Issue #30: Protect Pensioners from Corporate Default and Protect Deferred Wages
Canadian pensioners need protection from corporate default, particularly during and post COVID-19. Compared to other jurisdictions, Canada significantly lags in its protection of pensioners. In the UK, 90% or more of pensions up to at least $57,000 annually are protected through a national pension benefit scheme. In the U.S. the Pension Benefit Guaranty Corporation protects pensioners; in 2018 a 65-year-old’s pension is guaranteed up to U.S. $71,431. In Canada, only Ontario offers some protection, and that is only “bottom-up” protection of $18,000 annually.
1.3 million Canadians with corporate defined benefit pension plans are potentially at risk of having their pensions cut. Canada needs pension reform to ensure that pensions of hard-working Canadians are not lost due to insolvency or bankruptcy. CanAge supports the calls of the Canadian Federation of Pensioners and the National Pensioners Federation for needed pension protections.
Recommendation #103: Create Pension Benefit Guarantee Funds Across Canada
Create Pension Benefit Guarantee Funds for all jurisdictions. Ensure pensioners receive 100% of their deferred wages – the pension their employer committed to. Currently, pension guarantee funds exist only in Ontario.
Recommendation #104: Fully Funded Pension Funds
Require pension funds to be fully funded to 100%.
Recommendation #105: Recurring Refundable Tax Credit
Establish a recurring refundable tax credit equal to the annual pension loss experienced by a pensioner. If legislation is amended to ensure pensioners receive their full pension or if a pension insurance program is created, this credit will serve as a backstop to ensure these changes work to protect pensioners.
Recommendation #106: Flexible Pension Reform
Operationalize modern tax and pension policies to allow for increased options for flexible retirement and a hybrid pension withdrawal and income-earning model.
The following resources from the Government of Canada and Financial Consumer Agency of Canada are
Starting June 30th, your bank will be sending you alerts via email, text or mobile
On Feb 28th, we presented to the federal government’s Standing Senate Committee on Social Affairs,