendent of Financial Institutions is an arm’s-length federal regulator. Of course, regulators have laws enacted to permit regulations to be developed, and this is the supervisor or the superintendent of those regulations.

The Superintendent of Financial Institutions regulates financial institutions — banks, creditors and others. The rules under which they have to act are the regulations. The superintendent, on breach of regulations — and I’m fortunate enough to have been head of a federal regulator at one time, so I know how it works — if they don’t act in accordance with the regulations, penalties can be imposed. In that respect, they are compelled and can be compelled by the regulations.

Very often, because you might be dealing with a financial institution, the financial institution will know immediately what the regulations are and what their obligations are.

Can they be compelled? Yes, they can be compelled, but they’re compelled by the regulations that they’ve signed onto in their licensing.

Will the senator take a question?

Senator Wells, we have discussed this before. I want to understand the number of people who have access in Canada to a defined benefit plan and which of it is publicly funded and which of it is privately funded.

Thank you very much for your question. I do know that there is approximately $350 billion under defined plans now. I don’t know how many people that represents, and $350 billion is a lot of money, of course. The number of companies that go bankrupt every year is in the hundreds. Recently, it has been in the low hundreds. About 10 years ago, it was in the high hundreds. I hate to say that the numbers are quite low, but they are.

Again, I don’t know the number of people under private or public, but that is something we could explore at committee.

I just want to add to the last comment you made. It’s information that would be valuable to the members of the committee so that we have a better understanding of how many people have the golden benefits and how many are maybe not as well protected. Having these numbers often makes it easier for us to make a decision at the end of the process when this bill comes back to us — wouldn’t you think?

I know that defined programs are obviously less and less these days — I think even less than 10%. But you’re right. We need to know the scope of this. However, colleagues, it’s also important to not forget the principle of the bill, and that’s to protect those who are at the end of the line and who have been paying into a pension. In fact, when you sign on with a company and you pay into a pension, it’s essentially a contract. It’s an agreement that you have — that’s one of the benefits, like your salary or your hours — when you sign up with a company. It’s that contract that this bill aims to protect.

Would Senator Wells agree to take another question?

Yes.

I have two questions. The first question is about the Pension Benefits Standards Act — the question was asked by Senator Marty Deacon. It applies only to federal pension funds. It doesn’t apply to most pension funds that are regulated by the provinces. Am I right or wrong?

You’re wrong. I don’t want to say this again, but you’re wrong. It would apply to both federal and provincial pensions.

You mean the amendments to the Pension Benefits Standards Act will apply to provincial pension funds?

It would fall under the financial institutions rubric, and therefore it would be nationally covered.

I suppose that is an aspect the committee will look at because provincial pension funds are regulated by provincial regulators and not by the superintendent here in Ottawa. It is a constitutional issue, as a matter of fact.

My other question is about the scope of that bill. I certainly understand and share the goal of the bill to protect retirees. They have worked many years, and they come to retirement having managed their retirement based on the retirement benefits they expect to receive. If there is a reorganization of the company for which they were working, they may end up receiving a lesser amount. You referred to Sears and Nortel. Algoma Steel also went through that process, but were able to reorganize the pension funds and re-establish the pension benefits.

You referred to the fact that this will apply — if I understand properly — only to those who are entitled to defined pension benefits, and you said these now represent less than 10% of the retirees in Canada. I also understand this bill will not come into effect right away if it is adopted. It will come into effect in four years — further to an amendment that was adopted in the House of Commons — in order to give a transitional period to the employers who are providing pension benefits. Do you feel that at the end of the day the number of people who will benefit from that bill will be even less than 10% of the retirees?

It could very well be less than 10%. I think it is important to note that the defined benefit pension plans right now are funded to about 109%. That’s not to say that all the different pension plans are overfunded. They are not. Some are obviously below. Over time, you are right — that will decrease.

The whole idea of the four years is for a getting-up-to-speed for those that have to ensure that their pension funds are funded. That four-year period is to allow that to happen so there is no deleterious effect if a company has to reach in and pull out from some source — from revenues or asset holdings — enough to top up their plans. That four-year period is to allow that, and, of course, an important part of the bill is to allow that to happen without deleterious financial penalty by placing sold or liquidated assets or other revenues into that plan. It would essentially allow them to do it without a tax penalty.

To conclude on the last question, I understand that during that period this bill will not prevent an employer from, with the consent of the union, moving from a defined benefit pension to a defined contribution system with no defined benefits.

