If you have a pension this is good news
PENSION PROTECTION BILL C-228 TO BECOME LAW!
The House of Commons unanimously passed MP Marilyn Gladu’s private member’s Bill C-228 last year.
On April 18, 2023, it passed the Senate without a dissenting vote.
Bill C-228 will receive Royal Assent shortly – and come into full force in four years.
Impact of Bill C-228 on the Security of your Pension
Bill C-228 will improve the security of your pension in the event our pension plan is underfunded and involuntarily terminated – in the following two ways:
In a bankruptcy, Bill C-228 elevates pension plans in the order of precedence in the division of remaining corporate assets. While pensions will continue to rank below government remittances (taxes and other payments) and officers of the Court (e.g. bankruptcy trustee, lawyers, etc), they will rank equal to earned, unpaid employee wages. But more importantly, pensions will rank ABOVE secured and unsecured creditors, specifically banks.
In a corporate restructuring, no proposal to restructure may be considered by the Court unless it provides for full funding of the pension plan(s).
Given sufficient remaining assets, pensions will be paid in full.
Bill C-228 is very good – but not perfect
We cheer the adoption of Bill C-228 – but we must remember it has actual and potential gaps in its protection of pensions.
· Four-year delay before coming into force: Any bankruptcy or restructuring filed prior to April xx, 2027 will be governed by current legislation.
· Possible avoidance: Recent history provides examples of US parent companies successfully draining assets from distressed Canadian subsidiaries prior to restructuring or bankruptcy.
· Possible legal challenge: At least two opponents of Bill C-228 threatened to challenge it in court – on its first use or before.
The BPA continues to seek 100% security for your pension