HR leaders need to ensure they’re compliant when it comes to payroll
The New Democratic Party (NDP) Finance Critic Daniel Blaikie has introduced new bill that seeks to protect the pensions and benefits of Canadian employees, should their company fall into bankruptcy. The bill also seeks to have employers provide for termination and severance pay for staff before paying off their secured creditors.
"When companies declare bankruptcy, big banks get paid out first while people who paid their whole life into a pension plan are left with scraps. Canadian workers deserve certainty when it comes to their retirement income," said Blaikie.
The NDP cited in its statement the situation at department store SEARS, where retirees saw a 30% reduction to their monthly pension benefits. According to the party, the situation unveils how "inadequate" existing bankruptcy laws are in Canada, which fails to protect the retirement futures of employees who "spent decades paying into a pension."
NDP Labour Critic Alexandre Boulerice said protecting employees' pensions should be employers' way of "upholding their end of the bargain … before doing things like offering dividend and share buy backs to shareholders." Bea Bruske, president of the Canadian Labour Congress, welcomed the bill filed by the NDP, encouraging other members of Parliament to support the proposal.
"Asking pensioners to bail out banks is wrong, but that is what our current bankruptcy laws require. We are glad to see Daniel Blaikie pick up the torch from former NDP MP Scott Duvall and lead the charge to right this wrong," Bruske said.
Read more: Future of retirement: What HR needs to know
'Retirement anxiety'
A previous survey by Abacus Dataz for the Healthcare of Ontario Pension Plan revealed that four in five Canadian workers said they would rather sign up for better pension scheme than receive higher pay. It reflects what BDO Canada described is "retirement anxiety," where workers are more concerned about financial security after retirement than their current personal debt.
David Coletto, CEO of Abacus, said that this could be a call to improve retirement affordability, with more Canadians wanting to work for employers that can ensure their financial stability in retirement.
"These results present a clear call to action to enhance retirement affordability," said Coletto.
David Goodsell, Natixis’ Durable Portfolio Construction Research Centre executive director, previously told HRD that employers play a huge part in preparing their staff for retirement.
"Employers play a critical role, so looking at what type of plan is available, is the match significant enough to ensure that individuals are participating," Goodsell said.