This bill is silent on that. That would be up to the company and its pension holders, whether that’s the union, the employee association or just the general employee agreement that might be present.

Would Senator Wells take a question?

I would.

By way of background — and I think Senator Wells knows where this is coming from — you observed the part about employees getting a modest degree of super priority for unpaid wages and the Wage Earner Protection Program filling in some of that gap. The evidence from the Wage Earner Protection Program is that there is still a significant shortfall for employees. Indeed, that plan itself acknowledges that its recovery — subrogated, that is, in the place of workers — is a recovery of about 2% or 3%.

I recognize the dilemma you described about the other place, but when one thinks about workers who might lose some portion of the pension they will collect 20 years from now versus the shortfall of last month or the month before and paying the rent with credit cards, the attraction of a super priority seems to me to be compelling for the parts of wages they have not been able to get. I would be interested in whether you think that’s an appropriate issue to be considered in this exercise?

It’s a really good point, Senator Cotter, and you and I have spoken about this. I read the transcripts from the other place where they addressed it. It was removed not because it was a bad idea. I think it’s a great idea. I agree that severances and unpaid wages may be even more important — they’re certainly equally as important.

I think it’s something we should explore further at committee. If there is an amendment to that, we will address it there. If there are some sharp edges that might suggest that it wouldn’t pass again in the other place, then we would have to deal with that. On principle, I think it’s an excellent idea. If this is the vehicle for it, then terrific. If it’s not the vehicle for it, then maybe that’s something this chamber should seek.

Honourable senators, I find myself in this very interesting moment in my life. I’m the critic of a bill that I can be a critic of, so I will try my best to tell you the best story I can invoke as to why this piece of legislation before us is worthy of our consideration and support.

I rise today to speak to Bill C-228, the pension protection act. Although this bill deals with the complex, confusing and often hard-to-describe subject of bankruptcy law, fundamentally it is about something that everyone in this chamber can easily understand and wants not only for themselves, but for their children and grandchildren to retire with.

Simply, people want and deserve a dignified and respectful retirement. That is what this bill is all about. It ensures that people’s dignity and respect are not kept at the back of the line, but instead will be placed at the front of the line in a bankruptcy when their pension plan is not fully funded.

Senators, we have all heard the devastating stories of pensioners who worked all their lives for companies like Nortel, Sears Canada and White Birch on a promise that they would have security in their retirement, only to find that security replaced with fear, anxiety and uncertainty when their company faced bankruptcy and their pension plan was not fully funded.

Since 1982, more than 250,000 seniors have suffered pension losses when their company underfunded their pensions and went bankrupt. The current bankruptcy laws kept those quarter million pensioners at the back of the line when their company went into bankruptcy. Bill C-228 will change the status quo and puts workers and pensioners first in line when a company goes bankrupt.

Colleagues, today I want to talk about why we should support this bill. It is to ensure retirees can live with the dignity and respect they have earned and deserve in their retirement.

Senators, let me start with some context for this bill. Bill C-228 deals with employer-sponsored pension plans, particularly defined benefit plans. Data shows there are currently some 1.2 million Canadians in private sector defined benefit plans, and it is estimated that 2.8 million retirees have the same.

Employer-sponsored pension plans are part of the collective bargaining process and agreement between employees and employers. They are negotiated and agreed to in the same way as wages. Workers will often agree to lower wage increases, preferring that money go into the pension plan to provide more security for their retirement.

What does that mean? In essence, pensions are deferred wages: Rather than being paid immediately, they are earned while working and payable upon retirement. Fundamentally, an employer-sponsored pension plan is a promise — a promise made between the employer and their employees. The employees commit to work to help their company succeed and grow today for their financial retirement security of tomorrow. The employer, in return, promises to fully fund their pension commitment. That is what is expected of each party — no less, no more.

Senators, I want to be clear that employee pension plan benefits are negotiated and earned. They are not a charitable handout. Employees negotiate and agree to have part of their wages being deferred to enjoy a better and more secure retirement — a retirement with dignity. That is the deal.

For retirees, the bankruptcy of their former employer whose pensions are underfunded can have dire consequences, not for a month or a year, but for the rest of their lives, as we have seen in past bankruptcies of other companies. It means their fixed income is reduced and it will be more difficult to pay for the necessities of life. Pensioners have had to sell their homes or their cars, or have had to choose between groceries, putting oil in the furnace, medication or even going back to work at a very late stage in their life despite the fact they had planned for their retirement.

