OTTAWA — A day after throwing a line to private-sector union workers, Conservative Leader Erin O’Toole is digging in against what the party calls “corporate elites” in a pitch to Canadian seniors and working-class voters.
At an announcement from his virtual broadcast studio in Ottawa, O’Toole pledged to give priority to pensioners over most other creditors during bankruptcy or restructuring proceedings.
He also said a Conservative government would amend legislation to prevent executives from paying themselves bonuses while steering a company through restructuring unless the pension plan is fully funded.
“As I’ve met with Canadian workers and labour unions across the country, I’ve heard the same thing over and over again: After working hard their whole career, people should be able to look forward to financial security in retirement,” O’Toole said Tuesday.
“Canadian workers who’ve paid into a pension plan on every paycheque should be able to rely on it actually being there when they retire.”
The Tory leader, who on Monday promised union representation on federally regulated big companies’ boards, says workers have been forced to take major cuts to pensions when their former employer goes bankrupt, with Sears as a recent example.
The Canadian Labour Congress cast doubt on O’Toole’s pledge, citing his track record as a cabinet minister under Stephen Harper. The former prime minister cut the corporate tax rate to 15 per cent from 22 per cent and replaced lifetime pensions for wounded veterans with lump-sum payments that some ex-soldiers said resulted in less money, noted president Bea Bruske.
“Conservative Erin O’Toole’s rhetoric just doesn’t match his record,” she said in a release.
“Time and time again Mr. O’Toole failed to support pensioners — and even wrote a law to make it easier for corporations to walk away from pension obligations.”
O’Toole tabled a private member’s bill in 2018 that he has said was meant to give pension administrators more leeway to preserve remaining funds and beef up returns for pensioners. It also sought to limit payments to executives during insolvencies, he said.
“But it would have actually allowed executive bonuses to rise by a factor of 10 once a company entered creditor protection,” Bruske stated.
O’Toole’s pension pitch has striking similarities to recent legislation proposed by the New Democrats and builds on his push for trade union votes as he seeks to nab support from that party’s traditional turf.
In December, NDP MP Scott Duvall tabled a basket of bills that sought to shore up worker protections, including around pensions and benefits in bankruptcy proceedings.
The bill, which died on the order paper after the federal election was called for Sept. 20, would have required companies to provide termination and severance pay before secured creditors got their cash.
“Erin O’Toole can try and pretend he’s got workers’ backs this election, but he’s spent his entire political career throwing them under the bus,” NDP Leader Jagmeet Singh said in a statement.
For seniors, the Liberals pledged $3 billion over five years in their budget from the spring to support long-term care and another $90 million over three years to help low-income seniors age at home.
New Democrats have proposed universal pharmacare and a national seniors strategy that would target dementia and elder abuse and suspend clawbacks to the guaranteed income supplement for low-income seniors who received emergency benefits during the COVID-19 pandemic.
According to Statistics Canada figures, about 1.3 million of the country’s more than 13.5-million private-sector employees have a defined-benefit pension plan, where employers pay workers a specified amount in retirement — unless bankruptcy sabotages the scheme.
“This will be the death knell to defined-benefit pension plans,” said Ian Lee, an associate professor at Carleton University.
He predicted that knocking secured creditors, such as banks, down the priority ladder below pensioners would trigger a rush of conversions to defined-contribution plans — where a set amount for retirement is not guaranteed — or simply a phaseout of defined-benefit plans.
Nonetheless, he noted the apparent interest for pensioners facing bankruptcy scenarios. “They usually get diddly squat because there’s no money left.”
Lee approved of the Tory pledges to block bonuses for executives during restructuring, require companies to report their pension plans’ funding status to employees and no longer force underfunded pension plans to be converted to annuities.
That last practice, which sees financial assets sold for an insurance product in order to reduce risks, often occurs in a recession when markets are depressed, locking in losses and leaving less money for pensioners, the Conservatives say.
In 2018, Sears retirees learned they would receive 30 per cent less than their promised monthly pension benefits after the retail giant’s insolvency, despite millions in bonuses for executives.
Nortel pensioners in Ontario also saw a roughly 30 per cent reduction in their pensions more than a decade ago.
This report by The Canadian Press was first published Aug. 24, 2021.