So what will the amendments proposed in Bill C-228 do to help protect pensioners’ retirement security? This bill will give employer-sponsored pension plans a superpriority in the case of bankruptcy and insolvency. That means that when a company goes bankrupt or seeks to restructure under the Companies’ Creditors Arrangement Act, pension plan deficits will go to the front of the line, ahead of secured creditors, when funds are distributed.

The goal of the bill is to protect the pensions of retirees of companies that end up in insolvency, like General Chemical, Eaton’s and Co-op Atlantic. In those cases, there was not enough money left in the pension fund to pay all of the liabilities, and because pension plans are unsecured creditors under current bankruptcy laws, pensioners were left to take a very painful cut in their retirement income.

Critics of the bill say that giving superpriority to pensioners ahead of secured creditors like banks will have a negative effect on lending, either preventing companies from getting loans or increasing the cost of loans.

Here is the truth: Secured creditors make informed investment decisions and adjust the terms of loans based on the risk of the investment every day. That’s what banks do. They are sophisticated lenders that can easily assess risks even when they are hard to define or measure.

Workers and retirees, on the other hand, do not have the same opportunity or ability to diversify risk and pension investments. Pension plans are often their only savings, and they have no control over the investments. They have no option but to trust that the promise their employer made — that their pension fund would be fully funded — is kept. Their retirement future is dependent on that trust.

Unfortunately, for far too many, that trust has been broken. Bill C-228 is insurance for workers and retirees against employers breaking that trust and devastating their retirement security.

Here is another thing about superpriorities in bankruptcy law. The Bankruptcy and Insolvency Act already provides for a series of priorities that rank ahead of unsecured and secured debt, including taxes owing, Canada Pension Plan and Employment Insurance contributions, recently delivered goods and up to $2,000 in salary.

The banks and other secured lenders already must factor in these superpriorities when they assess risk and consider lending to a company. I am confident they have the expertise and sophistication to factor in a superpriority for pensioners.

However, I know this is a big change that involves complex laws. That is why it is a fair compromise to allow banks and the pension investment industry four years after the bill is passed to adapt before it comes into effect.

The bill also requires an annual report on federally regulated pension fund solvency to be tabled in the House of Commons to provide more transparency on the health of pension funds within the federal sector, because on the provincial side, of course, provincial governments have that authority.

Colleagues, over 250,000 pensioners have had their retirement future turned upside down over the last 40 years. I ask you a simple question: After a lifetime of hard work, should anybody have to struggle to make ends meet in their retirement? This bill ensures that the answer is “no.”

Critics of the changes to bankruptcy laws in this bill would often talk about the unintended consequences, so I want to take a few minutes to talk about that — not the unproven unintended consequences of passing Bill C-228, but the real unintended consequences of the current bankruptcy laws that will persist if this bill is not passed. The unintended consequences of the status quo have resulted in some 250,000 pensioners over the last 40 years having their retirement blindsided with devastating effect because their former employer went into bankruptcy, and the deficit in their pension fund was at the back of the line when it came to trying to recoup the money it was owed.

I know the former employees of Sears, Eaton’s, Caterpillar and Co-op Atlantic truly felt, and had to live their remaining years with, the unintended consequences of our current bankruptcy laws.

Imagine dedicating your working life to one company for more than 27 years, only to find out you are out of a job and won’t be getting the full pension you’ve paid into all your life. Is that fair?

That was the reality that was faced by 62-year-old Gail Paul of Corner Brook, Newfoundland, and more than 17,000 Sears workers across Canada who were either close to retirement or already retired, and who lost almost 20% of their pension income for the rest of their lives. That’s what they had to face when their company went bankrupt, because they were unsecured creditors and the assets of their bankrupt company were not going to go to fund their pension plan because they were not a priority of previous governments and legislators at the federal level.

Honourable senators, the pensioners of companies like Wabush Mines, Timminco, Smoky River Coal and other companies whose pension plans were slashed are real people. You know them. They are friends; they are neighbours. They are even family members. They have faced real hardship because of the current bankruptcy laws in our country.

I ask that you hear their stories because they have a lot to say about the unintended consequences of not passing this bill. If Bill C-228 had been the law, many of these retirees would have had a dignified and respectful retirement. That is what is possible if we pass this bill.

Colleagues, before I conclude, I want to acknowledge the activists and advocates who have worked relentlessly and tirelessly over the last two decades, fighting to make the amendments to the proposed Bill C-228 a reality. One of them is standing before you today. I want to start with the parliamentarians who began proposing private members’ bills and public bills going back some 15 years. They forged the path that eventually led to MP Marilyn Gladu working with all parties in the other place to achieve unanimous support to pass this bill last month in the other place.

I also want to recognize the labour groups such as the United Steelworkers, Unifor and the Canadian Labour Congress, who have fought for this day to come, not only for their pensioners but for their members who will one day rely on their pensions in retirement.

Finally, I want to recognize the pension advocacy groups who were here yesterday. They have never given up fighting for fairness and justice. These groups have fought not only for their own benefits — which they won’t get as a result of the passing of this bill — but for the next generation of pensioners should we pass this bill. I am speaking of groups such as CanAge; the Canadian Association of Retired Persons, or CARP; the Canadian Federation of Pensioners; the Canadian Network for the Prevention of Elder Abuse; Réseau FADOQ; the Congress of Union Retirees of Canada, or CURC; and National Pensioners Federation. I thank them for their hard work and their unwavering determination to change the laws that put them and their families at the back of the line.

In conclusion, colleagues, I want you to think about the unfairness in the current bankruptcy laws, which have caused so much pain for people who only wanted to retire with dignity and respect. These men and women have worked all their lives expecting the secure retirement that was promised to them by their employer-sponsored pension plan.

I want each of you to think about what it would be like for you and your family if, after working your entire life and retiring believing you have a guaranteed retirement income to rely on, you found out the company you worked for went bankrupt, and your pension will be cut 20% or more because the company pension plan was underfunded and in deficit. Your pension savings go to the back of the line during the bankruptcy proceedings.

That is the reality right now because of the current bankruptcy laws, laws that do not protect the interests of pensioners when companies go bankrupt or reorganize. Companies make promises to employees that they accept as being true: that they will have a guaranteed retirement income when they retire. The pension is a condition of employment to which both the employer and the employees contribute. An employer who fails to properly fund their pension plan is at fault in the same way as an employer who fails to pay workers their agreed-upon wages.

Senators, we would find it unacceptable to allow an employer to not pay their employees the wages that were earned and owed. Allowing companies not to pay deferred wages should be equally unacceptable. You will hear from the critics of this bill, who will talk about potential unintended consequences. I want you to remember that the unintended consequences of the current laws are already known all too well by pensioners whose dignity and respect have been placed at the back of the line for far too long.

Colleagues, a lifetime of work should not leave someone to face insecurity and poverty in retirement because of an unjust law in this great land of ours. This bill can change that. I urge you to support it to get it to committee, where we will hear the witnesses. More importantly, it will come back to you for a final vote. I am hoping that, after decades of history, we can finally write the law in the way it was intended, to ensure that workers can have dignity and that companies can continue to be successful and to contribute to this great land of ours. Thank you so much.

Honourable senators, I just realized, in listening to the last speaker, that we are almost in a conflict of interest because if the Government of Canada goes broke, our pensions will be protected under this provision.

Colleagues, we’ve all heard the stories: A company goes under, the creditors line up, and the workers and retirees of that company find themselves at the very end of that line. After those creditors are done, the workers and retirees get what is left. If what’s left isn’t enough to fund their pensions or health benefits, well, that’s the way it goes.

We all remember Nortel. At its peak, they employed almost 95,000 people — 25,000 in Canada alone — but that all ended in 2013. Whatever the cause of Nortel’s collapse — mismanagement on the part of senior executives or the Chinese government hacking and selling trade secrets — it is the impact of their bankruptcy that informs the bill we are debating.

Colleagues, similar bills have been brought forward in the past. In preparing this speech, I looked at correspondence I received during one such debate, correspondence from former Nortel employees facing financial hardship, if not ruin, as a result of its collapse; stories of workers unable to work due to disability. Family members wrote to me, saying:

He thought himself very fortunate that he had been working for a company that supplied the wonderful pension benefits held by Nortel. Can you imagine his shock when he was told that these benefits, in fact, did not exist?

They used words like “nightmare,” “desperation,” “shock and horror,” “financial destruction,” but there was another theme as well — anger — anger at seeing senior executives walk away with bonuses and severance packages while employees and pensioners found themselves at the end of their ropes and at the end of the line.

It happened again with Sears. The company goes under. It is revealed that the pension fund had been grossly underfunded, even though, between 2005 and 2013, Sears Canada paid about $3 billion in dividends to shareholders. The employees, current and retired, are left in the lurch. In fact, the story of Sears is even more shocking. Whereas the fate of Nortel may be attributed to market forces, there was something else at play with Sears Canada.

I mentioned the $3 billion in dividends starting in 2005. That year, its American parent company was purchased by a billionaire hedge fund manager. From events that followed, one can assume that the “management” of Sears Canada had a job not so much to build the company as to strip it. Flagship stores in major cities, the financial services branch, which was a money‑maker at the time, and other assets were sold off, providing a dividend yield to shareholders much higher than what other companies were providing at the same time.

And yet, all this time, Sears Canada’s pension fund was underfunded by hundreds of millions of dollars, a situation that continued despite numerous warnings from Sears employees and pensioners. When the end finally happened, when there were no more assets to sell off, the company filed for bankruptcy in 2017, and creditors lined up, with pensioners at the end of the line again.

So the person selling couches or fridges in the Sears outlet in Charlottetown lost almost everything, but the hedge fund manager could buy a 300-foot yacht — not that I begrudge him his 300-foot yacht, but I do begrudge the lost pensions and benefits that paid for it.

Honourable senators, as was stated repeatedly during study of this bill in the House of Commons, pensions are not gifts provided at the whim of some employer. They are wages earned by employees, deferred until their retirement.

This bill, like those that came before it, seeks to recognize their contribution in a tangible way, by ensuring that, in the case of a company that has failed, those who worked to build that company have a greater claim on those assets that remain than those who would profit from its demise.

Honourable senators, this bill passed 318 to 0 in the House of Commons. That burst of energy, activity and even manic behaviour by the members of the House of Commons, after years and years of refusing to take any action, requires a sober second review by the Senate. Having said that, I believe this bill is long overdue, and the Senate may find ways at committee to improve it and correct any errors or omissions.

I take no joy in the anticipated final passing of this legislation. Parliament should be ashamed that it has taken so many years to do the right thing, and the sadness that connects to its eventual passing is that so many hard-working men and women, and their families, suffered so much while waiting for Parliament to finally take action.

Thank you, colleagues.

Honourable senators, as we meet today in the Senate of Canada on the unceded lands of the Algonquin Anishinaabe people, we have before us a bill at second reading, Bill C-228, which is fundamentally about fairness, justice and accountability for hard-working Canadians, their families and their communities.

It’s a bill about income security and financial security for a significant number of Canadian seniors. It’s a bill about parliamentary oversight and the prevention of further pension erosion and vulnerabilities in our country. It is a bill about my friends and neighbours, and yours, and it is a bill that is, unfortunately, too late for my friends Anne and Peter.

I do not intend to speak for long; rather, I will encourage us to send this bill, with its important pension protection objective, to committee for a thorough and thoughtful study.

While some colleagues in the other place had originally asked for the bill to be fast-tracked and moved quickly to Royal Assent, I would urge our Senate committee studying the bill to do so with great care and attention, as the last thing we would want is to cause unintended negative consequences to people paying into defined benefit pension plans or those reliant on payments from them.

And, of course, as Senator Yussuff has said, we would not want the consequences of not finding a way to protect our pensioners.

Colleagues, we have heard about previous bills with similar intentions — Bills C-253, C-405, C-259 and C-225 — and we have heard that the House of Commons sponsor of this Commons public bill, the Member of Parliament for Sarnia-Lambton, Ms. Marilyn Gladu, intends this bill to accomplish three things. The first two are focused on ensuring the health of defined benefit pension funds and the last one is focused on fairness and priority being given to workers and pensioners in the case of the bankruptcy of employer companies.

As you have heard, it would require that an annual report on the solvency of pension funds be tabled in the House of Commons for greater transparency and oversight. It would create 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. Third, in the case of bankruptcy, pensions would be paid out to retirees ahead of large creditors and ahead of bonuses to executives.

Given the nature of these three key elements, changes are therefore required to the Pension Benefits Standards Act, 1985; the Companies’ Creditors Arrangement Act; and the Bankruptcy and Insolvency Act.

Honourable senators, we have heard from our colleagues Senators Wells, Yussuff and Downe about the many devastated and rightfully aggrieved pensioners from Nortel, Sears, Co-op Atlantic and others. Debate in the other place also cited Eaton’s, Cliffs Natural Resources and General Chemical.

I mentioned earlier that this bill is unfortunately too late for my friends Anne and Peter. My friend Anne and I are very similar in some ways. We were both born in 1954; we both come from families of seven children; we both have children and grandchildren whom we cherish; we both live in Antigonish, Nova Scotia; and we were the first two women vice presidents at St. Francis Xavier University. We have enjoyed satisfying careers, largely working in the not-for-profit sector where defined benefit pensions were non-existent.

Unlike mine, Anne’s professional career was cut short by severe health problems and accidents. Although she remains as active and productive as possible, writing and creating art when she is able, Anne experiences a lot of limitations in our ableist world. Identifying as a person with disabilities, Anne cannot drive anymore. She relies on a wheelchair to get around, and her severe health and pain management issues can be very consuming and expensive — and I underline “expensive.”

Anne’s husband, Peter, is older than she is. He also has cherished children and grandchildren. Peter had a very active and productive career, in his case as a professional forester. Peter worked for Stora Enso, a Swedish forest products company in Port Hawkesbury, Cape Breton, for 27 years. He was also a very skilled volunteer designer and builder of many of the beautiful nature trails in our area.

Unfortunately, fairly early into his retirement, Peter fell and broke a hip, and he developed dementia, which ultimately caused him to require specialized care in a long-term care home in our town.

Like many Canadians, Anne and Peter worked hard, saved for their retirement and were disciplined in trying to pay off their mortgage. For 27 years, Peter paid into his company pension plan, along with his coworkers. Stora was sold to an American company, NewPage, in 2007.

Unfortunately, the case of Peter, and his fellow Stora and NewPage colleagues, is another example of a company — NewPage — declaring bankruptcy in 2011, and its workers and pensioners were left holding the bag. NewPage was ultimately sold to Pacific West Commercial Corporation in 2012, which wanted nothing to do with pension plan liabilities. The mill now operates as Port Hawkesbury Paper.

As a result, after 27 years of service and his deferred wages being contributed to the pension plan, which, at the time, wasn’t that high in the first place, Peter’s pension was cut by almost one third, leaving him with a very basic level of pension income, close to the equivalent of the Canadian Emergency Response Benefit — and we know what that is. It is not the amount that he and Anne were counting on when they were planning their retirement and certainly not what they need, given their multiple and cascading health problems.

Anne believes the impact of the stress and trauma they have experienced due to the shock of the bankruptcy and their resultant financial insecurity has also exacerbated their many health problems.

They didn’t lose their house — not at first, anyway — although many others did, but they did have to ultimately sell it to compensate for income lost and in order to support their health care and other costs of living, which we all know are only going up.

Anne tells me now that, however difficult it will be, she is looking into somehow finding paid employment. In a conversation with Anne this morning, she said that Peter paid thousands and thousands of dollars of his wages into his pension, and that it was his money and the money of his colleagues that went to pay New York lawyers, creditors and shareholders. She also acknowledged that although losing a third of Peter’s pension has been extremely devastating for them, many forestry workers were hit with deeper cuts — more than that 30% — because their pension funds were in even worse shape.

Colleagues, I tell you the story of Anne and Peter, a story of vulnerable seniors with severe health issues facing a future of financial insecurity, because this bill, Bill C- 228, is about people like them and preventing that kind of injustice from happening again and again to Canadians.

As I said, unfortunately, this law comes too late for Peter and Anne, and the other Stora/NewPage pensioners. Colleagues, in 2012, the year after NewPage declared bankruptcy, the Superintendent of Pensions indicated that only 43% of the then 131,439 Nova Scotians enrolled in defined benefit pension plans had fully funded plans at that moment.

We know there are many people across Canada today who are vulnerable to similar pension losses.

Honourable colleagues, it is time to bring these serious pension vulnerability issues out of the shadows and into the light, and to find effective ways to protect our valued seniors.

Honourable colleagues, let’s send Bill C-228 to committee. Let’s ensure justice, fairness, accountability and dignity for Canadian seniors. As Chris Lewis, the Member of Parliament for Essex, said in his second reading speech on Bill C-228 in the other place, “. . . It is always a good time to do the right thing.” I would add it is, frankly, high time to do the right thing. Wela’lioq, thank you.

Is it your pleasure, honourable senators, to adopt the motion?

Hon. Senators: Agreed.

(Motion agreed to and bill read second time.)